RIO DE JANEIRO, Aug. 14, 2014 /CNW/ - HRT Participações em
Petróleo S.A. - "HRT", "HRTP" or "Company" (BM&FBovespa: HRTP3
and TSX-V: HRP) announces its results for the second quarter of
2014 ("Q2 14"). Unless otherwise indicated, the financial and
operational information below is presented on a consolidated basis
and stated in thousands of Brazilian Reais (R$) according to the
International Financial Reporting Standards (IFRS), including our
direct subsidiaries: HRT O&G Exploração e Produção de Petróleo
Ltda., Integrated Petroleum Expertise Company - Serviços em
Petróleo Ltda., HRT Africa Petróleo S.A., and HRT America Inc., and
their respective subsidiaries and branches.
Q2 14 HIGHLIGHTS AND SUBSEQUENT
PERIOD
- Net revenue of R$138 million,
Gross Income of R$55 million, EBITDA
of R$34 million with Margin of 25%
and Net Income of R$10 million;
- Oil and gas production in the Polvo Field without stoppage and
workover underway to enhance the production in a well previously
abandoned;
- Approval of the Reverse Split process;
- Effectiveness of the Provisional Presidential Decree 651/14
that refers to the exemption of income tax on the sale of shares of
small and medium-sized companies;
- Signing of an agreement with Maersk for the acquisition of a
40% working interest ("WI") in the Polvo Field, turning HRT the
holder of a 100% WI, after ANP's approval;
- ANP's approval of the request for reconsideration filed by HRT
O&G on the extension of the second period of the exploration
phase for Block SOL-T-195, in Solimões;
- ANP's approval of the assignment of a 6% WI and the transfer of
operating activities in the Solimões Basin from HRT to Rosneft
Brasil;
- Signing of a Memorandum of Understanding for the study of
alternatives to the Solimões' Gas Monetization with HRT, Rosneft
and Petrobras.
MANAGEMENT REPORT
Following the results of the previous quarter,
HRT has concluded this first half with a free cash flow of
R$365 million, closing its accounts
with a net revenue of R$281 million,
gross income of R$78 million, EBITDA
of R$70 million and net income of
R$11 million, as a debt-free company
at the end of the period.
In its new line of growth, the Company has
established a goal of minimum free cash exceeding USD100 million, thus assuring the focus on the
sustainability of its businesses, seeking new efficiency mechanisms
every day, which allow to reduce costs and increase the Company's
revenues. The agreements completed these last months with Rosneft,
in Solimões, and with Maersk, in the Polvo Field, are the basis of
the HRT's new philosophy in the coming periods.
As for Namibia,
we continue seeking the farm down, with the intention to attract
major global oil companies to evaluate our assets and enter into a
partnership with HRT. Negotiations underway are concentrated on the
reduction of HRT's risk exposure, the correct assessment and
measurement of information and discoveries, as well as obtaining
larger exploration periods in licenses before the Namibian
Government.
HRT's 2014 strategy has been tirelessly
implemented, including determined efforts into cost reduction,
focus on operating results, cash generation and protection,
investment recovery in fixed assets, including the execution of the
divestment plan, in addition to the search for strategic partners
in exploration assets and assessment of new opportunities of
acquisition of oil and gas producing assets.
HRT, free of conflicts and with new Board of
Directors' and Fiscal Council's members, follows the strategy to
diversify its portfolio and acquire new production assets, seeking
to increase its production level and the lifespan of the production
profile, with a consequent increase of revenues, results and cash
generation.
With that, I would like to emphasize my pleasure
to report the second successive quarter of positive operating
results, for HRT and its shareholders, from the oil production in
the Polvo Field, with a high level of operating and financial
efficiency. The results obtained in this quarter encourage us to go
on developing HRT and constantly seeking new business and assets
opportunities, in addition to the adjustment of corporate risks and
the strengthening of our financial position.
Milton Romeu
Franke
CEO of HRT
CORPORATE GOVERNANCE
At the beginning of the second quarter of 2014,
the Board of Directors resolved to cease the existence of the Chief
Technical Officer position at the HRT's organizational chart. In
light of that, the Chief Executive Officer, Mr Milton Romeu Franke, became to accumulate the
relevant position, besides the one of President of the wholly-owned
subsidiary, HRT O&G Exploração e Produção de Petróleo Ltda.
("HRT O&G"), managing the Exploration and Production technical
departments.
On April 30, 2014,
the Company held an Annual Shareholders' Meeting ("ASM") and, in
accordance with the agenda, it was approved, by majority votes of
shareholders in attendance, the following matters:
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|
i. |
The Executive Board's accounts, the Management Annual Report,
the Company's Financial Statement and the Independent Auditor's
Opinion, related to the fiscal year ended December 31, 2013; |
ii. |
The allocation of results at the fiscal year ended December 31,
2013; |
iii. |
The establishment of the overall annual compensation of the
Company's management for the fiscal year 2014; |
iv. |
The installation of the Company's Fiscal Council, establishment
of the compensation of its members and the election of Messrs Elias
de Matos Brito, Roberto Portella and Gilberto Braga, as full
members, and Messrs Ronaldo dos Santos Machado, Anderson dos Santos
Amorim and Luiz Alberto Pereira de Matos, as alternate members;
and |
v. |
Not changing the official newspaper for the Company's
publications and the determination of the publishing of a Notice to
the Shareholders. |
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|
In the second half of June, the Board of
Directors approved the creation of the Chief Legal Officer position
for HRT, given the amount and relevance of ongoing matters and the
need of an executive full-time dedicated to the Company. It was
unanimously approved the appointment of Mr Ricardo Wagner Carvalho de Oliveira.
HRT held a Special Shareholders' Meeting ("SSM")
on June 13, on first call, and on
June 24, on second call, at which
were approved, by majority votes of those in attendance, the
following matters:
|
i. |
The change of the Company's headquarters; |
ii. |
The ratification of the Company's capital increase, due to the
exercise of stock options and subscriptions bonus, in an amount
equivalent to 4,335,996 new shares, in the total amount of R$
11,420,758.80; |
iii. |
The Company's common shares on a Reverse Split basis; |
iv. |
The amendment to the head provision of article 5 of the
Company's By-laws, to reflect the new capital stock; |
v. |
The approval of the reform of the By-laws; and |
vi. |
The restatement of the Company's By-laws. |
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The reverse split of the Company's common shares
was performed at the rate of 10 common shares for 1, pursuant to
article 12 of Law 6,404/76, including also the reverse split of
Global Depositary Shares ("GDSs") of the Company, at the rate of 10
GDSs for 1, maintaining the proportion currently in force of 2 GDSs
for one common share.
The Company's proposal to effect the reverse
split was in line with the understanding that a target price equal
to or exceeding R$ 10 protects the
Company from being affected by high fluctuations in percentage,
resulting from low fluctuations in stock prices, as per inquiry
made and indications received from the BM&FBOVESPA.
Additionally, the Company's proposal to perform
the reverse split was equally in line with the new regulations for
the Listing of Issuers and Admission of Securities for Trading
(Regulamento para Listagem de Emissores e Admissão à Negociação
de Valores Mobiliários) presented by BM&FBOVESPA in
February 2014, developed with the
purpose of upgrading and streamlining the relationship of issuers
with BM&FBOVESPA and market participants. This regulation will
become effective in August 2014.
The shareholders (common shares and GDSs
holders) had until August 1, at their
own discretion, to sell or buy the amount of shares required to
eliminate the fraction of shares that might result from the reverse
split executed by the Company.
As from August 4,
the common shares and GDSs became to be traded on a reverse split
basis.
Within the next weeks, the group of shares which
composes the share fractions will be sold through an auction on the
stock exchange market, by a brokerage firm, in Brazil, and a selling agent, in Canada. The value resulting from the sale of
fractions of common shares and GDSs will be credited to their
holders.
In early July, the Brazilian Securities and
Exchange Commission (CVM) disclosed at its website the list of
companies envisaged by the Provisional Presidential Decree 651/14,
which refers to the exemption of income tax on the sale of shares
of small and medium-sized companies. According to the relevant
rule, the exemption falls on the income tax of the capital gain
earned by the individual, until December 31,
2023, on the sale, performed on the stock exchange market,
of shares that have been issued by companies that, cumulatively,
meet the requirements set forth in sections I to IV of article 16
of the relevant Provisional Presidential Decree. Currently, HRT
complies with all requirements under the Provisional Decree 651/14.
HRT's Management believes that this initiative will ramp up the
growth of the Brazilian capital market, boosting the demand for its
shares, and increasing the liquidity of shares covered by the
rule.
The entire content of the Provisional Decree
651/14 is available at the website
http://www.planalto.gov.br/CCIVIL_03/_Ato2011-2014/2014/Mpv/mpv651.htm.
HRT recommends the reading of this content before taking any
investment decision.
HEALTH, SAFETY, ENVIRONMENT AND SOCIAL RESPONSIBILITY
During Q2 14, important events occurred in the
Polvo Field development plan. HRT forwarded to the Brazilian
Institute of Environment and Renewable Natural Resources
(IBAMA) the documentation for the drilling licensing of new
wells by the Polvo A platform. Also, in respect of the Polvo Field,
HRT proceeded performing socio-environmental projects under its
operating licenses and delivered to the Environmental Body, in May,
the 15th Requirement Compliance Report of this
license.
HRT GROUP COMPANIES
Q2 14 HIGHLIGHTS AND SUBSEQUENT EVENTS
HRT OIL & GAS
SOLIMÕES
HIGHLIGHTS
In early July, the Brazilian National Agency of
Petroleum, Natural Gas and Biofuels (ANP) approved the assignment
of a 6% WI in the exploration, development and production rights
and the operation on 19 blocks under HRT O&G's concession in
the Solimões Sedimentary Basin, in Amazônia, to Rosneft Brasil, a
Brazilian subsidiary of Rosneft Oil Company ("Rosneft Brasil"),
which becomes to hold a 51% WI, and HRT O&G, the remaining 49%
WI. The preliminary agreement between HRT and Rosneft was signed in
November 2013, and the process of
assignment before ANP started with the signing of definite
agreements, in March 2014. Through
the completion of the agreement, Rosneft becomes the operator of 19
blocks in Solimões.
The relevant transaction amounted to UDS 96
million and covered the HRT O&G's sale of a 6% WI and the
transfer of the operatorship in the Joint Venture in the Solimões
Basin to Rosneft, the sale of four heli-transportable drilling rigs
and the settlement of outstanding cash calls owned by Rosneft until
October 2013. From that amount:
- USD54 million were received in
the fourth quarter of 2013;
- USD18 million were received in
the first quarter of 2014; and
- The remaining amount of USD24
million will be received in the third quarter of 2014.
Furthermore, both companies entered into an
agreement for the grant of loan ("carry financing") of up to
USD40 million by Rosneft to HRT,
regarding the funding of investments in the Solimões Basin, for a
12-month period, from the conclusion of the transaction after ANP's
approval.
The transition process between the teams of both
companies is on the track to be completed. In addition to the
transfer of HRT's personnel and operations to Rosneft Brasil,
supply services agreements and financial guarantees submitted to
ANP will be also replaced and /or transferred.
Also, at the beginning of July, 2014, HRT,
Rosneft and Petrobras, signed a new Memorandum of Understanding
("MoU") for the second phase of the Gas Monetization Project,
regarding the establishment of cooperation in the review of
development systems to monetize the gas in areas under concession
of Petrobras and HRT O&G/Rosneft in the Solimões Sedimentary
Basin.
The MoU was signed by the relevant parties, in
Brasilia, in the presence of Mr
Igor Sechin, President and Member of the Management Board of
Rosneft Oil Company, Mr José Alcides Santoro Martins, Chief Gas and
Energy Officer of Petrobras and Mr Milton
Franke, CEO of HRT. The signing ceremony relied on the
presence of the President of Brazil, Ms Dilma
Rousseff and the President of Russia, Mr Vladimir
Putin.
As reported in the Q1 14 earnings release, HRT
has filed with ANP, during the first quarter of 2014, some requests
for the extension of the exploration phase for blocks SOL-T-195,
SOL-T-148 and SOL-T-149. At the beginning of the third quarter, ANP
granted HRT O&G a two-year extension for the second period of
the exploration phase of Block SOL-T-195, located in the Solimões
Sedimentary Basin, with effectiveness from July 9, 2014. The request for extension of the
second period of the exploration phase for the areas of blocks
SOL-T-148 and SOL-T-149 continues under evaluation of the
regulatory agency.
In the second quarter of 2014, the second period
of the exploration phase of Block SOL-T-172 terminated. Given
the 1-HRT-11-AM well drilling result, which presented no
hydrocarbon shows, and once the Minimum Working Obligations
(Programa Exploratório Mínimo - PEM) of such block been met,
HRT understood as appropriate not to submit the request for the
extension of the second period of the exploration phase, and
relinquished the block.
In that context, the Company is preparing a
relinquishment plan and subsequently a final relinquishment report
of the area, which will be submitted to ANP.
NEXT STEPS
In the coming months, HRT, Rosneft and Petrobras
will submit a work plan for the Gas Monetization Project that will
establish the steps and responsibilities, prioritizing the options
in the scope of natural gas converted to LNG and the electric power
generation, both of which are critical inputs for the development
of the region and the country.
POLVO
HIGHLIGHTS
As foreseen in the Q1 14 earnings release, HRT
executed, in June, the sale of the third crude oil shipment with a
volume of approximately 595 thousand barrels. Through the sale of
this crude oil shipment, HRT recognized a Net Revenue of
R$138 million, in the Q2 14.
In the second quarter of 2014, the field
produced a total of approximately 940 thousand barrels of oil
(100%) and until July of this fiscal year, the production reached
the volume of 2,140 thousand barrels of oil (100%). The average
natural gas production in this quarter, 32 thousand m3
per day, is fully used as fuel in the field activities. HRT is
currently ranking the seventh in oil production in Brazil, according to ANP.
The Company expects to execute the sale of the
fourth shipment with an approximately volume of 550 thousand
barrels, by September 2014.
In early July, HRT entered into a purchase and
sale agreement with Maersk Energia Ltda ("Maersk") for the
acquisition of 40% in the exploration, development and production
rights in the area of the Polvo Field, located in the Campos
Sedimentary Basin.
The conclusion of the purchase and sale
transaction between HRT and Maersk is subject to certain
conditions, among them, ANP's definite approval. Once the
transaction is approved, HRT will become the holder of a 100% WI in
the Polvo Field.
The acquisition of a 40% WI in the Polvo Field,
after six months of HRT as its operator, underscores the Company's
confidence in the potential for production of this field, as well
as it can contribute to potential gains in cost management ,
bringing to the field new perspectives on the development of the
production.
The chart below shows the monthly average of
daily oil production in the last 13 months, considering 100% of the
Polvo Field output: (click here)
NEXT STEPS
HRT is preparing a plan to extend the lifespan
of the Polvo Field, which foresees, among other measures, the
enhancement of the production through a new well to be drilled from
the undeveloped proven reserves of the field, and it is
operationally assessing alternatives to enhance the production
efficiency from existing producing wells and those that once were
producers.
HRT AFRICA
NAMIBIA
HIGHLIGHTS
In mid-June, the Spain's Repsol, in partnership with Tower
Resources, announced the conclusion of the drilling of well
Welwitschia-1, whose spud-in was in May. The drilling reached a
total depth of 2,454 meters. Logging evaluations indicated that
Paleocene, Maastrichtian and upper Campanian section reservoirs
were less well-developed than it was anticipated, and no
hydrocarbons were encountered. Welwitschia-1 is located at
PEL0010, in the Walvis Basin, at 200km, in the northern of the
HRT's Wingat-1well.
Repsol and Tower Resources were interested in
continuing the drilling of the well in order to test deeper
targets, therefore its drilling timetable had already been set
back, and costs were 10% in excess of the USD 91 million previously budgeted. However,
costs estimated to continue the drilling would exceed USD40 million and thus the companies have agreed
not to drill further this time and wait for full analysis of the
field before taking any decision. In this regard, drilling
operations were interrupted and the well was plugged and
abandoned.
In July, Eco Atlantic Oil & Gas executed a
farm down with Tullow Kudu Limited, a wholly-owned subsidiary of
Tullow Oil. Through an agreement, Tullow has acquired a 40% stake
in Block 2012A, located in the Walvis Basin. This farm in, in
conjunction with Eco Atlantic's prior farm out to Azimuth for 20%,
nets the Company a 100% carry of all costs on an expanded 1,000
km2 3D seismic survey and interpretation. This seismic
program is expected to commence in the fourth quarter of 2014.
Tullow has also committed to fully carry the drilling costs related
to the exploration well in the block.
The abovementioned activities, together with
other ones reported in the Q1 14 earnings release show the industry
growing interest in the Namibian region, where HRT owns 10 blocks
over an area that exceeds 53,000 km2. In light of this
scenario, HRT pursues opportunities of farm down and new partners
for its African assets.
NEXT STEPS
Following the farm down process, as mentioned in
the Q1 14 earnings release, an International Oil Conference took
place in Windhoek, Namibia's
capital, in this quarter, one of the three planned conferences to
be held in 2014. HRT's representatives attended this event with
focus on opportunities of partnerships and farm downs for its
Namibian blocks. Additionally, HRT's Business Development area
continues focused on the development of new partnerships and the
data room with block, seismic and well information, all concerning
Namibia, is affordable at our
office in Houston, USA, for potential HRT's new partners.
HEADCOUNT
We show below the changes in HRT's headcount,
showing consistent progress in line with the initiatives
implemented since early 2013, and the current allocation by
project: (click here)
By the completion of the transfer the Solimões'
operation to Rosneft and concluding its divestment program, HRT may
end the fiscal year with a headcount 40% lower, when compared to Q2
14.
To view HRT's full Q2 14 Earnings and Financial
Results, please view at the following link: (click here)
CAUTIONARY STATEMENT ON FORWARD-LOOKING
INFORMATION
Certain information contained in this document,
including any information as to our strategy, projects, plans or
future financial or operating performance and other statements that
express management's expectations or estimates of future
performance constitute "forward-looking statements". All
statements, other than statements of historical fact, are
forward-looking statements. The words "believe", "expect", "will",
"anticipate", "contemplate", "target", "plan", "continue",
"budget", "may", "intend", "estimate" and similar expressions
identify forward-looking statements. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by management, are inherently subject
to significant business, economic and competitive uncertainties and
contingencies. HRT cautions the reader that such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause the actual financial results, performance or
achievements of HRT to be materially different from HRT's estimated
future results, performance or achievements expressed or implied by
those forward-looking statements and the forward-looking statements
are not guarantees of future performance.
HRT disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result
of new information, future events or otherwise, except as required
by applicable law.
ABOUT HRT
HRT, through its subsidiaries, holds a 60%
participating interest and it is also the operator of the Polvo
Field, which is located in the southern portion of the Campos
Basin, at 100km east of the city of Cabo Frio, Rio de Janeiro. HRT has the Brazil's seventh largest daily production of
barrels of oil equivalent (boe), with 20.3º API, deriving from
three producing reservoirs. HRT is the owner, through its
subsidiaries, of "Polvo A" fixed platform and a 3.000HP drilling
rig, currently in operation in the field, being the platform
connected to the "Polvo FPSO" vessel, with capacity to segregate
hydrocarbons and water treatment, oil storage and offloading. Polvo
Field license covers an area of approximately 134km2,
with several prospects with potential for further explorations.
Additionally, HRT holds a 55% interest and is the operator of 19
exploration blocks in the Solimões Basin, and also operates ten
exploration blocks off the Namibian coast, in the Orange and Walvis
sub-basins. HRT is committed to minimizing any possible
environmental impacts on the sites where it acts. Our commitment to
the local communities is towards health conditions, safety and
quality of life. For more information, please visit the Company's
website: www.hrt.com.br/ir.
Legal Notice This document contains statements about future
events. All statements contained in this document, except those
relating to historic facts, refer to future events, including,
without limitation, statements about drilling plans and seismic
acquisitions, operating costs, equipment purchases, expectations of
oil finds, the quality of the oil we expect to produce and our
other plans and objectives. Readers may identify a number of these
statements from the use of words such as "estimate", "believe",
"expect" and "intend", and similar words or their negatives.
Although management believes that the expectations indicated in
these statements are reasonable, we cannot give any assurance that
such expectations will be fulfilled. By their nature, statements
about future events require us to make suppositions and so such
statements are subject to inherent risks and uncertainties. We warn
readers of this document not to place undue trust in our statements
about future events, since various factors can lead to future
circumstances, results, conditions, actions or events that may
differ substantially from the plans, expectations, estimates and
intentions expressed in these statements about future events and
their underlying assumptions. The following risk factors could
affect our operations: assessment reports on contingent or
prospective resources involving a significant degree of
uncertainty, and based on projections that may not be accurate;
risks inherent to the exploration and production of oil and natural
gas; limited history of operating as an oil and natural gas
exploration and production company; drilling and other operating
problems; breakdown or failure in equipment or processes; mistakes
made in agreements or by operators; failure of contractors to
perform; labor disputes, interruptions or loss of productivity;
increase in material or personnel costs; inability to attract
sufficient personnel; intensive capital requirements for investment
and maintenance expenses that HRT may not be able to finance; costs
caused by delays; exposure to fluctuations in exchange rates and
commodity prices; economic conditions in Namibia and Brazil; complex laws that may affect costs or
the means of carrying on the business; regulations in respect of
the environment, health and safety that may become stricter in
future and lead to an increase in liabilities and capital costs,
including indemnities and penalties for damage to the environment;
the early cancellation, non-renewal or other similar factors
affecting the concession agreements; and competition. We warn you
that this list of factors is incomplete, and that investors and
others basing their decisions on statements about future events
should carefully consider other uncertainties and potential
occurrences. The statements about future events contained herein
are based on the assumption that our plans and operations will not
be affected by these risks. If our plans and operations are so
affected, our statements about future events may prove to be
inaccurate. This legal notice applies expressly to all statements
about future events contained in this document. These statements
are made as of the date of this document. We do not undertake to
update these statements about future events, except when required
to do so by the applicable securities legislation.
SOURCE HRT Participações em Petróleo S.A.
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