Brazil’s Petrobras to raise $64.5 billion in stock sale-the biggest in history

Brazil's state-controlled oil company, Petroleo Brasileiro SA, (Petrobras) today said that it will raise $64.5 billion by selling new stock to fund its massive $224 billion five-year oil exploration investment plan, the biggest ever in the history of the oil industry.

The offer, which would be the largest stock sale in capital markets history, could go as high as $74.7 billion if the 'greenshoe' option is exercised by the underwriters.

Petrobras, Latin America's largest oil company, will offer 1.59 billion new preferred shares to raise $25.4 billion and 2.17 billion new common shares to raise $39.2 billion. The sale includes state-backed oil-for-shares swap worth $43 billion, the oil major said in a regulatory filing today.

Petrobras said that it expects to begin bookbuilding from today, 3 September, and price the share sale on 23 September.

If the $64.5 billion stock sale by Perobras goes through, it would dwarf the $22.1 billion IPO by Agricultural Bank of China in July 2010, (See: China's Agricultural Bank raises $19.2 billion from Hong Kong and Shanghai IPO) and the $36.8 billion share sale by Japanese mobile phone company NTT DoCoMo in 1987.

Petrobras is raising money to fund the development of its Tupi offshore oil field in the Santos Basin, (See: Petrobras may emerge among top oil producers with new oil find in Santos Basin) which company engineers had in 1998 put the Tupi find at an estimated $20 trillion on an estimated reserve of more than 100 billion barrels of oil at a market price of $200 a barrel.

Brazil's 12.6-billion barrels of proven oil reserves could nearly be doubled with the Tupi and Iara find thereby slowly moving towards recovering the unofficial estimated oil reserves contained in the subsalt band.