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Statoil-led consortium wins production rights for Carcará North block in Brazil

EBR Staff Writer Published 30 October 2017

A consortium of Statoil, ExxonMobil and Portuguese gas distribution firm Galp has won a production sharing contract for the Carcará North block in Brazil’s second pre-salt offshore licensing round by bidding a sum of around BRL3bn ($910m).

The consortium features the subsidiaries of the three companies that include Statoil Brasil Oleo e Gas, ExxonMobil Exploracao Brasil and Galp’s subsidiary Petrogal Brasil.

Statoil’s share for the block will be $364m and it will be the operator for the Carcará North block in the Santos basin with a stake of 40%. ExxonMobil will hold 40% and Galp 20% stake in the offshore block.

The three partners have also agreed on other subsequent transactions in the nearby BM-S-8 block to align equity stakes in the two blocks that together constitute the Carcará oil discovery.

Located nearly 322km offshore Rio de Janeiro, the Carcara field holds an estimated recoverable resource of two billion barrels of high-quality oil.

Statoil CEO Eldar Sætre said: “This further strengthens Statoil’s presence in the prolific Brazilian pre-salt area and these transactions help build a strong and aligned partnership across the two Carcará blocks.

“Together they significantly advance our strategy in Brazil, a core area for Statoil. Developing a world-class asset like Carcará as operator is a good match with our competence and capacity.”

Statoil will receive a total of $1.55bn from the transactions with ExxonMobil and Petrogal Brasil. Its potential net cash inflow following the licensing round will be nearly $1.19bn.

As part of the transactions, Statoil will divest 33% of its current stake of 66% in BM-S-8 to ExxonMobil for about $1.3bn that includes an upfront cash payment of around $800m, while the remaining amount of around $500m will be made through contingent cash payment.

Additionally, Statoil after completing its acquisition of a further 10% stake in BM-S-8 from Queiroz Galvão Exploração e Produção (QGEP) will divest 3.5% stake to ExxonMobil and 3% stake to Galp for about $250m.

After all the transactions, Statoil and ExxonMobil will each hold stakes of 36.5% in BM-S-8 and a 40% stake each in Carcará North. On the other hand, Galp will own 17% stake in BM-S-8 and 20% in Carcará North.

ExxonMobil chairman and CEO Darren Woods said: “These agreements and recent bid round results mark ExxonMobil’s entry into a world-class resource and prospective exploration acreage in Brazil.

“ExxonMobil has a long history in the country and we’re confident our deepwater technology and project expertise can help to further grow the value of Brazil’s energy resources.”

The transactions involving ExxonMobil and Galp are subject to customary conditions, including partner and government approvals.

Image: Map showing locations of Carcará North and BM-S-8 blocks of the Carcará oil discovery. Photo: courtesy of Statoil ASA.