Friday 20 November 2020

Petro Rio S.A. (the “Company” or “PetroRio”) (B3: PRIO3), following best corporate governance practices, informs its shareholders and the market in general the signing of an agreement with BP Energy do Brasil Ltda. for the acquisition of interests of 35.7% in the BM-C-30 Block (“Wahoo” or “Wahoo Field”) and 60% in the BM-C-32 Block (“Itaipu” or “Itaipu Field”), thus, subject to the necessary approvals, becoming the operator of both pre-salt fields.

Wahoo, with production potential of over 140 million barrels (100% of Wahoo), had oil discoveries in 2008 and carried out formation tests in 2010, and fits precisely in the Company’s value generation strategy. The Wahoo development will allow the Company to create another production cluster, which will share all infrastructure with Frade Field (including the FPSO), enabling the capture of synergies, resulting in significant and sustainable lifting cost reduction, while maintaining high levels of safety and efficiency.

The acquisition, subject to regulatory approvals and other usual conditions precedent, will have a fixed portion of US$ 100 million, which will be divided into 5 payments (US$ 17.5 million split between the signing and the completion of the transaction - closing - once all conditions are met; US$ 15 million in December 2021; with the balance due in 2022), plus a US$ 40 million earn-out contingent on Itaipu’s unitization (or first oil).

PetroRio reaffirms its commitment to maintaining conservative indebtedness levels, and estimates that even after incorporating this financing, the Net Debt/EBITDA ratio will remain within normal and acceptable ranges.

Wahoo is located 30-35 km north of Frade, with a water depth of 1,400 m, and has a carbonate reservoir at the pre-salt layer at a depth of 5,000 to 7,000 meters. Wahoo oil is of excellent quality, with 30º API, low viscosity, and associated gas that will be used to generate energy for the Frade FPSO.

Itaipu, which was discovered in 2009 and has 3 pilot wells drilled, is located close to the Whales cluster. Preliminary studies indicate that the accretion is potentially shared with the southeast portion of the cluster. Thus, the development of this area may go through a unitization process, before any development definition.