October 25, 2019 / 3:50 PM / 24 days ago

UPDATE 2-Petrobras floats exiting Braskem via share sale

(Recasts with Braskem stake sale)

By Gram Slattery and Marta Nogueira

RIO DE JANEIRO, Oct 25 (Reuters) - Brazil’s state-run oil company Petroleo Brasileiro SA is studying exiting its stake in Braskem SA via a share offering, an executive said on Friday, the latest in a series of proposals to separate itself from the petrochemical firm.

Anelise Lara, head of Petrobras’ downstream division, divulged the potential share offering, which she said was being considered alongside more traditional M&A options, at a press conference after the company’s third quarter results.

Petrobras, as the company is widely known, has long been trying to reduce its stake in Braskem as part of a wider push to sharpen its focus on offshore oil production. But its plans have hit a number of snags, as Braskem battles regulatory and legal issues.

Under the possible plan, Lara said Braskem shares would be consolidated into one class. Those shares would then migrate to the Novo Mercado segment of the Sao Paulo stock exchange, which demands higher governance standards, but generally fetches a premium for its constituents.

Petrobras, which holds a nearly 40% stake in the firm, would then unwind its stake in the company via a share offering, similar to Petrobras’ privatization of fuel distribution unit Petrobras Distribuidora SA in July, Lara said.

Preferred shares in Braskem jumped over 3%, but quickly erased most gains. Shares were down 0.14% in afternoon trade.

Braskem did not immediately respond to a request for comment.

PRODUCTION COSTS FALL

On Thursday evening, Petrobras hit third-quarter margin estimates, and said production costs in a key oil-producing zone known as the “pre-salt” had fallen 20% compared to the previous quarter to $5.03 per barrel.

Later, in a call with analysts, Exploration and Production Director Carlos Alberto de Oliveira said costs at the coveted Buzios field could fall to less than $4 per barrel.

He added, however, that costs could be slightly higher next quarter thanks to the ramp-up of the P-70 platform and other one-off factors, likely bringing costs back near $6 per barrel.

Still, analysts were encouraged by the cost savings and overall financial results.

Analysts at Banco BTG Pactual SA called the production cost figures “impressive,” adding that the firm’s earnings before interest, tax, depreciation and amortization beat their estimates by 13%.

Brazil-listed preferred shares in Petrobras were up 3.7% in afternoon trade, after jumping 4% earlier in the day, their biggest intraday gain in over a month. (Reporting by Gram Slattery and Marta Nogueira; editing by David Evans and Tom Brown)

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