Will Morpho unleash an Amazonian tidal wave in Brazil?

The success of the Upper Cretaceous deepwater play in the Guyana and West African basins has surged interest for its potential elsewhere. The Brazilian Equatorial Margin is still considered a frontier area with no deepwater wells drilled in the last eight years. Part of this lack of activity is related to the difficulty of getting environmental permits to start exploration activity in the area. A large discovery will be needed to be economic. But just how large will also depend on cost and fiscal factors. Per our simulation, reducing the royalty rate improves the project’s economics, and would support the risk involved in exploring in a remote location. This report provides our take regarding the permits to drill the Morpho-1 well and an overview of the actions required to make the area more attractive.