Exxon's Brazil play
The US supermajor made a splash in Brazil's oil auction, snapping up deep-water acreage and signalling its interest in the upcoming pre-salt round
ExxonMobil's virtual absence from Brazil's prolific deep waters has long been a glaring gap in its portfolio. It took its first step to plug that gap last week, emerging as the biggest winner from last week's 14 th round oil auction.
The American supermajor made its biggest splash in the Campos Basin, which was Brazil's dominant basin before the massive pre-salt finds in the nearby Santos Basin. It snapped up 100% stakes in two blocks in the Campos, including areas with unexplored pre-salt potential. It won another six blocks in the basin bidding alongside state-owned
Petrobras, including blocks CM-346 and CM-411, which combined accounted for nearly 90% of the record 3.8bn reals ($1.2bn) in signature bonuses the round brought in.
In total, ExxonMobil put up $600m in signature bonuses, a major bet on a country that it has long overlooked.
The aggressive bidding alongside Petrobras also comes amid widespread speculation that the companies have been working on a broader strategic partnership, similar to those Petrobras has signed with Shell, Total and Statoil, which could lead to further joint projects in Brazil and beyond.
ExxonMobil's targeting of Campos Basin blocks with unexplored pre-salt potential also sets the stage for the company to be an active bidder in the 2
nd and 3 rd pre-salt focused bid rounds coming up later this month. Brazil has lifted restrictions mandating Petrobras operate all pre-salt fields, so the rounds will give foreign investors their first chance to take the lead on projects in one of the world's fastest-growing oil provinces.
In addition to the Campos Basin, ExxonMobil led a consortium including local offshore specialist
QGEP and US producer Murphy Oil that won two blocks in the prospective Sergipe-Alagoas Basin, and ExxonMobil and Murphy separately farmed into two more blocks. The deals establish a new cluster for ExxonMobil's offshore exploration efforts in an area where Petrobras has made a string of enticing discoveries, but where development has been limited.
ExxonMobil's big move into Brazil was a highlight in an otherwise mixed result for the government. The $1.2bn cash haul exceeded expectations, but fewer than 15% of areas up for auction drew winning bids, and outside of ExxonMobil interest from foreign majors was tepid.
Latin America is becoming a far more prominent region in ExxonMobil's portfolio than it has been in the past
—largely thanks to a series of investor-friendly reforms across the region over the past few years. ExxonMobil snapped up acreage in Mexico's deep waters following that country's oil opening. The company is also ramping up spending on shale projects in Argentina's Vaca Muerta play following President Mauricio Macri's liberalisation reforms. It has also notched a 1bn barrel-plus discovery off the coast of Guyana, and will be ushering the country into the club of oil-producing nations.
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