Brazil's Petrobras agreed to sell 90% of its natural gas pipeline unit to a group of investors led by Canada's Brookfield Asset Management Inc. for $5.2 billion, a source with direct knowledge of the deal said on Sept. 6.
The investor group includes British Columbia's pension fund and Chinese and Singapore sovereign wealth funds CIC and GIC. The preliminary agreement will be submitted to the companies' boards and the transaction is expected to close in late September, the source said.
Petrobras declined to comment on the matter and Brookfield also declined to comment.
The deal will be the largest divestment so far in the heavily indebted oil company's asset sale plan. So far this year, Petrobras has sold $1.4 billion in assets out of a total $15.1 billion target for divestments expected by the end of next year. The sale should give a boost to downsizing efforts at Petrobras that hinge on divestments to cut the roughly-$130 billion debt burden, which is the largest of any international oil firm.
Reuters reported on May 11 that Brookfield had entered exclusive talks to acquire Nova Transportadora do Sudeste SA, or NTS, as the Petrobras subsidiary is informally known. The exclusivity period expired on Aug. 12.
NTS has nearly 1,560 miles (2,511 kilometers) of pipelines in southeast Brazil.
The talks took longer than expected because the parties and their financial and legal advisers had to agree on terms of new contracts establishing the commercial relationship between Petrobras and NTS, according to the first source and two other people with direct knowledge of the matter. All three asked not to be identified because they are not authorized to discuss the matter publicly.
During the exclusive talks, the investor group led by Brookfield raised the stake it was offering to acquire in NTS to 90% from 82%.
The investment banking unit of Banco Santander Brasil SA advised Petrobras on the deal.
Recommended Reading
Kissler: OPEC+ Likely to Buoy Crude Prices—At Least Somewhat
2024-03-18 - By keeping its voluntary production cuts, OPEC+ is sending a clear signal that oil prices need to be sustainable for both producers and consumers.
Buffett: ‘No Interest’ in Occidental Takeover, Praises 'Hallelujah!' Shale
2024-02-27 - Berkshire Hathaway’s Warren Buffett added that the U.S. electric power situation is “ominous.”
Matador Resources Announces Quarterly Cash Dividend
2024-04-18 - Matador Resources’ dividend is payable on June 7 to shareholders of record by May 17.
Matador Resources Declares Quarterly Dividend
2024-02-14 - Matador Resources will pay a $0.20 dividend on March 13 to shareholders of record by Feb. 23.
Bobby Tudor on Capital Access and Oil, Gas Participation in the Energy Transition
2024-04-05 - Bobby Tudor, the founder and CEO of Artemis Energy Partners, says while public companies are generating cash, private equity firms in the upstream business are facing more difficulties raising new funds, in this Hart Energy Exclusive interview.