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Petrobras in Nigeria: Valuation of the Agbami Oil Field April 21, 2010 Prepared by: Nikita Agarwal

Petrobras in Nigeria: Valuation of the Agbami Oil Field April 21, 2010 Prepared by: Nikita Agarwal Jacob Anjilivelil Mahesh Damodaran Jesse Schwarz Supervised by: Professor Campbell Harvey. Agenda. The current situation. Brief overview of current situation. Nigeria Politics.

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Petrobras in Nigeria: Valuation of the Agbami Oil Field April 21, 2010 Prepared by: Nikita Agarwal

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  1. Petrobras in Nigeria: Valuation of the Agbami Oil Field April 21, 2010 Prepared by: Nikita Agarwal Jacob Anjilivelil Mahesh Damodaran Jesse Schwarz Supervised by: Professor Campbell Harvey

  2. Agenda The current situation

  3. Brief overview of current situation

  4. Nigeria Politics Petrobras Current situation Oil in Nigeria Nigeria Economy Key statistics Agbami Project Petrobras

  5. Petrobras • 1998: Enters Nigeria, because of: • Deepwater oil resources • High quality “sweet” oil in Nigeria • Lower transportation cost to Brazil

  6. Petrobras Still, it leverages the scale of major commercial partnerships to enter large fields

  7. Oil in Nigeria Nigeria Politics Proved Oil Reserves Nigeria Economy Key statistics Agbami Project Current situation Petrobras

  8. Major Oil Producing countries

  9. Oil Production Stages:

  10. Nigeria in Africa

  11. Nigeria: Politics Nigeria Politics Oil in Nigeria Nigeria Economy Key statistics Agbami Project Current Situation Petrobras

  12. Nigeria Economy Nigeria: Economy Nigeria Politics Oil in Nigeria Key statistics Agbami Project Current Situation Petrobras

  13. Nigeria: Current situation

  14. Oil in Nigeria Overview: Oil Industry in Nigeria Nigeria Politics Nigeria Economy Key statistics Agbami Project Current Situation Petrobras

  15. Key Highlights

  16. Key risks within the oil industry

  17. Nigeria Economy Agbami Field Nigeria Politics Oil in Nigeria Agbami Project Key statistics Current Situation Petrobras • Location – 70 miles off the coast, 5000 feet in depth • Partners: • 68.15% - ChevronTexaco--68.15% • 18.85% - Statoil • 13% - Petrobras Other party involved: NNPC (Nigerian National Petroleum Company)

  18. FPSO

  19. FPSO

  20. Nigeria Economy Current Situation Current Situation Nigeria Politics Oil in Nigeria Key statistics Agbami Project Petrobras

  21. Current - Key uncertainties Relationships

  22. Cost of capital analysis

  23. Recommendations Petrobras should not sell its stake to Statoil. This is supported by the results of the valuation as well as strategic reasons. • Valuation: • High valuation— $1.8 billion • Base case--$1.0 billion • Low valuation-- $0.4 billion • Strategic reasons: • Value of relationships and reputation—worldwide deepwater potential, necessary to partner with large players • Despite political and economic instability in Nigeria, the country is in line with its strategic objectives

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