FACTBOX-Details on Petrobras' capitalization plan

Sept 2 (Reuters) - Brazilian state oil company Petrobras (PETR4.SA) is preparing a massive capitalization program that will help raise up to $25 billion in new funds to finance an ambitious deep-water oil exploration campaign.

Under the oil-for-shares capital program, the government will give Petrobras access to 5 billion barrels of offshore oil in exchange for $43 billion worth of company stock, while minority shareholders will buy stock to retain their stakes.

The basic outline of the operation is as follows:

* RIGHTS TRANSFER: The government will transfer rights to produce 5 billion barrels of oil distributed in six offshore fields buried under the ocean floor in a region known as the subsalt in deep waters.

The government and Petrobras agreed to price the oil at an average of $8.51 per barrel, above market expectations of $5 to $6 per barrel.

About 60 percent of the crude will come from the giant Franco discovery, with the rest coming from five other areas: Tupi South, Tupi Northeast, Florim, Guara East, and Iara.

A seventh field, known as Peroba, will be held in reserve in case the other six fields fail to yield 5 billion barrels.

Most of the fields to be used are adjacent to major subsalt region discoveries.

* SHARE ISSUANCE: Petrobras will launch a share offer for as much as $150 billion reais ($85 billion).

It will ultimately use some of those shares to pay for rights to develop offshore crude. Minority shareholders will have to buy shares in cash or in government bonds to avoid dilution of their holdings in the company.

Existing shareholders will have a right of first refusal, but leftover shares will be available for other investors.

State-run banks such as development lender BNDES and mortgage bank Caixa Economica Federal will be able to step in to buy shares as well.

Analysts believe this step was meant to ensure Petrobras would receive enough fresh funds from the operation should a significant number of minority shareholders decide not to participate in the offer.

* TRANSFER OF GOVERNMENT BONDS: The state will use government bonds to buy Petrobras shares. The total value of that purchase will be equal to the value of the oil determined by the auditors.

Petrobras will later return the bonds to the government in exchange for rights to produce the 5 billion barrels.

This additional step was created on concerns that minority shareholders could complain of discriminatory treatment if they were required to pay in cash while the government could pay in oil reserves.

As a result, minority shareholders will also be allowed to buy shares in government bonds.

* FIELD DEVELOPMENT: Petrobras will explore and produce oil from the fields with no private partners. It will pay royalties on oil pumped from those fields, but will not pay Brazil's Special Participation tax of up to 40 percent on high productivity fields. (Reporting by Brian Ellsworth, editing by Gerald E. McCormick)