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CNOOC to Buy Extra 5% Stake in Petrobras' (PBR) Buzios Oilfield

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PetroleoBrasileiro S.A.  or Petrobras (PBR - Free Report) recently stated in a securities filing that CNOOC Limited (CEO - Free Report) is interested in paying it $2.08 billion for an extra 5% share in the massive Buzios pre-salt field in the Santos Basin. Given this development, the Brazilian state-run oil company does not foresee any impact on its 2021 output target until the deal is completed.

The agreement's efficacy is contingent on the approvals from the Administrative Council for Economic Defence, the National Agency of Petroleum, Natural Gas and Biofuels, and the Ministry of Mines and Energy.

The move comes well over three months after Rio de Janeiro-based Petrobras signed the Buzios Coparticipation Agreement with Présal Petróleo S.A. (PPSA) and its Chinese partners CNODC Brasil Petróleo e Gás Ltda. (CNODC) andCNOOC, which will control the coexistence of the Transfer of Rights (TOR) Agreement and the Production Sharing Contract for surplus oil found in the Buzios field offshore Brazil.

Under this arrangement, China's state-owned CNOOC and CNODC paid Petrobras $2.94 billion for the past development expenditures at the Buzios pre-salt field, easing investor concerns ahead of another pre-salt auction in December 2021. Petrobras controls 92.666% of the Buzios reservoir while the remaining 3.667% stake is owned by other partners apiece.

In the November-2019 auction, Petrobras won 90% of the rights to explore and produce the excess volume of the Transfer of Rights from the Buzios field. The residual 10% interest was distributed evenly between CNOOC and CNODC with an option to increase it at a later period. The three firms paid $17.1 billion for the right to generate more than the 3.15 billion barrels of oil equivalent that Petrobras had initially agreed to produce.

Company Profile

Petrobras is the largest integrated energy firm in Brazil and one of the biggest in Latin America. The company’s activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons in addition to other energy-related activities.

Zacks Rank & Key Picks

Petrobras currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Continental Resources, Inc. and Magnolia Oil & Gas Corp (MGY - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Resources’ earnings beat the Zacks Consensus Estimate in three of the previous four quarters while missing the same on one occasion.

Magnolia’s earnings beat the Zacks Consensus Estimate in all the last four quarters.


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