By Jeb Blount
RIO DE JANEIRO, Aug 14 (Reuters) - Brazilian oil and naturalgas producer HRT Participações SA said on Wednesdaythat liquefied natural gas is its preferred solution to move gasfrom isolated Amazon wells to paying customers.
HRT and its partner in the company's Brazilian operations,Russia's NK Rosneft' OAO, have signed letters of intent withBrazil's state-run oil company Petroleo Brasileiro SA, orPetrobras, to cooperate on projects to "monetize," orsell gas from the remote and sparsely populatedregion.
The LNG plants needed to chill natural gas to a negative 162degrees Celsius (negative 260 degrees Fahrenheit) so it can bepumped as a liquid aboard specialized ships are expensive. LNG'scosts, plus large future exploration needs in Brazil andNamibia, have prompted the company to look for partners orbuyers for stakes in individual company assets, Chief ExecutiveMilton Franke said on a conference call with investors.
To help raise the capital needed to finance such projectsand to pay for future exploration and production, HRT hiredinvestment bank Goldman Sachs Group Inc to find companiesinterested in buying a stake in HRT or shares in existing HRTsubsidiaries and other assets. Franke expects Goldman Sachs'efforts to show results by the end of the year.
A final decision on what options to use in the Amazon couldcome as early as this month.
HRT shares, which fell more than 3 percent on Wednesdaymorning after the Rio de Janeiro-based company posted a 546million real ($236 million) second-quarter loss on Tuesday, wereup 5.13 percent to 1.64 reais in the afternoon.
The stock is on track for its highest close in nearly twoweeks and its second-biggest, one-day gain in a month.
While drilling and exploration costs fell, most of the losscame from charges related to writing off and closing dry andnon-commercial wells.
Franke said it is likely that Rosneft will increase itsstake in HRT Brazil unit to 55 percent as planned and that HRTwill reduce its stake to 45 percent or less. HRT needs to reducethe risk associated with the large investments needed to fundnew gas exploration and finance the production of the oil andgas found, he said.
Franke said he is confident Rosneft's share of new capitalneeded for the Amazon operations will appear on time.
New drilling in the Amazon could happen in early 2014, hesaid.
The company also said its separate HRT Americas unit plansto complete a third well in Namibia by mid-September. TheMoosehead prospect in the Orange Basin, has a 25 percent chanceof finding commercial quantities of oil, the company said in astatement, citing Dallas-based oil resource certificationcompany DeGoyler and MacNaughton.
HRT is drilling Moosehead in partnership with Portugal'sGalp Energia SGPS SA. Two previous wells in Namibia'soffshore Walvis Basin, did not find commercial accumulations ofoil, though they reinforced the company's belief that thelittle-drilled frontier basins will eventually be an oilproducing region.
"We remain confident that the Namibia basins contain oil andgas resources," Franke said. Ocean.
New partners and investment for future drilling campaigns inNamibia will probably have to wait until 2014, he said.
"It's hard to find partners to put money into a project inthe middle of drilling."
BP (BP.)
