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20 May 2024

Daily Newsletter

3R Petroleum agrees to merge with Enauta in $1.2bn deal  

It is anticipated that the merged company will have a production capacity of more than 100,000 barrels per day (bpd) of oil and natural gas.   

Shivam Mishra

Brazilian companies 3R Petroleum and Enauta have agreed to merge operations to create a new independent oil and gas company in Latin America. 

Under the terms of the deal, Enauta shareholders are set to receive 0.8092 of a 3R share for each Enauta share they hold.  

The deal is estimated to be worth $1.2bn (6.12bn reais) based on the number of outstanding shares of Enauta and the closing price of 3R on 16 May 2024, according to Bloomberg

Following the merger, 3R will own a 53% stake in the combined entity, while the remaining 47% stake will be held by Enauta's shareholders. 

The merger is expected to create a company with the capacity to produce more than 100,000bpd of oil and natural gas.  

Its combined 2P reserves are estimated to exceed 700mbbl. 

In a parallel development, Maha Energy, a shareholder in 3R, has agreed to consolidate its 15% interest in 3R Offshore into the larger 3R entity.  

Maha will be compensated with new ordinary shares, representing 2.17% of the voting rights and capital of the merged company. 

Leadership roles have also been determined, with Enauta's CEO, Décio Oddone, set to lead the new company.  

Meanwhile, 3R's CFO, Rodrigo Pizarro, will continue in his financial stewardship role in the merged entity.  

Earlier in the year, Maha Energy increased its stake in 3R Petroleum to 5% and suggested a separation of its onshore oil assets. 

The agreement follows the memorandum of understanding signed between 3R and Enauta in April, signalling their intention to merge.  

Prior to this, 3R had been in discussions with PetroReconcavo over a possible merger, which was halted in favour of the Enauta proposal. 

Upon completion, Enauta will operate as a subsidiary of 3R and its shares will be delisted from the Brazilian stock market.  

The deal is subject to shareholder approval from both companies, in addition to the green light from Brazilian regulatory authorities. 

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