Exxon Mobil Corp. on Sept. 10 teamed with Brazil's Enauta Participações SA and Murphy Oil Corp. to snap up three ultra-deepwater oil and natural gas concessions during Brazil's first Open Acreage auction.
The companies paid a total of 7.9 million Brazilian reais to purchase the SEAL-M-505, SEAL-M-575 and SEAL-M-637 blocks in the offshore Sergipe-Alagoas Basin.
The three blocks are close to areas Exxon, Enauta and Murphy Oil grouped to buy at recent offshore bid rounds as well as where Brazil's state-led Petróleo Brasileiro SA made about 12 separate oil and gas discoveries and plans a long-term well test of the Farfan discovery by the end of 2019. The area is rich in oil and gas, with government officials expecting the region to produce 30 million cubic meters per day by the mid-2020s.
Exxon will hold a 50% operating stake in the blocks, while Enauta will retain a 30% minority share and Murphy Oil 20%. The stakeholder breakdown maintains the same ratios in the companies' other Sergipe-Alagoas Basin partnership.
Brazil's Open Acreage sale, however, got off to an inauspicious start as three shallow-water blocks in the Campos Basin and five deepwater blocks in the Sergipe-Alagoas Basin failed to garner bids. Brazil's National Agency of Petroleum, Natural Gas and Biofuels, or ANP, expected to receive at least a single bid for each of the nine sectors that were nominated for the sale.
The Open Acreage auction included 273 exploration and production concessions and 14 areas holding marginal accumulations of oil and gas, with 249 blocks onshore and 24 offshore. All of the blocks in a sector were included in the sale after oil companies expressed interest in the area, with oil companies committing to make at least a single offer for the nominated blocks.
Of the 273 blocks on offer, 33 were sold, with signing bonuses totaling 15.3 million reais.
Under the auction rules, oil companies that expressed interest in a sector but failed to make a bid will be required to pay at least the minimum signing bonus for the area the company expressed interest in ahead of the sale, ANP officials said.
The areas up for sale were exploration and production concessions that failed to receive bids at previous bid rounds or were returned to the ANP. In addition, the ANP also put up for sale mature onshore fields holding marginal accumulations of oil and gas that had also been returned.
Brazil no longer includes onshore concessions in its annual bid rounds, so the Open Acreage program is the only way for oil companies to win development rights for onshore acreage.
The Open Acreage program will be "the primary model to contract areas for small and medium-size companies," said ANP Director General Decio Oddone during the sale's opening ceremony. The program allows oil companies to take the initiative to buy acreage when it is convenient rather than waiting for specific areas to come available in annual bid rounds, which limited exploration activity, Oddone said.
Each Open Acreage bid session is triggered by one or more oil companies expressing interest in at least a single block. The ANP then opens a 70-day window for oil companies to express interest in additional areas that will be added to the sale. The auction is then held within 90 days of the first expression of interest.
Independent natural gas producer Eneva SA also bid aggressively in the onshore Parnaiba Basin, where the company installed Brazil's first gas-to-wire project. Eneva produced 5.5 million cubic meters per day in July, according to the latest data available from the ANP.
Eneva paid total signing bonuses of 3.5 million reais for 100% stakes in the PN-T-102A, PN-T-47, PN-T-48A, PN-T-66, PN-T-67A and PN-T-68 blocks. The company committed to drilling two wells in the PN-T-66 block and single wells in the PN-T-102A, PN-T-47, PN-T-48A and PN-T-68 blocks.
U.S. independent Petro-Victory LLC also made its debut at a Brazil bid round, paying 3.2 million reais for 100% of 15 blocks in the Potiguar Basin's SPOT-T2 and SPOT-T4 sectors. The blocks will be the Fort Worth, Texas-based explorer's first operated assets in Brazil, with the company last year acquiring a 50% minority stake in five blocks operated by Imetame Energia in the onshore Espirito Santo Basin.
As of Sept. 9, US$1 was equivalent to 4.08 Brazilian reais.
Jeff Fick is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are both owned by S&P Global Inc.
