February 03, 2020 / News News
PRIO buys vessel and 80% of the hammerhead shark field
PRIO, the largest independent oil and gas company in the country, announces the purchase of the vessel OSX-3, for US$ 140 million (about R$ 600 million), in conjunction with the acquisition of 80% in the Tubarão Martelo Field – where the Production Storage and Oil and Gas Transfer (FPSO) unit is chartered.
The two transactions will allow the integration between the Polvo field, already operated by PRIO, and Tubarão Martelo, both in the Campos Basin (RJ).
This is the first initiative of an independent company in the country for the optimization of mature fields, with the creation of a hub in the region – all the oil producing wells of the two fields will be interconnected to the newly acquired FPSO (OSX-3).
“We have studied this acquisition a great deal and are preparing to put in place a pioneering strategy to revitalize producing fields in Brazil. The two businesses will generate significant synergies, cost reduction, extension of the economic life of the two fields, and lower emissions due to the integrated operation. We also follow our basic premises of safety and responsibility with the environment,” says Nelson Queiroz Tanure, CEO of PRIO.
Cost reduction and production increase
The combined operating costs of Polvo and Tubarão Martelo, currently at more than $200 million per year, are expected to fall by about $70 million per year, after implementing synergies with logistics and operations, as well as the return of the FPSO currently leased for the processing and storage of oil from the Polvo field.
With this, PRIO estimates that the production costs of the new pole could reach around $15 per barrel, resulting in an expected increase in the economic life of the assets until approximately 2035 and with a positive impact on production and reserves additions of 40 million barrels, totaling 52 million barrels.
Tubarão Martelo currently produces about 5,800 barrels per day, but this volume could reach up to 10,000 barrels per day after the completion of the field revitalization campaign currently underway.
The new pole may reach an estimated production of 20 thousand barrels/day as of 2021.
Octopus and Hammerhead Shark Integration.
The acquisition of the 80% of the Tubarão Martelo field will have as a counterpart the assumption of 100% of the costs of operating the field, with the right to initially commercialize 80% of the oil produced.
After the interconnection of the Tubarão Martelo and Polvo fields, scheduled for mid-2021, PRIO will hold a 95% stake in the new integrated production hub; and Dommo (current operator), the remaining 5%. The investment in the integration of the two assets, only 9 km apart, is expected to be between $50 million and $60 million.
PRIO relied on Prisma Capital as financial advisor throughout the process, which includes funding of $100 million for the project.
The operations depend on the approval of the regulatory agencies – Cade and ANP.
The integration model of the two fields was widely studied by the PRIO team, under the optics of the technology developed by the company, the C.R.P – Cost, Reservoir and Production -, which consists of innovative techniques in Brazil of cost rationalization, focus on reservoir management, and the redevelopment of mature fields aiming at the increase in production.
“Our innovative vision and management method, with the effort, persistence, and engagement of the entire PRIO team, aims to increase oil recovery and extend the economic life of the field, generating benefits for the company and society. The five years of the company’s life are translated by the achievements and the strong increase in the company’s market value, the result of the recognition of our capacity to do good business, with results for our shareholders,” he highlights.