The Polvo A fixed platform, located in the Polvo Field in Brazil’s Campos Basin
Author: Renato Jerusalmi, Head of Finance and IR at PetroRio
October 11, 2016
PetroRio is the largest independent company in oil production in Brazil. It is the operator of the Polvo Field, located in the Campos Basin, which boasts Brazil’s seventh largest daily production of barrels of oil equivalent (BOE).
/ir.petroriosa.com.br/default_en.asp?idioma=1&conta=44" style="box-sizing: inherit; background-color: transparent; text-decoration: none; color: rgb(0, 104, 146); outline: none;" rel="noindex nofollow" target="_blank">PetroRio is the owner of Polvo A fixed platform and a drilling rig, currently in operation in this field. The platform is connected to the FPSO Polvo with capacity to segregate hydrocarbons and water treatment, oil storage and offloading.
Still burning bright
PetroRio stands out among the world’s big energy producers for one simple reason: for PetroRio, 2015 was a good year. Despite the challenges imposed by the oil price collapse, PetroRio achieved impressive results from the beginning of the year, when it initiated an aggressive cost reduction programme that comprised operational optimisations and renegotiations with its entire supplier base.
In 2015, 3.056 million barrels were produced in the Polvo Field (100 percent of the field), with average operating efficiency of 94.4 percent, 1.1 percentage points higher than in 2014. This was an excellent result, considering some operational setbacks the company had to face.
In addition to the cost savings achieved, in December PetroRio completed the purchase of Maersk’s remaining stake of Polvo in order to start a well-succeeded revitalisation programme. After the completion of the first phase in July 2016, which involved an intervention in two producing wells and the revitalisation of a third one that had been abandoned in 2008, a productivity gain of 20 percent was observed.
Turning the screws
Last year was a turning point for PetroRio. The company took the bold step of reinventing itself, switching its strategy from an exploration company to instead focus on the acquisition and development of producing fields. As such, PetroRio has undergone significant changes in recent years as part of its development process. Chiefly, this meant increasing oil reserves and obtaining a massive cost reduction, all the while maintaining the highest levels of operational safety. This model is to be executed as part of the company’s expected growth strategy that now relies on the acquisition of producing fields. This successful model implemented in the Polvo Field, which combines cost optimisation, careful reservoir management and a well redevelopment programme should enable the company to obtain additional gains in the new fields to be acquired.
In line with its strategic focus on producing fields and reducing exposure on exploratory risks, PetroRio completed the farm-out of the concessions held by the company in the Brazilian Solimes Sedimentary Basin to Rosneft for $55m, and did not renew the oil exploration licenses in Namibia. Therefore, the company is no longer exposed to commitments with the exploration project in the amount of $150m that would be originated from the automatic renewal of these licenses. Continuing with the process of divesting on non-strategic assets, four aircraft were sold during 2015 for $6.1m. Two others were sold in the first quarter of 2016 leaving only one aircraft, for which the firm is currently
seeking a buyer.
/www.worldfinance.com/wp-content/uploads/2016/10/PetroRio-2.png" srcset="https://www.worldfinance.com/wp-content/uploads/2016/10/PetroRio-2.png 509w, https://www.worldfinance.com/wp-content/uploads/2016/10/PetroRio-2-203x300.png 203w" style="box-sizing: inherit; border: 0px; height: auto; max-width: 100%; display: inline; float: right; margin-left: 1.5em;" width="300">In addition to Polvo Field’s optimisation, another area that should be highlighted is PetroRio’s innovative capacity and entrepreneurial culture. This has proven to be of vital importance as the energy company has now become the first in Brazil to use a new technology for oil containment and collection in case of oil spills. At the same time, the new equipment, Side Collector, increases oil collection capacity, as well as being able to eliminate the need for a second dedicated vessel. This then goes towards promoting the firm’s expected annual cost savings of approximately $3m. This strong culture, focused on results, will consolidate PetroRio as Brazil’s largest independent oil and gas production company.
PetroRio had what can only be described as a successful 2015. In the environment of seemingly unending soft energy prices, many firms around the world have wavered, unsure of how to move forward in this new climate. PetroRio has not been one of them. It has faced the decline head on and used it as an opportunity for reorganisation. Its strong corporate culture has allowed it to make the most of the tough international climate within which it finds itself operating; its hard-headed and practical approach has allowed it to face down the worst of the world’s energy price collapse. PetroRio can now boldly move forward – in spite of prices seemingly not recovering anytime soon – with confidence.