Petrobras, Pampa in Exclusive Talks for Argentine Unit Sale

  • Pampa may have to pay up to $1.5 billion: brokerage Puente
  • Assets include gasoline stations, refinery, electricity stakes

Petroleo Brasileiro SA, the world’s most indebted oil producer, is in exclusive talks to sell its Argentine unit to Pampa Energia SA.

Petrobras, based in Rio de Janeiro, and Buenos Aires-based Pampa will continue negotiating for 30 days in a deal that can be extended for the same amount of time, according to the filings sent to regulators in Brazil and Argentina on Tuesday.

The Brazilian state-run oil producer is cutting spending and selling assets after crude prices tumbled and Brazil’s biggest corruption scandal led to management changes. The producer aims to raise about $15 billion from asset sales this year.

Petrobras Argentina SA, the subsidiary that the parent failed to sell in three prior attempts, owns assets including gasoline stations, a refinery, stakes in electricity companies and drilling rights for several oil and gas fields. Petrobras Argentina’s most lucrative oil and natural gas assets are located in Neuquen province, home to the Vaca Muerta formation, the world’s second-largest shale-gas deposit.

The potential acquisition of Petrobras Argentina would be “positive” for Pampa Energia, Raymond James analyst Santiago Wesenack wrote in a Dec. 23 report. The transaction could be financed via debt issuance or sale of assets such as an electricity distributor known as Edenor. In January, Pampa created a bond shelf registration of as much as $500 million for potential future business opportunities.

Pampa, run by Marcelo Mindlin, is Argentina’s largest integrated utility company and also produces hydrocarbons through its Petrolera Pampa unit.

Stock Reaction

Petrobras rose 4.1 percent to 5.53 reais in Sao Paulo, while Pampa fell 4.3 percent in Buenos Aires.

Pampa may have to pay as much as $1.5 billion for the company, according to Juan Manuel Vazquez, the head of strategy at Buenos Aires-based brokerage Puente. The value includes Petrobras’s 67.2 percent stake in Petrobras Argentina plus an eventual tender offer by Pampa to acquire the rest of the company’s outstanding shares.

At the same time, Pampa might have to sell some assets owned by Petrobras Argentina to gain regulatory approval, such as a stake in gas pipeline Transportadora de Gas del Sur SA, Vazquez said.

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