2013.11.23
Billionaire Delists OGX As National Oil Firms Step Off The Gas
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Brazil's pre-salt oil boom ended with a whimper for OGX Petroleo, the nation's only privately held oil company run by dethroned billionaire Eike Batista.
Brazil’s pre-salt oil boom has gone bust, and the first casualty has been former Brazilian billionaire Eike Batista’s OGX Petroleo & Gas. OGX officially delisted from the BM&F Bovespa stock exchange on Oct. 30 after filing for bankruptcy protection a few hours before. And now national oil firm Petrobras is divesting in order to help it invest in a deep sea project that cost more than anyone imagined.
OGX’s founding father, Eike Batista, was once Brazil’s first oil billionaire with a fortune estimated by FORBES to be around $30 billion. Today, he is worth probably $300 million or so. All lost because of oil bets. His Brazilian blowout cost investors $3.6 billion, with California based PIMCO being the biggest foreign holders of OGX debt.
The default is the largest corporate bankruptcy in Latin American history.
Of the 73 companies listed on the Bovespa, OGX was one of the most hotly traded, trailing the mega caps like Vale and Petrobras and financial powerhouses Itau, Bradesco and Banco do Brasil.
When OGX listed on the Bovespa back in June 2008, Goldman Sachs was busy forecasting oil prices of $200 a barrel and Petrobras shares shooting to $60. Boy were they wrong. And while hindsight is 20-20, at the time of the IPO Batista’s private oil firm, the only one in Brazil, was the hottest public offering in the Americas. The stock lost 99.3% of its value between then and now, according to Economatica.
As recent as last year, Batista cheerleaded OGX into greater oil finds, at least on paper. The oil guesstimates went terribly wrong. Batista had estimated as much as 10 billion barrels of oil equivalent deep under the sand, salt and rock of the Atlantic Ocean off coastal São Paulo. OGX ended up tapping dry wells, coming nowhere near the production estimates set by the company.
The entire sector over-invested in oil and oversold its prospects to the market.
Since Petrobras discovered oil deep under water six years ago, oil firms from around the world were quick to consider Brazil’s Atlantic a Saudi Arabia Waterworld.
Over the last several months, Brazilian state run oil firm Petrobras has been divesting its assets outside of the country in order to handle the billions in debt it’s accrued to invest in complicated drilling technology and services to get to that pre-salt oil, thousands of feet below the sand. It’s divested out of Argentina and on Wednesday it announced that it sold its entire collection of Peru assets to PetroChina for $2.6 billion.
Petrobras is shrinking, all in an effort to keep its pre-salt dreams alive.
When Maria Graças Foster took over Petrobras in 2012, Petrobras had operations in 23 countries. Today, they are in 17 countries, including in the Gulf of Mexico, United States. Petrobras has already closed 15 offices internationally and plans on closing 38 more within the next two years, Agencia Estado newswire reported.
Petrobras is turning inward out of necessity. The pre-salt oil is too costly for the company to invest as much as it had overseas prior to the 2007 discoveries. For the International Energy Agency, Brazil is eventually going to become the sixth largest oil producer in the world. According to the IEA, Brazil will produce nearly a third of all the new oil production worldwide by 2035.
But to do that, Petrobras will have to invest billions in new technology to dig that oil out of the bedrock below the surface of the sea. And the government will have to be more open to foreigners doing the same.
For now, Brazilians have heard this story about the oil boom before. Despite having all the oil, they pay the equivalent of around $5.10 per gallon of gasoline. And they still have to import gasoline because they don’t have the refining capacity to make it themselves.
Eike Batista believed in the oil boom story, until OGX went bust. He might still believe IEA’s assessment of a Saudi Waterworld a few miles off Copacabana. But Batista at least won’t be a participant in it, except maybe as a shareholder.
IEA said in London this week at the release of its World Energy Outlook report that Brazil should produce six million barrels of oil a day by 2035, up from two million daily today.
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New management at Batista’s firms — Eyzaguirre quits Canal 13 — Venezuelan central bank gets third governor of 2013
2013.9.25
By Karen Schwartz
As financial problems intensified at Eike Batista's group of companies, the former billionaire quit as chairman of Brazilian logistics firm LLX Logística. His resignation came after he agreed to sell control of the company to US investment firm EIG Global Energy Partners. Roberto D'Araújo Senna replaces Batista.
Shipbuilder OSX, another in Batista's group, named Marcelo Gomes as chief executive, replacing Carlos Eduardo Bellot. Gomes has been advising OSX with the firm Alvarez & Marsal Brasil. Over at EBX, chief financial officer Otávio Lazcano resigned. Chief executive Batista picked up his responsibilities.
Nicolás Eyzaguirre resigned from his post as chairman...
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Creditors approve restructuring of Batista's Oleo e Gas
June 3, 2014 10:58 PM
(Adds restructuring detail, company comment and plans, criticism of plan)
By Jeb Blount
RIO DE JANEIRO, June 3 (Reuters) - Creditors of Brazilian tycoon Eike Batista's Oleo e Gas Participacoes SA approved a restructuring plan for the oil company that could lead to a quick resolution of the largest bankruptcy in Latin America's history, lawyers said on Tuesday.
The plan was approved by creditors holding 90 percent of the Rio de Janeiro-based company's nearly 12 billion reais ($5 billion) of unpaid obligations.
If a judge approves, creditors will swap debts for about 90 percent of Oleo e Gas stock, said Ricardo Knoepfelmacher of Angra Partners, the consultancy that handled talks with creditors. The judge's approval is expected within days, he said.
Creditors include Newport Beach, California-based Pacific Investment Management Co, or PIMCO, one of the world's largest bond investment companies; Batista's shipbuilding company, OSX Brasil SA, and suppliers such as oil services company Schlumberger NV.
"This is one of the first Brazilian cases to be solved in a coherent way, using solutions that are common in developed countries," said Eduardo Munhoz, a lawyer with Mattos Filho Advogados, one of the law firms representing the company.
Munhoz said the restructuring deal is important because it shows that Brazil's 2001 corporate law rewrite has properly tilted power away from shareholders to creditors such as suppliers, lenders, employees and bondholders.
Coming only seven months after Oleo e Gas, then known as OGX Petroleo e Gas Participacoes SA, filed for bankruptcy, the approval may boost confidence in Brazil's corporate bankruptcy legislation, he added.
In the past, Munhoz said, Brazilian shareholders often gained a bigger share of a restructured company than they deserved.
Many economists support bankruptcy protection because it helps investors take risks while limiting the losses if they fail. They also warn that favoring shareholders too much will make lenders less likely to lend at reasonable rates and suppliers less likely to offer goods and services.
Batista, who controls 51 percent of the company's stock, will see his stake drop to about 5 percent. Last year, Batista lost almost all of his estimated $30 billion fortune after shares of EBX's listed companies plunged.
Ownership transfer from Batista and other shareholders to creditors is likely to occur by September or October, Knoepfelmacher said. Batista and other shareholders will get warrants to buy about 15 percent of new Oleo e Gas stock.
Some creditors were unhappy with the deal. Luiz Filipe Tavares, a manager of the Itava Inc investment fund, a British Virgin Islands company that bought 9 million reais of Oleo e Gas' bonds, says bigger creditors such as Pimco prevented smaller creditors from taking part in new loans to the company during the bankruptcy, a move that will limit their share in the restructured company. He plans a court challenge.
"The big creditors forced this deal and cut us out," he said. "We wanted to invest more. Batista got warrants, but we can't invest more."
Oleo e Gas shares closed on Tuesday at 0.20 real, unchanged from Monday, before the vote took place.
The plan makes Oleo e Gas debt free, easing efforts to increase output from offshore oil wells near Rio. Since the bankruptcy, creditors have pledged $215 million of new debt to keep the company afloat. About $90 million of that will be made available if the judge approves, Knoepfelmacher said.
The company may also sell part of its 40 percent stake in the Atlanta and Oliva oil field in the BS-4 exploration block in the Santos Basin south of Rio de Janeiro and part of its 100 percent stake in the Tubarão Martelo offshore field east of Rio, Knoepfelmacher said.
(Reporting by Jeb Blount; Writing by Reese Ewing; Editing by Andre Grenon, Eric Walsh and Jan Paschal)
makes Oleo e Gas debt free, easing efforts to increase output from offshore oil wells near Rio. Since the bankruptcy, creditors have pledged $215 million of new debt to keep the company afloat. About $90 million of that will be made available if the judge approves, Knoepfelmacher said.
The company may also sell part of its 40 percent stake in the Atlanta and Oliva oil field in the BS-4 exploration block in the Santos Basin south of Rio de Janeiro and part of its 100 percent stake in the Tubarão Martelo offshore field east of Rio, Knoepfelmacher said
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ri, Aug 30 03:33 AM BST
Brazil's Batista sells more of stake in oil company OGX to pay debt
By Jeb Blount
RIO DE JANEIRO (Reuters) - Brazilian tycoon Eike Batista, the controlling shareholder of OGX Petróleo e Gas Participações SA (OGXP3.SA), sold 1.54 percent of the oil company's stock to pay debts of his Grupo EBX, according to a securities filing on Thursday.
Batista made the sale on Wednesday, bringing his total sale of stock in OGX to 5.67 percent since March, the filing added. He plans to sell at least another 5 percent of his OGX stake, but plans to keep at least 50.01 percent of the company's capital, the filing said.
OGX, whose shares fell as much as 21 percent on Thursday, has led a year-long meltdown of Batista's Grupo EBX which includes energy, shipbuilding, mining and port operations. The group, once worth more than $60 billion, has seen its value nearly evaporate in the last year and a half.
The stock fell 12.3 percent on Thursday to finish at 0.49 reais, its lowest close in six weeks.
Batista's or EBX's problems are unlikely to tarnish the image of Brazil's stock market - the largest in Latin America and the most liquid among emerging markets, said Edemir Pinto, chief executive of Brazil's sole financial exchange BM&FBovespa SA (BVMF3.SA).
The problems facing the conglomerate, which also comprises a entertainment company, interests in tourism and even a renowned restaurant in the city of Rio de Janeiro, "were not expected by anyone, not even by Eike Batista himself," Pinto said. "All the money he raised in the market he poured into his group, he didn't grab even a cent for himself."
SHARES AND THE INDEX
Pinto, speaking at a BM&FBovespa event in the Brazilian city of Campos do Jordão, added that it is unlikely that, under current bourse rules, shares of OGX are excluded from the benchmark Bovespa index (.BVSP). The tumble in OGX, which has the fourth-largest weighting in the Bovespa, has been a key driver in the index's 18 percent decline this year.
OGX stock could only be excluded from the Bovespa in the case where the struggling oil producer files a request for bankruptcy protection or goes out of business. Asked whether an eventual debt restructuring at OGX could trigger the stock's expulsion from the Bovespa index, Pinto said "not at all."
Lower than expected oil output at OGX raised concerns about the group's abilities to generate cash flow to fund expansion and pay debt, creating a crisis of confidence in other EBX companies, many of which depended on each other for revenue.
The OGX slide has led to a wider reorganization of EBX, with Batista agreeing to give up control of port operator LLX Logística SA LLXL3.SA and electricity generator MPX Energia SA MPXE3.SA to foreign companies in exchange for new investment.
BTG PACTUAL
While he has maintained most of his holdings, Batista has made small sales in recent months to pay debts.
Batista has been using Brazilian investment bank Grupo BTG Pactual SA (BBTG11.SA) to help him reorganize his companies and finances. The accord, signed in March, has provided Batista and EBX with access to loans, advice and other services.
Shares of OGX and other EBX companies came under additional pressure on Thursday after the Veja weekly news magazine said BTG Pactual and Batista will end their relationship. Veja did not name any source in its report.
BTG Pactual's returns on the partnership depend on the performance of EBX Group stock. EBX Group stock has fallen sharply since the accord was made in March. BTG Pactual and the EBX Group declined to comment on the news report.
The sale of OGX stock is the second asset sale announced by Batista's EBX this week. on Tuesday, OSX Brasil SA (OSXB3.SA), EBX's shipbuilding unit, said Batista would sell $50 million of stock in the shipyard to help pay for a promised capital injection into the company.
Batista's Centennial Asset Mining Fund LLC and Centennial Asset Brazilian Equity Fund LLX, companies that form the basis of the EBX Group's holdings, held 58.92 percent of OGX as of July 10, according to Thomson Reuters data.
(Additional reporting by Asher Levine and Guillermo Parra-Bernal and Natalia Gómez in Campos do Jordão; Editing by Gerald E. McCormick, Matthew Lewis and Chris Gallagher)
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EBX Group[1] comprises six companies listed in BOVESPA’s Novo Mercado, the segment that features the highest standards in corporate governance: OGX (oil), MMX (mining), OSX (offshore industry), and CCX (coal mining). These companies are controlled by the Brazilian entrepreneur Eike Batista,[2][3][4] the chairman of the EBX Group.
Between 2011 and 2012, EBX Group invested US$ 15.7 billion, generating 20,000 jobs in the construction and operation of its enterprises.
Over the succeeding years, it will invest US$ 50 billion.[5]
The group has strategic partners [6] and develops structured projects, which focus on state-of-the-art technology and the generation of wealth.
EBX primarily invests in the sectors of infrastructure and natural resources. It also has leading initiatives in real estate, technology, entertainment, sports and gold mining, as well as in the air and rail catering sectors.[7][8]
EBX Group is active in nine Brazilian states, Chile, Canada and Colombia, and has offices in New York (USA).[
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Edit
EBX Group’s trajectory began in the early 1980s, with a project that was conceived and executed by Eike Batista: “Novo Planeta”, the first mechanized alluvial gold mine in the Amazon. Over the course of that decade, Batista became chairman of the board and CEO of TVX Gold. It was starting with this company - listed in Canada’s Toronto Stock Exchange - that Batista’s relationship with the global capital markets began.[10]
Between 1980 and 2000, he raised US$ 20 billion in value through the implementation and operation of nine gold and silver mines in Brazil and Canada (Amapari, Casa Berardi, Crixás, Musselwhite, New Britania, Novo Astro, Novo Planeta, and Paracatu), as well as a mine in Chile (La Coipa). In the 2000s, he began operating three iron ore mines in Brazil (Mina 63, Tico Tico, and Ipê). Between 2004 and 2012, Batista structured and went public with six companies: OGX, MPX, LLX, MMX, OSX, and CCX.[11]
The creation of job posts and professional training have served as the basis for the growth of the group and of Brazil. Until 2014, EBX will invest R$ 30 million in the training of 25,000 workers and has simultaneously allocated approximately R$ 20 million in financing for projects and partnerships with universities in Brazil, Chile, Colombia and China. This support encompasses more than ten universities and educational institutions. Among the beneficiaries are Alberto Luiz Coimbra Institute - Graduate School and Research in Engineering (COPPE) of the Federal University of Rio de Janeiro (UFRJ),[12] China’s Tsinghua University, the Institute of Nuclear and Energy Research (IPEN), and the University of Valparaiso in Chile.[13]
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How Brazil's Richest Man Lost $34.5 Billion
By Juan Pablo Spinetto, Peter Millard, Ken Wells
10월 03, 2013
Eike Batista stands at the center of a specially built air-conditioned stage on his 22,000-acre-plus Açu port project, a massive oil and iron-ore shipping complex about 200 miles north of Rio de Janeiro. He’s beaming, flashing victory signs. He has on an orange-and-gray racing jacket of the type he wore as a champion speedboat racer two decades before. It clashes badly with his bright pink tie and gray pinstripe suit, but he doesn’t appear to care—in fact, the loud ensemble only serves to highlight a faux oil-stained handprint across the jacket’s left pocket—a corny hint about why he’s asked everyone here.
It’s a cloudy April afternoon in 2012, but Batista is full of blue skies and endless vistas. To date he’s founded five publicly traded companies and is soon to launch a sixth. His personal wealth is estimated at $34.5 billion; most of his enterprises are managed under the umbrella of a holding company bearing his initials, the EBX Group. At 55, he’s Brazil’s richest man—and the eighth-wealthiest man on earth.
With him onstage is a roster of Brazil’s political and business elite: President Dilma Rousseff, Rio Governor Sérgio Cabral, and Mines and Energy Minister Edison Lobão. The audience of 400 includes foreign corporate luminaries such as Kim Jung Rae, co-chief executive officer of Hyundai Corp. Batista has gathered them to show off Açu, which he predicts will be the largest port in the Americas. He also wants to share some good news. His oil company, OGX Petróleo e Gás, has begun production on what he describes as a “new frontier” of petroleum 37 miles off the Brazilian coast. “This is an historical moment,” says Batista. “It’s the first time an independent Brazilian company has produced offshore oil.”
Behind this week’s cover
That Batista, new to the oil business, had brought in wells gushing with crude was the sort of announcement investors had come to expect of him. At that moment, Batista embodied Brazil’s decade-long economic expansion, and for international investors wanting a piece of the new Brazil, he could do no wrong. Many of those investors were American. BlackRock, the world’s largest money manager, had bought millions of OGX shares. Pimco, manager of the world’s largest bond fund, owned $576 million in OGX bonds. General Electric took a 0.8 percent share in EBX valued at $300 million. Brazilians “should be very proud” of what Batista and OGX had achieved, said Rousseff, sporting her own orange OGX jacket onstage at the Açu port. “OGX has a big contribution to make in the offshore oil production of Brazil.” Batista, in an interview a few days later with investment conference host Michael Milken in Beverly Hills, declared Rousseff’s appearance at his port not simply a feather in his cap but also “a major event for Brazil.”
To say Batista overreached would be to seriously undersell what has happened in the 18 months since that self-regarding presstravaganza of hubris and magical thinking. In what is shaping up to be one of the largest personal and financial collapses in history—if not the largest—Batista may be nearing bankruptcy. on Oct. 1, OGX missed a $45 million interest payment on bond debt it had racked up during its rise. Batista has sold his planes and his helicopter, and creditors are arguing over the remains of his companies. He’s no longer on the Bloomberg Billionaires Index and has become the butt of jokes in Brazil. one suggests that Pope Francis plans to return to Brazil soon and will again be visiting the poor, including Batista.
Batista declined to be interviewed for this story, but journalists are not the only ones asking questions. Brazil’s securities regulator has started an investigation into Batista and OGX after an investor alleged that Batista dumped 126.7 million OGX shares just before the company scrapped projects and warned that it may stop pumping crude next year. In a July op-ed for Brazil’s Valor Econômico newspaper, Batista said he would honor all of his obligations. In that same article, he put some of the blame on his auditing firm and executives for unreasonably building shareholder expectations. The company has denied it gave faulty advice. once a staple on the airwaves and in print, Batista has mostly gone silent.
Rare is the person—at least until recently—who meets Batista and is not seduced by his supreme self-confidence. As Daniel Lamarre, CEO of Cirque de Soleil, said when announcing a partnership with Batista’s IMX entertainment venture in 2012: “He is alone in his league.”
Batista has always been the leading chronicler of his own legend. He has long liked to tell the story of how as a teenager in Germany, he dreamed of becoming wealthy on gold, and how those dreams came true. At one point, a clairvoyant advised him to go to Machu Picchu, the ancient Inca site in Peru, and gaze at the sky at a certain hour, saying it would bring him luck. “Seems that it worked,” he told Brazilian TV host Jô Soares in May 2011. It’s all part of a mystical streak he embraced, and peddled. His company names all end in X—EBX, OGX, MMX. In his numerology, X stands for the multiplication of wealth.
Batista was born in Governador Valadares, these days a town of about 260,000 in Brazil’s mining state of Minas Gerais, but spent his teens in Europe with his family, hopping from Geneva to Düsseldorf and Brussels as the career of his father, Eliezer Batista da Silva, took off. The elder Batista is a polymath who speaks seven languages, and a giant figure in the industrialization of Brazil. In the early 1960s he ran Vale do Rio Doce, at the time the government-owned mining company, transforming it through his two stints as CEO into the world’s largest iron-ore producer. Known as Vale today, it’s valued at more than $80.6 billion.
Eike Batista studied metallurgy and returned to Brazil in 1980. At the time, thousands of pick-and-shovel peasant miners known as garimpeiros were pushing into the Amazon to look for gold in the jungle. Batista joined the rush as a gold buyer but soon started applying industrial mining to the tracts the peasant miners were working by hand. Arranging financing through a contact of his father’s, Batista went from a 24-year-old bartering gold nuggets to a 30-year-old buying and selling gold mines.
In 1983, Batista and his backers took over Treasure Valley Explorations, a small company trading on the Toronto stock exchange, and renamed it TVX Gold. As CEO, he developed successful mines in Brazil, Canada, and Chile. By 1996 the company was valued at $1.7 billion. He married a Playboy centerfold—Luma de Oliviera—and had two sons, Thor and Olin, named after Norse gods. (The couple divorced in 2004.) Journalists visited him at his marble-clad home high above Rio’s glittering beaches, marveling at the palatial swimming pool, the two home theaters, and “a vista fit for a king.”
Trouble soon arrived, however, with an ill-advised effort to develop a gold mine in Greece that drew huge public opposition over the potential environmental impact. Bogged down in Greece, he pressed ahead with mines in Russia and the Czech Republic, projects that failed on tumbling gold prices and what Batista would later say was his poor choice of managers. By the time he resigned in 2001, TVX, which had once been worth $1.7 billion, had lost more than 96 percent of its value. It was eventually sold to Kinross Gold in 2002 for C$875 million ($847 million).
Batista might have been finished but for an oncoming boom that would favor a specialist in resources. Brazil in 2002 entered a period of economic expansion under President Luiz Inácio Lula da Silva, and the next commodities rush was on—this time for oil. “Lula,” as he’s universally known, enacted free-market reforms that created the highest Brazilian growth rates in two decades and helped the country avoid the worst of the 2008 recession. No one benefited more from the economic miracle than Batista.
In 2001 he started a thermoelectric venture in the north of the country, which grew into the utility company MPX Energia, and in 2005 an iron-ore project. Both became public companies.
In July 2007, Batista announced the creation of OGX, which would explore for and produce oil offshore, with early backing from the ontario Teachers’ Pension Plan and the billionaire Ziff brothers from New York. He did not appear worried about his inexperience in oil and gas exploration and development. He would hire the knowledge he needed, starting with executives from Petrobras, the state-controlled oil company. Among those he lured from the company was Paulo Mendonça, its exploration chief, whom Batista came to call Dr. Oil. With Mendonça at the helm of OGX, Batista boasted that he now had a “dream team” that would discover deposits that Petrobras had missed.
OGX entered the business aggressively. In November 2007 the company bid at a government offshore oil lease sale, paying $1.3 billion for 21 blocks, seven in what is known as the Campos Basin, off Rio state. The bids for the leases in Campos, which holds 80 percent of Brazil’s output, startled his competitors. OGX offered double what Petrobras was offering for four Campos tracts and outbid Anadarko Petroleum, an offshore specialist, fourfold on another.
“They went in and paid massively; they put multiple times what anyone else put on the blocks,” recalls Rebecca Fitz, an analyst with Washington-based PFC Energy. “They needed to have extraordinary success to recoup. The high bid kind of forced the hand to begin with. They were showing the world they could beat everybody.”
Behind this week’s cover
In 2007, Batista purchased a 177-foot-long cruise ship, which he converted to a private yacht and overhauled to run tours and host parties in Rio’s Guanabara Bay. Aboard the Spirit of Brazil VII, he threw parties where he entertained Brazilian soap-opera stars and courted the press. Never shy of displaying wealth in a country with vast income disparity, Batista would also be photographed with his $500,000 Mercedes-Benz SLR McLaren parked in the living room of his mansion in Rio’s Jardim Botânico neighborhood. (In June, Thor Batista, now 21, was convicted of involuntary manslaughter after killing a cyclist while driving the McLaren at night in a low-income Rio neighborhood. He has appealed the conviction.)
A few days after Batista took OGX public in June 2008, oil hit a record $145.30 a barrel. The initial public offering raised 6.7 billion reais ($3 billion), making it the biggest in Brazilian history. “You can see why everybody wanted to jump on the train,” says Ruaraidh Montgomery, a senior analyst at oil and gas researcher Wood Mackenzie. OGX announced it was aiming for more than 1 million barrels a day by 2019—which would have amounted to almost half of Brazil’s total output. They announced potential resources of 4.8 billion barrels, more than a third of Petrobras’s proven reserves. OGX had yet to drill a single well.
Batista’s super port at Açu was the capstone of his master plan—a virtuous cycle in which shipping unit OSX Brasil paid rent to his LLX Logistica unit, while OGX produced natural gas for MPX Energia, which would supply electricity for his iron-ore mines. “If the port wasn’t mine, the port guy would charge me half of my profits,” he said in an interview with a German journalist. “You better control the whole system.”
Behind this week’s cover
As the economy cruised along, investors who wanted in on the Brazilian miracle came to Batista. His investors would include not only BlackRock, Pimco, and GE, but also Abu Dhabi’s sovereign wealth fund, Mubadala Development, IBM, and even ExxonMobil, which teamed up with OGX on bids for offshore oil leases. (Mubadala says it remains in “close discussions” with EBX. The others declined to comment on their investments in Batista’s ventures.)
By the end of 2010, careful observers might have noticed some odd signs about the Batista empire. For one, Batista was publicly peddling a stake in the Campos Basin to the Chinese and other possible buyers yet finding no takers—this at a time when Beijing-based Sinopec Group was willing to pay $7.1 billion for a 40 percent stake in Spanish oil giant Repsol’s Brazilian operations. Management at the time called that a positive development, saying it could get a better price after additional exploration unveiled more hydrocarbon riches.
In April 2011, OGX released a report by independent auditors that startled investors. Reserves in the company’s fields looked less a sure thing than earlier reports indicated, with a good portion of them marked down as “prospective” instead of “contingent.” Essentially, recoverable reserves simply were not as certain as they once seemed to be. The stock fell 17 percent, the most in two and a half years, and OGX would never recover to the 20-reais level traded early that year. An historic unraveling had begun.
Unable to find drilling partners, Batista and OGX in May 2011 turned to the bond markets and—despite concerns about its reserves—the “smart money” poured in. The company raised $2.6 billion for its exploration campaign and began to tout a 100 percent success rate on its Campos test wells. A year later, after its own analyses showed most of the crude it had discovered was locked in complex subsea geologic formations that made it difficult to pump out, OGX revised its claims to say it thought 87 percent of its drill sites would be producing oil.
Many oil companies would have stayed quiet in this period so as not to be accused later of inflating expectations. Several of his top executives are believed to have advised Batista to tone down the promises. Batista, according to people working with him at the time, couldn’t help himself.
One longtime associate with knowledge of Batista’s operating style, who asked not to be named because he is not authorized to speak, says caution and patience aren’t Batista characteristics. “Eike is a trader, not a project builder,” he says. “He set goals that should have taken 5 to 10 years to achieve but was managing them as if he were running the 400 meters.” Batista also doesn’t like bad news, according to this person. “Management was structured in a way that there was incentive to take only good news to Eike because he had a tendency to shoot the messenger,” he says.
In January 2012 an initial production report that might have disappointed some companies caused celebration at OGX. The report on the first well showed flows in the middle of the company’s expectations, at 15,000 barrels a day. The results had Batista and “Dr. Oil” popping champagne corks while technicians opened the valves remotely from Rio and webcams delivered pictures to the world. When his executives cautioned him about overselling these results, Batista’s reply was always the same: He preferred to rely on the opinions of Mendonça. But even Dr. Oil could do little to help, which may explain why he was nudged out of OGX in June 2012. He stayed on briefly as an EBX adviser before severing ties with Batista in August of that year. Mendonça declined to be interviewed for this story.
“I’m not sure how much Paulo Mendonça pushed it, or how much was Eike Batista, but it was a big mistake,” says Wagner Freire, a former exploration and production manager at Petrobras during the time Mendonça was an exploration executive. “They were very optimistic; they didn’t look at the conservative side of the argument. You’re starting in a very difficult area. You can’t extrapolate and say you have big reserves.”
OGX began to hit snags as it replaced the drilling rigs with production platforms that would pump the oil out, taking almost a year longer than its most optimistic forecasts to get its extraction operations up and running. For Batista this was nothing that more money couldn’t solve, and he headed again to the bond markets. In March 2012, OGX raised an additional $1.1 billion. That same month, however, output at the company’s first well in the Tubarão Azul field, part of the Campos Basin, dropped to 10,000 barrels a day, the low end of what Batista had estimated.
Despite the setback, Batista maintained a buoyant facade. At the end of March, EBX announced that after a year of quiet negotiations the Abu Dhabi sovereign wealth fund Mubadala was investing $2 billion for a 5.63 percent stake in EBX. The investment meant not only that one of the world’s largest investing funds was entering Brazil by buying into Batista’s strategy, it was also backing a valuation for EBX of about $35 billion.
Always a pitchman, he told Bloomberg News a few hours after announcing the Mubadala deal that he was looking to sell another stake for about $1 billion to another sovereign fund. “Imagine me getting my engine and adding another turbocharger,” he said during the interview. In public, he all but promised he would be the world’s richest man by 2015 and be worth $100 billion by 2020. At the end of April 2012, Batista would tell Bloomberg TV that his companies were sitting on $1.5 trillion of “underlying assets.” That amounts to the entire estimated value of all the mineral assets in Mongolia.
Elsewhere, he dropped hints about new deals. one day he was considering bringing in an “industrial partner,” the next he was saying another sovereign wealth fund wanted in on EBX. In May he told Rio journalists that he was in talks with groups from the U.S. and Asia to sell a 2.8 percent stake of EBX for about $1 billion and that he hoped to reach an agreement “in 63 days.” His lucky number, he explained, was 63.
Brazilian growth slowed in 2012, and Batista’s fortunes followed. on June 26, OGX announced that well pressure at the Tubarão Azul field had faded and that “ideal” production at its first two wells would be about 5,000 barrels a day—75 percent less than expected. It was a number that could not be spun. Shares fell about 45 percent in two days, and OGX bonds began a free fall as analysts cut ratings.
It only got worse. OGX brought in a new CEO who hired U.S. oil-field services company Schlumberger to review the mountain of data from its drilling campaign, says a person who helped set up the contract but isn’t authorized to comment on it. An eight-month study, says this person, showed the wells were basically duds. With that knowledge, OGX would announce it was abandoning a group of fields, turning back some of those expensive leases to the government. The well that started at 15,000 barrels a day would be shut in 2014. If OGX fails to pay off its $3.6 billion in bonds it would be among the largest corporate defaults in history.
Behind this week’s cover
“It’s stunning. There’s a maxim: Never drill with debt,” says Michael Roche, an emerging-market strategist at broker-dealer Seaport Group. “I’m sure the bond managers who suffered the most losses say ‘I’m never again going to lend to an oil company that’s not producing oil.’ ”
Batista has been spending the last few months shrinking his empire by relinquishing control of his most promising units; renegotiating debt with his banks and creditors, including Mubadala; and seeking to avoid the bankruptcy of his most problematic venture, OGX, which has total debt 11 times larger than its market value. He’s cut his stake in MPX Energia, the utility company. E.ON is now the largest shareholder in the company, which has been renamed Eneva. In September he ceded control of the Açu port complex to EIG Global Energy Partners and announced an agreement to sell an iron-ore port to a joint venture between Mubadala and commodities trader Trafigura.
These days, Batista is melancholic and dazed and yet still craving the kind of attention he once commanded, according to people who have seen him in recent months. He told the Wall Street Journal in an interview published on Sept. 15 that he would make a comeback, mentioning the example of billionaire entrepreneur Elon Musk, founder of PayPal and electric car maker Tesla Motors.
“Mr. Batista continually said, ‘Don’t bet against world-class, idiot-proof assets,’ but it appears the assets were neither world-class nor idiot-proof,” says Greg Craig, a Telluride (Colo.) investor who holds shares and bonds in OGX and has investments in other Batista enterprises. “They called themselves conservative in their results and plans yet turned out to be either disastrously wrong or dishonest.”
The Spirit of Brazil VII is no longer moored in Rio de Janeiro. A ship broker familiar with the market reports that EBX has considered selling it for scrap.
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Pre-salt layer in Brazil
The current findings from Petrobras and other companies in the province of the Pre-salt, located in the Brazilian continental shelf, can mean reserves of over 50 billion barrels of oil, a volume four times greater than the current national reserves, roughly 14 billion barrels.
In this province, there may be large oil and natural gas reserves located under salt layers that extend for 800 kilometers along the Brazilian coast – from the state of Santa Catarina coast to the coast of Espirito Santo – up to 200 km wide.
Some estimates give the total area of the Pre-salt as 122,000 km2. Of this total, concessions have already been granted for 41,000 km2 and 71,000 km2 have not yet been tendered.
Pre-salt oil is of good quality, although it is found in reserves that are in deep-sea areas and under thick layers of salt, requiring large-scale investment to extract it.
Since 2006, Petrobras has sunk 11 oil wells in the Santos Basin. All these oil wells have been successful. At the prospects of Tupi and Iara alone, which are located in the BM-S-11 block, Petrobras already estimates that there are 8 to 12 billion barrels of recoverable oil. This block alone can almost double the current Brazilian oil reserve
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Neymar
Brazil tycoon Batista to run Neymar's career
July 10, 2012|Reuters
RIO DE JANEIRO/SAO PAULO (Reuters) - Brazil forward Neymar has handed control of his career and image rights to the country's richest man, Eike Batista, in a deal announced on Tuesday.
Neymar's signing with Batista's IMX Talent hands the group control of the soccer player's image both during his playing days and after he retires.
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Definition of 'Asset-Backed Security - ABS'
A financial security backed by a loan, lease or receivables against assets other than real estate and mortgage-backed securities. For investors, asset-backed securities are an alternative to investing in corporate debt.
The transfer must be a true sale, or its legal.
Liquidation
The conversion to
cash. Liquidating a position may simply mean
selling stock or
bonds; the
seller in this case receives the cash. Liquidation also refers to a situation in which a company ceases operations and
sells as many
assets as it can; the company uses the cash to
repay debt and, if possible,
shareholders. Liquidation often has a negative connotation for this reason. See also:
Panic selling.
자산유동화 (Asset Securitization)
자산유동화란 일반적으로 SPC(Special Purpose Company, 특수목적회사)가 자산보유자로부터 유동화자산을 양도 또는 신탁받아 이를 기초로 유동화증권을 발행하고 해당 유동화자산의 관리·운용·처분에 의한 수익이나 차입금등으로 유동화증권의 원리금 또는 배당금을 지급하는 일련의 행위를 입니다.
여기서 '자산'이란 자동차 가전회사등이 고객들로부터 미처 받지 못한 미수금(매출채권), 금융기관 대출금, 리스채등 각종 채권, 부동산 등 일반 자산을 이야기 합니다. 간단히 이야기 하면 회사가 보유한 위와 같은 자산을 특수목적회사에 양도(또는 신탁)하고 특수목적회사는 양도(또는 신탁)받은 자산의 현금흐름에 기초해 자금을 조달하여 회사에 양도대금을 지급하는 구조입니다.
「자산유동화에 관한 법률」에서는 이 같은 유동화증권을 발행할 수 있는 자로서 유동화전문회사, 자산유동화업무를 전업으로 하는 외국법인, 「자본시장과 금융투자업에 관한 법률」에 의한 신탁업자로 규정하고 있습니다. 자산유동화는 자산보유자의 신용과 분리하여 유동화자산 순수하게 그 자체에서 발생되는 현금흐름을 바탕으로 자금을 조달하는 금융기법으로서 자산보유자의 재무구조 개선, 자금조달 코스트 절감 및 투자자 확대 등의 이점이 있습니다.
자산유동화를 통해 자금을 조달하는 방식에 따라 주로 자산유동화증권(ABS)
