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Brazilian round draws record bid total

This story was updated May 16 and May 17.
 
Brazil’s 11th bidding round for onshore and offshore exploration rights, its first in 5 years, auctioned 142 blocks and drew bids totaling a record $1.4 billion.

The blocks cover 100,300 sq km of the 155,800 sq km offered by the National Agency of Petroleum, Natural Gas, and Biofuels (ANP).

The bid total represented a 798% premium over the total auction starting price. Total forecast investment to be made by winning companies under minimum exploration work programs is $3.45 billion.

Thirty-nine companies from 12 countries participated. Thirty companies had winning bids. Among winners, 12 are from Brazil, 4 from Canada, 3 from the UK, 2 each from Colombia and the US, and 1 each from Australia, Bermuda, Spain, France, Guernsey, Norway, and Portugal.

ANP said the average percentage of nationally owned/produced technology and assets for the 11th round was 62.32% for the exploration phase and 75.96% for the development phase of the concession agreement.

The biggest signing bonus, with a winning bid of $172 million, came from a group involving Total E&P Brasil, operator with a 40% interest, and Petrobras and BP EOC, 30% each. The bid was for offshore Block FZA-M-57 in the Foz do Amazonas basin of northern Brazil.

Total will be the operator with 40% interest in five blocks in the Foz do Amazonas basin, the other four being FZA-M-86, FZA-M-88, FZA-M-125, and FZA-M-127, and with 45% interest in the CE-M-661 block in the Ceara basin. Total also acquired a 25% working interest in the ES-M-669, ES-M-671, and ES-M-743 blocks in the Espirito Santo basin and a 50% interest in the BAR-M-346 block in the Barreirinhas basin.

Total won the various blocks in partnership with Petrobras, BP, Statoil, OGX Petroleo e Gas Participacoes SA, and Queiroz Galvao Exploracao e Producao SAU.

Premier Oil PLC won three blocks in largely underexplored deepwater basins offshore northeastern Brazil that contain prospects and leads each capable of delivering 250 million-1 billion bbl.

Premier and Cia. Espanola de Petroleos SA were awarded 50-50 interests in blocks 717 and 665 in the Ceara rift basin.

In Block 717 the companies will pursue a potential extension of the Pecem discovery south into the block and a slope channel play that will require more 3D seismic to mature to drillable status. Meanwhile, a large Cretaceous onlap play has been identified In Block 665, and a block-wide 3D seismic survey will be acquired to assess this opportunity in 2014.

Premier was also awarded a 35% nonoperated equity stake in Block 90 in the Foz do Amazonas basin. Queiroz Galvao will operate Block 90 with 35% interest and Pacific Rubiales Energy Corp. has 30%.

Block 90 provides Premier with access to a high impact Cretaceous exploration play proven across the border in French Guiana. Specifically, stratigraphic traps onlapping a rift basin high will be targeted. The plan is to shoot 3D seismic in 2014.

Well commitments include one exploratory well in Block 90 and two in Block 717 at an estimated total net cost to Premier of $100 million.

Gran Tierra won the REC-T-86, 117, and 118 blocks onshore in the Reconcavo basin. The blocks total 20,658 gross acres. Gran Tierra will pay a $16.5 million signature bonus and expects contracts to be finalized by August 2013.

Gran Tierra committed to drill five exploratory wells and shoot 84 sq km of 3D seismic in the initial 3-year period.

The blocks lie north of the company’s existing core areas in the basin, where Gran Tierra is developing the Tie conventional oil discovery, having grown production to 1,000 b/d from 400 b/d.

Petrominerales Corp., Calgary, said its Alvopetro SA Extracao de Petroleo e Gas Natural subsidiary was awarded a 100% interest blocks REC-T-106 and 107 in the Reconcavo basin and a 75% interest in Block TUC-T-177 in the Tucano basin, all onshore in Bahia state. The first phase lasts 3 years on each block.

Block REC-T-106 covers 7,759 acres, and the first phase work commitment is to shoot 10 sq km of 3D seismic. Block REC-T 107 has 7,561 acres near the company’s Bom Lugar field. First phase work program is for drilling two wells.

First phase work commitment on 46,505-acre Block TUC-T 177 in Tucano is one well and 31 sq km of 3D seismic.

Petrominerales said the three blocks “increase our exposure not only to the deep tight oil potential in the (Neocomian) Gomo horizon but also add considerable exploration potential in shallower conventional reservoirs. Our initial focus will be to demonstrate the commercial deliverability of the Gomo sands using fracture stimulation technology.

Petrominerales said, “Our vision in Brazil is to implement a large-scale, repeatable, low-risk, multiwell development program, utilizing advanced technology and completion techniques. We look forward to drilling our first wells in Brazil later this year.”

OGX acquired working interests in seven deepwater and two shallow-water blocks. The company came away with 100% interests in three Barreirinhas basin blocks and one each in the Foz do Amazonas, Potiguar, and Ceara basins. It won 50% interests in Potiguar and Ceara basin blocks operated by ExxonMobil and a 30% interest in the Total-operated Ceara basin block.

OGX also was awarded four onshore blocks in the Parnaiba basin and plans to sell a 50% stake in the four blocks, PN-T-168, PN-T-153, PN-T-113 and PN-T-114, to MPX Energia SA. The blocks average close to 3,000 sq km each.

The 142 auctioned blocks are in 11 states and 11 sedimentary basins. Other basins are Barreirinhas, Ceara, Espirito Santo, Para-Maranhao, Parnaiba, Pernambuco-Paraiba, Potiguar, Reconcavo, Sergipe-Alagoas, and Tucano Sul.


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