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PetroReconcavo began operations in February 2000 and is now Brazil’s largest independent onshore oil and gas exploration and production (E&P) operator in terms of daily production in barrels of oil equivalent (boe), according to the ANP.

The Company specializes in the development and rejuvenation of mature and marginal fields in onshore basins and is the operator in all of its fields.

Most of its reserves are composed of light crude, which is less common in Brazil and more valuable than heavy crude.

The 17 fields operated by PetroReconcavo are located in the Recôncavo Basin, in the state of Bahia, which contains Brazil’s largest onshore oil reserves, according to the ANP. It operates 12 of its 17 fields through an incremental production agreement with Petrobras, which will expire in 2025, with the possibility of renewal for a further 27 years. The other five fields, in which the Company retains a 100% interest, are operated in accordance with the concessions granted to them in several rounds of ANP bids, which will expire in 2031 and 2033, also with the possibility of renewal for another 27 years. The Company believes these fields have a substantial gross volume of original oil in situ, totaling approximately 499 million barrels, of which just 17,3% had been produced by December 31, 2014.

Under the terms of the production agreement, all oil and natural gas produced by the Company in the 12 fields under Petrobras concessions belongs to Petrobras and must be delivered to it. The reference price of the incremental oil delivered to Petrobras by PetroReconcavo is based on the benchmark established by the Brent Crude oil (or Brent), which is used to price approximately two-thirds of the crude traded internationally, while the reference price of the natural gas delivered to Petrobras is the average industrial-use price for this commodity in the state of Bahia.