First reserve-based lending in Brazil fuels Petrobras sale

First reserve-based lending in Brazil fuels Petrobras sale Credit: iStock.com/grandriver

Herbert Smith Freehills in London and Pinheiro Neto Advogados in Rio de Janeiro and São Paulo have helped British oil company Trident Energy acquire 10 mature oil fields from Petrobras for US$851 million, in a deal financed by a pioneering reserve-based lending transaction.

Petrobras retained Machado Meyer Advogados, which is regular counsel to Petrobras for its comprehensive divestment programme and has worked with the oil company on numerous deals, including the US$8.6 billion sale of gas pipeline TAG and a more recent sale of a shallow water oil field. 

The deal was signed on 24 July. It was financed by the first reserve-based lending to take place in Brazil.

Herbert Smith and Pinheiro Neto advised the borrower. White & Case LLP in London, Houston and São Paulo and Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados in Rio de Janeiro advised the lenders.

Reserve-based lending is backed by oil reserves. Although such an arrangement was possible in Brazil, it was never used before. In May, oil and gas watchdog ANP issued new regulations making the process clearer and more attractive to investors.

The financing was signed on 24 July.

Petrobras will receive payment from Trident in two tranches. The company paid US$53.2 million when the contract was signed. The remaining US$797.8 million will be paid when the deal closes. Before then, ANP must first approve the transaction. Petrobras may receive a further US$200 million payment which is contingent on oil prices.

This is the first time Trident, which is backed by US private equity company Warburg Pincus, has acquired assets in Brazil. The company uses technology to explore fields which have already passed peak production.

The 10 fields are located in two shallow water clusters known as Enchova and Pampo. They produced 35,000 oil barrels a day in 2017, but production fell to 18,000 barrels a day this year.

Counsel to Trident Energy

Herbert Smith Freehills

Partners Laura Hulett, Thomas Bethel and Pedro Rufino Carvalho, and associates Rakhee Patel, Kate Newman and Charlotte Whight in London

Pinheiro Neto Advogados

Partners Francisco Werneck de Albuquerque Maranhão, Luis Claudio Furtado Faria, José Alexandre Buaiz Neto and Emir Oliveira, and associates Raphael Moraes Paciello, André da Costa Santa Ritta, Guillermo Zuma Hoorn, Beatriz Costa de Melo, Anna Carolina Guimarães, Beatriz Pyrrho, Camila Gargaglione Coelho, Rodrigo Tostes, Daniel Andrade de Souza, Erick Mateus Faustino, Daniel Rebello and Felipe Bernardelli in Rio de Janeiro and São Paulo

Counsel to Petrobras

In-house counsel - Alexandra Infingardi Paixão and Priscilla Goulart da Silva

Machado Meyer Advogados

Partners Arthur Penteado, Daniel Szyfman, Diana Henne, and associates Fernando Xavier and Raphael Correia

Counsel to Counsel to Sumitomo Mitsui, ING and Crédit Agricole

White & Case LLP

Partners Mukund Dhar, Tom Bartlett and Ingrid York, counsel Meredith Campanale, and associates Radhika Wason, Nathaniel Crowley, Bruna Beloso and Ana Louise O’Sullivan in London; partner John Anderson in São Paulo; and associate Fern Han in Houston

Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados

Partners Giovani Loss, Pablo Sorj, Nilton Gomes de Mattos Neto, Thiago Sombra and Luiz Gustavo Bezerra, and associates Gabriela Velloso Tavares, Antonio Oliveira, Lucca Rizzo, Igor Moreira Novais Teixeira and Gedham Medeiros Gomes in Rio de Janeiro

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  • Oil & Gas