Sao Paulo: Petroleo Brasileiro, Brazil's state-controlled oil producer, raised as much as $70 billion (Dh257 billion) in the world's largest share sale as investors bet on its plans to double output within a decade by tapping offshore fields.
Petrobras, based in Rio de Janeiro, sold 2.4 billion common shares for 29.65 reais (Dh63.35) each and priced 1.87 billion preferred stock at 26.30 reais apiece. The company sold 115 billion reais of shares and banks have an option to buy another 5 billion reais, according to a statement sent late Friday.
Petrobras is spending about $224 billion over the next five years to boost production to 5.38 million barrels a day by tapping deposits trapped under a layer of salt beneath the ocean floor.
The share sale was priced at a 2 per cent discount to Friday's close, suggesting investors are backing Petrobras's plans to overtake industry rivals such as Chevron Corp.
"Many of the other global majors are being challenged because their reserves are being depleted," said Ron Holt, chief executive officer of Hansberger Global Investors Inc, which manages $8 billion.
"If you look at the potential capital expenditures that the company has planned for the next several years, that is a very significant potential exploration project for them." The company is tapping demand for emerging-market assets to develop deposits including Tupi, the largest discovery in the Americas in three decades. The field, and the nearby Libra deposit in the so-called presalt region off the Brazilian coast, may each contain as many as 8 billion barrels of oil.
After the sale Petrobras jumped to the fourth-biggest company in the world, behind ExxonMobil Corp, Apple Inc and PetroChina Co, data compiled by Bloomberg shows. Petrobras has a market value of $214 billion, more than companies including Microsoft Corp and Wal-Mart Stores Inc.
Exploration programme
"Given Petrobras's superior asset base and growth profile versus global oils, we believe the stock should trade at a premium relative to peers," Bank of America analyst Frank McGann said in a note to clients.
Petrobras has slumped 28 per cent this year on concern the sale will cut earnings and boost state interference. After the share sale, investors will focus on Petrobras's exploration programme to exploit the discoveries, said Mirela Rappaport, who helps manage about $100 million at Investport in Sao Paulo.
Brazil will add the most oil production of any country outside the Organization of Petroleum Exporting Countries, or Opec, over the next 25 years and surpass Venezuela and Mexico to become the second-largest producer in the Americas,
