Petrobras Said to Start Asset Sale With Fields in Argentina

Petrobras Said to Start Asset Sale With Fields in Argentina

By Rodrigo Orihuela Daniel Cancel

11:48 AM BRT
March 27, 2015

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Billionaire Eduardo Eurnekian. Photographer: Scott Eells/Bloomberg

(Bloomberg) — Petroleo Brasileiro SA, the state-controlled company at the center of Brazil’s biggest corruption scandal, agreed to sell oil and natural gas fields in southern Argentina to billionaire Eduardo Eurnekian’s Corporacion America, two people with knowledge of the deal said.

The sale, the first divestment since a management overhaul at Petrobras last month, was approved by the Rio de Janeiro-based company’s board this month, the people said, asking not to be identified before the companies make an announcement as early as Monday. The fields, located in Santa Cruz province in the southern Patagonia region, are valued at about $90 million, one of the people said.

The sale process in Argentina began in September and was delayed as Petrobras became ensnared in a corruption scandal that led to the resignation of Maria das Gracas Silva Foster as chief executive officer in February. New CEO Aldemir Bendine is leading a review of investment plans and corporate governance and is seeking to increase asset sales to raise funds as the company is locked out of international credit markets.

Corporacion America’s press department in Buenos Aires declined to comment. Petrobras’ press department in Rio de Janeiro didn’t immediatelty provide a comment on the deal.

Eurnekian is looking to expand his oil and gas unit after purchasing a majority stake in Cia General de Combustibles in 2013. The 82-year-old businessmen runs the holding with several nephews encompassing industries from airports to construction.

Waning Output

Shares in Petrobras Argentina SA, the local unit, rose 2.5 percent to 8.29 pesos at 1:19 p.m. in Buenos Aires. That was the best performance among global peers tracked by Bloomberg. Argentina’s benchmark equity index declined 0.5 percent.

The Buenos Aires-based company said in its 2014 annual report that it is focusing mostly on unconventional exploration and production and drilled a first well in the vast Vaca Muerta shale formation in Neuquen province.

The company, whose net income fell 41 percent in 2014 to 458 million pesos ($56.6 million), said output fell 10 percent in the year partly due to the $40.7 million sale of its stake in the Puesto Hernandez venture with state-run YPF SA.

Petrobras appointed the top executive at iron-ore miner Vale SA, Murilo Ferreira, to lead its board as it looks to improve transparency amid allegations of political interference and corruption.

The Rio de Janeiro-based company said on March 2 it plans to sell $13.7 billion in assets in the next two years including exploration and production, supply and gas and energy divisions.

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