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Petrobras' (PBR) Production Declines in March Due to Outage

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Brazil oil giant Petroleo Brasileiro S.A., aka Petrobras (PBR - Free Report) recently announced that its total production for oil and natural gas in March was 2.74 million barrels of oil equivalent (Boe) per day. This volume represents 3% decrease compared with the production figures in February. The drop is attributed to the maintenance outages on two of its floating production storage and offloading (FPSO) vessels, located in Lula and Marlin fields.

Petrobras owns a 65% operating stake in the Lula Field. The remaining 25% and 10% interests are held by Netherlands-based Royal Dutch Shell PLC and Portugal’s Galp Energia, SGPS, S.A. (GLPEY - Free Report) . A couple of weeks ago, Petrobras announced plans of adding two additional FPSOs in the Lula field to boost production. The new FPSOs will be part of the eight units that are to be installed offshore Brazil over the next two years, according to Petrobras' 2017–2021 investment plans.

Petrobras’ total oil and natural gas liquids production amounted to 2.14 million barrels per day in 2016 and the company targets to expand production to 2.77 million barrels per day by 2021 as per its 2017-2021 business management plans.

Zacks Rank and Key Pick

Currently, Petrobras is focusing on improving its liquidity and operational performance. The company’s efforts to deleverage or at least refinance its debt obligations to extend maturity also work in favor. The company’s rigorous divestment goals are likely to reinstate its financial health by mitigating leverage. However, Petrobras at present is reeling under immense debt burden which can’t be resolved until the cash flow is positive. Also, any negative developments from the pending litigation cases may hamper the financials adversely. Thus, the state-run integrated energy company carries a Zacks Rank #3 (Hold).

The company’s shares rallied almost 46% over the past one year, outperforming the Zacks categorized Oil & Gas Emerging Markets Integrated industry’s 28% gain.

A better-ranked player in the same industry include China Petroleum & Chemical Corporation or Sinopec which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sinopec is expected to report year-over-year growth of 56.23% in its earnings in 2017.

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