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Eike Batista could raise another $1 billion with OGX deal

BY LUCIANA MAGALHAES

SAO PAULO -- OGX Petroleo e Gas Participacoes controlled by billionaire Eike Batista, could raise about $1 billion with the sale of stakes in some of its exploration blocks and oil fields, according to a person familiar with the situation.

The potential sale comes as Mr. Batista' s EBX group is seeking funds for massive, capital-intensive infrastructure projects with the sale of stakes in some of its most mature companies to industrial partners. Last week, Mr. Batista agreed to sell almost half of his stake in power utility MPX Energia to E.ON for at least $700 million. The German company already owns 10% of MPX and will increase its stake to more than 36%.

The reputation of Mr. Batista, who has raised billions of dollars with stock offerings over the last few years, has been dented amid growing doubts over his ability to complete ambitious projects. OGX, the flagship company of his industrial group, has failed to meet production targets and shares in many of his companies ranging from mining, real estate and shipbuilding, have taken a beating in the last months.

OGX has had talks with Lukoil Holdings and Petronas. Petronas is seen as the frontrunner in the stake sales, the person said, without providing further details.

Lukoil and Petronas didn' t immediately respond to requests for comment. In a written response, OGX said it doesn' t comment on market rumors, but it acknowledged the company is "always attentive to business opportunities and possible farm-outs" agreements in which the owner of an oil and gas lease assigns all or part of that interest to another party under specific conditions.

There is no guarantee companies will come to an agreement, but OGX’s CFO Roberto Monteiro said last month that the company was considering, among several alternatives, the sale of a stake in some of its exploration blocks and oil fields, in which it holds stakes between 70% to 100%.

OGX plans to invest $1.3 billion this year. It may also need more funds if it participates in a new auction of oil and natural gas licenses in Brazil to be held in May. The oil company ended 2012 with $1.7 billion in cash and admits that participating in such auctions, the first in Brazil since 2008, will require "financial discipline." At the end of 2012, OGX' s gross debt was around $4 billion.

Last month, Mr. Batista' s EBX group struck a strategic partnership with local banker Andre Esteves to secure financing and management support. Other companies controlled by Mr. Batista could also take new industrial partners, according to people familiar with the situation.

Last year, EBX discussed the sale of a 49% stake in gold miner AUX, to Qatar Holding, the investment house founded by the Qatar Investment Authority(QIA), for $2 billion. But unfavorable global market conditions hindered a potential transaction. While not on the horizon right now, a stake sale in AUX is still a possibility, one of the people said.

Dow Jones Newswires

04/02/2013

 

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