Bloomberg News

HRT Plunges on Changes in TNK-BP Joint-Venture Terms: Rio Mover

January 31, 2012

Jan. 30 (Bloomberg) -- HRT Participacoes em Petroleo SA, Brazil’s fourth-largest oil company by market value, fell the most in three weeks on concern it will get less revenue after changing the terms of a joint venture with Russia’s TNK-BP.

HRT, based in Rio de Janeiro, dropped 1.5 percent to 453 reais at 1:31 p.m. in Sao Paulo trading, after earlier plunging as much as 5.7 percent, the biggest intraday loss since Jan. 5.

HRT announced after markets closed on Jan. 27 an amendment to a $1 billion agreement with TNK-BP, Russia’s third biggest oil company, to develop HRT’s fields in the Solimoes block in the Amazon. Under the revised terms, HRT will be required to invest more in the project and receive about $90 million to $100 million less from TNK-BP, according to a UBS AG report published today.

“We have become much more skeptical of management delivering in Solimoes,” UBS analysts Lilyanna Yang and Luiz Pinho wrote in the report. “The risks are clearly higher for minority investors, on an absolute and relative basis, than previously perceived.”

The amendment led UBS to downgrade HRT to “sell” from “buy” and to cut its 12-month target price by more than half to 460 reais from 925 reais.

--Editors: Richard Richtmyer, Carlos Caminada

To contact the reporter on this story: Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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