In a strategic move, Enauta has put forward a merger proposal with 3R. This plan, unveiled on Monday, could merge both firms into a powerhouse valued at nearly R$16 ($3.2) billion.
Enauta’s strategy focuses on a share swap, streamlining the process for a seamless union.
The deal suggests that 3R’s new shares would merge with Enauta’s.
This arrangement grants 53% of the new entity to 3R’s shareholders and 47% to those of Enauta, including a 12% premium for 3R shares.
The merger promises to position the combined entity as a Latin American leader in oil and gas.
It aims for growth, balance, and resilience, forecasting output to surpass 100,000 barrels daily.
This entity will also oversee over 700 million barrels in reserves, showcasing a diversified portfolio.
President Lula’s halt of Petrobras’s divestment strategy is set to ignite a wave of mergers and acquisitions (M&A) among Brazil’s smaller oil entities, or junior oils.
These companies, flush with cash but facing a scarcity of mature field opportunities from Petrobras, are now eyeing mergers and acquisitions of rival assets or international ventures for growth.
Upon receiving Enauta’s offer, 3R’s board paused other merger discussions, notably with PetroReconcavo.
They committed to a 30-day review of Enauta’s proposal, marking a period of exclusive negotiations.
Fragmented market to be consolidated
The merger is expected to enhance share liquidity and market valuation for the new company.
Enauta’s shares have soared by about 50% this year, reaching a market cap of R$7.7 billion. Likewise, 3R’s value has increased by 30%, totaling R$8 billion.
Decio Oddone, Enauta’s CEO, has been vocal about consolidating Brazil’s fragmented oil sector.
The market includes around 90 independent operators, with a few, including PRIO and PetroRecôncavo, standing out alongside 3R and Enauta.
This proposed merger, still under review, follows Enauta’s vision for a scalable, market-savvy powerhouse.
It notably eclipses Maha Energy’s earlier bid for Petroreconcavo, underscoring Enauta’s strategic, governance, and risk management prowess.