Sinopec acquires 30% stake in Galp's Brazilian subsidiary with a US$5.2 billion capital injection Report

Deal Insight 11 November 2011

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Report summary

Sinopec is to acquire a 30% stake in Galp Energia's Brazilian subsidiary, Petrogal Brasil. The transaction is a capital increase, rather than a 'clean' acquisition. The structure of the deal is analogous to Sinopec's 2010 purchase of a 40% stake in Repsol Brasil. In total, Sinopec will inject US$5.18 billion of cash. Accounting for balance sheet impacts, the effective acquisition cost is US$3.74 billion.We value a 30% stake in Galp's Brazilian portfolio at US$2.2 billion ...

Executive summary
Transaction details
Upstream assets
- Santos Basin pre-salt cluster
- Technical resources
- Other basins
Deal analysis
- Upside analysis
  - Commercial assets
  - Technical resource base
  - Exploration potential
- Precedent transaction analysis
Strategic rationale
- Sinopec
- Galp Energia
Oil & gas pricing and assumptions

Tables and charts

This report includes 8 images and tables including:

Deal analysis: Table 1
Oil & gas pricing and assumptions: Table 1
Oil & gas pricing and assumptions: Table 2

Upstream assets: Table 1
Wood Mackenzie base production and capex forecasts (30% of Petrogal Brasil)
Inferred breakdown of value (commercial vs. upside) at base and high oil price scenarios
Per barrel resource acquisition costs vs. WoodMac NPV per boe estimates
Galp Energia indexed share price performance post deal announcement