Petrobras is studying whether to sell shares in its fuel distribution business to the public, as the company seeks to raise more than $15 billion in asset sales by the end of next year to cut leverage.
Brazil’s state-controlled oil producer is considering listing the subsidiary, Petrobras Distribuidora SA, or BR, in a secondary public offering, the company said in a filing late Wednesday. Other options include finding a strategic partner for the business, the company said.
The Rio de Janeiro-based producer, formally known as Petroleo Brasileiro SA, could sell a 49 percent stake to an international oil company or financial investor for $3.1 billion to $4.7 billion, Bank of America Corp. said in a research report. Petrobras may look to retain control of the division, analysts Frank McGann and Vicente Falanga Neto said.
Petrobras is focusing on boosting production and trimming its leverage after becoming the world’s most indebted oil company. On Monday it raised its target for asset sales and cut spending and output goals by at least a third, scaling back investment in refineries that have become the subject of Brazil’s biggest corruption scandal.
An eventual listing of the fuel business would take place on the Novo Mercado, a section of the BM&FBovespa with higher standards of corporate governance, Petrobras said.
“BR Distribuidora is a very visible business for Petrobras and is a core part of the company’s image in Brazil,” the Bank of America analysts wrote. “Assuming that this is followed by concrete moves to sell additional assets, we expect this could be an important catalyst for the stock.”
Shares of Brazil’s top oil producer rose 2.6 percent to
12.49 reais at 11:10 a.m. in Sao Paulo, leading gains among major Brazilian stocks.
BR controls the largest gasoline station network in Brazil, with about 8,000 units and more than 1,000 convenience stores. It also sells fuels including diesel and ethanol.
The business generated revenue of 120.6 billion reais ($38 billion) last year, according to Petrobras’s annual earnings release. UBS Group AG valued the unit at $10 billion in a June 12 research note.
Petrobras is planning $42.6 billion in divestments and restructuring in 2017 and 2018 and boosted expected asset sales to $15.1 billion for 2015 and 2016, it said on Monday. The company is also looking to progressively reduce its debt ratio through 2020, it said.