Corporate Finance

Petrobras Sells Assets to Total for $ 2.2 billion

The deal occurred as part of a business plan to reduce the costs of the Brazilian company

The deal occurred as part of a business plan to reduce the costs of the Brazilian company

On March 1st, Petrobras announced it will sell $2.2 billion in assets to the French company Total. This is part of a business plan revealed by the Brazilian company in September 2016 to reduce costs and manage its debts. Both parties officially announced the negotiations on December 21st, 2016. At that time, the value of the offer was $ 2billion.


As part of the deal, Petrobras will grant Total a 22.5% stake in the Iara deep water oil field, located in the Santos Basin, in the Brazilian state of Sao Paulo. It covers approximately 300km2. Petrobras believes the field holds three to four billion barrels of light oil and natural gas. The Brazilian company will maintain its position as the operator of the field, with an ownership of 42.5%. The remaining percentage will be kept by BG E&P Brasil (Shell), with 25%, and Petrogal Brasil, with 10%.


In the oil field of Lapa, which commenced operations in December 2016, Total will receive 35% of its rights, while Petrobras maintains 10%. The remaining percentage will be split between BG E&P Brasil with 30% and RepsolSinopec Brasil, with 25%.


The agreement also foresees the transfer of 50% of the rights of Termobahia, including the thermal power plants of Rômulo de Almeida e Celso Furtadoduas. Both are located in the state of Bahia.


In addition, the deal also gives to Total the option of acquiring 20% of participation in the second block of the Perdido oil platform, the deepest floating platform in the world, reaching a depth of 2,450 meters. Located in the Gulf of Mexico, Shell operates Perdido, with Petrobras holding a 20% stake, which may be transferred to Total.


The transaction will consist of $ 1.7 billion paid on demand, on top of a line of credit of $400 million, that may be used by Petrobras, representing the investments of the Brazilian company in Iara, and a contingent payment of US$ 150 million.


Apart from these transactions, the deal also aims to foster a partnership between Petrobras and Total to study the Equatorial area and the South of the Santos Basin in the coastal region of the state of Sao Paulo. The agreement also intends to nourish a technological partnership between both parties in the segments of geological processing and systems of submarine production.


According to Total, the deal represents an extension of its presence in Brazil, with a participation in the aforementioned operations. The deal is yet to be made official, as regulatory agencies still need to review and approve the transactions and their terms.




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