Brazilian Oil and Gas Company PetroReconcavo Acquires Stake in Natural Gas Midstream Assets

Brazilian oil and gas company Petroreconcavo has signed a purchase and sale agreement (PSA) with 3R Potiguar, a subsidiary of compatriot player Brava Energia, for the acquisition of a stake in natural gas midstream assets located in Brazil’s State of Rio Grande do Norte.

Under the deal announced in December 2024, PetroReconcavo will get a 50% interest in the infrastructure that includes two natural gas processing units, each with a processing capacity of 1.5 million cubic meters (cbm) per day. One is in operation (NGPU III) and one hibernated (NPGU II).

Additionally, the deal encompasses liquefied petroleum gas (LPG) spheres situated within the Industrial Asset of Guamaré (IAG), as well as the gas pipeline connecting Brava’s producing fields to the IAG.

These assets form part of the Potiguar cluster – 22 concessions of onshore and shallow water fields Brava Energia’s predecessor 3R purchased from Petrobras in 2022.

A total of $65 million for the transaction is set to be paid in installments: 10% on the date of execution of the agreement (June 5, 2025), 25% within 10 business days from the approval of the transaction by Brazil’s Antitrust Authority, Conselho Administrativo de Defesa Econômica (CADE), and 50% at closing, subject to the satisfaction of certain conditions precedent.

Finally, the remaining 15% is payable in installments, once certain milestones related to the real estate transfer process are completed. Petroreconcavo said it is analyzing the possibility of contracting new financing to cover up to 100% of the value of the transaction.

Establishment of Operations Committee and Joint Operating Agreement

The agreement outlines the establishment of an operations committee with members from both companies, with Brava acting as the operator of the consortium. The body will be entrusted with establishing budgetary, cost and efficiency principles for the assets’ operation.

The process will be regulated by a joint operating agreement (JOA), which will become effective at the closing of the transaction. Furthermore, the utilities and services from the Industrial Asset of Guamaré, which support the operation of the UPGNs, are set to be shared.

Long-Term Gas Purchase Commitment

Additionally, the deal sets forth the execution of a long-term gas purchase commitment, under which Brava will purchase natural gas from PetroReconcavo. This entails purchase of 75,000 cubic meters (cbm) per day from July 1, 2025, then 150,000 cbm per day from 2026 to 2030, and finally going back to the initial 75,000 cbm per day in the first half of 2031.

The deal follows a binding partnership agreement laying down the conditions for the acquisition that the Brazilian duo signed in December 2024.

It also builds on the memorandum of understanding (MoU) PetroReconcavo signed with 3R Petroleum Óleo e Gás, which subsequently merged with Enauta to form Brava Energia. The deal entailed negotiations relating to the sharing of natural gas infrastructure in the Potiguar Basin.