Arabaiana

Location

The Arabaiana field is located offshore in the Potiguar Basin, Brazil.

Ownership and Operation

The Arabaiana field is operated by Ouro Preto Óleo e Gás (Ouro Preto), which holds a 100% working interest in the field.

Reserves and Resources

As of July 31, 2020, the Arabaiana field, along with the adjacent Pescada field, has been audited for its reserves and contingent resources. Here are some key figures:

• Contingent Resources: The fields have contingent resources categorized into 1C, 2C, and 3C.
  • 1C: 0.2 million barrels (MMbbl) of liquids and 6.4 billion standard cubic feet (Bscf) of gas.
  • 2C: 5.0 MMbbl of liquids and 44.9 Bscf of gas.
  • 3C: 5.2 MMbbl of liquids and 49.9 Bscf of gas.

Development Plan

The development plan includes several key activities:

• Horizontal Well Drilling and Completion: Estimated costs for horizontal well drilling and completion are $35.9 million per well.
• Workover Costs: Estimated at $11.6 million.
• Mobilization Costs: The mobilization cost of the jack-up rig to the site is $2.5 million. These jobs are planned to be performed back-to-back in 2026.

Abandonment Costs

Ouro Preto and Petrobras have signed a Decommissioning Cost Sharing Agreement. Petrobras will cover $100 million (adjusted by the Brazil inflation index) of the abandonment costs, which effectively makes the abandonment cost zero for Ouro Preto.

Economic and Regulatory Aspects

• Royalties: Royalties are paid in cash and amount to 8.8% of the production value.
• Taxes: Income tax is 34%, and other taxes such as PIS/Cofins and ICMS are financially recovered and not included in the costs.
• Concession: The concession for the field ends on August 31, 2025, and Ouro Preto plans to request an extension.

Conclusion

The Arabaiana oil project is part of Ouro Preto's operations in the Potiguar Basin, Brazil. It involves significant investment in drilling, completion, and future abandonment costs, with a detailed economic and regulatory framework in place. The project's development is guided by technical and economic data to ensure commercially recoverable resources.