Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) has reached an agreement for the sale of a majority stake in an offshore oil block in Brazil to Norwegian oil company Statoil ASA ADR (NYSE:STO). According to a statement from the Norwegian company, the deal is worth $2.5 billion for a 66% stake in the BM-S-8 offshore license, in the Santos base.
The BM-S-8 offshore field includes a substantial part in the carcara oil field, which is one of the most coveted pre-salt oil region. The acquisition will provide Statoil with access to between 700 million to 1.3 billion barrels of oil.
The purchase further affirms Statoil’s intention of expanding internationally at the back of the recent rebound in oil prices from multi-year lows. The Norwegian company currently produces about 100,000 barrels of oil a day from its operations in Brazil alone.
The selloff is not expected to have any impact on Petrobras oil reserves or production figures given that the BM-S-8 field is still in an exploratory phase. The company has also confirmed that it is still in discussion with Statoil as they continue to explore other long-term initiatives.
Paying Down Debt
The sale is of great importance to Petrobras, which is aggressively looking for funds to pay down its massive debt that currently stands at $126 billion. The selloff also marks an important step towards the proposed $15 billion asset divestment plan. The oil giant remains confident of hitting the target before the end of the year having already completed a number of asset sales in the recent past.
Focus on the asset sales has already shifted towards assets that have the potential to generate cash in the short term. The company has already started talks with Mexican Petrochemical Company Alpek as it looks to offload its petrochemical units Petroquimica Suape and Citepe.
Last week Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) announced plans to offload its fuel distribution business BR Distribuidora as the asset selloff wave gains momentum.