With oil price recovery, Enauta expects to resume investments

Source: Valor Econômico


By: André Ramalho



Enauta’s CEO, Lincoln Guardado, said on thursday (6) that he expects, from now on, to take the decision of new investments, amid the recovery of oil prices in recent months. The taking of charter prices for the new platform of the Atlanta field, in the Santos Basin, was postponed, but should stay for the second half. The company expects that the breakeven [economic equilibrium price] of the Atlanta full development system project will be around US$ 40 a barrel.


“With the environment more relaxed, we will return to take decisions that we had paralyzed [after the oil price shock],” said the CEO during a conference call with investors about the second quarter results. “The Atlanta breakeven should be around US$ 40 a barrel, and may even fall, depending on how we develop the field, with certain elasticity of capital allocation,” he added.


The oil company and its partner Barra Energia discuss the drilling schedule of the fourth well, whose investment decision had been suspended. Due to the postponement of the drilling of this well, the company reduced the average production estimate of Atlanta to 18 thousand barrels/day.


For 2020, the expectation is to produce 23 thousand barrels/day, a level below the 28 thousand barrels/day initially foreseen.


The revision occurs by technical problems on the asset. According to Enauta, in June the company started to commission the oil and water separation units on the platform that operates in Atlanta’s SPA, but there was a problem in this process, which led the company to reduce the production. Guardado said that the expectation is to normalize operations in August. There were, however, impacts on production in June, July and part of August. “The covid-19 pandemic made it a little difficult for Teekay staff [to normalize],” he said.


The executive explained that the costs of the technical problem are the responsibility of the platform operator, Teekay, and that the charter rate of the vessel will be reduced. He ruled out problems with reservoir behavior.


The president of Enauta also said that he expects to resume in 2021 the divestiture of exploration concessions in the Pará-Maranhão Basin. The idea is to return to the market when the environmental license of the assets is obtained.


The farm-out process (sale of participation in the concessions) of the blocks of the Pará-Maranhão Basin was interrupted due, precisely, to uncertainties regarding the date of obtaining the drilling license. According to Enauta, however, the recent discoveries located in Guyana and Suriname have valued the equatorial basins in the Brazilian portion and there is interest in the assets.


Guardado said that the company and Petrobras are in the final phase of negotiations on the contractual additive for the Manati natural gas field in the Camamu-Almada Basin. According to him, the agreement under negotiation foresees that the volume not withdrawn in the months in which the operation of the field was interrupted could be withdrawn this year or in 2021. “The negotiation is going well,” he said.


In March, Petrobras, the operator of the field, declared force majeure to interrupt the production of the asset and, consequently, suspend minimum payments stipulated in the “take-or-pay” clause (minimum gas purchase commitments).


Manati returned to operation in May and is being normalized. According to Enauta, the company received the amounts for the months of April and May and the month of June was invoiced already based on the proposal of the agreement.


Guardado also commented on the prospects of resumption, in 2021, of operations of the fertilizer plant in Bahia, which was leased by Petrobras to Proquigel.


He pointed out that the unit is a traditional consumer of Manati gas, with a demand of around 1 million cubic meters daily (m3/day).


According to the executive, the Fafen Bahian lease is a win-win relationship for all. Now under the command of Proquigel, the unit can become one more client for the Manati field.


“We see with great joy that the consumption of gas will grow again in the Northeast”, he commented.


Enauta’s CEO said that he does not rule out the possibility that the last installment for the Carcará concession sale, to Equinor, be paid this year. The most probable, according to him, however, is the value, of US$ 144 mi, be received on the first quarter of 2021.


Guardado said that the company “has plans” for the money that will be received. According to him, Enauta is focused on the development of the definitive production project of the Atlanta field, in the Santos Basin, and on the Sergipe-Alagoas exploratory campaign, but also for eventual acquisitions.


The CFO, Paula Côrte-Real, said that Enauta is well capitalized and monitors acquisition opportunities. “We see the repositioning of some companies, this will bring market opportunities. This is what we are looking for”, she commented.


Enauta ended the second quarter with a cash balance of $ 1.6 billion.


Guardado has clarified, however, that company has seen few opportunities in the market that make sense to company’s portfolio. According to him, the oil company has no interest on mature fields at the end of its useful life.


The executive said that investing in offshore wind power “is part of the imaginary” of the company for the medium and long term. According to him, however, the energy transition cannot be drastic and the company’s priority at the moment is still the production of oil and gas.


“The size of the company still does not allow us to invest directly in alternative sources. We have many commitments ahead in oil and natural gas exploration and production. The company was born producing gas, we like gas and it is our insertion mechanism in the low carbon economy”, he commented.


According to him, entering the offshore wind sector is a “good path” that Enauta can pursue in the medium and long term. If confirmed, this entry could be made in partnership with companies with expertise in the area, he explained.


“It is part of the imaginary we have in the company, but it is always very important that we have steps, direction for these things. This cannot be done in a drastic way,” he said.