July 22 (Bloomberg) -- HRT Participacoes em Petroleo SA, the Brazilian oil company that has fallen 64 percent in 2013, plunged to a record after abandoning its third well this year.
The shares sank 15 percent to 1.71 reais at the close of trading in Sao Paulo, the lowest level since HRT’s initial public offering in 2010. Volume was 3.5 times the three-month daily average. The Ibovespa stock benchmark added 2.5 percent.
HRT is abandoning a well in in Namibia after finding no oil, according to a regulatory filing on July 19 after the stock market closed. The company already had left one dry well in the African country and another in northern Brazil’s Solimoes Basin in May.
“The question now is whether the company will have money to keep its exploration plans,” Luana Helsinger, an analyst at brokerage GBM Brasil, said in a phone interview from Rio de Janeiro. “HRT is still in a pre-operational stage. It needs to find hydrocarbons to have some expectation of cash flow.”
UBS AG recommended selling the stock after the announcement and cut its 12-month price target to 1.80 reais from 5.50 reais.
HRT, based in Rio de Janeiro, also said today it will sell its air logistics business in Amazonia, which includes six helicopters, to Erickson Air-Crane for as much as $40 million.
The deal forms part of the company’s effort to strengthen its cash position, Milton Franke, HRT’s chief executive officer, wrote in an e-mailed response to questions from Bloomberg News.
“There is an inherent risk in the business, and this is true of all the companies in the industry,” Franke wrote. “We’re continuing with our plan, taking measures to strengthen our cash.”
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