PRIO announces acquisition of 40% of the Peregrino field

27 Sep 2024

PRIO informs that it has signed today a Sale and Purchase Agreement with SPEP Energy Hong Kong Limited and Sinochem International Oil (Hong Kong) Company Limited (“Sinochem”) for the acquisition of Sinochem Petroleum Netherlands Coöperatief U.A., which indirectly holds a 40% interest in the Peregrino and Pitangola Fields (“Field” or “Peregrino”).

Thus, the new consortium will be formed by Equinor, the operator of the Field with a 60% interest, and PRIO, with a 40% interest. The transaction’s completion is subject to the usual conditions precedent for this type of transaction, such as CADE approval and the waiver or lapse of Equinor’s pre-emption rights within 30 days.

The acquisition value is US$ 1,915 million, with US$ 191.5 million paid upon signing the contract, plus US$ 1,723.5 million to be paid on closing, in addition to the net working capital and other usual price adjustments for this type of transaction (the price net of the adjustments should remain between US$ 1,665 million and US$ 1,715 million). The company and its subsidiaries also had US$ 632 million in tax losses on December 31, 2023.

According to the reserve certification report by DeGolyer and MacNaughton (“D&M”), prepared at PRIO’s request, and considering a long-term oil price of US$ 62 per barrel, it is estimated that economically recoverable reserves and resources (1P+1C) for the Peregrino Field is close to 338 million barrels from January 1, 2024, with a net volume of 135 million barrels for PRIO, with an abandonment date forecast for after 2037.

After the acquisition’s conclusion, the Company’s production will increase by approximately 35 thousand barrels per day. Additionally, PRIO sees synergies in marketing the Field’s oil, as each offtake from Peregrino of approximately 650 thousand barrels can be combined with cargo loads from other fields operated by the Company to optimize logistics. All payments will be made using resources already available in PRIO’s cash accounts, and leverage levels will remain within healthy and conservative ranges of up to 1.2 times Net Debt / EBITDA.

Discovered in 1994, the Peregrino Field had its first oil in 2011. Peregrino is located 85 kilometers off the coast, in the Campos Basin, within blocks BM-C-7 and BM-C-47, and 28 kilometers from the Polvo and Tubarão Martelo Cluster. The Field’s production is carried out through the FPSO Peregrino, which has an oil processing capacity of 110 kbbl/d and 300 kbbl/d of water. Additionally, the Field has 3 fixed platforms (Peregrino A, B, and C) where wells are connected and completed, and which have rigs that drill and intervene in the wells.

The Field’s infrastructure is operated by Equinor and owned by the consortium. The Field is currently in its second development phase, which included the installation of the fixed platform Peregrino C and the drilling of new wells connected to platforms A and C. Currently, it produces approximately 88 kbbl/d, through its 26 producing wells and 6 injection wells. The Field’s oil has an API of 13.5° and sulfur content of 1.79%.

PRIO thanks Sinochem for its commitment and cooperation during the transaction. PRIO was advised by Bank of America, and by the law firms Tauil & Chequer Advogados associated with Mayer Brown in Brazil and Mayer Brown International LLP in the UK