With record profits, QGEP changes name and aims at the pre-salt

Source: Valor Econômico

 

By: Rodrigo Polito

 

 

Queiroz Galvão Exploração e Produção (QGEP), which announced yesterday the change of its corporate name to Enauta, intends to buy a pre-salt area in the auctions of the National Agency of Petroleum, Natural Gas and Biofuels (ANP) until next year. The company’s strategy is to have 10% to 20% share of one of these areas.

 

“We remain attentive, because we believe that our portfolio needs, if not this year next year, to have an asset in the pre-salt. And we will try to seek this,” said the president of Enauta, Lincoln Guardado, to Valor.

 

According to him, the Company’s focus is the 6th Pre-Salt Auction and the 16th Round of ANP Concessions, scheduled for the second semester. “We remain interested in sharing [pre-salt production sharing scheme] and in a concession involving the pre-salt, which should be in the 16th [Round],” he said.

 

In spite of following the discussions surrounding the mega auction this year, Enauta should not participate in the bid. The auction is expected to attract the attention of large oil companies, increasing competition and financial efforts to acquire the areas.

 

Also with regard to portfolio management, the Company also analyzes opportunities for the sale of stakes in the Pará-Maranhão basin. According to Guardado, the process is “very well underway” and the expectation is to make the farm-out still this year.

 

Despite its interest in pre-salt areas, the oil company already has a foot in the geological layer. The Atlanta field, in the Santos Basin, has possibilities at the pre-salt level, but the Company’s efforts in the field are dedicated to the post-salt.

 

Atlanta began production last year and should reach a volume of 25,000 and 27,000 barrels of oil equivalent per day in the third quarter of 2019, from a third well, whose drilling began in February. The field will consume US$ 43 million of the total of US$ 65 million in investments estimated by Enauta this year. For 2020, the oil company expects to invest US$ 133 million, of which US$ 90 million in Atlanta and US$ 43 million in other assets.

 

After the exit of Dommo (former OGX) from the business, decided by an arbitration tribunal after the oil company founded by Eike Batista did not execute the development investments in Atlanta, Enauta now owns 50% of the BS-4 block, together with Barra Energia.

 

While production in Atlanta is growing, natural gas extraction in the Manati field, in the Camamu-Almada Basin, should decline. The company estimates that production in 2019 will be 4.1 million m3 /day, compared to the previous projection of 4.3 million m3 /day. The fall, explained Paula Corte-Real, Enauta’s Chief Financial and Investor Relations Officer, is due to lower production in January and a scheduled shutdown of the Manati unit in March.

 

The start of production in Atlanta boosted the company’s net revenue, which reached approximately BRL 800 million in 2018. The profit, of BRL 425 million, was also a record, up 19% over 2017. The result was driven by the increase in oil and gas production and extraordinary effects.

 

With net cash of BRL 1.6 billion at the end of 2018, the Company decided to pay dividends in the amount of BRL 500 million.

 

Under the new name, the strategy is in line with the movement of other oil companies, seeking a brand that represents a broader vision of energy, not only based on oil. In the case of Enauta, in the first instance, the growth bet is on natural gas, a fuel less pollutant than oil. However, it does not rule out investments in renewable sources in the future, especially at sea, where the company is an expert.