Brazil's Enauta casting wide net to rebuild portfolio: CFO

Rio de Janeiro — Brazilian independent oil and natural gas producer Enauta is actively pursuing production assets in an expanded acquisition search that includes onshore and offshore targets, CFO Paula Costa Corte-Real said Dec. 8.

"We are actively seeking to rebuild our portfolio," Corte-Real said during a webinar.

The move to aggressively hit the mergers and acquisitions represented a strategy shift at Enauta, which had conservatively worked a portfolio of exploration and production assets acquired in the late 2000s. The portfolio, however, has matured, been sold off or awaits an uncertain fate. In addition, new leadership is in place after Decio Oddone, former director general at Brazil's National Petroleum Agency, or ANP, was named CEO in September.

Enauta holds about $400 million in cash to finance any moves, officials said in November. The company's small debt load also would allow for potential bond or debenture offers should additional funds need to be raised.

Low cash costs were a driving force behind Enauta's surprising move into onshore exploration and production at Brazil's Open Acreage sale held Dec. 4. The company partnered with Eneva, Brazil's first gas-to-wire producer, in Parana Basin blocks prospective for natural gas. Eneva will hold a 70% operating stake, while Enauta owns a 30% share. Corte-Real called the partnership a "strategic positioning."

While Corte-Real downplayed a new outlook at the company, she admitted that the scope of Enauta's search for production assets had widened recently along with the market.

"Now we're seeing opportunities available that make sense for the company that weren't there before," Corte-Real said. "The company wants to take advantage of the opportunities in the best way possible."

Brazilian state-led oil company Petrobras currently has more than 50 oil fields in its portfolio of assets up for sale, including stakes in the Albacora, Albacora Leste and Marlim fields, although Corte-Real declined to name any prospects of interest. She confirmed Enauta's targets include mature fields, onshore fields and shallow-water offshore fields, in a shift away from the company's previous deepwater exploration roots.

"We don't discard the analysis of any type of asset," Corte-Real said.

While Enauta recognizes the need to take part in Brazil's transition to a low-carbon economy, the company's acquisition hunt will primarily focus on oil rather than gas, Corte-Real added.

"Our focus is to actively seek the recomposition of assets in oil production," Corte-Real said. "We are actively seeking."

Atlanta uncertain

Further development at the Atlanta Field became uncertain after partner Barra Energia opted out of its 50% stake Nov. 3. The two companies extended a Nov. 28 deadline to reach a decision on whether the field will be abandoned or Enauta will continue developing the project alone or with new partners.

"We don't have any defined deadline," Corte-Real said. "We continue evaluating and talking with Barra about the best solution."

Corte-Real, however, continued to indicate that Enauta would like to find a partner to replace Barra Energia in what she called a "constructive solution."

Atlanta's 14-16 API crude has proved popular with global refiners because of its low sulfur content. Output at the field was preventively shuttered Nov. 19 after corrosion was discovered. A specialized company has been hired to carry out inspections and implement corrective measures, Corte-Real said.

"We're evaluating the extension of the corrosion and how we can restart production in the safest way possible," Corte-Real said.

Enauta also owns a 30% minority stake in nine blocks in the offshore Sergipe-Alagoas Basin. ExxonMobil holds a 50% operating stake, while Murphy Oil retains the remaining 20%.

The group expects to drill the first exploration well in the blocks in the second half of 2021, Corte-Real said.