New ANP Resolution regulates assignment of E&P agreements and creation of collaterals over exploratory rights

On May 17, 2019, the National Agency of Oil, Natural Gas and Biofuels (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis – “ANP”) enacted Resolution ANP No. 785/2019, which regulates, among other aspects, the procedures to: assign E&P agreements; change the concessions’ operator; require waiver or replacement of performance guarantees; and changes in the corporate control of concessionaires and/or consortium members.

However, the most important aspect introduced by the Resolution is the new regulation regarding the creation of collaterals over the rights deriving from the exploration and production agreements. Such regulation brings new rules to ensure effective enforcement of such guarantees. It is expected that there will be an increase in the number of financing projects secured by reserves, known in the international industry as reserve based lending (RBL).

Among the innovations introduced, the following can be highlighted:

1. the possibility of interference by the creditor and voting in the E&P agreement as of the commencement of the debt’s enforcement;
2. the creditor’s capacity to act on behalf of the debtor within the assignment proceeding, as long as it is provided for under the guarantee instrument; and
3. the possibility of suspending the E&P agreement for up to 180 days, upon the creditor’s request,  in the case that the debtor is the operator and the agreement is in the exploration phase.

Additionally, in order to increase the recovery factor of mature fields, the new ANP Resolution also allows that in the event of assignment of such assets, both assignor and assignee may submit to ANP a new Development Plan concomitantly with the request of assignment, being able to also apply for the extension of the concession agreements’ term.

In effect, this new Resolution reinforces ANP’s effort to promote the entry of new players in the Brazilian O&G market, especially investments in mature fields, facilitating the financing of E&P projects and readjusting the Brazilian regulatory framework to the best international market practices.

Our Oil & Gas team is available for any further information on such Resolution.