Australia-based Karoon Energy has reached an agreement with Petróleo Brasileiro (Petrobras) for amending the payment terms of their previously announced $665m deal for the former’s acquisition of the Baúna field offshore Brazil.

The company’s subsidiary Karoon Petróleo e Gás has signed a binding agreement with the Brazilian national oil company to split the consideration into two installments. The first installment is $380m of firm payment while the second is a contingent installment of $285m to be paid by Karoon Energy until 2026.

Baúna field has been producing since 2013

The Baúna field, which has been in production since 2013, is located in the BM-S-40 concession area in shallow waters in the Santos Basin, off the coast of the state of São Paulo. Fully-owned by Petrobras, the light oil field has a current production output of nearly 16,000 barrels of oil per day via the FPSO Cidade de Itajaí.

Petrobras said that the amended changes to the deal signed in July 2019 have been made owing to the impact caused by the Covid-19 crisis and the difficulty to address the previously set conditions for closing the deal.

The Brazilian energy company said: “This transaction is in line with the portfolio optimization strategy and the improvement of the company’s capital allocation, increasingly concentrating its resources in deep and ultra-deep waters, where Petrobras has demonstrated great competitive edge over the years.”

For Karoon Energy, the signing of the amended agreement follows the completion of a strategic review of the options available to it under the present global health and economic situations.

The Australian oil and gas company said that the main conclusion of its review was that pursuing its previously announced Southern Santos Basin strategy offered the best outcome for its shareholders. The first step under the strategy was to negotiate and sign a revised deal to acquire the Baúna field, said the company, which added that the amended terms simplify and considerably de‐risk the deal.

Karoon Energy managing director Robert Hosking said: “Despite the changed environment, this revised agreement delivers the benefits we always wanted from acquiring a producing asset including immediate cash flow, reasonable terms, management of risk, and opportunity for the future.

“Karoon has assessed several opportunities as part of its broad ranging strategic review and this revised deal for Baúna has proven the best outcome for shareholders on an overall valuation and returns basis.

“Karoon is always looking to create value wherever it can be found for its investors and we will continue to work towards delivering Karoon’s operational plan to expand its production footprint in Baúna and surrounds, including Neon.”

In October 2019, Karoon Energy said that Karoon Petróleo e Gás signed a senior secured term loan facility of up to $275m, which was fully underwritten by ING Bank’s Singapore branch.