Sete Brasil is specialized in portfolio management of assets related to the offshore oil and gas sector in Brazil, particularly on Brazilian pre-salt, creating value to its shareholders through the strategies below:

Mitigation of risks associated to performance and alignment of interests

Sete Brasil operates through risk mitigation, specially via diversification of the extensive portfolio of assets, operators and shipyards. The Company’s business model is based on strategic partnerships with companies proficient and experienced in asset operations and whose ownership is shared between Sete Brasil and its partners. A company created to join forces with major operators, thus increasing its ability to raise capital (equity and financing) and acquire the necessary guarantees. The 29 rigs of Sete Brasil’s portfolio offers two important advantages: (i) generation of scale in order to attract interest from international shipyards for Brazil; and (ii) it provides the best alternative to mitigate the risks related to dilution between different elements.

Business Plan structured by relevant private and public financial institutions investments

Sete Brasil has a solid shareholder base, represented by its direct shareholders Petróleo Brasileiro SA - Petrobras ("Petrobras"), which owns 5% of the capital shares and the Fundo de Investimentos em Participações Sondas (“FIP Sondas”), which owns 95% of social capital, and is comprised by recognized investment institutions, banks and investment funds. The Company currently holds R$ 8.3 billion in shareholder capitalization (total committed capital). The Company has also raised more than US$ 4 billion in short-term bridge facilities with major Brazilian and international banks and R$ 1.85 billion in debentures fully subscribed by FI-FGTS.

Pre-salt development strategic positioning

The pre-salt is a recently discovered major oil province, with a total area of 149,000 km2 and high potential for oil and gas resources. With the discovery of pre-salt, the development of the oil industry has enabled generation of wealth not only in the oil sector, but through scale, across all Brazilian economy. In order to futher develop this growth, the Federal Government adopted guidelines to promote the construction of drilling rigs within Brazil by encouraging local content as to boost the country's development, particularly Brazilian shipbuilding industry, thus seeking to stimulate the technological development of the industry.

Currently, Sete Brasil is primarily responsible for implementing the construction of drilling rigs in Brazil and its respective charter to Petrobras for exploring pre-salt. The Company’s positioning in the first stage of the development of pre-salt (exploration) is unique. Sete Brasil has 28 long-term charter agreements signed with Petrobras, representing a contractual backlog of approximately US$89 billion. What’s more this does not takes into account possible additional payments related to performance bonuses and the enforcement of term extension clauses in each of the 28 charter agreements.

Benefiting from attractive growth opportunities

The global supply of deep-water drilling rigs is fairly fragmented, with a total of 40 companies involved in the ownership and management of the fleet, with the five largest contractors holding about half of all the available rigs with these characteristics.

Market demand is booming and most of the big international players don’t want to be subjected to additional risks. Thus, Sete Brasil was created as an off-balance sheet solution, with scale and contractual structure capable of mitigating risks and raise funds for platforms demand to pre-salt exploring. Contracts for charter signed by Sete Brasil have terms of 10 years (five rigs), 15 years (21 rigs) and 20 years (two rigs), well above the average of 1 to 5 years generally practiced in the international market.

In summary, the model of the Company's business for the rigs involves (i) the creation of value through the association of the Company as shareholder capital and mitigating overall risk (credit, construction, operation, etc.) with experts from companies in each sector (strategic players) responsible for assets operation; (ii) long-term contracts with forecasted cash flow; (iii) offtakers with good credit quality; and (iv) capital discipline by identifying the best sources of funds (equity and debt).

Assets that can be implemented within these guidelines and generate synergy for business of rigs itself, fitting into goals of economy and risks, may be subject to future review by the Company as potential new investment opportunities.

Last updated on 2014-09-01T11:35:47

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