France's Perenco Delays IPO Of Brazil Unit For 60 Days
02 July 2011 - 10:35AM
Dow Jones News
The Brazilian unit of French oil and natural gas company Perenco
said late Friday that it was delaying its initial public offering
for up to 60 days because of market conditions.
Perenco's planned $511 million IPO succumbed to market
volatility after the European Union debt crisis and concerns about
sluggish economic growth turned global financial markets on their
collective ears in recent weeks. Markets appeared to get a reprieve
earlier this week, when Greek lawmakers averted the trade bloc's
first-ever debt default by passing a package of austerity
measures.
Current market conditions could also lead the company to revise
its offer terms, Perenco said in the regulatory filing. Perenco,
which was in the bookbuilding process for the offer, also said that
it would cancel existing orders and refund investors who had
already made deposits on the prospective shares.
Volatile markets also claimed a separate share offer late
Friday. Brazilian sugar producer Tereos Internacional (TERI3.BR), a
subsidiary of France's Tereos Group, canceled plans for a $368
million follow-on offer.
Oil and natural gas exploration companies, especially, have
faced a tough time coming to market in Brazil recently. In
November, Karoon Gas Australia Ltd. (KAR.AU) faced a similar
dilemma when it canceled plans to raise about $773 million from the
IPO of its Brazilian unit.
The depth of the debt problems in Europe were just starting to
surface when Karoon canceled the IPO, at the time citing market
conditions and a downturn in interest in Brazil's oil and natural
gas sector. Like Perenco, Karoon is considered a pure exploration
play because it doesn't yet have any production assets in
Brazil.
Perenco operates five offshore exploration blocks in the
Espirito Santos Basin, in partnership with independent driller OGX
Petroleo e Participacoes (OGXP3.BR, OGXPY), part of billionaire
Brazilian Eike Batista's industrial empire. The blocks could hold
645 million barrels of oil, according to preliminary estimates made
by consultants DeGolyer & MacNaughton.
The company said that it will use proceeds from the share sale
to fund its exploration activities, including seismic data
gathering. In addition, the company could use the funds to acquire
exploration assets in Brazil. Brazil will offer fresh offshore
concessions later this year, when the National Petroleum Agency
will hold its 11th round auction of exploration and production
blocks.
Perenco's decision could also affect the IPO planned by
PetroReconcavo SA, which is scheduled for later this year.
PetroReconcavo was created in 1999, and produces oil and natural
gas from onshore fields in the northern Brazil state of Bahia.
-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085;
jeff.fick@dowjones.com
--Rogerio Jelmayer in Sao Paulo contributed to this report.
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