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Petrobras (PBR) Announces Plans to Sell Assets in Amazon
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Shares of Brazilian oil giant Petroleo Brasileiro S.A., aka Petrobras (PBR - Free Report) fell 2.09% to close at $8.89 on May 25. The state run company is not only grappling with huge debts but is also embroiled in Brazil's latest corruption scandal which can also put an end to the Brazilian President Michel Temer’s term before the end of 2018.
Petrobras witnessed an impressive turnaround since Pedro Parente took over as the company’s CEO a year ago. Petrobras is concentrating on improving its liquidity and operational performance. The company’s deleveraging efforts and divestment goals will help in reinstating its financial health.
Petrobras which aims to revive its financial health through the divestment program of 2015–2018, has already sold assets worth $13.6 billion since Jan 2015. The company intends to raise another $21 billion over the next two years to garner $35 billion from asset sales. These divestment plans are in sync with the company’s strategy to reinstate investor’s faith in the stock. Moving ahead with its divestment plans, Petrobras recently announced plans to offload its 100% stake in the Jurua natural gas field in the Amazon region. This comes after the company’s revealed plans to sell stake in the Azulão Field a week ago. Notably, this stake is also located in the Amazon region.
In a separate report, as per Reuters, Petrobras expects to export higher volumes of oil this year than what it had projected initially. As the company moves forward with the development of its pre-salt oil reserves, it now expects its oil exports to reach 503,000 barrels per day (bpd) from the initial forecast of 450,000 bpd. Further, it expects its oil export volumes to cross 742,000 bpd by 2021. The company will exercise its preferential rights in three pre-salt blocks in Santos Basin for the second and third bidding rounds in an attempt to maximize the value of its portfolio. The company is likely to become the operator with a minimum share of 30% in each area. Pre-salt oil reserves are capable of producing lighter varieties which are in demand internationally. Taking part in the offshore pre-salt auctions is in sync with the company’s strategy to strengthen its exploratory portfolio without major impact on its leverage metrics.
Taken together, the auctions and the divestment plans of the company is likely to reposition the company by reducing its financial burden and enabling it to focus on developing its core base of pre-salt fields.
Zacks Rank & Key Picks
Petrobras is an integrated company that is involved in exploration, production, refining, retailing and transportation of petroleum and its byproducts, both domestically and internationally. The Brazilian multinational corporation is headquartered in Rio de Janeiro.
Year to date, shares of Petrobras declined 12.2%, underperforming the Zacks categorized Oli & Gas Emerging Markets integrated industry which declined less than 4%.
However, the company reported average positive earnings surprise of 18.51% in the last four quarters.
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked players from the broader energy sector include McDermott International, Inc. , Canadian Natural Resources Limited (CNQ - Free Report) and Delek Logistics Partners, L.P. (DKL - Free Report) . All the three firms sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
McDermott reported positive earnings surprise in each of the last four quarters, the average being 387.5%.
Canadian Natural Resources is expected to post year over year growth of 720% in its earnings in 2017.
Delek Logistics is expected to deliver year over year growth of 16.1% in its earnings in 2017.
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Petrobras (PBR) Announces Plans to Sell Assets in Amazon
Shares of Brazilian oil giant Petroleo Brasileiro S.A., aka Petrobras (PBR - Free Report) fell 2.09% to close at $8.89 on May 25. The state run company is not only grappling with huge debts but is also embroiled in Brazil's latest corruption scandal which can also put an end to the Brazilian President Michel Temer’s term before the end of 2018.
Petrobras witnessed an impressive turnaround since Pedro Parente took over as the company’s CEO a year ago. Petrobras is concentrating on improving its liquidity and operational performance. The company’s deleveraging efforts and divestment goals will help in reinstating its financial health.
Petrobras which aims to revive its financial health through the divestment program of 2015–2018, has already sold assets worth $13.6 billion since Jan 2015. The company intends to raise another $21 billion over the next two years to garner $35 billion from asset sales. These divestment plans are in sync with the company’s strategy to reinstate investor’s faith in the stock. Moving ahead with its divestment plans, Petrobras recently announced plans to offload its 100% stake in the Jurua natural gas field in the Amazon region. This comes after the company’s revealed plans to sell stake in the Azulão Field a week ago. Notably, this stake is also located in the Amazon region.
In a separate report, as per Reuters, Petrobras expects to export higher volumes of oil this year than what it had projected initially. As the company moves forward with the development of its pre-salt oil reserves, it now expects its oil exports to reach 503,000 barrels per day (bpd) from the initial forecast of 450,000 bpd. Further, it expects its oil export volumes to cross 742,000 bpd by 2021. The company will exercise its preferential rights in three pre-salt blocks in Santos Basin for the second and third bidding rounds in an attempt to maximize the value of its portfolio. The company is likely to become the operator with a minimum share of 30% in each area. Pre-salt oil reserves are capable of producing lighter varieties which are in demand internationally. Taking part in the offshore pre-salt auctions is in sync with the company’s strategy to strengthen its exploratory portfolio without major impact on its leverage metrics.
Taken together, the auctions and the divestment plans of the company is likely to reposition the company by reducing its financial burden and enabling it to focus on developing its core base of pre-salt fields.
Zacks Rank & Key Picks
Petrobras is an integrated company that is involved in exploration, production, refining, retailing and transportation of petroleum and its byproducts, both domestically and internationally. The Brazilian multinational corporation is headquartered in Rio de Janeiro.
Year to date, shares of Petrobras declined 12.2%, underperforming the Zacks categorized Oli & Gas Emerging Markets integrated industry which declined less than 4%.
However, the company reported average positive earnings surprise of 18.51% in the last four quarters.
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked players from the broader energy sector include McDermott International, Inc. , Canadian Natural Resources Limited (CNQ - Free Report) and Delek Logistics Partners, L.P. (DKL - Free Report) . All the three firms sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
McDermott reported positive earnings surprise in each of the last four quarters, the average being 387.5%.
Canadian Natural Resources is expected to post year over year growth of 720% in its earnings in 2017.
Delek Logistics is expected to deliver year over year growth of 16.1% in its earnings in 2017.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>