Maersk Oil, a wholly owned subsidiary of AP Moller-Maersk AS of Copenhagen, has opted to write off $1.7 billion in investments in Brazil’s Wahoo and Itaipu fields while divesting its ownership share in Polvo field.
Wahoo and Itaipu, which Maersk says hold significant potential resources, were assessed by the company to have lower value than originally anticipated after appraisal drilling (OGJ Online, Mar. 26, 2013). Increased development costs and lower oil prices also factored into the decision.
The company expects that the field’s operating partners will be able to present commercially viable development plans.
HRT O&G Exploracao e Producao de Petroleo Ltda., a Brazilian independent company and operator of Polvo, will acquire Maersk’s 40% stake in the field for an undisclosed sum. HRT in 2013 purchased the other 60% interest in Polvo from BP PLC for $135 million cash (OGJ Online, May 7, 2013).
The three fields, each part of the Campos basin, were acquired in 2011 by Maersk from South Korea’s SK Energy Co. Ltd. for $2.4 billion.
“The SK Energy investment was made at a time when the outlook for the oil industry and oil prices were more positive than today and we had growth ambitions for our Brazilian oil business,” said Nils S. Andersen, Maersk Group chief executive officer.
Following the transaction, Maersk will no longer pursue growth or operatorship for its business in Brazil.
“We have now adapted our strategy to the situation we see today, but it is of course clearly unsatisfactory that the oil volumes in the acquired fields Itaipu and Wahoo after appraisal drilling has proved to be in the low end of our original expectations,” Andersen said.
Jakob Thomasen, Maersk Oil chief executive officer, said the company plans to take its experience in Brazil into consideration as it formulates plans to expand the business.
“In the short term, that means we will reduce our planned exploration spending whilst we reload the acreage and prospect portfolio,” Thomasen said.
Maersk says that its revised assessment of its Brazilian assets will have no effect on the company’s long-term production plans.