Progress made in turning potential Enauta-3R merger into reality

Brazilian oil and gas company Enauta has taken another step closer to bringing to life a larger and more diversified independent oil and gas company in Latin America by inking a memorandum of understanding (MoU) related to its proposed business combination with a compatriot player, 3R Petroleum Óleo e Gás.

After Enauta’s board of directors unanimously approved the submission of a merger proposal to the board of directors and shareholders of 3R Petroleum Óleo e Gás to establish a big independent oil and gas company in Latin America, the firm entered into a memorandum of understanding with 3R Petroleum and Maha Energy Offshore Brasil.

The MoU about the potential transaction involving the integration of Enauta and 3R’s activities provides for the assumptions, terms, and general conditions governing the potential transaction, including the exchange of participation currently held by Maha in a company controlled by 3R and exclusive due diligence and negotiation for 30 days, extendable for an equal period.

Based on the potential transaction, Enauta will be incorporated by 3R, and its shareholders will receive new shares of 3R, so that, the share capital of the newly integrated company will be represented by 53% of 3R shareholders and 47% of Enauta shareholders, subject to adjustments.

Furthermore, the potential transaction envisages the roll-up of Maha’s 15% stake in 3R Offshore, enabling it to get 2.17% of the newly integrated company, subject to terms and conditions provided for in the MoU, including a fairness opinion. However, the structure of the potential combination, including the exchange ratio to be established, is subject to changes and usual adjustments for this type of transaction and due diligence results.

In light of this, implementation of the potential transaction is subject to the execution of definitive documents and conditions precedent, such as approval by Enauta and 3R shareholders and legal and regulatory approvals, including Brazil’s Administrative Council for Economic Defense – CADE. While Enauta has engaged XP Finanças Assessoria Financeira and Citigroup Global Markets Brasil CCTVM as financial advisors, Pinheiro Neto Advogados has been hired as legal advisor.

Enauta is set on expanding its portfolio, as illustrated by a contract with Petrobras to obtain oil and gas fields in the Santos Basin and natural gas pipeline infrastructure. In addition, the firm set the wheels in motion to acquire the entire stake held by QatarEnergy Brasil in the oil fields comprising the Parque das Conchas.