Brazil, Petrobras Reach $42.5 Billion Oil Deal |
| Wall Street Journal - Sep 1, 2010 |
Brazil's state-controlled oil giant Petroleo Brasileiro SA has agreed to pay the federal government $42.5 billion in stock to acquire five billion barrels of deepwater reserves, a controversial price because investors say it is more than the oil is actually worth.
Shares of Petrobras, as the company is known, have crumbled this year on investor expectations the oil company would come under government pressure to pay above market price for oil reserves it is acquiring under a recapitalization plan. Petrobras also plans to sell new shares to the public to raise an additional $25 billion in cash under the plan.
The price works out to $8.51 per barrel, more than the $6 to $7 often cited by analysts as fair market value. Setting the price is a moving target because the oil is still deep below the ocean, and it is impossible to know with certainty how much it will cost to bring it to the surface.
Read Full Article from Wall Street Journal
- Posted: 2010-09-01 20:59:20
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