The 21 oil and gas exploration blocks, majority owned and operated by HRT O&G, cover an area of approximately 48,500 square kilometers, are located in the Amazon’s Solimoes basin. According to a Degolyer & MacNaughton reserves audit report, the blocks bring TNK-BP a net prospective and contingent resource of 789 Million barrels of oil equivalent (BOEs).

These include 11 discoveries, where oil and gas were tested. Initial production from the fields in the Solimoes basin is expected in 2012.

Commenting on the acquisition, Mikhail Fridman, Chief Executive Officer of TNK-BP said, “TNK-BP is pleased to have signed these agreements with HRT on the Solimoes Basin project, TNK-BP’s first venture in Brazil. The project will give the company access to significant new resources in one of the world’s fastest growing markets.

“TNK-BP is looking forward to a long and successful business partnership with HRT, as well as to new opportunities to deepen its footprint in the region,” said Fridman.

The companies intend to hold a formal ceremony and press conference in Rio De Janeiro, Brazil on 1 November, 2011 to officially mark the start of their new partnership.

TNK-BP is Russia’s third largest oil company, 50% held by BP and 50% held by the AAR Consortium (Alfa Group, Access Industries, and Renova). TNK-BP also owns close to 50% of another Russian oil and gas company, Slavneft. TNK-BP accounts for approximately 16% of Russia’s production (including its share of Slavneft). SEC proved reserves (life of field basis) were 8.794 billion boe as of December 31, 2010.

BP is one of the world’s leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.

TNK-BP is a vertically integrated oil company with a diversified upstream and downstream portfolio in Russia and Ukraine. The company’s upstream operations are located primarily in West Siberia (Khanty-Mansiysk and Yamalo-Nenets Autonomous Districts, Tyumen Region), East Siberia (Irkutsk Region), and Volga-Urals (Orenburg Region).

In 2010 the company produced on average 1.74 mboed (excluding its 50% share in Slavneft).

Andy O’Donnell, president of the Western Hemisphere for Baker Hughes said; “Baker Hughes’ new research facility on the CENPES (Centro de Pesquisas Leopoldo Americo Miguez de Mello) campus will open up a new level of collaboration with customers and Latin American universities.”

According to O’Donnell, “Together the collaboration will build a new generation of highly specialized wellbore construction tools and services to economically produce the pre-salt reservoirs in offshore Brazil.”

“The new Baker Hughes Rio Research and Technology Center in Brazil represents the next phase in the expansion of the company’s global technology network and strengthens its capability to provide local solutions,” said O’Donnell.

The Brazil center is one of 10 major research and technology facilities globally situated in the U.S., U.K., Russia, Germany and Saudi Arabia. The centers focus on providing solutions to oil and gas challenges specifically related to applications engineering and geosciences. In addition, the facilities enable Baker Hughes to provide support for field testing of new products and regional customization of existing commercial products.

By the end of 2012, the Rio Research and Technology center is expected to create 45 new jobs and the company will continue to add to its workforce by recruiting regional scientists and engineers and other professionals to the center as new projects are initiated.

Baker Hughes is already partnering with the Federal University of Rio de Janeiro and Petrobras to consult on the design, construction and operation of a full-scale laboratory drilling simulator located near the university. Baker Hughes will reproduce field-drilling conditions in a controlled environment so that the drilling process can be monitored, characterized and improved.

Baker Hughes provides reservoir consulting, drilling, formation evaluation, completions, pressure pumping and production products and services to the worldwide oil and gas industry.

Baker Hughes was formed in 1987 with the merger of Baker International and Hughes Tool Company—both founded over 100 years ago when R.C. Baker and Howard Hughes, Sr. conceived ground-breaking inventions that revolutionized the fledgling petroleum era. The company has more than 50,000 employees with operations in more than 90 countries.

The bidding process for the hiring of the drilling rigs was published on June 15 of this year and involved large world corporations.

According to HRT, the company analyzed proposals, adopting the best price and technology criteria, thus selecting the ATI-HH company, which holds the know-how and technology for use of helitransportable equipment, allowing the rigs to be assembled/disassembled in modules, in order to be transported by helicopters to operate in areas of difficult access, like the Amazon region.

The rigs have the capacity to drill up to a depth of four thousand meters. The first two rigs should arrive in the Shanghai Port, in China, in February, and the remaining ones, in March of 2012. After this delivery, the equipment is expected to arrive in Manaus within approximately two months, ready to be transported to the Support Base, and later, to the drilling site.

Andrews Technologies, Inc. (ATI) is an oilfield services company with corporate headquarters in Houston, Texas, working mostly in Mexico, China and Brazil in the Oil and Gas E&P market sector. ATI collaborates closely with Chinese oil services companies and oilfield equipment manufacturers in long-term partnership.

In the last ten years ATI has obtained contracts for seismic acquisition, drilling and related services, supply of drilling rigs and oilfield tubular goods for the US, Mexico and Brazil markets in excess of 800 Million US Dollars.

Honghua Group Ltd. (Honghua) is one of the world’s principal land rig manufacturers and the largest rig package export enterprise in China. Honghua has an annual production capacity of more than 120 rigs, specializing in R&D, engineering, manufacturing and assembly of onshore and offshore drilling equipment.

Honghua Group Ltd offers a large range of diverse drilling equipment and delivers superior technical support services through its well established global network. Honghua is a leading edge manufacturer providing new and advanced cost-efficient solutions.

HRT Participações holds one of the largest independent oil and gas exploration and production companies in Brazil. The HRT Group comprises eight main subsidiaries. The Company retains a 55% interest in 21 exploratory blocks.

The company secured a 20% participation interest from US oil company Chevron and the remaining 10% that Anglo-Dutch super major Shell held in the license, home of the Atlanta and Oliva heavy-oil fields.

In late August, Brazilian player Queiroz Galvao Exploration & Production (QGEP) penned a deal to take 30% of BS-4 from Shell.

Barra Energia president Joao Carlos de Luca noted that the acquisition is another important step in implementing the company’s strategy of building a high quality portfolio of exploration and production assets in Brazil.

BS-4 is located some 185 kilometers off the coast in water depths of approximately 1550 meters. The two fields, Atlanta and Oliva, are estimated to hold 2.1 billion barrels of oil in place.

Both QGEP and Barra Energia also recently purchased each a 10% stake in Block BM-S-8 from Shell. The block includes the Bem-Te-Vi pre-salt accumulation.

Barra Energia do Brasil Petróleo e Gás Ltda. is a newly established independent oil and gas exploration, development and production company based in Rio de Janeiro, Brazil.

The company’s main competitive edge is its technical and commercial expertise and local knowledge, which will be used to find, develop and produce hydrocarbon resources with a primary focus in the 3 most important Brazilian proven petroleum basins: offshore Santos, Campos and Espírito Santo.

The company will target high growth opportunities either in shallow or deep water, in both the post-salt play and in the new high potential pre-salt play.

In May 2010, Barra Energia announced an agreement with First Reserve Corporation, the world’s leading energy-focused private equity investor to commit US$ 500 million of equity capital to fund acquisitions and operations of the company.

In April 2011, private equity firm Riverstone Holdings LLC joined Barra Energia, to provide another US$ 500 million for the company’s investments. Riverstone is a private equity firm focused on the energy sector, and has approximately US$ 17 billion under its management, across six investment funds, being one of them the largest investment fund in the world in the area of renewable energy.

And in May 2011, other private investment funds have committed around US$ 200 million, raising the capacity of the company’s investment to nearly US$ 1.2 billion.

Brazil continues to develop the extensive Pre-salt oil and gas reserves in the Santos Basin and their largest energy company Petrobras and others are rapidly expanding their infrastructure and engineering presence in the city.

Santos Offshore Oil & Gas Expo has been held in Santos City since its 2007 launch. When it opens in October 2011, it will present 7,000nsm of exhibits and is expected to attract 18,000 visitors. The event has grown 20% in its last two editions.

Working in close partnership with the Brazilian Institute of Petroleum (IBP), Reed Exhibitions Brazil will immediately begin developing world-class content and customer value for exhibitors and attendees alike.

Globally, Reed Exhibitions produces a total of 16 upstream oil and gas and renewable energy events. The Santos Offshore event joins a wider global portfolio that includes Offshore Europe, All Energy (UK) and the World Future Energy Summit (Abu Dhabi).

In South America the event lines up alongside Brasil Offshore (Macae) and Protection Offshore (Rio de Janeiro) in Reed Brazil’s upstream energy group and Fenasucro (Ribeira Preto), Sucronor (Recife) and Agrocana (Ribeira Preto) in the ethanol sector.

Commenting on the investment, Juan Pablo de Vera, President of Reed Exhibitions Brazil, stated; “All of Reed’s staff will join with colleagues at IBP to maximize this exciting opportunity to support the continuing growth of Brazil’s oil and gas industry.”

“Reed will strive to make Santos a special part of its global energy portfolio, helping customers from around the world to discover a new market in Santos,” said Vera.

Reed Exhibitions is a division of Reed Elsevier plc, a world leading provider of professional information and workflow solutions in the Science, Legal, Medical, Risk Management and Business sectors.

Based in over 200 locations worldwide, it creates authoritative content delivered through market leading brands, enabling their customers to find the essential data, analysis and commentary to support their decisions. In 2010, Reed Elsevier made an adjusted profit before taxation of £1,279 million on turnover of £6,055 million.

The approval of this acquisition was published on the website of the National Petroleum, Natural Gas and Biofuels Agency (ANP) on September 8, 2011.

This interest was acquired from the companies Imetame Energia S.A., Delp Engenharia Mecânica Ltda. and Orteng Equipamentos e Sistemas Ltda., which maintain participation percentages of 16.67%, 16.665% and 16.665%, respectively. OGX Maranhão becomes the operator of this block in partnership with the consortium that has operated successfully for years in various Brazilian basins.

Paulo Mendonça, OGX’s General and Exploration Officer, said the acquisition reflects OGX’s interest in expanding operations in the Parnaíba Basin after the drilling of several successful exploratory wells.

As well, it strengthens OGX’s position in the region and provides important potential synergies with other discoveries that are being developed, said Mendonça.

To acquire this participation, OGX Maranhão paid the Consortium an amount equivalent to the signature bonus and expenses previously incurred.  In addition, OGX Maranhão has committed to exploration activities of this block.
With this additional concession, OGX Maranhão now holds positions in 8 onshore exploratory blocks in the Parnaíba Basin with total area exceeding 24,500 km².

OGX Maranhão expects to begin activities by acquiring seismic data for this block in the coming weeks.

OGX currently has two drilling rigs and two seismic crews accounting for more than 1,000 people working in the region. The drilling of the first production well in the Gavião Real field, which should start producing in the second half of 2012, has already been initiated.  In addition, a third onshore rig has been hired for the Parnaíba Basin.

Since its inception, in June 2007, OGX has established a leading position in the Brazilian oil and natural gas exploration and production sector by acquiring a diversified portfolio comprised of 34 exploratory blocks – 22 offshore and 12 onshore.

In November 2007, OGX raised US$1.3 billion in an equity private placement, generating capital to purchase concession rights in the Ninth Bidding Round held by the ANP (Brazilian National Petroleum Agency). In this round, OGX acquired concession rights to 21 exploratory blocks in the Campos, Santos, Espírito Santo and Pará-Maranhão basins, comprising a total area of 6,400 km².

Under the investment plans, Petrobras will raise as much as $91 billion in debt and sell up to $13.6 billion of assets as part of the spending program for 2011 through 2015, said Bloomberg.

According to Bloomberg, the Brazilian crude producer is spending more than any other major oil company to develop fields located deep beneath a layer of salt under the ocean floor that are the Western Hemisphere’s largest discoveries in about three decades.

In a statement, Petrobras said it’s “fully committed” to keeping its investment grade rating while it boosts investments on exploration, production and refining. Petrobras is increasing spending by $700 million compared with the previous five-year plan through 2014, the smallest increase in planned investments since at least 2006, indicated the Bloomberg report.

However, Petrobras didn’t give details on which assets may be sold. Last year, the company agreed to sell a refinery and gasoline stations in Argentina, noted Bloomberg.

Petrobras will raise up to $12 billion a year in net debt, excluding amortization costs. Total debt as a percentage of equity will increase to as much as 35 percent by the end of 2015, up from 17 percent at the end of the first quarter, said the report.

According to Bloomberg, some investors were expecting Petrobras to boost spending to about $250 billion, Banco Bradesco SA analyst Auro Rozenbaum wrote in a note to clients. The slowdown in spending growth and focus on profitable exploration and production projects is encouraging investors, Max Bueno, an analyst at Spinelli Corretora SA, said today in a telephone interview.

Petrobras is basing its estimated financing needs on an average Brent oil price of at least $80 a barrel for 2012 through 2015. Petrobras expects prices to average $110 a barrel this year, according to the statement. Standard & Poor’s Ratings Services affirmed the company’s BBB- corporate credit rating and revised the company’s outlook to positive on May 23, said Bloomberg.

The company increased exploration and production spending to 57 percent of the total, including $12.4 billion to develop five billion barrels of reserves it acquired from the government last year. The company trimmed spending on refineries, power plants and petrochemical projects to help contain costs, indicated Bloomberg.

Each part was bought for US$ 175 million. In the new configuration of the block, Petrobras continues to operate, with 66%, Galp keeps its 14% and there’s now Barra and Queiróz Galvão with 10% each.

João Carlos de Luca, former president of Repsol Brasil and director of Barra Energia noted that it is a privilege to be in such an important area of the country.

The consortium will begin drilling a well in the area that was named Biguá. According to De Luca, the probe is already in place and the drilling should take four months. Then, another well should be drilled. The second exploratory phase of that block ends in late 2012.

Besides Bem-Te-Vi and Biguá, there are another four or six prospects in the block, according to the director. Cesar Cainelli, vice president for exploration of Barra Energia, also explained that the concession area has a great chance to communicate with the field Abaré Oeste, found in the south of the block, but in a surrounding area, more precisely the block BM-S-9 that has Petrobras, Repsol, Sinopec and BG as partners.

Cainelli reiterated that unitization will probably be required. The advantage is that Petrobras is the operator of the two areas, he said.

Despite the entry of two new partners, the BM-S-8 is not considered one of the most promising blocks in the pre-salt. In a recent report, Credit Suisse says it does not consider that the acquisition is “very profitable”, at least for Queiroz Galvão, which is a company with shares in the stock market, unlike Barra Energia.

In a report to clients, the bank estimates that for this asset to add value will require a very successful drilling in the area, believed not to be as superior as BM-S-11 (where Petrobras has found the giants Lula and Cernambi) or BM-S-9 or the north of the cluster (Franco / Libra). The bank’s estimate is that there are 800 million recoverable barrels in the reservoirs ever found.

The 21 oil and gas exploration blocks, majority owned and operated by HRT O&G, covering an area of approximately 48,000 km2, are located in the Amazon’s Solimoes basin. According to a Degolyer & MacNaughton reserves audit report, the blocks bring today for the company a net prospective and contingent resource of 783 Million barrels of oil equivalent (BOEs).

These include 11 discoveries, where oil and gas were tested. Initial production from the fields in the Solimoes basin is expected in 2012.

According to the signed farm-out agreement, the value of the transaction will depend on the future performance of the asset. HRT will remain the operator of the Solimoes project, with TNK-BP playing a more active role during the development and production stages.

The closing of the transaction will be subject to final agreement between TNK-BP and HRT concerning operations, approval from TNK-BP and HRT boards of directors, as well as approval from Brazilian federal regulators.

Michael Fridman, executive chairman of the board of TNK-BP, reiterated the company’s delight to have successfully completed negotiations with Petra Energia regarding the farm-out agreement for the Solimoes concession in Brazil.

According to Fridman, negotiations on this project are still ongoing and a number of additional agreements have to be negotiated with the Solimoes operator and majority partner, HRT. Management hopes to have these agreements finalized before the end of August and submit the entire investment for Board approval by September, said Fridman.

TNK-BP is Russia’s third largest oil company, 50% held by BP and 50% held by the AAR Consortium (Alfa Group, Access Industries, and Renova). TNK-BP accounts for approximately 16% of Russia’s production (including its share of Slavneft). SEC proved reserves (life of field basis) were 8.794 billion boe as of December 31, 2010.

TNK-BP is a leading Russian oil company and is among the top ten privately-owned oil companies in the world in terms of crude oil production. The company was formed in 2003 as a result of the merger of BP’s Russian oil and gas assets and the oil and gas assets of Alfa, Access/Renova group (AAR).

The shareholders of TNK-BP also own close to 50% of Slavneft, a vertically integrated Russian oil company.

The block is located offshore in the Santos Basin in water depth of approximately 2,100m. Petrobras is the operator of the block with a 66% working interest while Galp holds a 14% working interest.

In accordance with Brazilian regulatory requirements, the transaction and all the applicable assignment documentation will be submitted to ANP for final approval.

Renato Bertani, CEO, said the farm-in is the first major acquisition for Barra Energia as the company executes its strategy to build a high quality portfolio of exploration and production assets in Brazil, and continues to evaluate other opportunities.

The company is striving to create a leading independent Brazilian company committed to technical excellence and ethical business practices, said Bertani.

Barra Energia’s principal investors are First Reserve Corporation and Riverstone Holdings, LLC.

Barra Energia do Brasil Petróleo e Gás Limitada is a Brazilian company focused on petroleum exploration and production in the Brazilian sedimentary basins. The company is led by Brazilian professionals highly experienced in the oil industry, both in Brazil and abroad, with financial support from the private equity firms First Reserve and Riverstone.

The main focus area of Barra Energia is offshore, including the Santos and Campos basins and the emerging pre-salt play.

First Reserve is a leading private investment firm in the energy and natural resource industries, making both private equity and infrastructure investments throughout the energy value chain. For 28 years, it has invested solely in the global energy industry, and has developed a preeminent franchise, utilizing its broad base of specialized energy industry knowledge as a competitive advantage.

The firm is currently investing its most recent private equity fund, which closed in 2009 at approximately US $9 billion and its most recent infrastructure fund which closed in 2011 at approximately US $1.2 billion. First Reserve invests strategically across a wide range of energy industry sectors, developing a portfolio that is diversified across the energy value chain, backing talented management teams and building value by building companies.

Riverstone Holdings LLC, an energy and power-focused private equity firm founded in 2000, has approximately $17 billion under management across six investment funds, including the world’s largest renewable energy fund.