Prio shares rise after announcing the purchase of 40% of the Peregrino field, for US$ 1.9 billion (Image: Disclosure)
Even with the drop of almost 1% in oil Brent, the shares of Prio (PRIO3) operated among the biggest highs in the Ibovespa (IBOV) in the first hour of trading this Friday (27).
Around 10:30 am (Brasília time), PRIO3 rose 2.86%, to R$43.86. Follow Real Time.
Prio closed a agreement with Sinochem for the acquisition of 40% of the Peregrino field for US$1.9 billion, located in Rio de Janeiro.
After rumors at the beginning of the week, the company had already informed that it was in the process of negotiating the deal last Wednesday (25).
The other 60% of Peregrino belongs to the Norwegian oil company Equinor, which is the operator of the field.
Therefore, Equinor still has the option to exercise its preemptive right, within a period of 30 days, based on the same conditions offered by Sinochem to Prio.
The operation also needs to pass the scrutiny of the Administrative Council for Economic Defense (Cade).
No surprises
In BTG Pactual's assessment, the purchase of the stake in the Peregrino field should be “transformative” for Prio.
“The acquisition of this stake further strengthens its high-growth investment case,” says the bank.
Furthermore, the purchase should help mitigate operational risks in the medium term.
“We believe that, after accounting for oil stocks and the cash position of the company that holds Sinochem's 40% stake in Peregrino, the actual cash outlay will likely be lower, at approximately US$1.7 billion,” says the report.
Analysts also consider that the move could be the “first step” towards the acquisition of the entire asset, if Equinor decides to sell the 60% stake in the future — which the bank believes is likely.
“If this materializes, PRIO could then focus on implementing a more comprehensive redevelopment plan, driving greater efficiencies,” write analysts Pedro Soares, Henrique Pérez and Thiago Duarte.
BTG maintains the company's shares as preferred (top pick) of the sector.
Bradesco BBI and Ágora Investimentos state that the value of the transaction was below the bank and broker's initial estimate of US$2.1 billion.
For analysts, Prio should capture additional advantages with the asset related to better oil marketing and monetization of a potential R$3 billion in tax credits, linked to Sinochem's participation in the field.
They also see a further increase of up to 10% in Prio's current market value.
“We see an additional increase of R$1.00/PRIO3 for each US$4.00/barrel reduction in the Peregrino oil discount for Brent and R$1.70/PRIO3 related to the monetization of tax credits, adding up to a total increase of R$4.20/PRIO3 (or 10% of the current market value)”, write Vicente Falanga and Ricardo França.