Karoon Gas Scraps $773 Million Brazil IPO in Sixth Canceled Sale This Year

Karoon Gas Australia Ltd., an oil and gas explorer, has canceled a Brazilian initial public offering of its South American unit, citing "unfavorable" market after another five companies delayed or shelved sales this year .

The shares sold by the Brazilian energy companies have not fared as well as investors had hoped, Mt. Marta, based in Victoria Karoon said in a statement. Karoon, which planned to raise up to U.S. $ 773 million in sales, may reconsider an initial public offering later, Scott Hosking chief financial officer, said.

"Intellectual property offices earlier in Brazil have not changed, and that could have, so people were wary of taking the risk," Hosking said in a telephone interview. "We have had to lower the price in Brazil, and we were not willing to do that. There are good prospects too many to give it away."

Companies Multiplus OSX Brasil SA SA raised less than it sought in IPOs this year, European demand for debt crisis damped for riskier assets. State-controlled oil producer Petroleo Brasileiro SA has fallen 30 percent this year and 4.4 percent since raising $ 70 billion to offer the world's largest securities in September. The six sales left out equity in Brazil compared to four in the same period last year and 29 in 2008, according to data compiled by Bloomberg.

Karoon fell to 9.5 percent to $ 7.15 in trading today in Sydney before recovering to close 1.3 percent higher to $ 8. The S & P / ASX 200 fell 0.2 percent.

Brazil, Peru

Karoon, ConocoPhillips partner in a gas company in northwest Australia, was to use the proceeds from the offering to fund exploration in Brazil and Peru. While Karoon has $ 330 million ($ 324 million) in cash, enough to explore outside of South America and Australia for up to 24 months, the company may sell a 20 percent stake in its Brazilian assets to a partner to help finance the company, Hosking said.

Karoon plans to drill a minimum of three wells in Brazil and two in Peru and spend about $ 180 million exploration program in South America over the next two years, he said. The Australian company has interests in the Santos Basin in Brazil, where Petrobras has made discoveries.

Petrobras, based in Rio de Janeiro, fell 1.4 percent in Sao Paulo, the trade of 25.55 reais at 9:58 pm New York.

Brazilian oil explorer Oil TRH em Participacoes SA has fallen 0.8 percent since the increase from 1.54 billion in an initial public offering last month.

Investors have gained access to the shares of companies with oil reserves in Brazil, Xavier Grunauer, Sydney-based analyst at Nomura Holdings Inc., wrote in an email today.

"Why add to this position through a smaller company based in Australia? said.

'Disappointing' End

Karoon had planned to sell 32 percent of South American unity, offering 1.03 million shares at $ 603 to $ 750 each, the company said Oct. 27. After a delay the originally scheduled November 10 Karoon had expected stock price yesterday and reiterated that the goal in a Nov. 18 to shareholders.

"It's disappointing to end this way," Hosking said. "Until yesterday we thought that the deal is done."

Petrobras announced the discovery of oil early this week in the exploration prospect Molly off the coast of Brazil. Karoon, who said that the well is being drilled, agreed to acquire a 20 percent stake in the company. The discovery adds to the appeal Karoon, UBS AG analyst Gordon Ramsay said.

Karoon has fallen by 25 percent this year in trade in Australia.

Target Price

"If, in the worst case, the Brazilian IPO does not occur, we can still justify our A $ 11.64 target share price," Ramsay said in a report of 17 November. ConocoPhillips drilling plan in the company Karoon from Australia shows that the company "is very serious demonstrating that it can provide sufficient gas reserves," said analyst based in Melbourne.

At least 206 equity offerings totaling 37.9 billion U.S. dollars have been postponed or withdrawn across the world this year, according to data compiled by Bloomberg.

Queensland state may sell shares of coal train operator QR National Australia Ltd. in the bottom of a price range indicated in its initial public offering, three people familiar with the matter said.

The action, due to begin operating in Sydney on November 22, probably will sell for between $ 2.55 and $ 2.60 each, people said. The state government October 11, said it would sell shares at between $ 2.50 and A $ 3 each to raise between $ 3,660,000,000 and $ 5,050,000,000.