By Brazil Stock Guide — PetroReconcavo S.A. (B3: RECV3) has completed a farm-out transaction with Mandacaru Energia S.A., transferring a 50% stake and operatorship in seven onshore oil concessions in Rio Grande do Norte state. The move strengthens their collaboration to nine shared assets under joint management.
The US$5 million deal includes a 20% upfront payment, 15% due in six months, and the remaining 65% tied to PetroReconcavo’s investment commitments over two years. The companies formalized the partnership through a Joint Operating Agreement (JOA) that will govern operations across the Potiguar Basin fields — Acauã, Baixa do Algodão, Fazenda Curral, Fazenda Malaquias, Pajeú, Rio Mossoró, and Três Marias.
Mandacaru already operates the Cardeal and Colibri fields with PetroReconcavo, having delivered a notable increase in production since assuming operatorship. The expanded venture consolidates Mandacaru’s role as a key partner in the company’s onshore revitalization strategy.
A farm-out is a common type of contract in the oil and gas industry, in which a company holding exploration or production rights (the farmor) transfers part of its interest to another firm (the farmee) that assumes the operational lead and part of the development costs. The structure allows companies to share financial risk, accelerate field investments and focus capital on higher-return assets.
The transaction marks another step in PetroReconcavo’s portfolio optimization plan, prioritizing capital efficiency and focusing on assets with stronger economic potential. “This transaction reaffirms our commitment to sustainable long-term value creation and disciplined capital allocation,” said Rafael Procaci da Cunha, Vice President of Finance and Investor Relations.