Junior oil companies steal the show on the Stock Exchange with sector consolidation in sight

3R Petroleum (RRRP3) has a difficult choice to make in the next 30 days: Enauta (ENAT3) or PetroReconcavo (RECV3)? The company received a business merger proposal from Enauta this Tuesday and will have a period of 30 days for analysis. In the process, deliberations on PetroReconcavo are suspended.

For analysts, the synergies offered by the merger with Enauta and the proposal itself would already be more advantageous than PetroReconcavo’s current offer. RECV3 suffered a 9.02% drop in shares in this Tuesday’s session, quoted at R$21.07, after announcing the suspension of the merger analysis.

The agreement was also not seen favorably by the market for Enauta, which fell 11.09%, to R$25.73. 3R Petroleum rose 0.72%, to R$33.34 – but rose 7%.

Bank of America (BofA) highlights that the combination between the two companies (Enauta and 3R) would result in a company with production of more than 120 thousand barrels of oil per day (kboead). The merger would guarantee a diversified portfolio of onshore and offshore assets.

The clearest synergies for analysis, at first glance, are a robust balance sheet, better access to capital and better 3R debt allocation. The report also cites better conditions for selling oil and gas, in addition to greater liquidity.

3R, Enauta and PetroRecôncavo consolidate sector

The operation is viewed with optimism for 3R and caution for Enauta due to the different times they are experiencing. If 3R Petroleum faces market skepticism regarding its reserves and the ability to increase production assets, Enauta, in turn, takes advantage of the confidence based on the start of Atlanta’s full development system and its recent acquisitions. For BofA, both companies are recommended buys.

For 3R, the agreement would be very positive and should be analyzed carefully, according to Bradesco BBI. The bank considers that the merger proposal presents a more favorable proportion (at 53/47%, against the 51/49% offered by RECV3). The valuation would already create a premium for 3R shares, which would only be observed in the other proposal if the proportion were different.

Furthermore, Enauta would have a better leverage position than PetroReconcavo, guaranteeing a stronger company on its balance sheet. The merger proposed today would enhance 3R’s current capabilities, prioritizing the company’s current management capabilities.

And, ultimately, the merger would not prevent the deal with PetroReconcavo from being completed at another time in the future. In this case, however, the bargaining power would be on the side of 3R/Enauta, reinforces the BBI.

The movement of PetroReconcavo’s shares was no surprise to the bank, which considers the operation with 3R to be one of the main triggers for the name. For now, the agreement is suspended for 30 days and there is no certainty that it will even be concluded, depending on 3R’s position in relation to Enauta.

Guide considers that the positive impact would be present for both companies. The operation would be reinforced by the proximity of the fields and the similarity of the businesses, with synergies to be taken advantage of.

Even so, the choice of 3R remains uncertain, according to the analysis, which considers that there are gains in the consolidation of oil companies in every year. The correct one also highlights that it considers that the companies did not incorporate into their actions the possible synergy gains according to the combinations