Petrobras Raises $67 Billion in Record Share Offering, Focus Reports
Release Date: 2010-09-24
September 24th - Brazilian energy conglomerate Petroleo Brasileiro SA, colloquially known as Petrobras, has raised $67 billion in capitol in the world’s largest-ever share offering. The number eclipses the previous record of $36.7 billion, offered by Nippon Telecom and Telegraph in 1987.Petrobras was able to sell over 4 billion shares of its company, including 2.4 billion in common shares priced at 29.65 reais (17.4 USD) each, and 1.87 billion preferred shares priced at 26.30 reais (15.4 USD) each. Banks have an option to buy further stock in days to come. The series of transactions lead Petrobras to become the second-largest oil company in the world in terms of market capitalization, after first-place Exxon Mobile. By the same measure, it is now the world’s fourth-largest company overall.
Demand for Petrobras stock was fueled by speculation regarding development of its offshore oil assets. The corporation plans to spend $224 billion over the next five years to capitalize on several discoveries of immense size—including the Tupi site, which is considered the largest offshore finding in the Americas in the past three decades. Petrobras hopes to double its daily barrel output, to 3.9 million barrels, over the term of this investment period; indeed, estimates project that the Tupi field, and the nearby Libra field, may each contain up to 8 billion barrels of recoverable oil.
The Brazilian government holds a major interest in Petrobras. It acquired an equivalent of $43 billion worth of stock in the September 24th sale, by ceding the development rights to 5 billion barrels of oil in reserves. Government ownership of the company is expected to rise significantly from its previous 30% interest, to 40% or 50%. Several investors have expressed trepidation at increased governmental control, and question whether Petrobras will continue to act in the best interests of other shareholders.
Petrobras’ undeveloped reserves are located off the southeastern coast of Brazil, in a ‘pre-salt’ region. The oil is trapped under several kilometers of seawater, rock, and a resilient layer of hardened salt. If yields are significant, Brazil is poised to become one of the world’s major oil producers.
| Type: | NORMAL |
| Company: | Focus Reports |
| Country: | Switzerland |