PetroRecôncavo considers IPO in face of wave of business in oil and gas, say sources

(Reuters) Brazilian oil company PetroRecôncavo is exploring the possibility of an initial public offering (IPO), three sources said, in a move that illustrates companies’ thirst for resources amid a wave of sales of assets in the oil and gas industry in Brazil.

The company, based in Salvador, has been working with the support of the financial consultancy Lazard on the potential listing on the São Paulo stock exchange, which would be only the second IPO of the oil sector in Brazil since 2011, according to sources, who spoke on condition of anonymity .

One of the sources highlighted that a decision on the transaction is not imminent and that the company can simply seek bank financing for eventual capital needs while looking for potential acquisitions.

PetroRecôncavo did not immediately respond to a request for comment. Lazard declined to comment.

Brazil’s oil industry has been dominated by state-owned Petrobras since the beginning, but the company has now put hundreds of assets for sale, including mature fields, in an attempt to reduce its heavy indebtedness and increase its focus on oil exploration in deep waters.

In response to this movement, a new wave of small oil companies has emerged or expanded their portfolios in the country through acquisitions.

PetroRecôncavo, founded in the 1990s, bought a set of onshore fields from Petrobras last year for US $ 384 million. It is now evaluating dozens of fields on land and shallow water being offered for sale by Petrobras, according to a source close to the subject.

Since June, Petrobras has put several assets like these for sale in the Northeast, where PetroRecôncavo operates. The combined production of these assets exceeds 50,000 barrels per day, according to documents from the divestment processes.

PetroRecôncavo, whose shareholder includes PetroSantander and Brazilian asset manager Opportunity, is responsible for the production of around 11,000 barrels of oil equivalent per day, according to information on its website. The company describes itself as “the leading independent operator focusing on mature onshore assets in Brazil”.

In November, a small and recently formed company, 3R Petroleum, went public in the first IPO of the oil sector in Brazil in almost a decade.

If PetroRecôncavo decides to go ahead with an IPO, it would probably be one of the largest listed oil companies in Brazil – currently, the company’s production is second only to Petrobras, PetroRio, focused on offshore assets, and Enauta.

Source: Reuters