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Executives

Milton Romeu Franke – Chief Executive Officer

Ricardo Bottas Dourado – Chief Financial Officer

Luiz Eduardo Conde – Chief Administrative Officer

Nilo Chagas Azambuja Filho – Chief Executive Officer of HRT Oil & Gas

John Anderson Willott – Chairman

Analysts

Bruno Montanari – Morgan Stanley

Diego Mendes – Itau BBA

Luana Helsinger – GBM

Luiz Carvalho – HSBC

HRT Participacoes em Petroleo SA (OTC:HRTPY) Q2 2013 Earnings Conference Call August 14, 2013 10:00 AM ET

Operator

Good morning ladies and gentlemen. Welcome to the audio conference call for the Second Quarter 2013 Results of HRT. Thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session for analysts and investors and instructions to participate will be given at that time. (Operator Instructions).

This event is also being broadcasted simultaneously over the Internet and may be accessed through HRT’s Investor Relations website at www.hrt.com.br/ir by clicking on the banner webcast second quarter 2013. As a reminder, this conference is being recorded and the presentation will be available to download shortly also through HRT’s Investor Relations website.

Before proceedings let me mention that forward-looking statements are based on the beliefs and assumptions of our HRT’s management and on information currently available to the Company. They involve risk, uncertainties and assumptions because they related future events and therefore detailed and circumstance it may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of HRT and could cause results to differ materially from those expressed in such forward-looking statements. The teleconference is attended by Mr. Milton Franke, Ricardo Bottas, Nilo Azambuja, and John [Nuevo].

I’d now like to turn the conference over to Mr. Milton Franke, CEO of HRT. Please sir, you may go ahead.

Milton Romeu Franke

Good morning, thank you all for joining HRT’s second quarter 2013 conference call. I’m very glad to be here today to lead our management in this presentation.

In this first Slide, you see – the second-quarter highlights for the corporate for Solimões Basin, our Namibia Basin, our Polvo and then the last is our financials.

For the corporate issues. You see four elements, the election of a new management for the company; Our Special Committee for these so-called strategic alternatives, or inorganic alternatives; strong cash protection and diversified shareholders base in the company. I will not enter at this time the details of the items that are on this slide.

I will pass straight to Slide 4 that is already being on the wall. In this Slide 4 we highlight that during the first quarter of 2013, we had our Fiscal Council starting its activities. We had already two meetings; these meetings we’ll call it one at each month and we recently announced that one of them the members of our Fiscal Council renounced over the last days.

Then we have an item on the appointment of a new CEO, that’s myself for HRT, a new CEO for Oil & Gas that’s Nilo Azambuja, CFO and Investor Relations that is Ricardo Bottas Dourado, and the Chief Administrative Officer that is Luiz Conde.

The last line you will see the establishment of a Special Committee to evaluate strategic alternatives and the name given to this Committee that was created at the level of our board of administration, was to study what they call inorganic options for the future of HRT. And if I pass to Slide number 5, you will see that the structure of this Committee includes Peter O’Brien and he is the Chairman of the Committee, he is a Board member, François Moreau and Joseph Ash other two members, and the Ricardo Bottas as representative of HRT Administration. So we have four members in the structure of this Committee.

On the right side you see that a list of three objectives for this Committee, the first one is in light green, potential fund downs and asset fails and this will include from the farm-out in Namibia, the farm-out in the Solimões and asset sales like our Air Amazonia, our labs and our rigs and everything will be commended by the same group in this Committee.

Then when the second group of alternatives of option, they will be looking for, they called it strategic combinations and here you are maybe talking on measures potential measures, where there is synergy found between the HRT and some other companies. And the third one is the sales of sources of further capital to be introduced in HRT. I will come back on some information about this committee in the next slides.

Let me go to Slide number 6 and 7. I will go over some corporate objectives of an important change this going on in HRT organization and ways of proceeding in common business. It said that the main objective is a strong cash protection that we will basically have all officers and managers with very clear instructions to act in such direction and it includes not only cash protection, but also the non-core divestment of opportunities we have and we normally talk only on Air Amazonia on the helicopters on the planes on our lab in Rio, but we have list of over 20 tractors, we have machine that we are evaluating if we really need them at this time, or if we should divest them the next months to come.

And for the last one its just cost reduction measures and this includes some staff lay-offs that we have already proceed and some that will come for example, when we transfer Air Amazonia to Erickson Crane this will be a reduction of 75 or 75, 76 employees. If we are able to divest our labs it will be something like 40, 44 employees reduction and this is we are really trying to build the company with around 150 employees for the future of HRT.

The same slides shows a list of eight initiatives that are listed from Solimões slow down and a reduction of investment for sometime, Namibia drilling for only three wells, we will outsourcer our fourth slots drilling slots, the transition of the Polvo field and so I will not answer many details on this you can – you may ask question with respect to specific items of this list.

If we go Slide number 7. We continue with these key objectives, and I mentioned already that I would come back with is inorganic development options for HRT. And here I just want to comment that the main goals of this group are already define, we already have Goldman Sachs incorporated in our project as global financial advisor for HRT in respect to all these opportunities, evaluation and conduction. We have a very – we are working on the timeline and the first results of this Group are expected for the fourth quarter 2013.

I pass now the word to Ricardo Bottas our CFO and he will describe a little bit about our shareholders base that I found that is very important at this time.

Ricardo Bottas Dourado

Thank you Milton, good morning everyone. As you can see for Slide 8 the vast majority of shareholders base its free float. Almost 97% of our shares are owned by diverse base of investors. In the next Slide, Slide number 9, it terms of demographic breakdown we have the majority of stakeholders base in the U.S., followed by Brazil, Europe and Canada. The percentage of the GDS Holdings have important increased it from 13% in December of 2012 to 22% at the end of the second quarter.

I will pass now the word to Nilo, to for the Solimões this presentation.

Nilo Chagas Azambuja Filho

Thank you Ricardo and good morning everybody. Regarding the well in Solimões, we it’s a drill HRT-11 to test as the reservoir and these Juruá Formation and get our cluster. The well found good reservoir, we’ve had Ricardo’s indication, but the cables that performance have recovered only formation water. The well has been abundant as dry and the results will be integrated with all geological data to evaluate the potential of their west versus east.

Slide 12 please. The other important item in Solimões’ is the gas monetization project. The project as achieved its objective in conclusion and report of which of the groups has been done. And the next steps will be Steering Committee will be held on the late August for approval of the fine report and deliberation of the next steps.

The initial studies have considered to production profile on a base case of (inaudible) date and a plus oil production of 20 years. The initial results we can say that the feasibility for monetization options have been highlight that LNG conventional as the most attractive for economic. The LNG scenarios indicate better economics for bigger gas production volumes, the query based trend show better economics and (inaudible) well for LNG the potion for power generation is available option, but we will need additional discussion regarding regulatory and environmental and option and its important to mention that all this study have been considered just a standalone project and we have not took in account at this stage any sharing potential of Petrobras facilities in the Solimões.

Next slide please. Regarding the next step in exploration in the Solimões, we are analyzing 400 square kilometers in the eastern blocks, 150, 151, 174 with new parameters 15-meter deep drills, trying to improve quality of the prospect, this strategy will enhance the mapping of the prospects for possible future drilling.

The plan for 2014, a new seismic acquisition campaign will be carried out on the southwestern portion of our concession, in order to further exploratory frontier southwards.

Now I would like to turn towards (inaudible) of exploration HRT.

Milton Romeu Franke

Thank you Nilo and good morning everyone. On Slide 15 we are starting with our Wingat prospects, the location map shows HRT’s acreage and where located. Wingat number one was our first exploration well offshore Namabia, and this well is on PEL 23, which is located in Walvis Basin, about 200 kilometers Northwest of Walvis Bay. It expired on March 25, it about our water depth of 1,000 meters, reached TD of 5,000 meters at the end of May.

On May 20, HRT announced the Wingat-1 had found oil although not in commercial quantity. The project line and map on the slide show the initial plan of the well, which was to drill to a depth of around 4,100 meters with the main objective being Albian-aged carbonate platform. The target was penetrated on depth, but its range of our quality was much less developed than originally expected, mainly consisting of fine-grained carbonate mud with low porosity.

However, due to increasing concentration of hydrocarbon shows in the lower section of the well, it was decided to drill deeper to a TD of 5,000 meters, to test the deeper map reservoir and that will remain in the basin. Information obtained from this well, allowed HRT we identify two well-developed source rocks, rich in organic carbon, both within the oil-generating window.

Also, the well encountered several thin-bedded reservoirs that were oil saturated. HRT collected four samples of this oil, with the analysis showing a light oil of about 41 degree API and GUR of 1,200. Unfortunately these reservoirs are for non-commercial, so the well was plug in demand. The well at south was drilled safely and with no environmental issues.

The next Slide – on Slide 16, the Murombe-1 location is showing on the map and first 15 kilometers east of the Wingat-1. This our second exploratory well offshore in the U.S. was also located on PEL 23 and it was started on June 1 in a water depth around 1400 basis.

In late July recent 5729 meters and with being dry hole. The seismic line and map on the slides shows well had multiple objectives with the primary theme with deeper Murombe and secondary being shallower Baobab. It well penetrate Santonian Age Baobab objective, at around 4700 meters and in contained 35 meters of net sand within a 242 meter interval above 15% N/G with an average porosity was 19%. Unfortunately the sands were water wet.

The main target below will suggest the resource potentially Murombe objective which will then anticipated to be Barremian Age, basin floor fan turbidities. This target was penetrate, but wireline log show the intervals existed of long reservoir basis of low porosity. The well-developed marine source seen in the Wingat-1 well, to the east was also present and deeper in this well. However it was found not to be optimally located to source these objectives. This well was also drill safely with Murombe environmental and such as 62 days, eight days ahead U.S. eventually.

Our Slide 17 shows the Moosehead prospect and its location. In late July early August our Transocean Marianas drilling rig was mobilize over 635 kilometers to the south in to the Orange Basin on to PEL-24 for the Moosehead-1. The third well in our drilling campaign was sought on August 6, and water just around 1,700 meters. Current drilling operation are that the 20 inch, 18 has since then at 2,700 meters and we are currently running horizon. Our anticipated to date to penetrate the target of the well is early September.

The Moosehead-1 will target Barremian carbonates and will be drilled to its total depth of 4,100 meters. The product line and map on the slide shows location and size of the prospect. The anticipated source rock for this well is the Barremian-aged interval that was proven in our Wingat and Murombe wells located to the north. There is also another potential source rock, from deeper risk section underlying Moosehead.

The Moosehead reservoirs section is projected to be a 459 meter fixed line, in a similar setting as the Brazil and Angola “pre-salt” reservoirs. The DeGolyer & MacNaughton also known as D&M an independent petroleum consulting firm assess the prospect GDF 25%, with the – and risk resource potential of over 2 billion barrel. We anticipate the well will take 53 days to drill.

The next slide shows the status of the Namibia farm-out process. The main objective of the farm-out are the contract operators with existing Namibia acreage, Africa centered exploration companies and Angola/South Africa National Oil Company or NOC. HRT is looking to reduce risk, leverage learning’s from the Wingat, Murombe wells and generate additional funding for the remaining exploration program.

The status of this process is that a selection of 14 company, who previously visited HRT have been invited to review the Wingat-1 result. Then have (inaudible) our most companies have indicated that they are unable to meet HRT’s deadline constraint or do not have 2013 budget available for an entry. While that they have successfully generated after discussions with some perspective company nothing is finalized. Efforts continue to pursue with new partners however there is a diminish likelihood of adding a partner during this drilling campaign.

With that being said important ground work has been laid to develop future partnership for drilling HRT’s plan for 2014 and beyond. This concludes the summary of HRT Africa’s well result and ongoing farm-out activities with our Namibian asset. Polvo next over to Ricardo.

Ricardo Bottas Dourado

Thank you, John. Just to give you an update on the Polvo and the transition status in the Slide 19 BP has already submitted an assignment application for the transfer for concessions rights to HRT and regulatory approval is expected to happen in the fourth quarter of 2013. HRT and BP work stream teams have been intensively working together to manage transition activity to assure safe and reliable operation to continue.

Primary focus on filed operation supply chain management and safety operations risk. Our results generated by overall to from January 1, 2013 to HRT to our reduction on the purchase price. Moving on to the financial in the Slide 21 and as can seen financial revenues went up to R$54 million from that amount R$44 million related to the exchange rates of variation, over the distinct cash plates of abroad. In same way there’s also a significant increase in financial expense, representing a total amount of R$28 million, most part from the effect of exchange rate variation over debt denominated in US dollars.

In relation to operating expense the most relevant expense in this quarter were related to write-off drilled and non-commercial well in Namibia and Solimões. As well as write-off costs subscription bonds for two blocks in Solimões that which our team decided to not to enter into the second exploration period.

Additionally, we have recognizing this quarter, non-recurring expenses with determination contracts we’ve outsourced that last for the company. In the gross amount of R$26 million, including withholding taxes and social costs. As a consequence, considering especially the expense from tangible assets written-off which our team recorded a loss for the period of R$546.

Slide 22, for the first half results financial revenues in 2013 went down do it our combination of lower availability of fund displaced in the mass markets, along with constant reduction in government interest rates during the second semester of 2012. Even considering the relevant impacts of the exchange rate over cash of growth, which was present in the previous slide, on the other there was also a significant increase in financial expenses totaling R$41 million, half part resulting from the effects of the exchange rates valuation over debt.

Net results for the first half of 2013 was negative R$645, basically due to write-off of the dry drilled it well costs already mentioned. 2012 results had a positive impact, which arose from the sale of a 45% working interest in the Solimões project to Rosneft.

Additionally, the results of the first half in 2013 was affect by some non-recurring expenses with personnel a result of recognition of the loss on stock options distributed to employees in the amount of R$25 million in the first quarter and R$26 million as a result of termination expenses with officers in the second quarter.

In the Slide 23, I would like to present to you more details about our personnel cost by projects where you can note a reduction in all companies and projects, especially in Solimões costs 36% lower. It’s very important to highlight that the personnel cost with the subsidiary write backs and Air Amazonia should be deducted. As soon as the sale process is up these two companies are concluded. Additionally these results do not consider the fact for reduction in HRT head count around 30% which accrued between July and August.

In the Slide 24, you can see the breakdown of the write-off cost recorded in this quarter of dry and non-commercial wells in Solimões Namibia, its about R$430 million as well as the costs of subscription bonus associated with two relinquished blocks in Solimões, around R$20 million.

In the Slide 25,l the company ended second quarter with a consolidated cash positions of [R$814 million] representing almost the same balance of the first quarter, due to inflows from cash calls partner in Namibia facilities or Polvo acquisition, the chart also present the evolution of the company’s liquidity considering cash collaterals given as guarantee to chart of the rig and drilling related services high risk was the Namibian exploratory campaign.

And the funds in – account to support to deal with the fee for the acquisition of the Polvo field, we expect to release most part of restricted cash after the closing of Polvo deal and the conclusion of drilling campaign in Namibia. Both forecasted to occur during the fourth quarter, such events combined with the receipt obtaining cash flows, cash costs on road maps new inflows from asset divestment and savings from the cost reduction initiatives. We improved the liquidity ratings of the company. In addition, on the right you can see the chart with the cash allocation by banks, all first level in Brazil.

The next Slide 26, present the evolution in cash flow with changing the cash balance with emphasis on recurring and recurring disbursements in flow for revenues, most of them financial revenues in flows from receivables, cash costs from Gulf Energy for Namibia campaign and from the lower to the Polvo acquisition.

In the next slide you can see break-down of disbursement by projects. This exploratory campaign costs around R$402 million referred to gross disbursements for exploration activity, drilling was allocated to intangible assets flow the cost of personal expenses third-party services and other expenses allocated to the income statement.

Disbursements for seismic of R$70 million were related to exploration activity and Solimões and Namibia basins. And we often served surveillance seismic process contracts allocated to the income statement R$29 million paid in the second quarter related to the Polvo field refer to the initial payment of 10% to BP for the purchase price in accordance with the purchase and sale agreement sale estimate. Note that the cash burn rate was reduced it from R$3.4 million in 2012 to R$2.9 million in 2013, even consider in the offshore campaign cost non-exiting 2012.

The last slide for my part in terms of financials. I would like to draw your attention to the consistent decrease of cost in Solimões’. However we notice that it was do not reach the forecasted R$0.7 million per day for the second quarter. Due to the Rosneft the Polvo is R$62 million as of June, equivalent of R$0.7 million per day.

In respect of Namibia as we have planned we increased the cash per rate in relation to the previous quarter due to the acceleration of that offshore campaign. However it still then our projections due to the two cash cost receiving from in this quarter, corresponding to their participation the first two wells.

Now I will hand you back to Milton for his final remarks.

Milton Romeu Franke

Thank you very much Ricardo. I call your attention that I think for the first time we are able to have our presentation conclude this something like 30 minutes. And to call you attention that new revenues being open for HRT’s future over the last months and to think about this if you really see that we have made progress and reducing our cost and in the shaping our company for a new future. We have worked a lot on our cash protection measures and with this I think we are introducing a new scenario for HRT, I think we can now look to the future with new eyes, with respect to our cash position. Number two, it is clear to me that in Solimões, we have a project with our gas monetization partnership with Petrobras and Rosneft and we believe in HRT that this project will lead to positive development. At this time, we can still not comment or tell you very much about the results of the project, but we see it as very positive.

The next steps are still being discussed between both three parties in both and we will come up very soon with a concrete information about this project. In Namibia, we have drilled two wells, one was non-commercial oil discovery, I think John you described it very well, the results of the wells and we are now drilling our third well and the progress of this well is still in the beginning, we are still working on this 20 inches casing I think and we expect the final results to come during September.

If everything runs according to the plan the drilling plan we have and we believe that Moosehead is a very interesting prospect and that its drilling will add information that will be very important for the future of Namibian Basin.

Finally not so much about Polvo, when things are running smoothly I think there are not so many news transition is progressing smoothly, the project documents are really in ANP for analysis and we are working on a meeting and a set of really meetings with ANP to discuss how to proceed in the project operation.

I thank you all for coming and listening to us in this call and we will be available and open for questions. Thank you very much.

Question-and-Answer Session

Operator

(Operator Instruction). Our first question comes from Mr. [Bruno Verala] from UBS.

Unidentified Analyst

Hi good morning Milton, Ricardo, Nilo and John. I have a couple of question here starting with Namibia. I wanted to understand if there is a plan for Namibian casing Moosehead well come up right, and the second related to Solimões the reasons why the company is not going to drill any wells for being like six months. And if there are any of the blocks to be return and sent to ANP and third one it was excellent share with us regarding to full acquisition in how much the acquisition price would be reduced it by the results from (inaudible).

Milton Romeu Franke

Verala, I start and then pass to Ricardo for the last question. With respect to Namibia I have said this many times already. In Brasil if you take last in our exploration in Brasil and that it have the may the question who has really this part of oil in Brasil. And how is that discovery process in Brasil Campos basin that is today our most prolific basin.

The first oil discovery was on the well number 9 and in centres it was something well number 50. And I am talking about specific basin, in the case of Namibia if I take both basins as one single unit Walvis and Orange. And Walvis is the wells we drilled in Walvis something 700 kilometers from Orange Basin.

Okay we are I think now in well number 12 so as an exploration is I am convicted that oil will be found in Namibia if its not with our Moosehead it will be with the next wells that may be drilled by 7 or Petrobras or BP or any product independent company with its active in Namibia, but is real come and if it comes with well number 20 is still will be very nice. What I think any industry can be sure of Namibians stands the Brazilians that with out plan we are really helping the process of finding oil in Namibia. It was a very technical decision to drill four wells then we reduced this to three wells. They are independent prospects to test different opportunities that we identified in the basin. And we believe that this was the right way to approach an area that is so under explored like the Namibian coastline.

So with respect to your first question, if Moosehead is not a discovery and we will be working on the wells we drilled and the information we have, we have nature to the all the seismic data acquired in the basins. And to understand what really is meant what kind of lessons learned, we have from Wingat, for example, was a non-commercialized discovery.

We are already looking that the whole area to see if the reservoirs that has not developed so well if they could be developing in neighbor areas close to Wingat. And there’ll be a much work to be done in 2014 in HRT America, working on the data we have acquired. There will be news earnings coming from well companies that have already announced that they will drill. And we will be probably coming up with more detailed plan of our what kind of plans we have for Namibia in the years to come. But we still are confident that the Namibian Basins hold oil and gas resources that somebody has to find them and I expect that it would be HRT.

John Anderson Willott

With respect to Solimões if you look a little bit on what we have produced over the last months you see that we have really identified two projects in the basin, on one hand we have the gas monetization project that has its own life and the gas monetization project is ongoing and we are full involved in every discussion and analysis, modeling that’s being done and we cannot at this time submit to A&P what we call the PADs the plans for economic assessments of the discoveries we have made before we know what – how this project will develop and this is one reason why we are not drilling at this time in the area that is the gas monetization project in the Solimões.

When we look them to the other big projects this really exploration project, we are acquiring seismic and what we did with Rosneft, TNK-BP and now with Rosneft. We came up with completely new parameters for our new seismic and we are acquiring new seismic to map new prospects that can be drilled in a near future, maybe in the beginning of 2014. and it was kind of a coincidence for us that the gas monetization project is being developed and the seismic acquisition is being conducted, not

to the real and reduce our economic financial exposure in the Solimões at the same time preparing for farm-out in the basin in both projects the gas monetization and the exploration.

I pass now to Ricardo to tell you little bit about the last question.

Ricardo Bottas Dourado

Bruno unfortunately we cannot disclose any technical and financial information from Polvo up to closing for a confidentiality agreement with BP. The only information I can provide to you now is that already mentioned in the presentation related to the payment of the first 10% of the purchase price. Okay.

Milton Romeu Franke

Then Bruno, I think you had the fourth question as with why did we return this two blocks, 219 and 220 to ANP. And the answer is very simple, even though.

Unidentified Analyst

No sorry I just wanted to some response there are additional blocks could be returned I think in the near term ANP.

Milton Romeu Franke

No, not at this time.

Unidentified Analyst

Okay great. Thank you guys.

Operator

Excuse me, our next question comes from Mr. Bruno Montanari with Morgan Stanley. Go ahead.

Bruno Montanari – Morgan Stanley

Good morning thank you very much for taking the questions. I have few questions. First, could you talk a little bit about your relationship with Rosneft, how it is going? And what is the reason for the cash flows not being met? The second question is about compensation you do mentioned you expect recoup part of some of the severance. So just wondering if there are (inaudible) clauses, how easy it will be to recoup that and finally just remind you how many employees the company has today for the different reduction have begun. Thank you.

Milton Romeu Franke

Our relationship with Rosneft won the technical side has been very good. I very intend lots of discussions we have been all the meetings with respect to the gas utilization projects with respect to our exploration project and I think we understand each are pretty well, but with acquisition of TNK-BP by Rosneft this asset changed its hands from one large company to one very large company that has still some needs to digest all these acquisitions they have made.

And the understanding we had in the beginning that difficulties they had were mainly Bureaucratic because information we had where that Rosneft is really Bureaucratic company and but we don’t have any reason to suspect that these payment will not occur in the future. So being very short we expect that these cash costs to be paid in the next weeks with no discussions. With respect to recovering certain amounts that were paid with severance I will pass it to Ricardo that can eventually comment it to you.

Ricardo Bottas Dourado

About this issue, we just received information from the Compensation Committee, also inform Audit Committee about their revision about the amounts paid to the officers. So that’s the only information I have and this issue should be discussed in the Board of Directors, so that’s the only information I have to this. Okay.

Bruno Montanari – Morgan Stanley

All right and…

Ricardo Bottas Dourado

Sorry, in terms of head counts as of June, total company has 368 people, but including 130 people from Air Amazonia and IPEX and that head count position its before our last adjustment, okay.

Bruno Montanari – Morgan Stanley

All right, thank you very much.

Operator

Excuse me; our next question comes from Mr. Diego Mendes from Itau BBA.

Diego Mendes – Itau BBA

Yes, hi guys two questions. The first one its on your O&G project, you said that it has a bad economics, so the question is if you could share with us, how much you are willing to get at the oil head and also what would be the price of O&G for the [required] consumer and the second question is related to the farm-out in Namibia, I know you commented earlier, but I didn’t get it correctly. So if you could share how the result of the second well changed to farm-out process and how the companies that where in the room reacted to the news.

Milton Romeu Franke

Diego with respect to that the economic status in side the LNG alternative other alternative so cannot advance any information to you at this time. We have 100s of pages of analysis technical engineering HSC and modeling and everything was submitted to our Steering Committee and this Steering Committee will still meet at the end of August.

And then these three companies, the member of the Steering Committee will really come up with conclusions with respect to the project how to proceed, where the next steps are and so on. With respect to the results of the second well in Namibia and farm-out or farm-down losses sure any dry well as normally negative influence, but when you ask a question a geologist they see so many important information that came for example in Wingat well and in the Murombe well with respect to sourcing capacity with respect to techniques of these rocks with respect to they have being inside oil window and we in our feeling is that we still then have what we needs to have and what the market is expecting that is commercial oil discovery, but we are coming closer and closer with wells we are drilling

With respect to this third well, it is very important to stress that if you take for example the Brazilian Basins Campos, if Campos is Walvis Basin we are now drilling in Santos, okay because its something like 700 kilometers from the first two wells, we are moving to a different basin called Orange, so it’s a completely new step of petroleum systems for sure the main sources are the same as they are the same in Campos and Santos, but the reservoirs are completely different, now we have main reservoirs the equivalents to the Santos Basin (inaudible) types in the sub-salt. So we are very positive, we are waiting with optimism the results of these well as John has stressed our drilling operations, they are being perfumed in very good times. We have been able to drill faster than we had in our plans and therefore we are saving some money for the company and we still believe that we may have an oil discovery in this Moosehead.

Diego Mendes – Itau BBA

Thank you.

Unidentified Company Representative

Okay thank you.

Operator

Excuse me; our next question comes from Ms. Luana Helsinger from GBM.

Luana Helsinger – GBM

Hi guys thank you for the call. I have two quick questions. First I would like to know if the any time line for the guarantee of forward acquisition to returns to the recurring asset. And I was wondering have more deal on Namibia’s exploratory wells like timeline for new wells with for partners. Thank you very much.

Ricardo Bottas Dourado

Luana thank you for your question. First one in terms of timeline the most part of guarantee will be relieve that at closing and on others more parts it’s related to the CS facility. So the most parts of the guarantees will be relieve that closing okay.

Luana Helsinger – GBM

Okay perfect we got.

Milton Romeu Franke

Respect to new wells in Namibia Luana and no we’ve done have asset of well to be any clear plans to additional wells. However that we are at the same time we are following up the plans of order oil companies there are active in Namibia and that drilled wells in 2014 and 2015. We are – we will be working heavily on the results we have acquired in our first three wells. So I think if you look what is going on in most basin sand around the world including Brasil you will see that drive doesn’t have only blacks and whites they are several terms of grey and we expect the life in Namibia will continue, our exploration work may include new seismic before we drilled new wells may include interchange of information with other companies. We are working on this and when we have something concluded we will inform the market. Thank you.

Luana Helsinger – GBM

Okay thank you.

Operator

Excuse me, our next question comes from Caio Carvalhal of J.P. Morgan.

Caio Carvalhal – J.P. Morgan

Hi good morning everybody. I have two questions here. The first one is related to the farm-out in farm-down actually in Solimões Basin that information in Page 6 of the report. I understand the strategy behind this. I want to remember little bit of one specific point, that is the foot and coal option that both HRT and now rough net has against it’s rather if I’m not wrong is due by early next year. I would like to know basically about it is the transition from TNK to Rosneft change anything on this point, or if it’s still valid. What type of pricing, what type of valuation would be used to value this 10%?

And if it’s correct to understand that when it was written that HRT has this fourth option it’s really that even if TNK is interested in acquiring them, after 10% of the asset if HRT can actually force the company to acquire that. And my second question and I apologize if you already said that, I just want to understand a little bit, just on specifically formation on Polvo, is that the only reason why the company is not sharing its view of the potential development of Polvo in terms of well cost, in terms of production is because the deal is not (inaudible). And if we could expect, I mean, not right after that, but a couple of time after the approval to see some development plan for approval, these are my two questions, thank you.

Unidentified Company Representative

Caio, thank you for two questions. You are right Polvo presently it still is a BP’s assent, we can only come up with information with respect to the potential of the field or even the one P none developed reserves and so on. After ANP’s decision, we expect this decision to come around 90 days from the first day they received the documentation from BP. With respect to farm-down in Solimões , yes this got input, it is still valid, there is no change with respect to this, you are right when you say that a valuation of HRT to come considered or the Solimões to be considered is a key step, we agree with that.

I will not answer in details about this, but I will tell you when we think on farm-down and we have today 55% of the Solimões in 21 blocks. We are thinking eventually and not being in the 21 blocks and we think eventually not having 44% in all blocks. So we have – we want to really decrease our exposure to the Solimões over the next years, because mainly if you look the number of wells that eventually have to be drilled in the gas monetization and the costs of any development in the gas monetization, we will be heavy money and we cannot come in with 45% or 55% of such a projects. We have to prepare for them.

Luana Helsinger – GBM

Okay, thank you.

Operator

Excuse me, our next question comes from Mr. Luiz Carvalho from HSBC.

Luiz Carvalho – HSBC

Hi, Milton, hi Nilo, hi everybody, I’ve two questions here. The first one if you could give more color and the detailing about the committee form it to update maximize value for the current shareholders what would be that and how you are going to plan to B2B mark-to-market apart from the sales of the assets that you are planning but how it's going to be in terms of the timeline and in terms of returns to the uptake in minorities now.

And the second question it would be in following up to the Caio’s question the terms of Solimões. You mentioned that the CapEx for LNG project and for additional wells would be I’d say relevant and you want to decrease that but could you give us a bit of color how do you expect that to fund your additional CapEx for the development of its project I'm not asking here for any I’d say a amount of money that you’re going to rising but much more how do you plan to financial debt. Thank you.

Milton Romeu Franke

When I started Luiz also maximized value for the shareholders just consider one very simple size or say equation that stronger cost reduction we have been able to introduce in HRT from very simple measures like I don’t have to diverse anywhere, we’ve reduced the salaries of the officers. We are revising the ways we do business everything that can be outsourced will be outsourced. And we really have a smaller and leaner company.

And hopefully more flat entrance balance. If we achieve this, you will have a more efficient oil and gas company. On the other hand we are strongly divesting assets we have invested in the past for very good reasons, but in our evaluation today we don’t need this anymore like, for example, helicopters, planes and labs with Ericsson being on our door, knocking our door to enter Brazil, through the Amazon.

This is a very interesting opportunity, the same for our company they are knocking in our door to enter the lab market we already have six or seven offers of local and international companies they want to enter Brazil, to do service, lab services. With this we can focus more our officers time and managers, we have got less managers today and in offices today than we had in the past.

On really core functions for the company and if this company is let’s say prepared our members of the Board that are including this group, have been approached already by several other companies that want to talk about HRT. There may be synergies that can be explore between ourselves that has for example to very large assets, we are very focused in our portfolio and some other companies are very unfocused in their portfolio. They have a list of assets 10, 15, 20 different assets and the merger of two companies that have a profile like our and some others could be a good decision to jointly operate in more efficient fashion in the future. So that’s well I have to tell you at this time this is an ongoing what is styling we work on a very short timeframe with help of very well prepared international group and to local group its Goldman Sachs and we are say expecting results as I said in the fourth quarter, still in the fourth quarter 2013.

Operator

Excuse me; Our next question comes from Mr. (inaudible)

Unidentified Analyst

Hi, Milton, I had a couple of question to you actually some of them are just follow ups on some of the questions have before. The first one I just wanted to understand we the message that Ricardo is putting unlocking the cash proposal, whether it was okay how to restrict that cash and its cash that I can use or if how to restrict because it has been paid BP and as a result we shouldn’t even think about it has additional funding sources. I was just wondering its been – what the motivation about what that the story of their for the future. The second question that I had how to do with something that John said and I apologize able to properly on the call. Do you mentioned something about the source rock Murombe being out of place are something I just wanted to understand what we meant by it and the form out at least Solimões’ in suitable research at timing limitation that couldn’t happen during the drilling up the wells. If you could just touch on those three points, it would be great for us. Thank you.

Milton Romeu Franke

Okay (inaudible) thank you I answer your first question then past to John to answer the first the second follow up questions. About the Polvo transition and the Polvo deal we have that cash of guarantee of the PSA to support the transition and the PSA agreement and as soon as we have the closing we receive that money current in Escrow account and the purchase price would be adjusted with the results from the assets since January first. So that’s the simple way to make the calculations, so that $135 million minus 10% will have to deduct from those amounts, the results from their asset since January and then we will loose the funds in Escrow to pay the difference that’s the simple way to make the calculation, okay.

Unidentified Analyst

Okay so part of – the money gets unlocked and part of it is related to paying BP for the acquisition anyway.

Milton Romeu Franke

That’s right

Unidentified Analyst

So we have to think about it. All right super thank you.

Ricardo Bottas Dourado

John I would like to – invite you to answer the Northern questions.

John Anderson Willott

Yes its John Willott. To clarify what you had asked on the Murombe well, it relates to the source rock to our objectives but well just proved that there just was a connectivity between the source rock and our objective and that lead to the successful results. As for the farm-out what we’ve logged that it’s very difficult to do to Compas that farm-out effort.

Unidentified Analyst

Okay.

Ricardo Bottas Dourado

Can I ask you a question?

Unidentified Analyst

Yeah no if I’m really just qualified what you said, when you said the position and relations were objective and connectivity between the objectives and source rocks over there. Do you mean source rock and Baobab, or source rock and then would be all by itself?

Ricardo Bottas Dourado

The source rock had to potential sourcing each one more likely the Baobab.

Unidentified Analyst

Okay.

Ricardo Bottas Dourado

But it has potentials sourcing Murombe.

Unidentified Analyst

Okay.

Ricardo Bottas Dourado

We are all looking for other source rocks for the Murombe, but the main problem with Murombe was that the, it was just not a reservoir.

Unidentified Analyst

Cool, sorry, perfect, I think I understood it.

Ricardo Bottas Dourado

Because I add something to you with that is normally what we see in the producing basins is that, in-between the source rocks and the reservoir rocks there are a list of what we call migration paths or migration avenues that the oil that is sourced can reach the reservoirs. And these passed they are normally false, they may be unconformities. But they have to exist to this charge acquiring and this is what Joe is mentioning. When you look to there Murombe there are some false that’s link, for example, their main source rock to Baobab reservoirs. But they are minor flows than inexpressive units.

And this analysis and answer to your question was one of the discussions we recently had I had with Joe Paul. With respect to the new basin Orange that we have some other prospects, you’ll see much larger number of falls of migration avenues, in the Orange basin then you will see in the Wingat that’s hope its really was. Thank you.

Operator

Excuse me, ladies and gentlemen. This concludes today’s question-and-answer session. I would like to invite Mr. Milton Franke to proceed with the closing remarks. Please sir, you may now go ahead.

Milton Romeu Franke

Ladies gentle men, thank you all of you for listening towards I know that time is an important commodity today I remember that final words that we know that we have important challenges over the next months and years and we are very clear towards and but we on the same time very comfortable to communicate that we are really opening new avenues for HRT’s future. I think we are able to in continuous work reduce even more our cash exposure and diversify our portfolio the key people inside a strategy we need for the future. We will be successful this is what I have to say and thank you very much.

Operator

Thank you. That does conclude the HRT audio conference for today. Thank you very much for your participation and have a good day.

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