Brazil’s Petrobras unveiled one of the world’s biggest share offerings on Friday, a sale of up to US$64 billion in new stock to finance oil exploration aimed at turning Brazil into a leading oil exporter of the 21st century.
The transaction could be expanded to US$74 billion if there was heavy demand, the state-run company said.
The cash serves as the core of an ambitious plan Petrobras has already outlined to boost capital expenditure over the next five years to US$224 billion as it seeks to tap potentially vast oil reserves discovered recently off the coast of Rio de Janeiro.
PHOTO: EPA
The US$64 billion dollar target for the new share offer represents a more than 40 percent increase in the company’s capital, which on Thursday was estimated at US$150 billion.
Petrobras’s share prices rose nearly 5 percent during trading in Sao Paulo after the announcement, confirming investor confidence in the issuance and Brazil’s outlook generally.
Analysts’ predictions that the market could balk at the high price Petrobras has agreed to pay the government for new reserves in an oil-for-shares transaction seemed confounded, at least initially.
The offer would see 2.1 million common shares and 1.5 million preferred shares issued, the company said in a statement. The price of the new shares would be given Sept. 23.
Existing shareholders — including the government — will have first access to the bulk of the shares.
Petrobras estimates so-called subsalt fields offshore could more than triple its existing proven oil reserves of 14 billion barrels, catapulting Brazil into the top league of OPEC nations. Brazil is not a member of OPEC.
However, to get at the oil, Petrobras will have to overcome a series of costly technological challenges unprecedented in the oil industry. The company, a world leader in deepwater oil exploration, is confident it will be able to do so.
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