Brazilian state oil company Petrobras raised US$70 billion on Thursday in the world’s biggest share offering, giving the company the financial muscle it needs to tap vast offshore oil reserves.
The Rio de Janeiro-based company sold 1.87 billion new preferred shares at 26.30 reais each, the company said in a regulatory filing. It also sold 2.4 billion new common shares at 29.65 reais each.
The cash will help fund the world’s largest oil exploration plan, which at US$224 billion from this year through 2014 aims to turn Brazil into a major energy exporter.
The record-setting stock offering, which was larger than what the company originally planned but fell short of the maximum it had filed to sell, attracted total demand of US$140 billion. The bids included US$98 billion from existing shareholders and US$42 billion from institutional investors, a source with knowledge of the transaction said.
Sovereign wealth funds from the Middle East and Asia were among the investors buying into the offering, the source said on condition of anonymity.
The offering had “tremendous demand” from US mutual funds, the source added.
Petrobras said in the filing that it may sell another 188 million new shares to meet demand in the next 30 days.
Petrobras preferred shares, the company’s most widely traded class of stock, rose 3.2 percent to 26.80 reais, outpacing a 0.7 percent rise by Brazil’s benchmark Bovespa stock index. That was the stock’s largest single-day gain since Sept. 3.
The deal, comprising a US$43 billion oil-for-shares swap with the government and the cash offer that investors settled, topped Japanese telecommunications firm NTT’s US$36.8 billion 1987 share sale and Agricultural Bank of China’s (中國農業銀行) US$22.1 billion initial public offering earlier this year.
The share sale is a boon to Brazilian President Luiz Inacio Lula da Silva as he seeks to usher his anointed successor, former chief of staff Dilma Rousseff, into office in a presidential vote on Oct. 3.
Lula, who leaves office on Jan. 1, campaigned in favor of the offering with an eye on capitalizing Petrobras, whose growing stature is a source of pride for many Brazilians and mirrors Brazil’s rise on the global stage.
The capital plan was devised by the government to give Petrobras exclusive rights to develop 5 billion barrels of oil in one of the world’s most promising energy prospects — the deep waters off Brazil’s southern coast that are believed to hold more than 50 billion barrels of crude.
Rousseff, one of the main architects of the transaction, has insisted that it will allow the state to boost its share of the total capital in Petrobras, though the government already controls a majority of the voting shares.
She led last year’s proposed overhaul of Brazil’s oil legislation to give the government greater control over new reserves and put Petrobras in all major deep-water projects, possibly stretching the company too thin.
Petrobras needs fresh cash to develop the vast reserves buried deep beneath the ocean under a layer of salt in a region known as the subsalt. Tapping those reserves could in the coming years help push Petrobras’ production above that of the world’s biggest private oil companies, including Exxon Mobil and Chevron.
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