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The U.K. supermajor BP plc (BP - Analyst Report) along with its partners Total SA (TOT - Analyst Report), Petroleo Brasileiro S.A., or Petrobras (PBR - Analyst Report) and Petrogal have emerged as winning bidders for the deepwater acreage in Brazil's National Petroleum Agency's (ANP) eleventh bidding round. This represents the first bidding round held since Dec 2008 and the first under Brazil's new petroleum law.

BP and partners will explore for oil and gas in eight deepwater blocks including FZA-M-57, FZA-M-59, FZA-M-86, FZA-M-88, FZA-M-125, and FAZ-M-127 in the Foz do Amazonas basin, BAR-M-346 in the Barreirinhas basin, and POT-M-764 in the Potiguar basin. Under the Brazilian concession regime, the companies will have the legal right to develop any commercial discovery.

BP will operate block FZA-M-59 with a 70% stake and block BAR-M-346 with a 50% stake. The next step of BP and its partners involves working with ANP to finalize the awards. The signing of the contracts is scheduled for Aug 2013.

The contract award follows BP's re-entry into Brazil’s upstream market in 2011 with its purchase of interests from Devon Energy Corporation (DVN - Analyst Report) and acquisition of interests in four Petrobras-operated deepwater blocks in Brazil's equatorial belt in 2012.

Winning these blocks will help BP in achieving its strategy of optimizing its global portfolio and repositioning itself for long-term growth. The energy giant has created a large portfolio of upstream interests in Brazil over the last two years. Currently, the company is aggressively pursuing exploration in this new acreage that presents significant upside potential over the long term.

BP’s presence in Brazil dates back to 1957. The oil giant has significant business interests in the region even after the sale. It operates in Brazil through four businesses – exploration and production (BP Energy do Brasil), biofuels (BP Biocombustíveis), aviation fuel (Air BP) and lubricants (Castrol).

BP carries a Zacks Rank #3 (Hold), which is equivalent to a short-term Hold rating.
 

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