OREANDA-NEWS. September 28, 2017. Brazil's state-controlled Petrobras and its US partner ExxonMobil swept up six deepwater blocks in an otherwise lackluster licensing round today.

The two companies submitted joint bids totaling R3.6bn ($1.12bn) for the Campos basin blocks.

The six blocks are considered to have sub-salt potential but are governed by a simple concession model contract rather than production-sharing terms that govern confirmed sub-salt acreage.

The companies bid jointly, with Petrobras holding a 50pc operating stake.

Losing bids for areas in the coveted SC-AP3 sector of the Campos basin were a fraction of those offered by the Petrobras-ExxonMobil consortium, which paid a record signing bonus of R2.24bn for the C-M-346 block and R1.2bn for the C-M-411 block, outbidding a consortium comprised of Shell and Spain's Repsol, among others. Shell-Repsol offered R443mn for C-M-346 and R66mn for C-M-411.

Petrobras and ExxonMobil's winning R30mn bid for C-M-344 was almost double Australian Karoon's bid for the same block.

"You have to remember that Petrobras is the largest company that owns the set of information about the Brazilian offshore. So we would not pay the amount we paid if we did not have information that shows it's worth it," Petrobras chief executive Pedro Parente said, adding the company had been very selective in choosing a partner.

ExxonMobil has largely steered clear of Brazil's deepwater offerings, with the exception of an ill-fated partnership with fallen Brazilian billionaire Eike Batista's bankrupt OGX in Brazil's 11th upstream licensing round in 2013.

Today?s auction was a preamble to back-to-back sub-salt tenders scheduled for 27 October. ExxonMobil is among eight firms qualified to participate in the second sub-salt round and 11 firms for the third sub-salt round.

Petrobras and ExxonMobil went unchallenged for three other Campos basin blocks: C-M-210, C-M-277 and C-M-413.

The companies' bids accounted for around 95pc of the record R3.8bn in signing bonuses the round attracted. But only 37 of the 287, or 12pc, of the blocks on offer received bids, even lower than the 14pc awarded during the disappointing 13th round in 2015.

Oil regulator ANP had hoped to award 20pc of the blocks and generate signing bonuses of around R500mn in today?s auction.

ExxonMobil led the pack with 10 blocks. In addition to the Campos blocks with Petrobras, the company paid around R63mn for 100pc stakes in two other Campos blocks, C-M-37 and C-M-67, and partnered with US independent Murphy Oil and Brazilian independent QGEP for two deepwater blocks in the Sergipe-Alagoas basin.

The Sergipe-Alagoas blocks are adjacent to two deepwater blocks QGEP was awarded in the 13th round. ExxonMobil and Murphy are expected to farm in to those blocks shortly, potentially kicking off a new exploration campaign in the basin.

Petrobras was also awarded one onshore block in the Potiguar basin, but did not bid on any other blocks.

China's state-owned CNOOC and Repsol each took one block in the shallow-water Esp?rito Santo basin.

Karoon was the sole bidder for a shallow water Santos basin block, the only one of 75 offered in the category. No bids came in for offshore Pelotas basin blocks. Among other winners was Brazilian generator Eneva, which picked up additional gas acreage.