The memorandum of understanding with Cosan reflects BG's wider plan to free up about $5 billion of cash through asset sales over two years to help fund about $22 billion of capital investment over the same period.
BG, formerly British Gas, bought its stake in Comgás when the Brazilian business was privatized in 1999. The deal values its equity holding at $1.8 billion and will also move about $1.1 billion of debt off BG's balance sheet.
"Given the deals we have announced and others we are working on...we have identified the route to accessing more than 70% of the $5 billion [disposal target]", BG Chief Executive Frank Chapman told a conference call on Thursday.
Analysts at Tudor Pickering Holt & Co. Securities Inc. said the $2.9 billion price came in higher than their own valuation of $1.6 billion.
BG in April agreed to sell its 40% stake in Chilean LNG Terminal GNL Quintero SA to Spain's Enagas SA for as much as $352 million. It is also negotiating the sale of its majority stake in India's Gujarat Gas Co. Ltd. and is in talks to sell two gas-fired energy plants in the Philippines. Chapman said he was confident that both deals would conlclude.
Comgás supplies gas to the southeast region of Brazil and accounts for about 30% of all natural gas distribution in the country. It posted Ebitda of R$1.1 billion ($574 million) in 2011 and net income of R$487 million, according to a Dec. 31 Comgás investor presentation.
BG owns 83.5% of Integral Investments BV, which in turn owns 71.9% of Comgas. The remaining stake in Integral is owned by Royal Dutch Shell plc, which also directly owns a 6.3% stake in Comgás. Shell must give its approval for the sale, which BG expects to conclude by the end of the year.
BG's planned $22 billion of capital expenditure is its largest ever investment program and will develop its existing oil and gas fields. Much of that money will be funneled into assets in Brazil's Santos Basin, from which BG expects to pump about 600,000 barrels of oil a day by 2020, and the Australian Queensland Curtis LNG Project, which will begin selling about 10 million tons per annum of natural gas from 2014.
BG is also developing Bolivia's Caipipendi natural gas field. Chapman said he was not concerned by the possibility that the asset could be nationalized, noting that his experience with Bolivian authorities was "extremely positive". Bolivian President Evo Morales on Tuesday seized his country's national power grid operator, citing a lack of investment in the grid by the business's owner, Red Eléctrica Corp., of Spain.
BG also said Thursday that first-quarter revenue had risen 20% to $5.78 billion, while operating profit had climbed 21% to $2.37 billion. Shares in the group traded Thursday at 1,395 pence ($22.61), down 56 pence, or almost 4%.
-Claire Poole contributed to this report.
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