By Benjamin Parkin and Jeffrey T. Lewis
RIO DE JANEIRO -- Brazilian state-run oil company Petróleo Brasileiro SA said Wednesday its strategic alliance with France's Total SA would bring $1.6 billion in cash in the next two months, a much-needed boost as it struggles to unload assets and reduce its debt burden.
Petrobras said it would sell stakes in two of Brazil's deep water "pre-salt" oil concessions to Total and that the companies would go intopartnership on a pair of power plants and re-gasification terminal
The deal with Total is estimated to generate about $2.2 billion for Petrobras, the companies said. Petrobras said it expects to receive an immediate $1.6 billion in cash when the agreement is completed in the next 60 days.
"This alliance will offer a bright future for both companies," Total Chief Executive Patrick Pouyanné said at a press conference in Rio, citing Petrobras's experience in deep water projects.
The most highly leveraged oil major in the world with $123 billion in gross debt, Petrobras has so far faltered in its goal to sell $15.1 billion of assets by the end of the year. It was dealt a setback this month when Brazil's federal auditing court, known as the TCU, suspended all but five of its pending sales.
Even after accounting for the partnership, Petrobras would fall short of that goal by around $2 billion. CEO Pedro Parente said the difference could be added to Petrobras' $19.5 billion asset-sale goal for 2017 and 2018, and expressed confidence that the company would reach its target.
"We're absolutely certain that our goals have not been compromised," he said. "We will be ready the moment the TCU is ready."
Total will assume an operating stake one of Petrobras's pre-salt oil blocks and take a minority stake in another.
Petrobras will also have the option of buying 20% of a block in the Mexican portion of the Perdido Foldbelt area of the Gulf of Mexico, which Total acquired in partnership with Exxon earlier this year.
Brazil's Congress approved a bill in October easing restrictions on private investment in the fields by removing a requirement that Petrobras be the lead operator on any pre-salt concessions. The firms announced the alliance shortly after.
Write to Jeffrey T. Lewis at email@example.com
(END) Dow Jones Newswires
December 21, 201619:10 ET (00:10 GMT)
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