Petrobras, Brazil Said to Agree on Oil Reserves Price

Petroleo Brasileiro SA, Latin America’s largest company by market value, agreed in a meeting today on a price for oil reserves that it plans to buy from Brazil’s government in exchange for new stock, according to an Energy Ministry official briefed on the negotiations.

Petrobras, as the state-controlled oil producer is known, may give the price in a regulatory filing today after a meeting of the National Council for Energy Policy, said the person, who declined to be identified because an official announcement hasn’t yet been made. The official didn’t know what price Petrobras and President Luiz Inacio Lula da Silva agreed on.

Brazil will set an oil price “in the middle” of a $5-to- $12 a barrel price range after studying two reserve studies by independent auditing firms, Senator Delcidio Amaral said today in a telephone interview. Brazil will set a “fair” price for the oil, Lula said today during a speech in Brasilia.

The price for as much as 5 billion barrels of deepwater reserves will determine how much new stock Petrobras will offer minority investors in a related share sale planned for this month. The offering may be the Western Hemisphere’s biggest since at least 1999, according to data compiled by Bloomberg.

A price of $7.5 a barrel would raise $16 billion from minority shareholders and put the total sale at $54 billion, UBS analyst Lilyanna Yang wrote in an Aug. 11 report. A “worst” case of $10 a barrel would draw $5 billion in cash from investors and value the transaction at $55 billion, she said.

Petrobras Plunges

Petrobras has plunged 26 percent in Sao Paulo trading this year on concern the Rio de Janeiro-based company would pay more for the oil than it’s worth, diluting earnings per share. The company is seeking funds to help finance exploration and development of deepwater oil fields such as Tupi, the largest discovery in the Americas since Mexico’s Cantarell in 1976.

The National Council for Energy Policy met today at 3 p.m. New York time, according to Lula. Petrobras’s board is holding a meeting at about 5.30 p.m. New York time, Mirian Guaraciaba, a spokeswoman for Petrobras Chief Executive Officer Jose Sergio Gabrielli, said today by telephone from Brasilia.

Soros Sells Stock

Billionaire George Soros’s Soros Fund Management LLC, which oversees $25 billion, sold all of its Petrobras stock in the second quarter, dumping its biggest company holding. BlackRock Inc., the world’s biggest asset manager, and Banco BTG Pactual SA also sold Petrobras in the quarter, according to data compiled by Bloomberg.

Petrobras, which aims to carry out the sale by the end of this month, plans to issue enough shares to allow the government and minority investors to maintain their stakes. The sale was delayed in June as the company and the government awaited independent assessments of the reserves.

Petrobras Chief Executive Officer Jose Sergio Gabrielli said in March that the company may raise as much as $25 billion from minority investors.

Petrobras rose 97 centavos, or 3.7 percent, to 27.03 reais in Sao Paulo trading.

To contact the reporter on this story: Carla Simoes in Brasilia Newsroom at csimoes1@bloomberg.net; Peter Millard in Rio de Janeiro at Pmillard1@bloomberg.net

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