Brazil's Petrobras Expects $1.6 Billion From Total Deal in Next Two Months -- Update
December 21 2016 - 7:25PM
Dow Jones News
By Benjamin Parkin and Jeffrey T. Lewis
RIO DE JANEIRO -- Brazilian state-run oil company Petróleo
Brasileiro SA said Wednesday its strategic alliance with France's
Total SA would bring $1.6 billion in cash in the next two months, a
much-needed boost as it struggles to unload assets and reduce its
debt burden.
Petrobras said it would sell stakes in two of Brazil's deep
water "pre-salt" oil concessions to Total and that the companies
would go into partnership on a pair of power plants and
re-gasification terminal
The deal with Total is estimated to generate about $2.2 billion
for Petrobras, the companies said. Petrobras said it expects to
receive an immediate $1.6 billion in cash when the agreement is
completed in the next 60 days.
"This alliance will offer a bright future for both companies,"
Total Chief Executive Patrick Pouyanné said at a press conference
in Rio, citing Petrobras's experience in deep water projects.
The most highly leveraged oil major in the world with $123
billion in gross debt, Petrobras has so far faltered in its goal to
sell $15.1 billion of assets by the end of the year. It was dealt a
setback this month when Brazil's federal auditing court, known as
the TCU, suspended all but five of its pending sales.
Even after accounting for the partnership, Petrobras would fall
short of that goal by around $2 billion. CEO Pedro Parente said the
difference could be added to Petrobras' $19.5 billion asset-sale
goal for 2017 and 2018, and expressed confidence that the company
would reach its target.
"We're absolutely certain that our goals have not been
compromised," he said. "We will be ready the moment the TCU is
ready."
Total will assume an operating stake one of Petrobras's pre-salt
oil blocks and take a minority stake in another.
Petrobras will also have the option of buying 20% of a block in
the Mexican portion of the Perdido Foldbelt area of the Gulf of
Mexico, which Total acquired in partnership with Exxon earlier this
year.
Brazil's Congress approved a bill in October easing restrictions
on private investment in the fields by removing a requirement that
Petrobras be the lead operator on any pre-salt concessions. The
firms announced the alliance shortly after.
Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com
(END) Dow Jones Newswires
December 21, 2016 19:10 ET (00:10 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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