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The Oil Company PRIO Issued a Statement Alerting the General Public that the Deal to Acquire Dommo Energia Has Been Finalized.
Last week, the oil company PRIO, formerly PetroRio, issued a statement alerting the general public that the deal to acquire all of Dommo Energia, which was formerly known as OGX and led by Eike Batista, has been finalized. In the material fact, it was stated that Dommo’s shareholders will have the option to exchange their shares for cash or for PRIO shares according to an exchange ratio of 1 PRIO3 share for every 20 shares of Dommo Energia.
The news did not catch investors by surprise, as they already expected the deal to happen sooner or later. Proof of this is that shares in Dommo Energia increased in value by more than 200% this year alone. Prisma Capital specializes in taking over troubled assets like the former OGX of Eike Batista, and had taken control of the company at the beginning of the year.
PRIO Will Have Several Benefits from Acquiring Dommo
“Even though we believe that the shares already partially reflect the operation, given that its execution has been discussed by the market for some time, we consider this step positive for PetroRio,” said a report from Ativa Investimentos regarding the deal.
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PRIO will benefit from the deal, as it will have full ownership of all aspects of the activities of the Tubarão Martelo and Polvo clusters. Furthermore, analysts stated that the corporation could acquire up to R$ 7 billion in tax gains from Dommo, due to over R$ 20 billion in accumulated losses over time, when it was still OGX, and this was also one of the reasons for the deal’s completion.
It Is Estimated That PRIO Will Have a Net Present Value of Between R$ 2.5 Billion and R$ 4 Billion in Tax Benefits from the Purchase of Dommo
According to analysts from BTG Pactual, which characterized the operation as “small,” the present net value of the tax benefits that the company could obtain is estimated to be between R$ 2.5 billion and R$ 4 billion only. However, to give an idea, this represents something between 11% and 18% of PRIO’s current market value.
About PRIO and Dommo Energia
PRIO is a publicly traded Brazilian company specialized in the effective management of reservoirs and the development of mature fields. Its main business activities include the production of oil and gas, as well as the investment and recovery of production assets.
Dommo Energia S.A. is a company that also focuses primarily on the oil industry. Formerly known as OGX, it also operates in the energy sector. Between 2012 and 2015, the business successfully recovered about 6.5 million barrels of oil from the Tubarão Azul field, located in the Campos Basin. It began oil extraction in the Tubarão Martelo area, also in the Campos Basin, in 2013 and continues to this day.
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