Equinor (EQNR) Acquires Interest in Petrobras' Roncador Field

Equinor ASA EQNR completed the acquisition of a non-operated interest of 25% in the Roncador oil field, operated by Petrobras PBR, in Brazil’s Campos Basin. The acquisition of the interest was announced in December 2017.

Considering the equity volumes produced since Jan 1, 2018 and the deposit paid upon the signing of the transaction, Equinor paid Petrobras $2 billion as adjusted cash. An additional contingent payment of about $550 million associated with investments in projects to boost recovery from the field is yet to be paid.

Equinor’s interest in Roncador, the third largest producing field in Brazil, has augmented its equity production by around 150% to almost 100,000 barrels of oil equivalent (boe) per day in Brazil, up from around 40,000 boe per day. Petrobras will continue as the operator of Roncador with an interest of 75%.

The acquisition is part of Equinor’s strategic partnership with Petrobras to increase technical collaboration. Factors like Increased Oil Recovery (IOR) technology, competence and experience from the Norwegian Continental Shelf (NCS)will be leveraged by Equinor. Petrobras will utilize its experience as the world’s largest deepwater operator and pre-salt developer to maximize value creation from the longevity of the Roncador field. Currently, Equinor is on track to fortify presence in the natural gas market in Brazil.

The companies are aiming to boost Roncador’s recovery factor by five percentage points, increasing the total outstanding recoverable volumes to more than 1.5 billion boe from 1 billion boe.

Price Performance

In the past three months, Equinor’s shares have gained 16.7% compared with the industry’s 13.2% rise.

 

Zacks Rank & Other Key Picks

Equinor currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked players in the same sector are Occidental Petroleum Corp. OXY, and China Petroleum and Chemical Corp. SNP. These stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% in the last four quarters.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the last four quarters.

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