Brava Energia's shares surge on the potential sale of assets and oilfield resumption

The shares of Brazilian energy firm Brava Energia soared Friday after the company announced that it was in talks with banks about potential asset sales. The company also received approval from Brazil's oil regulator for the resumption of production at a major oilfield.

Brava shares closed 10.6% higher than the benchmark Brazilian stock index Bovespa which fell 0.5%.

Brava announced in a Friday statement that they were negotiating with two banks for mandates to evaluate possible partnership transactions or asset sale.

Those familiar with the situation say that Brava is currently negotiating with Itau BBA, and Bradesco BBI. Itau and Bradesco both declined to comment.

Brava stated that one of the banks had given a brief overview of onshore assets of the company to interested parties, and Jan. 9 was the deadline for proposals.

JPMorgan analysts estimated Brava's assets onshore could be worth $1.4 billion.

Investors also welcomed the news that Brazil's ANP oil regulator had allowed Brava to resume its production at Papa-Terra, which was halted last September after ANP asked for information on Brava's platform's operating systems.

Brava announced in a filing that it would begin preparing for production to resume early next week.

Brava reports that Papa-Terra was producing 15,000 barrels equivalent to oil per day when the shutdown occurred.

Santander analysts stated that they viewed the approval of Papa-Terra’s production resume as a positive development and an important factor for Brava’s future deleveraging story. This is what supports the 'outperform rating'.

Brava is the result of a merger this year between 3R Petroleum, and Enauta. (Reporting and editing by Rod Nickel, Alistair Bell and Alistair Bell; Additional reporting and reporting by Gabriel Araujo)

(source: Reuters)