Another change of heart for Brazilian player as it opts to sell its stake in Petrobras’ gas field

Following the decision to keep its interest in a Petrobras-operated gas field off Brazil, PRIO, formerly known as PetroRio, has changed its mind yet again, deciding to sell its stake in this field to Gas Bridge, in a bid to focus on its operated assets.

This change of heart comes several months after PRIO made up its mind to retain its interest in the Manati gas field, as the previously set conditions for the sale to Gas Bridge were not fulfilled. Petrobras operates the field with a 35 per cent stake in it, while its partners are Enauta Energia with a 45 per cent interest, GeoPark and PetroRio, which hold 10 per cent each.

As a reminder, PetroRio entered into an agreement in November 2020 with Gas Bridge to sell its 10 per cent interest in this field for R$144.4 million (approximately $26.25 million). On the other hand, Gas Bridge also reached separate agreements with Enauta and GeoPark to buy their stakes in the Manati field while Petrobras put its stake up for sale in May 2020.

After Enauta confirmed its intention to keep its interest in the Manati field in January 2022 – as the conditions required for the completion of this sale were also not met – PRIO highlighted in April 2022 that it remained “confident on the field’s future, especially given the recent gas market outlook. Nevertheless, it does not preclude possible further transactions involving Manati.”

In an update on Thursday, PRIO disclosed that it had inked an agreement with Gas Bridge for the sale of its 10 per cent interest in the Manati field for the total amount of R$124 million (around $23.43 million), of which 10 per cent would be paid upon signing and the remainder upon completion of the transaction. The company says that the effective date of the sale is 1 December 2022.

PRIO’s interest in the Manati field, which was acquired in 2017 for R$140 million, has generated R$350 million (about $66.13 million) of cash to date, returning 3.4 times the invested capital by the conclusion of the sale. This move is part of PRIO’s strategy to “generate value through dynamic management of its asset portfolio,” and reinforces the firm’s focus on its operated assets, which “compose the core of its business.”

The Brazilian player further explains that the completion of this deal is subject to the usual conditions precedent, such as approval by the Brazilian antitrust authority (CADE) and ANP. However, unlike the previous deal, which was terminated uncompleted, this one does not depend on any transaction of the counterparty with other consortium members.

Located in the Camamu-Almada Basin, in the state of Bahia,  the Manati field is one of Brazil’s largest non-associated natural gas fields. In addition to gas, the field also produces condensate. The field’s wells are connected by subsea lines to the PMNT-1 platform and gas flows through a 36 km pipeline to the compression plant (SCOMP), where it is compressed and travels another 89 km to the processing plant (EVF).

When it comes to PRIO’s most recent activities, it is worth noting that the firm entered into a memorandum of understanding (MOU) in September 2022 with Prisma Capital for the potential business combination with Dommo Energia.

PRIO explained that the conclusion of this deal is subject to the usual conditions precedent of transactions of this nature, such as the approval of Dommo’s shareholders and CADE, among others.