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Brazilian energy giant, Petroleo Brasileiro SA or Petrobras (PBR - Analyst Report) announced excellent well test results from the Iara oil field, located in Santos Basin, off the coast of Rio de Janeiro.

Petrobras announced that the Extended Well Test (EWT) in the region started on Jun 21 on the well 3-BRSA-1132-RJS (RJS-706). The initial yield from the well was 29 thousand barrels of oil. Petrobras mentioned that the results indicate the immense potential of the region as the initial production is similar to that of other wells in the Santos Basin pre-salt area that are producing for commercial purposes.

This is the first EWT to be carried out in Iara as part of the Discovery Evaluation Program. This ultra-deepwater oilfield was discovered in 2008 and has an evaluation period till the end of 2014. Post the expiry of the Evaluation Plan period, the consortium of companies comprising Petrobras, BG Group and Petrogal Brasil will submit the declaration of commerciality in the region to Brazil’s National Petroleum, Natural Gas and Biofuels Agency (ANP).

Petrobras, with a 65% interest, is the operator of the consortium. Meanwhile, BG E&P Brasil Ltda and Petrogal Brasil S.A hold 25% and 10% stake respectively.

Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil. The company’s activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks. The company also engages in the refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.  

Petrobras currently has a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players from the broader energy sector such as EQT Corporation (EQT - Analyst Report), QEP Resources, Inc. (QEP - Analyst Report) and TC PipeLines, LP (TCP - Analyst Report). All these stocks sport a Zacks Rank #1 (Strong Buy).

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