PetroRio buys semi-submersible rig for one dollar

Brazilian oil and gas company PetroRio has bought a semi-submersible drilling rig for a symbolic fee of $1. The rig will be used for well interventions and completions and enable the company to save on costs when compared to a leased rig.

PetroRio said on Monday it had signed an agreement with Ventura for the acquisition, for $1.00 (one US Dollar), of the Atlantic Zephyr rig.

Ventura Petróleo SA is a subsidiary of Petroserv Marine and is responsible for the drilling and production operations of the company’s units in Brazil.

The Atlantic Zephyr rig is a semi-submersible anchored rig suitable for interventions and completions in wells with water depths up to 300m. It was built in 1973.

PetroRio explained that this acquisition’s purpose is to reduce operational costs and increase the Tubarão Martelo field’s efficiency through a significant reduction of the response time to eventual wells shutdowns.

This strategy aims to replicate the Polvo field’s successful model, which achieved efficiency and investments payback records, due to the rig attached to the platform.

The rig is expected to add annual operational and maintenance costs of around $3 million and will avoid the contracting of third-party rigs for field interventions.

According to PetroRio, the field’s water depth requires anchored rigs, which have limited availability in Brazil, and can take several months to deploy.

This acquisition will allow workovers to be carried out in 60 to 70 days, at a cost of approximately $9 million, which is more than 40 per cent less than the cost of a workover carried out with a leased rig.

PetroRio has also signed an agreement with Prisma Capital for the conversion of the $100 million bridge loan into a long-term financing agreement, thus extending the dates of the debt amortization.

The purpose of the financing was to provide part of the funds for the OSX-3 FPSO and Tubarão Martelo field acquisitions and had already foreseen this term extension, pending guarantee suitability and maintaining the same interest rate.

To remind, PetroRio in August 2020 started production from a new well on the Tubarão Martelo field, which is located offshore Brazil. The start of production from the well was part of a revitalization campaign on the field.

The long-term financing agreement maintains the principal outstanding and sets the amortizations in FOUR equal tranches of $25 million in July 2021, January 2022, July 2022, and January 2023.

The Tubarão Martelo field incorporation, approved by ANP in August 2020, was another important step in the company’s strategy of acquisitions, cost rationalization and asset redevelopment.

The next step for the cluster will be the tieback between Polvo and Tubarão Martelo fields. This will take place in mid-2021 and will result in significant improvements of PetroRio’s operational costs.