--HRT reports wider third-quarter loss, reins in exploration to
cut costs
--Oil startup expects to drill first offshore Namibia well in
first quarter 2013
--HRT expects to complete sale of stake in Namibia exploration
blocks in December
(Updates with comments from conference call.)
By Jeff Fick
RIO DE JANEIRO--Brazilian oil startup HRT Participacoes em
Petroleo SA (HRTP3.BR) reported late Monday a wider year-on-year
net loss for the third quarter, but the company is moving closer to
a sale of a stake in its Namibia assets that should help ease cash
concerns.
A topsy-turvy year has forced HRT to rein in exploration
spending to save cash, but potential deals could help ease investor
concerns about how the company will make money off prized
exploration acreage off the coast of West Africa and natural gas
discoveries in the Amazon. HRT plans to spend about 670 million
Brazilian reais ($327 million) on exploration efforts in the two
regions next year, executives said.
Speaking during a conference call with analysts, HRT America
Chief Executive Wagner Peres said the company expects to complete
the sale of a stake in its 12 offshore exploration blocks in
Namibia by December. "We have received a few offers, and we have
reached a commercial agreement for one of them," Mr. Peres said.
"We are making significant progress on this front."
HRT has made available recent processing of three-dimensional
seismic surveys to companies interested in the blocks while it
analyzes all of the offers on the table, Mr. Peres added.
The company expects to drill its first well toward the end of
the first quarter of 2013 at the Wingat prospect off the coast of
Namibia, an area that shows similar geology to Brazil's Campos
Basin, the executive added. Many of the executives who formed HRT
are familiar with the Campos Basin from previous work at state-run
energy giant Petroleo Brasileiro (PBR, PETR4.BR), which produces
more than 80% of Brazil's crude oil from the basin.
"As we speak, HRT is drill-ready," Mr Peres said. HRT Chief
Executive Marcio Rocha Mello added that the company's current
investment budget includes funding for two wells, but that total
could be increased to four wells depending on the results of the
stake sale.
HRT also holds operator stakes of 55% in 21 blocks in the
Solimoes Basin in Brazil's Amazonas state, with Russian joint
venture TNK-BP holding the remaining 45%. In October, the two
companies announced a joint study with Petrobras to evaluate how to
generate cash from neighboring natural-gas discoveries in the
remote region.
The group is evaluating "all of the alternatives that exist for
transforming or getting the gas out to market," said Milton Franke,
who heads HRT's oil and gas unit. The alternatives include
converting natural gas to liquid form, building natural-gas-fueled
power plants to produce electricity or building new pipelines, Mr.
Franke said.
HRT, meanwhile, will continue to trim costs to maintain a cash
position capable of funding its plans for at least two years,
executives said. In 2012, HRT has reduced staff by one-third, cut
outsourced employees by 40% and reduced its fleet of onshore
drilling rigs by half to two. That has trimmed HRT's daily cash
burn rate by 34% to BRL2 million per day through the first nine
months of 2012.
HRT shares traded 0.2% higher at BRL5.92 as of 1845 GMT after
reporting late Monday a net loss of BRL140.2 million versus a
BRL101.3 million loss in the year-ago quarter. While the shares
have gained more than 30% over the past month, the stock remains
down nearly 50% so far in 2012.
Write to Jeff Fick at jeff.fick@dowjones.com
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