May 27 (Bloomberg) -- Brazilian billionaire Eike Batista is planning a 5.59 billion real ($3.37 billion) initial public offering of OGX Petroleo e Gas Participacoes SA, betting the country's recent oil finds will lure investors who snubbed 20 IPOs this year.

Rio de Janeiro-based OGX, created less than a year ago, will offer 4.95 million shares for 883 reais to 1,131 reais each in Brazil and overseas, according to a statement today. OGX may increase the offer by 15 percent and sell another 741,807 shares worth as much as 839 million reais.

Batista, Brazil's richest man, is bucking a trend of IPO cancellations this year in Brazil, home to the world's best- performing equity market. Only the U.S. canceled more, according to Bloomberg data. Interest in Brazilian offshore oil soared after the announcement of the Tupi field, the largest Western Hemisphere oil find in three decades, and the possibility of 33 billion barrels in the Carioca field.

``The market is definitely not the best right now, but for the oil sector that doesn't really matter,'' said Daniel Gorayeb, chief investment analyst at Spinelli SA, a Sao Paulo- based brokerage. ``Brazil is a very attractive investment from a macro point of view, and the outlook for oil exploration in particular makes this IPO even more interesting.''

Brazil IPOs

Three Brazilian companies went public so far this year, raising 780 million reais, compared with 59 that sold 53.2 billion reais of new equity in 2007. Investors abandoned the IPO market in Brazil earlier this year after the U.S. subprime crisis increased aversion to emerging-market assets, leading to losses in shares of companies that went public last year.

So far in 2008, the value of oil-industry stock offerings rose 4 percent while the total value of all equity offerings worldwide fell 1.2 percent, according to Bloomberg underwriter rankings.

Francisco Gros, vice president of the OGX board and former chief executive officer, said in an interview April 4 that OGX may have oil reserves of 4.8 billion barrels, according to a study by DeGolyer and MacNaughton, an oil-reserve appraisal firm based in Dallas. OGX plans to start drilling wells by the end of 2008, said Gros, who is the former chief executive of Petroleo Brasileiro SA.

``We hope to announce oil discoveries as soon as 2009 and have some production activity about two years later,'' he said. The fields they bought ``are absolutely top quality.''

The banks OGX hired to manage the sale, Banco UBS Pactual SA, Credit Suisse and Banco Itau BBA, will start taking orders today and will determine the stock price June 11, the company said in the statement.

Mining to Crude

Batista, 51, also controls MMX Mineracao e Metalicos SA, an iron-ore producer, MPX Energia SA, a coal mining and electricity generation company, and LLX Logistica SA, which handles transportation infrastructure, such as mineral slurry ducts, or pipelines for iron-ore, rail services, port construction and operation and related industrial real estate.

Batista, who says he's worth $17 billion, paid $800 million in November to buy his first oil-exploration licenses off Brazil's coast. He said the investment marked a shift in strategy away from mining.

His move into crude followed the Nov. 9 announcement that the Tupi oil field, whose concession license is owned Petroleo Brasileiro,BG Plc and Galp Energia SGPS SA, may hold as many as 8 billion barrels of oil equivalent. In January, Petrobras, as the company is known, said that the nearby Jupiter field may contain similar quantities of oil and natural gas.

Pre-Salt Region

Both fields are in the so-called pre-salt region lying beneath a layer of salt in waters as much as 3,000 meters (9,840 feet) deep and below as much as 7,000 meters of seabed.

In April, Haroldo Lima, head of Brazil's oil regulator ANP, said the Carioca field, also in the oil-producing deepwater region known as the Santos Basin, may contain as many as 33 billion barrels of oil.

That would be enough to supply every refinery in the U.S. for six years, making it the third-largest oil field ever discovered. Only Saudi Arabia's Ghawar and Kuwait's Burgan fields are bigger: Ghawar holds as much as 83 billion barrels of crude, while Burgan has up to 72 billion.

Petrobras, which is drilling in Carioca, said there was no technical basis to make such an estimate.

Crude oil futures for July delivery in New York reached $135.09 a barrel on May 22, the highest since trading began in 1983. Prices have doubled in the past year.

While Batista and Gros believe their blocks contain large quantities of oil and some of the fields are in the same basins where Petrobras and other companies expect to announce new pre- salt discoveries, OGX's fields are in shallower water, Batista has said. The company hasn't yet received certification to bid for deeper water fields from the ANP, he said.

Brazil Focus

``Brazil is certainly a focus in the global oil industry,'' said Eduardo Roche, who helps manage the equivalent of about $280 million at Rio de Janeiro-based Modal Asset Management. ``Even though OGX is a new company, it's in a strong industry with the backing of someone who has gained respect in the financial markets.''

Batista said Jan. 17 he planned to raise $1.5 billion to $2 billion in the IPO of OGX, which would value the company at $12 billion to $13 billion.

After Brazilian stocks plunged in the wake of his December initial public offering of MPX stock, Batista donated his 30 percent indirect private stake in the company, worth between $800 million and $1 billion, to MPX shareholders.

He said in an interview in January that studies are also under way for building a refinery at his Port of Acu, north of Rio de Janeiro.

To contact the reporters on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net; Jeb Blount in Rio de Janeiro at jblount@bloomberg.net

Last Updated: May 27, 2008 15:01 EDT