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Exxon Brazil prospect found dry, partner says, in latest setback


Mon, March 28, 2022
By Sabrina Valle and Gabriel Araujo

SAO PAULO, March 28 (Reuters) - Exxon Mobil Corp failed to find oil in its first well in a new exploration area off Brazil's Northeast coast, its partner Enauta Participacoes SA said on Monday, the latest in a series of setbacks for the U.S. producer in the country.

Exxon had hoped the prospect could become its first discovery as an operator in Brazil, one of its key three bets for future production growth, along with Guyana and the U.S. Permian basin.

The disappointing news about the the so-called Cutthroat prospect in Sergipe-Alagoas Basin came just a week after Exxon's second minority partner in the venture, Houston-based oil producer Murphy Oil Corp, trumpeted its potential to yield as much as 1 billion barrels of oil and gas.

Murphy didn't immediately comment on Enauta's disclosure. Last week, Murphy said the drilling prospect had relatively low costs. Shares of Enauta fell nearly 6% following the statement saying no hydrocarbons were found at the 1-EMEB-3-SES well.

Exxon said it remains committed to its operations in Brazil, which include an interest in 28 offshore blocks.

"While we didn’t encounter hydrocarbons at this particular exploration well (Cutthroat-1), ExxonMobil will continue to integrate the data from our findings into regional subsurface interpretation efforts in order to better understand the block’s exploration potential," Exxon's spokesperson Meghan Macdonald said.

Exxon made a comeback to Brazil last year as an operator after a decade without drilling. Its first two exploratory wells in an area located 120 miles off Brazil’s southeast coast - dubbed Opal and Tita - didn't show enough potential to justify installing a platform, it told Brazil's oil operator last year.

Another block - Uirapuru - in which Exxon holds a minority stake, also came with poor results recently, according to Brazil's state-controlled oil firm Petrobras, the lead operator.

The company characterized Brazil as one of its "highest-quality growth projects" in its most recent earnings report.

The largest U.S. oil producer has been having better results in Brazil in its partnership with Norwegian oil firm Equinor ASA. Last year, it committed to investing 40% of the $8 billion https://www.reuters.com/business/energy/equinor-exxon-develop-8-bln-brazilian-oilfield-2021-06-01 needed to develop the Bacalhau offshore field. Equinor's field is set to deliver Exxon's first oil from Brazil in 2024, with an estimated 220,000 barrels of oil and gas per day.

Enauta holds a 30% stake in a total of nine clusters in Sergipe-Alagoas, while Exxon Mobil has 50% and Murphy 20% of such assets. (Reporting by Gabriel Araujo; Writing by Steven Grattan Editing by Mark Potter)