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Petrobras still in talks on oil swap price with government, Mantega says

SAO PAULO
Petroleumworld.com, Aug 31, 2010

Petroleo Brasileiro SA , Brazil's state-controlled oil company, is still in talks with the government to set a price for as much as 5 billion barrels of oil reserves that will be swapped for company shares, Finance Minister Guido Mantega said.

All news reports on the price of the government-owned reserves are based on speculation, Mantega told reporters in Sao Paulo today.

Investors are waiting for a valuation of the reserves to determine how much stock Petrobras needs to sell in a $25 billion offering that it plans to hold along with the swap by the end of September. The Rio de Janeiro-based government- controlled company needs to set the value for the oil by tomorrow to have enough time to prepare the stock sale, said Oswaldo Telles , an analyst with Banif SA in Sao Paulo.

“They have to do it tomorrow,” said Telles by telephone. “After that, it's nearly impossible to complete it by the deadline.”

Petrobras fell 72 centavos, or 2.7 percent, to 25.84 reais at 1:11 p.m. in Sao Paulo trading. The stock has lost 30 percent this year, more than a 5.8 percent drop for the benchmark Bovespa index, because of concern the share sale may dilute earnings per share.

Story by Joao Oliveira from Bloomberg

Bloomberg 08/30/2010

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