Brazil, Petrobras clash over reserve size-report

* Reserves to be used in oil-for-shares swap

* Gov’t and company already in dispute over price

SAO PAULO, Aug 25 (BestGrowthStock) – Energy giant Petrobras and
Brazil’s government clashed over the size of oil reserves to be
used in an oil-for-stock swap, Folha de S.Paulo newspaper
reported on Wednesday, further complicating the operation amid
a dispute over the price to be used for that oil.

The government believes an offshore area to be used in the
exchange holds more than 4.5 billion barrels, while Petrobras
management says the area holds less than 4 billion barrels,
Folha reported, citing no sources.

Petrobras (PETR4.SA: )(PBR.N: ) has said it will not comment on
any information regarding the operation because it has
established a period of silence in the run-up to the share
issue.

The massive capitalization plan, worth up to $85 billion,
is crucial for the company to advance its ambitious development
plan for deep water oil reserves, but uncertainty over the
transaction has weighed heavily on its stock price.

Under the plan, Petrobras would trade company shares for up
to 5 billion barrels of crude while minority shareholders would
buy stock. The stock offer could raise $25 billion in cash,
while the oil swap could be worth an additional $60 billion.

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Details of capitalization plan [ID:nN09151318]

Brazil oil graphic: http://link.reuters.com/wec82j

Scenarios for capital plan [ID:nN19264213]

Shareholder Graphic: http://link.reuters.com/quf29k

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The company and the government are already at odds over the
value of that oil, with Petrobras seeking a price close to $6
per barrel and the government asking $7 to $8 or even as much
as $12 per barrel, according to sources and media reports.

The price per barrel is crucial for investors eyeing the
transaction because markets are concerned the government may
charge Petrobras (PETR4.SA: )(PBR.N: ) too much for the oil to be
used in the swap, leaving Petrobras overpaying for the asset
and possibly diluting shares.

Petrobras shares have fallen more than 27 percent since the
start of the year in Sao Paulo, compared to a 5 percent decline
for Brazil’s benchmark Bovespa stock index.
(Reporting by Elzio Barreto and Brian Ellsworth; Editing by
Derek Caney)

Brazil, Petrobras clash over reserve size-report