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Equinor, Exxon acquire more acreage in Brazil's 4th pre-salt bid round

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Equinor, Exxon acquire more acreage in Brazil's 4th pre-salt bid round

Equinor ASA, formerly known as Statoil ASA, and oil major Exxon Mobil Corp. increased their holdings in Brazil's pre-salt basins after winning more offshore blocks during the country's fourth pre-salt bid round June 7.

Located in the Santos basin, the Uirapuru exploration block is north of the BM-S-8 and North Carcará blocks and was won by a consortium comprised of Equinor, Exxon and Petrogal Brasil SA after presenting the winning bid offering the government 75.49% profit oil, much higher than the minimum bid of 22.18%. Petroleo Brasileiro SA, commonly known as Petrobras, exercised its right to enter the consortium and will be the operator of the block with a 30% stake. Petrobras also has a right of first refusal to petition the government to operate all pre-salt block offered, ensuring that companies must partner with the national oil company for blocks where it is granted operatorship.

However, the partnership is mutually beneficial to the parties involved. "Companies benefit from Petrobras' operational expertise, superior access to the supply chain and offshore gas transport infrastructure, which can help drive down costs and speed up first oil. At the same time, for Petrobras, partnerships with respected deepwater players with deep pockets like BP, ExxonMobil, Equinor and Shell reduce exposure and dilute risks," Wood Mackenzie analyst Juliana Miguez said in a June 7 press note.

In addition to Petrobras' stake, Exxon and Equinor will each hold 28% of the final equity distribution while Petrogal Brasil will hold the remaining 14%. The predetermined signature bonus to be paid by consortium is approximately $682 million.

With Exxon previously purchasing 50% of Equinor's stake in Carcara oil field, the awarded block adds 88,900 net acres to the company's portfolio and increases its interests to 25 blocks offshore Brazil.

The Dois Irmãos block located in the Campos basin was won by a consortium comprised of Equinor, Petrobras and BP PLC after offering the government 16.43% profit oil. The final equity distribution stands at Petrobras holding 45% as well as being the operator, BP owning 30% and Equinor owning the remaining 25%. The predetermined signature bonus to be paid by the consortium stands at approximately $103 million.

The awarded blocks add to Equinor's existing portfolio in the Brazilian pre-salt area, which includes BM-S-8 and Carcará North, both in Santos basin, and the BM-C-33 in the Campos basin, containing the Pão de Açúcar discovery.