RIO DE JANEIRO, May 14, 2015 /CNW/ - PetroRio1
(current brand of HRT Participações em Petróleo S.A. – "HRT",
"HRTP" or "Company", BM&FBovespa: HRTP3 and TSX-V: HRP.V)
announces its results for the first quarter of 2015 ("1Q15"). The
financial and operational information below, except if otherwise
indicated, is presented on a consolidated basis and stated in
thousands of Brazilian Reais (R$) according to the International
Financial Reporting Standards (IFRS), including our direct
subsidiaries: HRT O&G Exploração e Produção de Petróleo Ltda.,
HRT Africa Petróleo S.A., HRT America Inc. and their respective
subsidiaries and branches.
MESSAGE FROM MANAGEMENT
PetroRio continued overcoming great challenges in this first
quarter, working hard to come out stronger from this challenging
scenario. The decline in Brent prices, coupled with the tough
macroeconomic scenario which has been affecting the Brazil, particularly the oil and gas industry,
created challenges in terms of hiring services and cutting costs,
but the Company has been recording healthy results by following the
strategy initiated in 2014.
Among the examples of success, it is worth mentioning the
improvement in the Polvo field's production curve and the excellent
levels of operational efficiency, achieved through actions such as
the improved management of underwater centrifugal pumps and the
maintenance of process plants, besides the understanding of the
reservoir as well as the reduction in unit costs.
Between January and March 2015,
total production in the Polvo Field came to 842,343 barrels. It is
worth noting that operational efficiency averaged 98.8%, one of
the best figures in the entire Brazilian offshore.
Note that it is part of PetroRio's strategy to sell higher
volumes to reduce freight costs and ensure lower discounts
regarding Brent on the final price of each sale, which effectively
occurred regarding the off-take in April. Following this guideline,
the Company did not sell oil in 1Q15.
In a scenario which combined Brent prices approximately 49%
lower than that of 1Q14 sales, a reduction in operating costs and
expenses implemented by the Company was crucial.
In 1Q15, PetroRio recorded negative adjusted EBITDA of
R$14 million, impacted by the
Company's decision not to sell oil in the quarter.
On April 21, 2015, PetroRio sold
approximately 623 thousand barrels of oil, at an estimated price of
US$48.3 per barrel (already
discounting the adjustments due to logistics and product quality),
generating revenue of approximately R$92
million.
If 1Q15 production plus the inventory in December 2014 had been sold within the quarter
itself, adjusted EBITDA would be positive by R$1 million.
In line with PetroRio's strategy of operating assets already in
production phase, the Company acquired 80% of the rights and
obligations of the concession agreements related to the Bijupirá
and Salema (BJSA) fields. After obtaining the relevant approvals
for this transaction, the Company will begin the operational
integration between the BJSA and Polvo fields in order to take
advantage of synergies and reduce costs. According to preliminary
studies, BJSA's production may triple PetroRio's current production
levels, confirming the Company's position as one of the most
important emerging companies in the national oil industry.
PetroRio's new corporate culture focuses on increasing
production through the acquisition of production assets,
re-exploration, operational efficiency improvement and reduction of
production costs and corporate expenses. In this context,
mitigating the exploratory risk is of utmost importance to
consolidate this strategy and, the divestment of the assets in the
Solimões Basin and Namibia is
fully aligned with this strategy, in addition to resulting in a
capital inflow for the Company. (click here)
PetroRio's management believes to be on the right track and that
the year of 2015 will bring major new achievements for the
Company.
OPERATING RESULT
BIJUPIRÁ AND SALEMA (BJSA) FIELDS
In January 2015, PetroRio entered
into a sale and purchase agreement for the acquisition of 80% of
the rights and obligations of BJSA concession agreements with Shell
Brasil Petróleo Ltda. ("Shell"). The remaining stake is held by
Petróleo Brasileiro S.A. - Petrobras. The transaction also included
other assets, among which the FPSO Fluminense platform, which is
used in the production of both fields and has storage capacity of
1.3 million barrels of oil. The acquisition value agreed between
the companies was US$150 million and
is subject to adjustments. PetroRio will finance 80% of the
acquisition with third-party funds and the remaining 20%, with its
own funds.
The conclusion of this transaction is still pending certain
conditions precedent, including approval of the assignment of
rights by the Brazilian National Agency of Petroleum, Natural Gas
and Biofuels - ANP and acceptance by TSX Venture Exchange
("TSX-V"), where the Company's Global Depository Shares ("GDS") are
listed. As a result, PetroRio will only become BJSA's operator
after said approvals are obtained.
BJSA's daily production totals 22,000 barrels of light crude and
325,000 m³ of associated gas, equivalent to 24,000 boe/day. These
fields, in water depths of 480 and 850 meters, are located in the
Pre-Salt polygon, just 80 km northeast of the Polvo Field.
POLVO FIELD (click here)
The Polvo Field produced 842,343 barrels (100% of the field) in
1Q15, with daily natural gas output averaging 28,143 m3.
Currently, 97% of gas produced is used as fuel in the field's
activities.
In the first quarter, average operational efficiency reached
98.8%, reflecting an excellent improvement in Polvo's operation: in
2014, this average was 93.3% and in 2013, 79.8%. Since PetroRio
began to be the field's operator in January
2014, production levels have become more stable and fewer
interruptions are being registered. It is worth mentioning that
Polvo's operational efficiency reached 100% in March 2015.
According to the ranking disclosed by the ANP, PetroRio is the
seventh largest operator of oil-producing fields in Brazil and its daily average oil production
per month since January 2014,
considering 100% of the Polvo Field's output, is shown below:
(click here)
At the end of March, the FPSO platform's oil stocks totaled
643.1 thousand barrels, 562.9 thousand barrels of which related to
PetroRio's stake in Polvo.
As part of the Company´s strategy to sell higher volumes aiming
to reduce freight costs and ensure lower discounts regarding Brent
on the final price of each sale,, PetroRio decided to postpone the
sale of its 1Q15 oil production. The Company believes that the
strategy yielded positive results, given that the sale price on
April 21, 2015 was estimated at
US$48.3 per barrel (already
discounting the adjustments due to logistics and product
quality).
As part of its plan to reduce operating costs, PetroRio
concluded renegotiating contracts with its main suppliers,
including the revision of scope and pursuit of synergies. The
Company expects positive impacts to be better perceived as of 2Q15.
(click here)
In the first quarter, manageable operating costs in the Polvo
Field (100% of the field) amounted to US$30.9 million, 3% down on 4Q14 and 17% down on
1Q14.
Operations in the Polvo Field reached 1,000 days without
accidents resulting in sick leave in March
2015, confirming PetroRio's commitment to the environment
and the safety of its employees.
MAERSK TRANSACTION
PetroRio entered into a purchase and sale agreement with Maersk
in July 2014 to acquire 40% of the
exploration, development and production rights in the Polvo Field
area. In October 2014, the ANP
informed the Company about the denial of this assignment request.
This authorization depends on compliance with requirements whose
deadline is still ongoing. The Company, Maersk and the ANP are
currently negotiating to solve said pending issues.
UNITIZATION
In June 2013, the ANP approved the
Development Plan of the Tubarão Martelo Field, of Óleo e Gás
Participações S.A. ("OGpar"), and determined that the Plan's review
should be presented by December 31,
2014, including "the submission of formalization of the
Production Individualization Agreement (or Acordo de
Individualizaçao da Produção - AIP) related to the extension of
reservoir to the Polvo Field area".
Given there were no negotiations between PetroRio and OGpar
regarding making use of or dividing the operating results of the
Tubarão Martelo field, on August 5,
2014 PetroRio requested from the ANP an integral copy of the
administrative proceeding which approved said Development Plan.
Since then, the parties have been discussing the matter within
the ambit of the ANP without reaching an understanding.
As previously disclosed in the 2Q14 Earnings Release, PetroRio's
technical staff has already prepared a Development Plan to be
submitted to the ANP regarding the extension of Polvo Field's
lifespan, which foresees, among other measures, increased
production from producing wells.
SEDIMENTARY BASIN OF SOLIMÕES
PetroRio and Rosneft Brasil E&P Ltda, a Brazilian subsidiary
of Rosneft Oil Company, continue to negotiate the transaction
related to the sale and transfer of the Concession Agreements
located in the Sedimentary Basin of Solimões, in the state of
Amazonas, Brazil.
The Company adopted initiatives to control costs and preserve
cash, reducing the recurring disbursements until the conclusion of
the transaction. Among these initiatives, the end of the agreements
with suppliers, the closing of logistics support bases and the 30%
reduction in personnel costs are the highlights.
NAMÍBIA
PetroRio is carrying out the farm out process of the licenses it
maintains in Namibia. With the end
of several activities in that country, the monthly expenses were
drastically reduced and should remain at approximately R$60,000 per month as of 2Q15. (click
here)
In 1Q15, PetroRio posted negative adjusted EBITDA of
R$14 million. This result was
strongly impacted by the Company's decision not to sell oil this
quarter, postponing said sales to a future opportunity, due to the
prospects of larger transactions normally resulting in cost
optimization. As a result, PetroRio understands that the strategy
adopted was positive, given that Brent prices recovered in April
compared to the last three months.
In the end of April, the Company sold approximately 623,000
barrels of oil, generating revenue of R$92
million. It is important to mention that revenue is
recognized after the product is loaded and the oil is transferred
from the FPSO platform to clients' cargo vessels.
In a comparison basis, in 1Q14 PetroRio concluded two sales,
totaling approximately 630,000 barrels exported (net for the
Company).
Non-cash amortization and depreciation costs totaled
R$5.0 million.
As the Company did not sell oil in 1Q15, production costs were
registered as inventory. The amount of R$82.3 million reflects the market value of this
inventory, considering the best sale value estimate at the end of
1Q15. Of this amount, R$27.8 million
did not impact cash generation. Inventory net sales value comprises
the estimated sale price minus the estimated costs of conclusion
and those necessary to execute the sale. The Company constituted a
provision for losses totaling R$19.1
million, reflecting the market value of its oil
inventory.
Geology and geophysics (G&G) expenses totaling R$76,000 confirm the Company's new strategy,
focusing on production assets and divestment of exploration
assets.
PetroRio has been going through a corporate restructuring,
optimizing its workforce and adjusting personnel costs to its new
reality.
The Company ended March 2015 with
82 employees (27% fewer than in December
2014), which already reflects the demobilization of
personnel from the HRT America subsidiary. First-quarter own
personnel expenses amounted to R$6.7
million, 38% down on 1Q14. Personnel expenses are net of the
amount allocated to Polvo and Solimões, and offset by partners
proportionally to their stake in these projects.
General and administrative expenses contracted by R$6.5 million in 1Q15 over 1Q14, equivalent to
53%. The end of various agreements related to exploration
activities in the Solimões Basin, including drilling rig rental,
contributed to this reduction in expenses. Expenses with
maintenance and the operational agreements in Namibia and Solimões are allocated directly to
the results.
Third-party services expenses totaling R$5.8 million reflect the demobilization of the
bases in the Solimões Basin, in addition to non-recurring expenses
with the termination of agreements related to this project.
It is worth mentioning that in 1Q15 manageable costs and
expenses declined by 35% in USD compared to 1Q14. The Company
estimates that additional reductions should be recorded in
2Q15. (click here)
In 1Q15, the financial result was a loss of R$15.8 million, composed of financial revenue of
R$59.9 million and financial expenses
of R$75.7 million.
The net result was negative by R$53.5
million, influenced by the Company's decision not to sell
oil in the first quarter. As previously mentioned, if PetroRio had
sold oil in 1Q15, adjusted EBITDA would be positive by R$1 million.
The charts below show the quarterly variation of the main groups
of accounts in PetroRio's Consolidated Income
Statement. (click here)
TOTAL CASH, CASH EQUIVALENTS AND
INVESTMENTS
The Company closed 1Q15 with a cash position of R$362.1 million, basically allocated abroad, most
of which in U.S. dollars. Among the factors which explain the 19%
reduction over December 2014, it is
worth mentioning the following:
- Net positive impact of R$54
million resulting from the exchange variation in the
period;
- Disbursements with costs, operating expenses and the payment of
royalties (net of cash calls) totaling R$67
million;
- Disbursement of R$83 million for
the acquisition of the rights and obligations in BJSA concession
agreements and other assets, including the FPSO Fluminense
platform. The amount paid corresponds to 20% of the total
transaction amount;
- Disbursement of R$2 million
related to the Solimões project;
- Capital inflow of R$13 million
related to the sale of four helicopters.
The Company's cash flow is summarized below and includes the
main financial transactions between December
2014 and March 2015. (click here)
It is worth mentioning that at the close of March 2015, the volume of oil in inventory
related to PetroRio totaled 562.9 thousand barrels, equivalent to
R$82.3 million, while in the end of
December 2014, inventory stood at 57
thousand barrels, equivalent to R$8.1
million.
The chart below shows the variation in the Company's
consolidated cash and cash equivalents as of 1Q14, which increased
throughout 2014. If the sale of inventory registered at the end of
March 2015 is considered, cash and
cash equivalents remained stable in 1Q15 over 1Q14, despite the
decline in Brent prices. (click here)
CONVERTIBLE DEBENTURES
In 4Q14, the Company issued 4,359,624 debentures convertible
into common shares (1st Convertible Debentures
Issuance), which generated proceeds of R$87.2 million.
The debentures will mature in five years and can be convertible
into shares at the sole discretion of the debenture holders, from
October 24, 2015 until its maturity,
on October 27, 2019. The compensatory
interest corresponds to the accumulated variation of 90% of the
daily average DI rate - Over Extra Group (DI Rate), with
half-yearly payment, being the first installment payable six months
after the issue date.
A portion of the proceeds raised with this debenture issue was
allocated to cover 20% of the amount paid on the acquisition of the
rights and obligations of the concession agreements related to the
BJSA fields, the Fluminense FPSO platform and other related assets,
as announced in January 2015. The
remaining 80% should be financed through export pre-payment
operations led by Glencore Ltd., a wholly-owned subsidiary of
Glencore PLC. These export pre-payment operations will be used to
replace the guarantee already granted by Glencore through a standby
credit facility. (click here)
ABOUT PETRORIO
PetroRio is one of the largest independent oil and gas
production companies in Brazil.
PetroRio is the operator of the Polvo Field, which is located in
the southern portion of the Campos Basin, Rio de Janeiro, holding a 60% participating
interest in the field. The Polvo Field has Brazil's seventh largest daily production of
barrels of oil equivalent (boe), with 20.3º API, deriving from
three producing reservoirs. PetroRio is the owner, through its
subsidiaries, of "Polvo A" fixed platform and a 3,000-HP drilling
rig, currently in operation in the field, being the platform
connected to the "Polvo FPSO" vessel, with capacity to segregate
hydrocarbons and water treatment, oil storage and offloading. Polvo
Field license covers an area of approximately 134,000,000 sqm, with
several prospects with potential for further explorations.
In January 2015, PetroRio
announced the acquisition of 80% of the Bijupirá and Salema Fields located at the same basin, the
Campos Basin, at a distance of approximately 80 km from the Polvo
Field, tripling its current daily production to more than 33,000
barrels of oil. Such acquisition is subject to the approval of
Brazil's Council for Economic
Defense (CADE) and the National Agency of Petroleum, Natural Gas
and Biofuels (ANP). Furthermore, PetroRio is born of a new
corporate culture focused on increasing production through the
acquisition of production assets, the re-exploration and
optimization of the Polvo, Bijupirá and Salema fields, increasing
operational efficiency and reducing production costs and corporate
expenses. The Company's main objective is to create value for its
shareholders, protecting its liquidity and increasing revenue and
profits, with full respect for safety and the environment. For more
information please visit the Company's website:
www.petroriosa.com.br.
Disclaimer
This document contains statements about future events. All
statements other than those of historical fact contained herein are
forward-looking statements, including but not limited to,
statements regarding plans for drilling and seismic acquisition,
operational costs, equipment acquisition, expected oil discoveries,
the quality which we expect to produce oil and our other plans and
objectives. Readers can identify these statements by reading
several words such as "estimate," "believes," "expect" and "will"
and similar words or their negative. Although management believes
that the expectations represented in such statements are
reasonable, it cannot ensure that such expectations will be
confirmed. By their nature, statements about future events require
us to make assumptions and, thus, such statements are subject to
risks and uncertainties. We caution readers of this document not to
place undue reliance on our forward-looking statements considering
that certain factors may cause future circumstances, results,
conditions, actions or events which may differ materially from the
plans, expectations, estimates or intentions expressed in said
statements regarding future events and assumptions that support
them. The following risk factors may affect our operations: the
contingent resource and prospective resource evaluation reports
involving a significant degree of uncertainty and being based on
projections that may not prove to be accurate; inherent risks to
the exploration and production of oil and natural gas;
inherent risks to the exploration and production of oil and
natural gas; drilling and other operational problems; breaches or
failures of equipment or processes; errors in contracts or
operators; execution failure of contractors, labor disputes,
interruption or decline in productivity; increase in material or
personnel costs; downtime to attract sufficient personnel;
requirements for intensive capital investment and maintenance costs
that PetroRio may not be able to finance; delay costs; exposure to
fluctuations in currency and commodity prices; political and
economic conditions in Namibia and
Brazil; complex laws that can
affect the cost, manner or feasibility of doing business;
environmental, safety and health regulation which may become
stricter in the future and lead to an increase in liabilities and
capital expenditures, including indemnity and penalties for
environmental damage; early termination, non-renewal and other
similar provisions in concession contracts; and competition. We
caution that this list of factors is not exhaustive and that, when
relying on forward-looking statements to make decisions, investors
and others should also carefully consider other uncertainties and
potential events. The forward-looking statements herein are made
based on the assumption that our plans and operations will not be
affected by such risks, but that, if our plans and operations are
affected by such risks, the forward-looking statements may become
inaccurate.
The forward-looking statements contained herein are expressly
qualified in their entirety by this cautionary statement. Such
declarations were made on the date hereof. We do not undertake to
provide updates on statements regarding future events, except as
required by applicable securities legislation.
1
|
The Company's
corporate name will remain HRT Participações em Petróleo S.A.,
until the modification is approved at the Shareholders' Meeting, in
accordance with the Management Proposal already submitted. The
Company's shares and GDSs will continue to be traded under the
tickers HRTP3 on the BM&FBOVESPA and HRP on TSX-V until the new
corporate name is approved and the request to change the tickers is
authorized by the BM&FBOVESPA and the Brazilian Securities and
Exchange Commission (CVM). The Company will keep its shareholders
and the market in general informed of the progress of this
process.
|
|
|
SOURCE HRT Participações em Petróleo S.A.