Petrobras: We acquired three offshore blocks in the Production Sharing System

We acquired three offshore blocks in the Production Sharing System

Leil_o2 600.jpgIn continuation of the Material Fact published on May 25, 2017, we hereby announce that we acquired, in partnership with other companies, three offshore blocks in the 2nd and 3rd Bidding Rounds in the Production Sharing System, held by the National Petroleum Agency (ANP), and that we will be the operator of all blocks.

Under the production sharing system, the consortium submits to the government a percentage of the so-called “surplus in profit oil for the Union,” which is applied to revenue discounted of the production costs and royalties. The offer of profit oil to the Union was the only criterion the ANP adopted to define the winning proposal, with the fixed value of the signing bonus, the minimum exploratory program, and the local content commitments already having been stated previously in the bidding rules.

The following table summarizes the blocks we acquired, in partnership, in the 2nd and 3rd Bidding Rounds in the Production Sharing System:

Area

Consortium composition

Petrobras Bonus (R$ million)

Surplus in profit oil (%)

Entorno de Sapinhoá

Petrobras (45%)

Shell (30%)

Repsol Sinopec (25%)

90

80.00

Peroba

Petrobras (40%)

BP (40%)

CNODC (20%)

800

76.96

Alto de Cabo Frio Central

Petrobras (50%)

BP (50%)

250

75.86

As was the case with the 14th Bidding Round in the Concession System, held in September, we performed selectively in today’s auctions, reflecting our strategic vision for the recovery of the exploratory portfolio, in which we seek to maintain the reserve/production ratio and to ensure the sustainability of our future oil and gas production.

Additionally, working in consortia with major companies is aligned with our strategic objective of strengthening partnerships, sharing risks, combining technical and technological competencies, and capturing synergies to leverage results, and it reflects the relevance of these areas in Brazil to world class oil companies.

In the Entorno de Sapinhoá area, the company was successful in maintaining the same composition as that of the Sapinhoá consortium, the concessionaire of the adjacent unzabitable area, in which we already worked in partnership with Shell and Repsol Sinopec. Comprising the consortium in the Peroba block with us are CNODC, a subsidiary of CNPC, a major partner in the Santos Basin Pre-Salt, and BP, also a partner of ours in the Equatorial Margin and in the Campos Basin. We won in partnership with BP at Alto do Cabo Frio Central.

The Entorno de Sapinhoá block is located in the central portion of the Santos Basin. In August 2017, the Sapinhoá field was the second largest oil and natural gas producer in Brazil, with an output of 325,000 barrels of oil equivalent per day.

The total amount of the signing bonus we will pay, of R$1.14 billion, represents 0.5 percent of the investments foreseen in the 2017-2021 Business and Management Plan and will be re-managed within the approved budget. After today’s auction, there will be the winning bidders’ qualification stage and subsequent signing of the contracts.