QGOG Restarts Equity Plans

After putting off IPO plans last year, Brazil’s Queiroz Galvao Oleo e Gas (QGOG) is hoping equity investor appetite is more favorable to Brazilians and to oil sector issuers in 2013. The QGOG Constellation unit has moved forward with a US IPO filing, setting a rough target of $500m. The exact size and timing of the SEC-registered deal remain to be determined, though a filing this week would put the issuer on course for a deal by mid-February if it wishes to issue under 3Q 2012 financials. The plan is for the sale of primary shares, raising funds for the oil services provider’s capex. QGOG is in need of funds to make down payments for two ultra-deepwater drillships, and raise capital for new and existing projects. JPMorgan, Bank of America Merrill Lynch, and Itau, who were hired at the time of a private SEC filing last year, are global coordinators, along with Credit Suisse and Bradesco as joint bookrunners. QGOG Constellation is 80% controlled by QGOG International Sarl, a vehicle owned by members of the Queiroz Galvao family. The unit operates or is building 11 drillships in Brazil’s offshore drilling space, and booked $325.6m in Ebitda through the first nine months of 2012, after booking $211.4 for all of 2011. QGOG Constellation’s Luxembourg registration and a US listing are expected to help it attract global energy investors as well as the LatAm and EM-focused buysides that have been finicky in the last two years. Brazil has not seen an oil sector issuer since QGOG’s sister unit Queiroz Galvao Exploracao e Producao made its public equity debut in February 2011, raising just over $900m-equivalent. Seabras Servicos de Petroleo was another looking in 2012 that shied away. If it prices in the January-February window, QGOG Constellation is likely to be the second SEC-registered deal from the region this year, after CorpBanca, which is expected to price January 15.