The Deal: Petrobras $2.1B in Asset Sales Disappoints
NEW YORK (TheStreet) -- Brazilian oil giant Petroleo Brasileiro Petrobras
The sale included Petrobras' 35% stake in block BC-10 in the Campos Basin, known as the Parque das Conchas, to China's Sinochem for $1.54 billion.
Analysts at Tudor Pickering Holt & Co. Securities wrote in a note Monday that the sales came in lower than the firm's valuation estimates, including Petrobras stake in Parque das Conchas, which it calculated as being worth $1.7 billion. But it added that the move will help fund the seller's "massive" pre-salt capital expenditure plan.
Simmons & Co. said Monday the sales also will provide some much needed relief to Petrobras' "bloated" balance sheet, whose debt level rose to 34% of capitalization in the second quarter.
Petrobras' partners in Parque das Conchas, 50% holder and operator Royal Dutch Shell
Sinochem's purchase continues a trend of Chinese companies investing in Brazil's oil sector. In January Sinochem agreed to buy a 10% stake in five offshore oil blocks in Brazil's Espírito Santo basin from Anglo-French Perenco SA. In 2010, it agreed to pay just over $3 billion for a 40% stake in Brazil's Peregrino oilfield bought from Norway's Statoil
In addition to Parque das Conchas, Petrobras agreed to sell Petroquímica Innova SA, a maker of ethylbenzene, styrene and polystyrene for use in home appliances, packaging and fiberglass in Triunfo, to Videolar and its majority shareholder for R$870 million ($372 million) and R$23 million in debt assumption. That deal has to be cleared by shareholders as well as the Brazilian Antitrust Authority.
Petrobras also signed farm-out contracts amounting to $185 million for its 33% stake in block MC 613 (Coulomb), 100% of block GB 244 (Cottonwood) and 60% of block EW 910, all in production and in the U.S. Gulf of Mexico. It didn't name the buyers. Shell operates the Coulomb field with a 67% stake while W&T Offshore Inc. owns 40% of EW910. Those deals must clear third party preemptive rights and approval by the Bureau of Ocean Energy Management.