Bloomberg News

Exxon Seeks to Sell 25% of Brazil Prospect After Dry Holes

October 05, 2011

(Updates with dry hole in first, third and fourth paragraphs.)

Oct. 5 (Bloomberg) -- Exxon Mobil Corp., the world’s biggest oil company, is offering for sale a 25 percent stake in an offshore Brazilian oil prospect after drilling two wells that failed to strike crude.

The prospect, known as Block BM-S-22 in the Santos Basin, may hold as much as 1.5 billion barrels of recoverable crude, Irving, Texas-based Exxon said in an offering document on Schlumberger Ltd.’s oilfield-marketing website. One of Exxon’s partners on the project, Hess Corp., last year wrote down the value of two of the three wells already drilled at the prospect after they came up dry.

The block lies beneath a layer of salt below the sea floor in the same region that yielded discoveries such as Tupi, a 6.5 billion-barrel field now known as Lula, Exxon said in the offering document.

Exxon owns 40 percent of the prospect and is the operator of the project. Hess of New York holds a 40 percent stake, and Rio de Janeiro-based Petroleo Brasileiro SA owns the rest. Hess expensed its share of costs for the Exxon-drilled Sabia-1 and Azulo wells during the fourth quarter of 2010, Gregory Hill, Hess’ executive vice president of worldwide exploration, said during a Jan. 26 conference call with analysts.

Agreement

Exxon and partners Hess and Petrobras, as the Brazilian oil company is known, “agreed to seek a fourth co-venturer” for the project, Patrick McGinn, a spokesman for Exxon’s exploration unit, said today in an e-mailed statement.

“We remain interested in future opportunities in Brazil,” McGinn said in the e-mail.

In the offering document, Exxon said an investor must fund the drilling of one well in the prospect in exchange for the 25 percent stake. The site has already received drilling permits from the Brazilian government, Exxon said. A data room is being set up in Houston for prospective buyers.

“This opportunity should appeal to companies looking to gain access to the significant pre-salt play in Brazil,” Exxon said in the offering document.

--With assistance from Peter Millard in Rio de Janeiro. Editors: Charles Siler, Jessica Resnick-Ault

To contact the reporter on this story: Joe Carroll in Houston at jcarroll8@bloomberg.net.

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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