Petrobas Seeking Partners in Deepwater U.S. Gulf

The BW Pioneer FPSO is anchored in over 8,000 feet of water at Petrobas’ Cascade field and is the first FPSO to produce oil and gas in the U.S. Gulf of Mexico. Photo: Petrobas USA

Brazilian state-owned oil company Petroleo Brasileiro SA, or Petrobras, is seeking a joint-venture partner to invest as much as $4 billion into the company’s deepwater drilling operations in the U.S. Gulf of Mexico, people familiar with the matter said.

Petrobras has hired Morgan Stanley to seek out potential partners for the assets, which the seller pegs at roughly $8 billion, the people said. The bank has begun sending out initial financial information to prospective buyers, including foreign and U.S. oil companies, they added.

Petrobras is looking to sell as much as 50% of its Gulf operations in a deal that would allow it to maintain control, the people said.

The asset sales are part of a previously announced plan by the Brazilian oil giant to raise nearly $15 billion to fund its five-year investment plan. Petrobras has looked to scale back its investment in the U.S. and in other overseas operations by selling assets including oil drilling blocks in the Gulf of Mexico and Brazil. In July, the company said it has increased its goal for raising revenues from asset sales to $14.8 billion, up from $13.6 billion previously, and reiterated that the sales will focus on overseas assets.

The company has provided few details on which assets it plans to sell.

Petrobras, which in Brazil unlocked one of the world’s most promising offshore oil provinces, delved deep into the Gulf of Mexico’s most challenging new region, the so-called Lower Tertiary. It found oil there in 2002.

Its Cascade-Chinook development began producing oil in February. It is being closely watched by the industry, as it’s the first to pump crude from Lower Tertiary rocks in the far-off Walker Ridge area of the Gulf, which is thick with projects by rivals Chevron Corp. and others. The fields are located about 160 miles south of Louisiana in waters more than 8,000 feet deep.

Production at the Cascade well has been ramping up quickly to 174,554 total barrels of oil in June, up from 85,348 barrels in March. Petrobras owns 100% of Cascade and 66.67% of Chinook, in partnership with France’s Total S.A. The Cascade-Chinook development was also the first in the U.S. Gulf of Mexico to pump offshore oil using a floating, production, storage and offloading vessel instead of a traditional oil platform. The so-called FPSO vessels can be easily placed in far off areas and don’t need pipelines to operate. Also, unlike pipelines, these vessels can be moved in the event of dangerous storms.

American depository shares of Petrobras closed up 3.2%, or 69 cents, at $22.13 on Friday. The stock is down 11.5% on the year.

-By Sharon Terlep, Anupreeta Das and Angel Gonzalez. (c) 2012 Dow Jones & Company, Inc.