Batista’s OGX Said to Seek $1 Billion Petronas Deal by MayCristiane Lucchesi and Juan Pablo Spinetto
Brazilian billionaire Eike Batista is seeking to sell 40 percent of the Tubarao Martelo oil block in Brazil’s Campos Basin for $1 billion as soon next month, a person with direct knowledge of the matter said.
OGX Petroleo & Gas Participacoes SA, the oil producer controlled by Batista, is in advanced talks with Petroliam Nasional Bhd., Malaysia’s state-owned oil and natural gas company known as Petronas, said the person, who requested anonymity because the negotiations are private.
Batista, 56, is selling assets and reshuffling management teams at his interlinked commodities and logistics units amid investor concern that the billionaire’s businesses are losing access to financing. Shares at his public companies have declined as much as 90 percent in the past year after OGX cut oil output targets, erasing more than $27 billion of Batista’s personal fortune since March 2012.
OGX doesn’t comment on market speculation, its press office in Rio de Janeiro said in a statement, adding that it’s always looking for new business opportunities including possible sales of stakes in fields, or so-called farm outs. Azman Ibrahim, a Kuala Lumpur-based spokesman for Petronas, declined to comment on Batista and OGX, saying that Petronas doesn’t comment on speculation.
Petronas has been linked to Batista before with Chief Executive Officer Shamsul Azhar Abbas last month denying that it was in talks to buy a stake in OGX Petroleo & Gas as reported by Sao Paulo-based newspaper Valor Economico.
OGX rose 3.7 percent to 1.40 reais at the close of trading in Sao Paulo after gaining as much as 5.2 percent. Yields on OGX’s bonds due in 2018 fell 17 basis points to 17.65 percent.
OGX plans to start output at the Tubarao Martelo field, whose name means hammerhead shark, in the fourth quarter, it said in a March 27 presentation. The Rio de Janeiro-based company has already drilled six wells at the field and is waiting for OSX Brasil SA, Batista’s shipbuilding unit, to deliver a production vessel to begin pumping the crude.
“Brazil is quite an interesting place,” Shamsul said March 7 after Petronas reported a 57 percent decline in fourth quarter profit. “The only thing is there’s a lot of hype over the last couple of years. We need to be extra careful when we get into Brazil.”
Batista in March signed an agreement with Grupo BTG Pactual’s Andre Esteves to co-run a strategic and financial management committee for his six publicly traded companies. Batista’s holding EBX Group Co. said the agreement includes future investments in projects. At first, BTG provided EBX with $1 billion credit line, a person with direct knowledge of the accord said March 7.
Batista is seeking to sell assets to pay debt, people familiar with the matter said March 18. He used shares of his publicly traded firms as collateral for loans that helped build his commodities and energy businesses, held as units of EBX. The holding company needs money from the divestitures to finance multiple projects.
“All EBX Group’s companies have the necessary funding established for the coming years and their debt profile is largely long term,” EBX said in a statement to Bloomberg News on April 13. “There is no pressure from creditors to execute the companies’ guarantees,” it said.