Enauta Participações SA revealed a potential merger with 3R that could create a company capable of producing over 100,000 barrels per day of oil and gas. Meanwhile, 3R is contemplating merging with PetroReconcavo SA, another Brazilian oil producer. This announcement led to a 7.3% surge in 3R’s stock value, while Enauta experienced an 8.7% decline, and PetroReconcavo saw a drop of 7.8%.
Brazilian oil companies, including 3R, Enauta, and PetroReconcavo, had expanded by acquiring assets from Petroleo Brasileiro SA. However, Petrobras’ shift away from selling oil fields to raise funds has prompted smaller producers to consider consolidation. Citigroup Inc. predicts that Brazil’s upstream sector will witness increased consolidation following Petrobras’ strategic change.
Enauta’s proposal involves 3R issuing new shares in exchange for Enauta shares, with 3R shareholders owning 53% of the combined entity and Enauta shareholders holding 47%. Enauta claims the deal offers a 12% premium over 3R’s market value. Additionally, it emphasizes a seamless share exchange without the need for carve-outs or restructuring, positioning it as a superior option to PetroReconcavo’s offer.
PetroReconcavo’s proposal suggests 3R retains its offshore fields while transferring onshore assets to PetroReconcavo. The initial merger proposal between 3R and PetroReconcavo was put forth by one of 3R’s shareholders, Maha Energy, earlier in the year. Guide Investimentos analysts suggest that with the emergence of Enauta’s offer, 3R’s negotiating power may strengthen, making the outcome uncertain.
