Tag: Petrobras

Sheila McNulty

Deepwater Horizon explosionThe big question for months has been what would happen if there was a significant spill in the deepwater outside the Gulf of Mexico. Following BP’s Macondo disaster, the industry worked together to build two spill response systems for this area. But nobody said what would happen if a deepwater disaster unfolded in the waters offshore Ghana or Brazil.

Now the industry has gathered together to address that question. Nine of the world’s biggest oil and gas companies – BG Group, BP, Chevron, ConocoPhillips, ExxonMobil, Petrobras, Shell, Statoil and Total have launched the Subsea Well Response Project (SWRP), an initiative designed to  enhance the industry’s capability to respond to subsea  well control incidents.

Petrobras offshore ship platformWhile Petrobras is drilling deeper than ever before beneath the seabed in its quest for nature’s wealth, above ground Brazil’s national oil company is seeking to tap further into international markets as it seeks to finance its ambitious capital expenditure plans.

The group plans to raise $30bn to $40bn by 2014. Only two weeks ago, it completed a $6bn bond offering that was Brazil’s biggest such deal. The size of the fundraising plan has left analysts wondering whether Petrobras can continue to meet its target of net debt to equity of below 35 per cent (the ratio is currently 18 per cent) without issuing new shares in the coming years.

Brazil refineryAt a year-end breakfast in Rio de Janeiro this morning, Petrobras announced a bit of pre-holiday housekeeping to help set the stage for the expansion planned over the next few years. The Brazilian state-controlled oil company will pay $850m to buy back complete control of the Refap refinery, Brazil’s fifth-largest, from Repsol.

The Spanish group is selling back its 30 per cent stake in the refinery to Petrobras for $350m, who will also take on $500m of debt to acquire full control. The purchase will allow Petrobras to press forward with new investments, as well as increase synergies, said Paulo Roberto Costa, supply director at Petrobras.

Kiran Stacey

Traditional integrated, multi-national oil companies are increasingly worried about the way in which nationalised (or part-nationalised) rivals are encroaching onto their natural territory.

One example is the way in which national oil companies (NOCs) are beginning to take an interest in upstream activities, and acquiring the kinds of technical expertise they used to rely on internationals (IOCs) to provide. Now we also know that the NOCs are outstripping the IOCs in capital spending, thanks to a new piece of research from Evaluate Energy.

According to the report, which surveyed over 50 NOCs and the top seven major IOCs, capital spending by NOCs has grown by 131 per cent from 2005 to 2009, while that by the IOCs has increased only 59 per cent in that time.

What will the election of Dilma Rousseff, Lula’s anointed successor, as president of Brazil mean for the country’s energy sector?

The short answer is that she surely owes her electoral victory to a large number of voters wanting things to change as little as possible. Brazilians are quite happy with the way things are going in the country at the moment, and Dilma, as she is known, ran on a continuity platform and is unlikely to make any radical changes in such an important area.

But she is not Lula, and some developments in the sector were already underway. The long answer, then, is that to the extent we are likely to see any changes, it is that the country’s energy sector may become more central to a national political and developmental strategy.

It is finally a done deal: Petrobras will sell about $70bn worth of shares in the biggest share issue in corporate history after enthusiastic investors asked for double that amount.

The price and size of the offer were revealed late on Thursday – the last day of bookbuilding – after a two hour meeting by video-conference from the Brazilian national oil company’s São Paulo office, joined by Sergio Gabrielli, chief executive and bankers from New York. At 29.65 Brazilian reals (US$17.25) per share, the ordinary shares are being sold at a fraction below Thursday’s stock market closing price. The preferred stock is going for R26.30.

Get ready. The world’s biggest share issue will be priced on Thursday – and the indications are it will be a resounding success, at least for the company, Petrobras, and its controlling shareholder, the Brazilian government.

Brokers and fund managers are suggesting the offer will be between 30 and 100 per cent oversubscribed. And expectations of such an oversubscription appeared to have boosted Petrobras’s shares: as of 1500 BST, they were outperforming the market in São Paulo – up 1.8 per cent.

At last — some de-equitisation.

From RNS on Tuesday:

The Board of Wellstream has noted the movement in its share price and confirms that it has received a number of preliminary approaches regarding a possible offer for the Company.

There can be no certainty that an acceptable offer will ultimately be made. A further announcement will be made in due course.

So who might these suitors be?

Petrobras’s IPO just got a little more intriguing. The Brazilian oil giant has announced that it will add another 376m shares to its offering, under an over-allocation option. That could take the IPO to a total of $79bn – three-and-a-half times the world record set by AgBank earlier this year.

The question is why. Does Petrobras think the IPO is going well or badly?

The bearish view is that demand is so low that Petrobras needs to sell the extra shares to finance its $224bn investment plan. (Thursday’s FT suggested why this may be the case: the IPO process has dissatisfied many investors, in Brazil and the US.)

Petrobras building in Rio de JanieroAs the FT reports on Thursday, many investors are unhappy about the way Petrobras and Brazil’s government, the national oil company’s controlling shareholder, have handled its forthcoming share issue, set to be the biggest ever attempted.

One measure of just how unhappy investors are is the price they have paid to rent Petrobras shares to short them in a bid to push their price down. In normal circumstances, the rate is between 1 and 2 per cent a year of their current price.

When Petrobras released the detail of its capitalisation plan on September 2, the going rate leapt to about 20 per cent. It had suddenly become hugely expensive to short Petrobras, but some investors were still eager to do so.

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