Multiple Oil Finds Continue String of Success in Brazil

RIO DE JANEIRO (Dow Jones Newswires), October 1, 2008

A series of oil finds reported to Brazil's National Petroleum Agency on Tuesday demonstrated once again the immense promise the country holds for global oil companies.

In a series of filings to the ANP, Anadarko Petroleum Corp. and Brazilian state-run energy giant Petroleo Brasileiro separately said they found oil off the coast of South America's largest country.

Details about the latest discoveries were limited because of the nature of the routine filings, but the finds continued a recent string of positive discoveries offshore Brazil. Oil companies operating in Brazil are required to inform the ANP within 24 to 48 hours if any exploratory wells hit oil or gas.

On Tuesday, Petrobras notified the ANP that it had discovered oil in the BM-CAL-5 block offshore from Bahia state. Petrobras holds a 45% stake in the block, with Queiroz Galvao, El Paso Corp. and Petroserv each holding 18.3% stakes.

The discovery was made at a water depth of 495 meters. Earlier in September, Petrobras also reported finding oil in two separate wells drilled to similar depths in the BM-CAL-5 block.

In addition, the ANP also said that Petrobras reported indications of hydrocarbons in the BC-60 block in the Campos Basin. The information, however, was later removed from the ANP's Web site.

An ANP spokesman said that Petrobras was in the process of clarifying the notification.

Separately, Anadarko struck oil near where the country's first producing sub-salt well went on line earlier in September. Anadarko made the find, dubbed Wahoo, in the BM-C-30 concession in the Campos Basin. The discovery was made 25 miles southeast of Petrobras' Jubarte field.

The find was made at a water depth of 4,650 feet, with a total depth of 18,400 feet, Anadarko said. Further drilling will take the well to a total depth of 20,000 feet. In addition, a drillstem test may be done in the future.

Anadarko is lead operator in the block, with a 30% stake. Devon Energy Corp. and EnCana Brasil Petroleo Limitada each hold a 25% share, while the local unit of South Korea's SK Energy Co. Ltd. has a 20% stake. Bharat Petroleum Corp. Ltd. and Videocon Industries Ltd. (511389.BY) snapped up EnCana Corp.'s Brazil operations earlier this month for $283 million.

The Campos Basin is responsible for more than 80% of Brazil's crude oil output, with production of about 1.5 million barrels a day. Most of that production comes from layers above the salt region, as does most offshore output in the country.

The BC-60 and BM-C-30 blocks are close to the Jubarte field. Reserves at Jubarte were estimated at 570 million barrels of oil equivalent. The estimate, however, doesn't include any reservoirs in the sub-salt region.

At the start of September, Petrobras started its first sub-salt oil production at Jubarte, pumping crude from the 103A well. According to Anadarko, the Wahoo prospect shares similarities to Petrobras' 103A well.

Anadarko said that it will next move the "Deepwater Millennium" drilling ship, which made the Wahoo find, to the BM-ES-24 block for further drilling at the Serpa prospect. Drilling at Serpa was halted because of rig limitations after previously finding hydrocarbons in secondary objectives, Anadarko said.

Anadarko expects to invest a total of $150 million in Brazil exploration projects in 2008.

Independent oil producer Devon, which holds interests in nine E&P offshore concessions in Brazil, also plans further drilling in the area around the BM-C-30 find and Jubarte field.

The company will bring into service the "Deepwater Discovery" drillship in January, with a sub-saltexploratory well at the BM-C-32 block expected by mid-2009. The BM-C-32 block is 16 miles northeast of the Wahoo prospect and 11 miles southeast of Jubarte, Devon said.

Devon expects to participate in nine deepwater exploratory wells in Brazil over the next two years, including five sub-salt wells.

The discoveries cheered investors, who sent shares of all three companies higher in trading Tuesday. Petrobras shares ended up 6.7% at 34.94 Brazilian reals ($18.37). Anadarko shares jumped 8.1% to $48.51, while Devon shares advanced 3.5% to $91.20.

Copyright (c) 2008 Dow Jones & Company, Inc.

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