US firm taking over Brazil’s only FPSO operator, thanks to $390 million deal for Ocyan

EIG, a Washington-headquartered institutional investor in the global energy and infrastructure sectors, is in the process of acquiring Ocyan Participações, a Brazilian-based solutions provider to the offshore oil and gas industry. The deal, valued at $390 million, will enable EIG to enrich its portfolio in South America by adding the sole Brazilian floating production storage and offloading (FPSO) operator to its assets.

The Ocyan acquisition, which is enabled by definitive agreements EIG entered into with Novonor and Brazilian Development Bank (BNDES), amounts to $390 million, considering $283 million for Novonor’s 100% equity interest and the remaining amount for liquidation of its outstanding balance of non-voting securities related to the company. The U.S. firm explains that the transaction’s proceeds related to Novonor’s equity interest will be directly paid to BNDESPAR, per the previously executed fiduciary agreement to settle a portion of the latter’s debt.

Flavio Valle, EIG’s Managing Director and Head of Brazil, remarked: “FPSO is an attractive asset class for both equity and debt opportunities, and we are pleased to deepen our presence in the industry. We have admired Ocyan for many years and have been impressed by their ability to develop ambitious projects through challenging economic environments. With our global footprint and local capabilities, which are now enhanced by meaningful capital commitments from local clients, we believe that EIG is uniquely positioned to deliver on this complex transaction and to usher Ocyan into a new phase of growth.”

While EIG has invested over $2 billion in Brazil since 1998, the company underlines that its acquisition of Ocyan reflects its long-term, comprehensive Brazilian strategy focused on the infrastructure supporting deepwater crude oil production, decommissioning activities, and investments in renewables and low-carbon projects. Once the acquisition has been completed, Ocyan is expected to benefit from the U.S. player’s technical expertise in FPSOs and potential synergies with Prumo Logística, an EIG portfolio company, and its subsidiary, Port of Açu.

R. Blair Thomas, EIG’s Chairman and Chief Executive Officer, commented: “I have known and respected Ocyan for decades. The company’s resilience and the strength of its business have helped it overcome significant economic headwinds while maintaining a healthy balance sheet, positioning Ocyan for long-term growth.

“Brazil is home to over 25% of the global FPSO fleets, and we believe the future market dynamics for oil and gas infrastructure in Brazil are very favorable, underscoring our dual commitment to supporting growth and development in this important region while creating value for our investors. We are also excited to support Ocyan’s ventures in the renewables space to help drive the energy transition forward.”

With a 23-year track record delivering maintenance solutions to the offshore oil and gas sector, including the operation of subsea construction and decommissioning projects, Ocyan currently operates four offshore units through a 50/50 joint venture with Altera Infrastructure, holding long-term contracts with Libra Consortium, Karoon Energy and 3R Petroleum.

The Brazilian firm, which has more than 3,000 employees, recently established a New Energies division that is focused on the digitalization of the oil and gas industry and engineering, procurement, and construction (EPC) contracts for renewable energy projects. The completion of the transaction is subject to certain customary closing conditions and is expected to occur in the first quarter of 2024.

Héctor Nuñez, Novonor’s Chief Executive Officer, underscored: “This is another important milestone for the Novonor Group in fulfilling its commitments to its stakeholders as it aims to reestablish the company’s focus on diversified operations in the engineering sector, where it was established almost 80 years ago. We are very proud of Ocyan and its team, who are recognized for their operational and technical excellence, and are certain that their successful trajectory will continue.”

While Lakeshore Partners has acted as EIG’s exclusive financial advisor, its newly established affiliate, Lake Capital, is providing asset management services. Mattos Filho and White & Case served as transaction legal advisors and Stocche Forbes as fund counsel. EY has acted as BNDES’ exclusive financial advisor and Lacaz Martins as transaction legal advisor. VMB Jurídica served as transaction legal advisor to Novonor.

Roberto Prisco Paraiso Ramos, Ocyan’s Chief Executive Officer, highlighted: “Ocyan has built and operated more than $4 billion of drilling rigs, pipelaying support vessels and FPSOs, alone or in joint ventures, always enjoying the very strong support of its shareholders and Novonor. This acquisition does not impact current contracts and operations with our clients and suppliers. This is another important chapter in our history and one that will undoubtedly create new opportunities for Ocyan.”

This comes months after Ocyan confirmed the completion of its restructuring process in June 2023, which separated its drilling business into a new company, temporarily being called DrillCo. The business side covering offshore production, subsea construction decommissioning, maintenance, and offshore services remained fully at Ocyan. The Brazilian player was also looking into new energies and services to integrate into its portfolio.

Recently, Ocyan won a contract with Petrobras to carry out the revitalization of a network of gas pipelines in the Campos Basin. Prior to this, the firm secured a long-term operating deal for the West Capricorn sixth-generation semi-submersible rig with PRIO in January 2023. While the rig would be primarily used on PRIO’s fields’ revitalization campaigns off Brazil, it could also be leased to third parties in the future.