On 30 May 2019, the ANP formally approved of the Equinor acquisition of the 10% working interest in the BM-S-008 contract, Carcara discovery evaluation area held by Barra Energia and the second phase of the transaction having Equinor assign 3.5% of the 10% to partner ExxonMobil and 3% working interest to Petrogal in order to equalize working interest in the BM-S-008 contract and contiguous PSC contract Norte de Carcara block. Â     With the formal approval, Equinor Brasil Energia Ltda is operator with 40% working interest, ExxonMobil holds 40% working interest, and Petrogal has 20% working interest.       The terms of the deal were reported to be that Equinor pays Barra Energia USD 379 million for the 10% working interest.   On 4 July 2018, Equinor issued a press release indicating it signed an agreement to acquire the 10% working interest in the BM-S-008 contract, Carcara discovery evaluation area held by Barra Energia for USD 379 million pending formal governmental approvals.Â  Once formal approvals are granted, the operator will then sell and assign 6.5% of the 10% to partners ExxonMobil and Petrogal in order to equalize working interest in the BM-S-008 contract and contiguous PSC contract Norte de Carcara block. Â The Barra working interest represents the last piece of the puzzle here for Equinor to move forward with development of the unitized Carcara discovery development which it hopes to bring on-stream by 2023 to 2024.Â  It reported that total estimated recoverable reserves are 2 Bboe.  The BM-S-008 contract transaction with Barra Energia will again require two phases. Â The current working interest breakdown in the BM-S-008 contract is Equinor Brasil Energia Ltda operator with 36.5% working interest, ExxonMobil with 36.5% working interest, Petrogal Brasil Ltd (Galp Energia) with a 17% working interest and Barra Energia with a 10% working interest.Â  After the final closing and governmental approvals, the working interest breakdown will be Equinor Brasil Energia Ltda operator with 46.5% working interest, ExxonMobil with 36.5% working interest, Petrogal Brasil Ltd (Galp Energia) with a 17% working interest. The second phase will involve Equinor Brasil Energia Ltda divesting 3.5% of the 10% working interest to ExxonMobil and 3% to Galp to equalize the working interest breakdown to Equinor Brasil Energia Ltda operator with 40% working interest, ExxonMobil with 40% working interest, and Petrogal with 20% working interest.  On 9 May 2018, the ANP officially approved of the 36.5% working interest acquisition by Exxon Mobil and the 3% working interest acquisition by Petrogal from Statoil in the BM-S-008 contract, Carcara discovery evaluation area. Â On 27 October 2017, Statoil concluded a farm-out agreement with ExxonMobil for the discovery evaluation plan (PAD) PA_4BRSA971BSPS_BM-S-8 of the BM-S-008 contract, Carcara discovery.Â  The transaction was announced after the results of the 2nd Pre-Salt Bid Round whereby the consortium of Statoil (40%), ExxonMobil (40%), Petrogal (20%) won the Norte de Carcara block with a bid of 67.12% state take won the Norte de Carcara block plus the fixed bid of USD 910 million (1USD = 3.3 BRL). Â The BM-S-008 contract transaction consisted of two phases. Â The first phase Statoil divested 33% of its 66% working interest to ExxonMobil for a total consideration of USD 1.3 billion, USD 800 million in an upfront payment and a contingent cash payment of approximately USD 500 million. Â The second phase involved the 10% working interest from Queiroz Galvao, in which Statoil divested 3.5% of the 10% working interest to ExxonMobil and 3% to Galp for a total consideration of USD 250 million, USD 155 million as an upfront payment and USD 95 million as a contingent cash payment.Â  The previous working interest breakdown in the BM-S-008 contract was Statoil operator with 76% working interest, Petrogal Brasil Ltd (Galp Energia) with a 14% working interest, and Barra Energia with a 10% working interest.Â  Now with the formal approvals for the ExxonMobil farm-in the working interest breakdown in the BM-S-008 contract is Statoil operator with 36.5% working interest, ExxonMobil with 36.5% working interest, Petrogal Brasil Ltd (Galp Energia) with a 17% working interest and Barra Energia with a 10% working interest.    On 28 November 2017, the ANP officially approved of the 10% working interest acquisition by Statoil from Queiroz Galvao in the BM-S-008 contract Carcara discovery evaluation area.Â  The total transaction value was USD 379 million.Â  Statoil paid Queiroz Galvao 50% or USD 189.5 million with the formal governmental approvals and the remaining 50% when certain conditions are met such as unitization with the Norte de Carcara block that Statoil and partners won in the 2nd PSC Pre-Salt Bid Round.Â  The conclusion of the unitization process likely a year or two in the future.Â  The resulting working interest breakdown in the BM-S-008 contract with the formal governmental approval is Statoil operator with 76% working interest, Petrogal Brasil Ltd (Galp Energia) with a 14% working interest, and Barra Energia with a 10% working interest.Â Â  Â     On 27 October 2017, Statoil announced that it concluded a farm-out agreement with ExxonMobil for the discovery evaluation plan (PAD) PA_4BRSA971BSPS_BM-S-8 of the BM-S-008 contract, Carcara discovery.Â  The transaction was announced after the results of the 2nd Pre-Salt Bid Round whereby the consortium of Statoil (40%), ExxonMobil (40%), Petrogal (20%) won the Norte de Carcara block with a bid of 67.12% state take won the Norte de Carcara block plus the fixed bid of USD 910 million (1USD = 3.3 BRL).Â  The transaction is complex with two different fiscal regimes and different working interest as well as formal approvals for the pending 10% working interest acquisition in the BM-S-008 contract by Statoil from Queiroz Galvao.Â  In its press release Statoil indicated that its portion of the bonus is approximately USD 364 million for its 40% working interest in the Norte de Carcara block.Â  For the BM-S-008 contract, the transaction has two phases.Â  The first phase is that Statoil divested 33% of its 66% working interest to ExxonMobil for a total consideration of USD 1.3 billion, USD 800 million in an upfront payment and a contingent cash payment of approximately USD 500 million.Â  Additionally upon the formal approvals and closing of the 10% working interest from Queiroz Galvao, Statoil will divest 3.5% of the 10% to ExxonMobil and 3% to Galp for a total consideration of USD 250 million, USD 155 million as an upfront payment and USD 95 million as a contingent cash payment.Â  The resulting working interest breakdown in the BM-S-008 contract will be Statoil operator with 36.5% working interest, ExxonMobil with 36.5% working interest, Petrogal Brasil Ltd (Galp Energia) with a 17% working interest and Barra Energia with a 10% working interest.Â  All the partners have agreed that Statoil will be operator of the unitized field development subject to ANP approval.Â  The discovery evaluation plan (PAD) PA_4BRSA971BSPS_BM-S-8 was modified in August 2017 pending results of the 2nd Pre-Salt Bid Round but now can move forward once the contract for the Norte de Carcara block is signed.Â  Statoil has provisional plans to drill several wells in the contract including two new-field wildcats.    On 23 August 2017, the ANP granted Statoil approval for an extension and modification to the discovery evaluation plan (PAD) PA_4BRSA971BSPS_BM-S-8 of the BM-S-008 contract, Carcara discovery.Â  The ANP granted the operator an extension of six months after the contract is signed for the Norte de Carcara block on offer in the 2nd PSC Pre-Salt Bid Round for the joint block owners to file a combined discovery evaluation plan (PAD).Â  The PAD has a current final expiry date of 1 March 2018 which will be extended once the joint PAD is filed and approved.Â  The contracts from the bid round are scheduled to be signed on or before the 29 December 2017 which would give the PAD a date of approximately 29 June 2018 for the companies involved to file the joint PAD.    The PAD has been extended and modified a number of times since the original contract expired on 9 August 2010 and now has a final expiry date of 1 March 2018.Â Â  Petrobras was granted approvals by the ANP on 8 January 2014 for a modified discovery evaluation plan (PAD) for the 2,089.51 sq km Santos Basin BM-S-008 contract, PA_1BRSA532ASPS_BM-S-8, evaluation area that also included a partial relinquishment and modification of the PAD nomenclature to reflect the Carcara discovery well, the PA_4BRSA971BSPS_BM-S-8.Â  Originally the PAD was granted based on the 1-SPS-052A (1-BRSA-532A-SPS) Bem-Te-Vi prospect but the area around the well was relinquished with the modified PAD approval.Â  On 30 March 2016 the ANP approved a second modification to the PAD.Â  The modification included substituting the long term cased hole production test of the 3-SPS-104DA (3-BRSA-1216DA-SPS) directional outpost with the drilling of the 3-SPS-105 (3-BRSA-1290-SPS) outpost.Â  The operator was required to maintain the commitment to conduct a cased hole formation test of the 3-SPS-104DA (3-BRSA-1216DA-SPS) and to drill the Guanxuma prospect. Â     Petrobras, operator (50%), Shell (40%) and Petrogal (10%) were originally awarded the 4,865 sq km BM-S-008 contract on 14 September 2000 through the ANP Round 2.Â  Through various relinquishments and partnership changes during the contract phases the contract now covers 815.22 sq km as a discovery evaluation plan (PAD).Â  The working interest breakdown in the BM-S-008 contract discovery evaluation plan (PAD) after the Statoil acquisition transaction was approved by CADE and the ANP is Statoil operator with a 66% working interest and partners include Petrogal Brasil Ltd (Galp Energia) with a 14% interest, Barra Energia do Brasil Petroleo e Gas Ltda with a 10% interest, and Queiroz Galvao Exploracao e Producao SA with a 10% interest.Â  In July 2017 Statoil agreed to acquire the 10% working interest from Queiroz Galvao but this is pending various approvals still.Â  This would give Statoil 76% working interest while remaining partners would still be Petrogal Brasil Ltd (Galp Energia) with a 14% interest and Barra Energia do Brasil Petroleo e Gas Ltda with a 10% interest.Â  After the results of the 2nd Pre-Salt Bid Round, ExxonMobil farm-in, and formal approvals, the resulting working interest breakdown in the BM-S-008 contract will be Statoil operator with 36.5% working interest, ExxonMobil with 36.5% working interest, Petrogal Brasil Ltd (Galp Energia) with a 17% working interest and Barra Energia with a 10% working interest.    Background Information    On 11 July 2017 Queiroz Galvao issued a press release indicating it sold its 10% working interest to Statoil in the BM-S-008 contract Carcara discovery evaluation area for USD 379 million pending formal governmental approvals.Â  Statoil is to pay Queiroz Galvao 50% or USD 189.5 million when the transaction receives formal governmental approvals and the remaining 50% when certain conditions are met such as unitization with the Norte de Carcara block now on offer in the 2nd PSC Pre-Salt Bid Round.Â  Queiroz Galvao acquired the 10% working interest in the block in July 2011 for USD 175 million.Â  The company also participated in the six wellbores drilled on the Carcara structure.Â  Once formal approvals are granted Statoil will have a 76% operated working interest and remaining partners will be Petrogal with 14% working interest and Barra Energia with 10% working interest.    On 2 May 2017 Petrobras CEO Pedro Parente at his presentation at OTC Houston indicated that the injunction issued for the sale of the 66% working interest to Statoil in the BM-S-008 contract Carcara discovery evaluation area has been overturned and Statoil can resume operating the block.Â  Petrobras also issued a material fact on said date stating the same information.    On 17 April 2017 the Petrobras issued a relevant fact press release indicating that the sale of its operated 66% working interest to Statoil in the BM-S-008 contract Carcara discovery evaluation area has been suspended due a legal injunction issued by the 2nd Federal District Court in Sergipe State.Â  The deal was announced by both companies on 29 July 2016 and approved by CADE and the ANP in November 2016.Â  The lawsuit against the sale, led by the Brazilian oil workers union has the same arguments that temporarily halted the sales of other assets by the company in December 2016, basically the lack of transparency.Â  However, in March 2017 the Tribunal de Contas da Uniao (TCU) issued a ruling that Petrobras could continue its asset sales with a new methodology.Â  The Carcara asset was never involved in the TCU process as it was concluded prior to the TCU temporarily halting the asset sales in December 2016.Â  Petrobras indicated that it will seek all legal recourse to overturn the injunction.     The working interest breakdown in the BM-S-008 contract discovery evaluation plan (PAD) after the transaction was approved by CADE and the ANP is Statoil operator with a 66% working interest and partners include Petrogal Brasil Ltd (Galp Energia) with a 14% interest, Barra Energia do Brasil Petroleo e Gas Ltda with a 10% interest, and Queiroz Galvao Exploracao e Producao SA with a 10% interest.    On 4 November 2016 the ANP officially granted Statoil approval for the acquisition of the Petrobras operated 66% working interest in the BM-S-008 contract Carcara discovery evaluation area.Â  The deal was announced by both companies on 29 July 2016. Â     On 29 July 2016 Petrobras and Statoil issued press releases indicating that the operator agreed to sell the 66% working interest and operations in the BM-S-008 contract Carcara discovery evaluation area to Statoil.Â  The deal was approved by the Petrobras Board of Directors on 28 July.Â  The transaction has a total value of USD 2.5 billion, USD 1.25 billion to be paid upon closing and the other USD 1.25 billion to be paid based on certain milestones, the principal one being the unitization of the Carcara discovery area with unlicensed Federal Open Area to the north that may be included in a 2017 pre-salt bid round.Â  The effective date of the transaction is 1 July 2016. The transaction is pending formal governmental and partner approvals.Â  Statoil indicated that it estimates recoverable oil in the contract area to be in the range of 700 MMboe to 1.2 Bboe with potential upside in the unlicensed areas.Â  IHS estimates that 50% of the field lies within the BM-S-008 contract area and 50% in the unlicensed area.Petrobras was granted approvals by the ANP on 8 January 2014 for a modified discovery evaluation plan (PAD) for the 2,089.51 sq km Santos Basin BM-S-008 contract, PA_1BRSA532ASPS_BM-S-8, evaluation area that also included a partial relinquishment and modification of the PAD nomenclature. The PAD area has been modified to only include the area of the 4-BRSA-971B-SPS, Carcara discovery but doesnât include the area around the 1-SPS-052A (1-BRSA-532A-SPS) Bem-Te-Vi prospect nor to the south around the 4-SPS-071C (4-BRSA-946C-SPS) Bigua prospect discovery. Petrobras relinquished an area of 1,274.29 sq km while retaining 815.22 sq km of the northwestern area of the block. The PAD nomenclature is assumed to be modified to PA_4BRSA971BSPS_BM-S-8. Although the Bem-Te-Vi and Bigua prospect discovery wells are structurally higher it is believed the reservoir net pay is thinned and the areas are non-commercial. Petrobras retained within the PAD the area to the south and west of the Carcara discovery where it plans to drill the wildcat Guanxuma prospect.     Petrobras suspended as an oil producer the 3-SPS-104DA (3-BRSA-1216DA-SPS) directional outpost in the BM-S-008 contract on 24 October 2015.Â  The final total depth (TD) of the well was 6,405 m. The operator issued a press release on 28 September 2015 indicating the well drilled 318 m of gross reservoir rock below the salt at 5,870 m without encountering the oil/water contact.Â  The company recovered 31Â° API oil, assumed through a wireline test (WLT) with no CO2 or H2S.Â  Petrobras filed an oil show report with the ANP on 25 September 2015 for the well. Partner Queiroz Galvao issued a similar press release on 28 September indicating that the three wells drilled to date in the reservoir indicates and oil column of at least 530 m.Â  The partners will now return to the 3-SPS-105 (3-BRSA-1290-SPS) outpost and conduct a cased hole production test as part of its evaluation plan commitments. The operator resumed drilling operations on the outpost during mid-July 2015 after concluding drilling operations on nearby outpost 3-SPS-105 (3-BRSA-1290-SPS).Â  Petrobras temporarily suspended the 3-SPS-104DA directional outpost, the Carcara NW prospect, in the block on 10 November 2014 at a depth of 5,638 m.Â  The directional outpost was originally spudded in the discovery evaluation plan (PAD) of the BM-S-008 contract, PA_1BRSA532ASPS_BM-S-8 on 14 September 2014.Â  The outpost had a proposed total depth (PTD) of 6,657 m. The Early Cretaceous Barra Velha and Itapema formations were the primary objectives. The final phase of the well was drilled by the âODN IIâ D/S in a water depth of 2,024 m.Â  It is located in the northern area of the block about 5 km northwest of the 4-SPS-086B (4-BRSA-971B-SPS), Carcara oil and gas discovery well. It is a sidetrack of the first attempt to drill the outpost, the 3-SPS-104D (3-BRSA-1216D-SPS) that was junked and abandoned on 5 January 2014. The partners are drilling the well in a two-stage process. The first stage was to top set the well to top of salt. The top hole portion of the well was drilled by the âLaguna Starâ D/S in a water depth of 2,024 m. The âODN IIâ D/S with a higher capacity BOP system drilled the salt and reservoir section of the well.    Petrobras issued a press release on 22 December 2015 indicating it concluded testing operations on the 3-SPS-105 (3-BRSA-1290-SPS) outpost in the BM-S-008 contract Carcara discovery evaluation area.Â  The official conclusion date for the well is 1 January 2016. The operator indicated that it tested the upper and lower portions of the 360 m reservoir and recovered 31Â° API oil with no H2S or CO2. The company further stated that the three wells drilled in the reservoir indicate one continuous reservoir with no oil water contact encountered. No specific flow test data was released but Petrobras indicated the flow properties were as good as any of the current productive wells in the pre-salt trend.Â  The testing operations lasted approximately three months. Petrobras commenced testing operations on the 3-SPS-105 (3-BRSA-1290-SPS) outpost in the BM-S-008 contract during mid-September 2015.Â  Without revealing full details partner Queiroz Galvao reported on 24 November 2015 that testing has so far indicated well productivity was as good as the best wells in the pre-salt implying potential production rates of 30,000 to 40,000 bo/d. The company also reported that sale of Petrobrasâ working interest in the contract was still pending. Partner Queiroz Galvao in early November indicated that testing would continue for some time and results would not be officially reported until early 2016. The âDeepwater Discoveryâ D/S has been on location since mid-September 2015.Â  Petrobras suspended as an oil well the 3-SPS-105 (3-BRSA-1290-SPS) outpost in the BM-S-008 contract on 11 July 2015 after reaching a final total depth (TD) of 6,338 m.Â  In a press release on 2 July 2015 partner Queiroz Galvao stated that the well reached TD in a volcanoclastic section, assumed to be the Camboriu Formation.Â  It also stated that the oil water contact of the reservoir was never penetrated implying that there is an approximate gross reservoir of 518 m.Â  The well has been suspended for several months waiting for the rig to conclude drilling operations on the 3-SPS-104DA (3-BRSA-1216DA-SPS) directional outpost. Petrobras filed two oil show reports with the ANP for the well. The first report filed on 29 May 2015 and the second on 17 June 2015. Partner Queiroz Galvao issued a press release on 28 May 2015 indicating the well penetrated 358 m of excellent quality pre-salt Barra Velha Formation reservoirs below the salt at 5,820 m. The partners also recovered 31Â° API oil through testing operations, assumed to be a wireline test.Â  Also notable is that the press release stated that the reservoir is one continuous reservoir and pressure data indicate it to be the same reservoir that was encountered by the discovery well.Â  The oil water contact has not been encountered.Â  Petrobras issued a press release regarding the well on 29 May 2015 with some additional information.Â  The fact the well is located only 950 m from the northern boundary of the block implies that a portion of the reservoir likely resides in Federal Open Area to the north.Â  This area will have to be unitized through direct government negotiations or the area may be included in a pre-salt bid round.Â  Petrobras spudded the outpost, the Carcara Norte prospect, in the discovery evaluation plan (PAD) of the BM-S-008 contract, PA_1BRSA532ASPS_BM-S-8 on 7 January 2015. The well had a proposed total depth (PTD) of 6,431 m. The Early Cretaceous pre-salt Barra Velha and Itapema formations were the primary objectives. The well was drilled by the âODN IIâ D/S in a water depth of 2,070 m.Â  The well is located in the northern area of the block about 4.6 km north-northeast of the discovery well and 4.2 km east-northeast of the 3-SPS-104DA (3-BRSA-1216DA-SPS) that was temporarily suspended in November 2014.Â  This is the second outpost of the 4-SPS-086B (4-BRSA-971B-SPS), Carcara prospect oil and gas discovery. The partners plan to drill the current outpost to total depth and then move the rig to the first outpost to drill the reservoir section below the salt.
ANP formally approved of the Equinor acquisition of the 10% working interest in the BM-S-008 contract, Carcara discovery evaluation area held by Barra Energia and the second phase of the transaction having Equinor assign 3.5% of the 10% to partner ExxonMobil and 3% working interest to Petrogal in order to equalize working interest in the BM-S-008 contract and contiguous PSC contract Norte de Carcara block.  