(Adds context, comments; updates share price)
By Todd Benson
SAO PAULO, June 13 Shares of new Brazilian oil
and gas company OGX (OGXP3.SA) soared on Friday on their first
day of trading, underscoring investors' voracious appetite to
profit from the nation's newfound energy wealth.
OGX Petroleo e Gas Participacoes SA, as the company is
formally known, was created from scratch less than a year ago
and has yet to drill an oil well. But the start-up has created
huge expectations that it will strike oil off Brazil's coast,
luring billions of dollars from energy-hungry investors.
The stock opened 18.9 percent higher at 1,345 reais after
the initial public offering priced at 1,131 reais -- the top of
the anticipated range -- on Wednesday. It later gave up some
gains and was trading 12.7 percent higher at 1,275 reais,
outpacing a 0.3 percent advance by the Bovespa index .BVSP.
"Investors that couldn't get a piece of the IPO are now
piling in," said Nelson de Matos, a stock analyst at Banco do
OGX raised 6.71 billion reais ($4.1 billion) in the
offering, making it the largest IPO in Brazilian history. Eike
Batista, the Brazilian billionaire who founded the company,
said demand for the offering reached $30 billion.
"I thought demand would reach about $20 billion, but it was
way above what we expected," he said on Friday at the Sao Paulo
stock exchange. "Investors feel reassured that they are
associating themselves with a company that is committed to the
principles of transparency."
OGX became the 100th company to list on the exchange's Novo
Mercado trading platform, which requires stricter corporate
governance standards. It placed shares with qualified investors
who had to shell out a minimum of 300,000 reais ($184,050) to
take part in the IPO.
Bovespa Holding BOVH3.SA, which controls the stock
exchange, set the previous record for IPOs when it raised 6.6
billion reais last September. Two months later, the BM&F
commodities and futures exchange BMEF3.SA raised 5.98 billion
reais by going public. The exchanges are now merging.
BILLIONAIRE RISK TAKER
Batista, a flashy entrepreneur who made his fortune in the
mining business, is one of Brazil's richest men. His
conglomerate also includes a water company, power plants and
mining company MMX Mineracao (MMXM3.SA)(XMM.TO), which he took
public in 2006.
Batista, who has a reputation as a risk taker, is betting
that recent oil discoveries off Brazil's coast are a sign of
more to come. On Thursday, state-run energy company Petrobras
(PETR4.SA)(PBR.N) announced another find in the Santos basin,
bolstering the view that Brazil may be poised to join the ranks
of the world's major oil exporters.
To get his new oil venture off the ground, Batista has
hired several former executives from Petrobras, a world leader
in offshore drilling technology. Among them are Francisco Gros,
a former chief executive there, and Paulo Mendonca, who had
been production and exploration manager.
The high-profile hires have helped reassure investors that
Batista did his homework before paying more than $1 billion for
drilling rights on 21 offshore blocks at an auction last
November while some oil majors watched from the sidelines.
OGX estimates the areas, all shallow-water tracts, hold 4.8
billion barrels of oil equivalent and expects production to
start in late 2011.
(Additional reporting by Alberto Alerigi Jr. and Marcelo
Teixeira; editing by Lisa Von Ahn)