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Brazil' s Barra Energia suspends talks to sell oil company - CEO


RIO DE JANEIRO -- Closely held Brazilian oil and natural-gas-exploration company Barra Energia has suspended talks to sell the oil company, Chief Executive Joao Carlos de Luca said in an interview Friday.

"We' re going to continue our exploration campaign," Mr. De Luca said. "We have positive expectations that we' ll be able to capture more upside from the important wells we plan to drill this year." China National Petroleum Corp., China' s largest oil producer, was in talks to buy Barra Energia in a deal valued at about $2 billion, a banker with knowledge of the transaction said in May.

Barra Energia instead expects to start drilling two wells in October that will increase the quality of its portfolio, including an extension well at the promising Carcara presalt oil prospect and at the Atlanta and Oliva heavy-oil fields, Mr. De Luca said. Barra Energia holds a 10% stake in the Carcara prospect and a 30% stake in the block containing Atlanta and Oliva.

Driving the decision to take the firm off the sale block was a shift in the outlook for Brazil' s oil and natural-gas industry, Mr. De Luca said. Brazil' s National Petroleum Agency, or ANP, held a successful auction of exploration acreage in May that generated record signing bonuses and investment commitments. Brazil also plans to hold its first auction of presalt acreage under new production-sharing agreements on Oct. 22 in Rio de Janeiro.

"The business environment has improved greatly now since the success of the [auction] in May, with many companies bidding, and the coming presalt auction," Mr. De Luca said. "Whoever has assets in the presalt today is certainly going to be more valuable in the future."

Barra Energia is currently evaluating the company' s potential participation in the presalt auction, which will sell off a single prospect in the area made famous for the billion-barrel oil discoveries made under a thick layer of salt off Brazil' s Atlantic Ocean coast.

"All possibilities are open, everything is being considered," Mr. De Luca said, adding that Barra Energia is also watching the market for any opportunities to buy up areas for sale by other oil companies.

Dow Jones Newswires



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