Spain’s Repsol YPF SA to raise funds for investments in Brazil

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Repsol YPF SA is to sell off some of its stake as it seeks to raise funds for investments, to be undertaken in Brazil. Spain’s largest oil firm Repsol YPF SA announced its planning to raise close to $2.36 billion via the sale of a 15 per cent stake in its Argentine YPF SA unit. The move is as well aimed at cutting down Repsol’s holdings in Argentina.

Under the plan, the Madrid based Repsol will sell as many as 59.9 million shares of YPF in New York as American depositary receipts, to be priced at a maximum of $39.93 each, according to a U.S. Securities and Exchange Commission filing from Buenos Aires- based YPF after the market closed on Nov. 26.

Repsol spokesman Kristian Rix said the size and timing of the sale will depend on market appetite. But according to the firm’s Chief Executive Officer, Antonio Brufau, Repsol owns 84 per cent of YPF and wants to reduce its stake sooner rather than later. The Spanish company is seeking to cut its stake to about 51 per cent as Argentine oil fields mature and the company boosts spending on prospects located off Brazil.

Another 15.4 per cent of YPF, Argentina’s largest crude producer, is owned by the billionaire Eskenazi family, the unit’s operator. The Eskenazis have an option to buy another 10 per cent of YPF by 2012 and may exercise it as early as next month, sources said. YPF is planning to return to global markets for the first time since 1998 by selling as much as $600 million worth of bonds, the company said earlier this month.

Repsol is seeking to develop the offshore Guara and Carioca fields in Brazil, located near Rio de Janeiro-based Petroleo Brasileiro SA’s Tupi field, one of the largest discoveries in the Western Hemisphere since Mexico’s Cantarell in 1976. Repsol wants to invest in exploration in Brazil’s offshore Santos Basin and elsewhere to increase reserves and output.

YPF may spend $3 billion to $3.5 billion a year to boost operations in Brazil, Colombia, Mexico and Canada, Chief Executive Officer Sebastian Eskenazi said in a May interview in New York. Overseas sales will account for 50 percent of total revenue in 10 years, up from 30 percent now, he said.

YPF, the biggest Argentina-based company by market value and the country’s largest employer, produces and processes about 50 percent of the South American nation’s oil and controls about as much of the domestic fuel market.

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