Petrobras Energía to Absorb Petrobras Assets in Share Swap

The board of Brazil's federal energy company Petrobras (NYSE: PBR) has approved a transaction to reorganize its assets in Argentina, Petrobras said in a statement Friday.

Under the transaction, Petrobras' Argentine unit Petrobras Energía (PESA) will absorb Petrobras' Argentine distribution subsidiary Eg3, and its oil producing subsidiaries Petrobras Argentina and Petrolera Santa Fe. In return, Petrobras, through its wholly owned Spanish subsidiary Petrobras Participaciones (PPSL), will receive 230 million shares in PESA.

"These companies [Eg3 and Petrolera Santa Fe] had already been bought by Petrobras in 2002 and due to legal and ownership issues couldn't be absorbed [by PESA] before, but in reality they already form part of the Petrobras group in Argentina," PESA spokesperson Paula Totonelli told BNamericas.

"There will be various stages, it will be presented to the Buenos Aires stock market and then it needs the approval of the authorities and shareholders, so it's a process that will take at least until the end of the second quarter of 2005 to be completed," Totonelli said.

PPSL currently owns 99.6% of Eg3, 100% of Petrobras Argentina and 100% of Petrolera Santa Fe. The move will "streamline the corporate structure of Petrobras' assets in Argentina, generate synergies, provide an enhanced platform for Petrobras to pursue its Southern Cone growth strategy, and enable management to extend responsibilities over a larger portion of Petrobras' Argentine businesses in an integrated manner," the statement said.

Petrobras, through PPSL, will increase its direct and indirect share of PESA to 67.2%. Petrobras currently owns 58.6% of Petrobras Energia Participaciones (PEPSA), a holding company which owns 98.2% of PESA.

The proposed transaction is subject to the backing of PESA shareholders and the necessary regulatory approvals.

PESA's board received advice from Goldman Sachs Group and PricewaterhouseCoopers International Limited. Morgan Stanley advised and rendered a fairness opinion to Petrobras for the transaction.


Eg3 is a refining and distribution company whose assets include the Ricardo Elicabe refinery located in the Bahía Blanca complex, with a capacity of approximately 31,000 barrels a day, one lubricant plant, logistical facilities and approximately 700 service stations under the brand name Petrobras and Eg3 throughout Argentina. Petrolera Santa Fe is an oil and gas production business that has five fields in the Neuquina, San Jorge and Cuyana basins, with current production of approximately 11,100 barrels of oil equivalent per day (boe/d) and 43 million barrels of oil equivalent (boe) of proven reserves, as of December 31, 2003. Petrobras Argentina is an oil and gas production business consisting of one field in Noroeste basin, with production of approximately 7,000 boe/d and 27 million boe of proven reserves, as of end-2003.

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