Brazil's HRT drills third dry well offshore Namibia
BY JEFF FICK
RIO DE JANEIRO -- Brazilian oil startup HRT Participacoes em Petroleo SA said that a third well drilled in deep waters off the coast of Namibia was dry, completing a string of exploration failures that leaves the company's plans there in doubt.
HRT will analyze data from the three wells before deciding on its exploration plans for 2014 and 2015, Chief Executive Milton Franke said in a statement. Both the Moosehead and Murombe wells drilled offshore Namibia were dry, while the Wingat prospect held non-commercial volumes of oil.
The disappointing exploration results leave HRT in limbo, as the company was banking on finding oil in a region that executives said shared similarities to Brazil's pre-salt region. The area off the coast of West Africa is considered geologically similar to Brazil's Santos basin, where billions of barrels of crude oil were discovered trapped beneath a thick layer of salt deep underwater.
HRT operates 10 exploration blocks off the coast of Namibia and holds minority interest in two others.
The company's other assets include a 55% interest in 21 exploration blocks in Brazil's remote Solimoes basin. While the company has discovered natural gas in the blocks, the rugged nature of the area makes efforts to generate revenue from the discoveries complicated. HRT, partner TNK-BP and state-run energy giant Petroleo Brasileiro, or Petrobras, are studying options such as liquefied natural gas and on-site thermal power plants to turn the natural gas into cash.
HRT also recently purchased a 60% stake in the Polvo offshore heavy oil field in Brazil, which produces about 13,000 barrels of crude per day.
Despite the lack of exploration success in Namibia, Credit Suisse said last week that HRT was likely worth about 2 Brazilian reais ($0.88) a share. HRT's has about $100 million in cash on hand and plans to sell off some assets, while the Polvo field, tax credits and writedowns also create value for the company, Credit Suisse said.
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