Enauta-3R merger reaches new stage

The boards of directors of Brazilian oil and gas company Enauta and compatriot player 3R Petroleum Óleo e Gás have approved the signing of a pair of protocols that set forth the terms and conditions for the proposed combination of the two companies.

FPSO Atlanta; Source: Yinson Production

As reported, the Enauta and Maha Holding protocols and justifications for the mergers, providing for the merging of Enauta shares into 3R, and Maha Energy’s merging into 3R, respectively, were submitted for approval to the boards of directors of the two companies on May 16, 2024. These protocols were accompanied by respective appraisal reports and other relevant documents.

The previous steps in the process included the memorandum of understanding that the two companies signed with Maha Energy Offshore in April after Enauta’s board of directors unanimously approved the submission of a merger proposal to the management of 3R Petroleum Óleo e Gás.

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The next step entails discussing the protocols and justification at the extraordinary general meetings of both companies. The meetings, expected to take place on the same day, will also cover the main terms and conditions of the transaction, which is subject to approval from Brazil’s Administrative Council for Economic Defense – CADE. 

As Maha Holding’s wholly owned subsidiary Maha Offshore owns shares in 3R Petroleum Offshore, in which 3R owns 85% of the share capital, its merger is meant to allow 3R to own all shares issued by 3R Offshore, both directly and indirectly.

If certain requirements for the implementation of the merger are met, and once the merger of Maha Holding is concluded, the company will be extinguished and 3R will become the holder of all the shares issued by Maha Offshore, which will be converted into a wholly owned subsidiary of 3R. Additionally, after the merger of Enauta shares, Enauta will become a wholly-owned subsidiary of 3R.

Commenting on the roll-up of its 15% holdings in 3R Offshore, Maha Energy’s CEO, Kjetil Solbraekke, said that the Brazilian market was ready for a consolidation process, just as his company had anticipated when it acquired a stake in 3R Petroleum in early 2024. He explained that once concluded, the transaction would double the value of the investment the company had initially made. 

Solbraekke noted: “This merger between 3R Petroleum and Enauta will create one of the leading and most diversified independent companies operating in the Latin American oil and gas chain, with a diversified and balanced portfolio, and high growth potential over the next 5 years, with resilience to price cycles and high competitiveness for expansion.”

Enauta claims that its business combination with 3R will strengthen the new business model, making it possible to complement the assets and make more robust investments for their maintenance and development, thus creating value for both. The companies do not envisage significant risks arising from the consummation of the merger of Enauta shares.

According to the two companies, the transaction will cost approximately R$40 million (around $7.83 million), which mostly entails the costs of appraisals, legal advice, other advisory services for the merger of Enauta shares, publications, and other related expenses.  

Apart from the administrative work related to the merger, Enauta has been busy preparing to connect the wells at its Atlanta field off the coast of Brazil to a floating production, storage, and offloading (FPSO) that arrived in the country recently.

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The FPSO, named in Dubai in late 2023, embarked on its voyage to Brazil in March. After crossing oceans, it finally reached its destination earlier this month.