Petrobras Clarifies Sergipe Discovery Announcement

Concerning the recent news of the oil discovery in the Sergipe-Alagoas basin, Petrobras provides the following clarification:

  • The legislation in force obliges Petrobras to communicate the Brazilian Oil Agency ("ANP"), upon a 20 day prior notice, of any perforation of well for the prospecting oil that may be done. And, since past year, ANP requires the submission, in conjunction with the Notice of Well Perforation ("NPP"), of a summary of the prospect to be perforated, informing the evaluation of the company concerning the probability of success, and the expectation in relation to the volume of oil to be found in the area. It is important to stress that this information shall be submitted to ANP before the perforation of the well.
  • On November 11, 2002, Petrobras submitted to ANP the NPP related to well 1-SES-147, the first one to be perforated in the area of the Basin Sergipe-Alagoas. The summary of the prospect following the notice informs that Petrobras would test two exploitation purposes, in different levels of depth. If summed, these two intervals would result in an expectation of discovery of oil in place of 300 million of m3 (approximately 1.9 billion of barrels) of oil. Based on this volume, a geological possibility of the existence of a minimum reserve was projected at the order to 60 million of m3 (370 million of barrels) of oil. It is necessary to clarify that, in the average, only 20 to 30% of the volume of oil in place is confirmed as reserve, i.e., can be extracted.
  • However, during the perforation of the pioneer well, we verified that only the superior interval revealed the presence of oil (the volume of which is being evaluated). The perforation of the deepest interval resulted in the verification of absence of oil, frustrating the initial expectations of volume of oil in place, drastically reducing the projection in relation to the initial estimations. The information related to the result of the perforation was officially communicated to ANP on January 14, 2003.
  • On January 17, 2003, ANP was communicated of the second perforation in said area, at an adjacent geological structure (4-SES-149), with the respective evaluations of probability and expectation of volume of oil in place. This second well - identifying the presence of oil - is in the final stage of perforation. The extent of volumes discovered is still being evaluated. The communication of this discovery was made to ANP on March 6, 2003, and received by the Agency on the 10th.
  • ANP disclosed this discovery to the press confusedly and incorrectly, mixing information on the initial expectations of the first perforation, estimated even before the perforation of the well - with concrete data delivered to the Agency concerning the results of the perforation in the second well.
  • In communication to the press, ANP led to an erroneous interpretation of the data available, at the extent in which it has referred to the potential volumes (in place) as if dealing with exploitable oil reserves. Furthermore, the volume initially expected of oil in place was not confirmed upon the perforation.
  • Petrobras did not disclose said information to the public due to the fact that the studies concerning the volume of exploitable oil and the economic feasibility of the reserve are not concluded, maintaining the same position adopted for prior discoveries.