QGEP Participações SA announced yesterday (9/27) that it has closed two farm-out agreements, one with ExxonMobil and another with Murphy Oil for blocks SEAL-M-351 and SEAL-M-428 located in the Sergipe- Alagoas. In addition, QGEP and its partners acquired blocks SEAL-M-501 and SEAL-M-503 in the 14th Round of Bids of the ANP held today.

The farm-out agreements are related to the blocks, which Queiroz Galvão Exploration and Production SA, a wholly owned subsidiary of QGEP, acquired a 100% interest in the 13th ANP Bid Round in October 2015. These blocks are located in ultra-deep waters of The Sergipe-Alagoas Basin, between 80 and 100 km off the Brazilian coast.

Under the terms of the farm-out contracts, QGEP will hold a 30% stake and ExxonMobil and Murphy Oil will acquire 50% and 20%, respectively. QGEP will receive 70% of R $ 100 million in subscription bonus, amount paid upon the acquisition of the blocks. In addition, QGEP will be fully reimbursed for seismic costs, among other forms of compensation.

Building on confidence in the potential of the Sergipe-Alagoas Basin, QGEP and its partners, ExxonMobil and Murphy Oil, acquired blocks SEAL-M-501 and SEAL-M-503 in the 14th ANP Bidding Round held today. These blocks are adjacent to SEAL-M-351 and SEAL-M-428 blocks. The total value of the signing bonus for these exploration blocks is R $ 109.9 million, net R $ 33.0 million for QGEP. The consortium also committed to acquiring seismic data for the blocks.

"We are very pleased to be partnering with ExxonMobil, which will operate with 50% stake in the blocks, and Murphy Oil with a 20% stake. The quality and expertise of this partnership will ensure us to use industry best practices in this area. we believe that QGEP is very well positioned to benefit from the improved industry environment as well as the relationship we are developing with new partners, "said Lincoln Guardado.

The transaction is subject to ANP and CADE approval.