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Brazilian state controlled energy firm Petroleo Brasileiro S.A. or Petrobras (PBR - Analyst Report) has affirmed the presence of 1,437-foot column of hydrocarbons in the well – 3-BRSA-1053-RJS (3-RJS-699) – in the pre-salt deposit of Santos Basin. The discovery of the well was first announced in mid-August.

The company also declared that oil recovered from the carbonate reservoirs below the salt layer of the well exhibit a superior light quality with a gravity of 28 degree to 30 degree on the American Petroleum Institute (API) scale.

Drilled at a depth of 19,596.5 feet in stratigraphic horizon line – the well is unofficially known as Franco SW. It is located about 130.5 miles off the coast of Rio de Janeiro and 10.6 miles to the south of the discovery well 2-ANP-1-RJS (Franco).

This is the fourth well explored in the Transfer of Rights area that covers an acreage known as Sul de Guara. Petrobras is permitted to generate up to 3 billion barrels of oil equivalent from the region.

Earlier, in 2010, Petrobras entered into the Transfer of Rights Agreement with the Brazilian National Oil, Natural Gas and Biofuels Agency and obtained the authority to explore the region under the Mandatory Exploratory Program. The company plans to complete the ongoing exploration activities by September, 2014.

Headquartered in Rio de Janeiro, Petrobras primarily engages in exploration, exploitation and production of oil from reservoir wells, shale and other rocks; in refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, as well as in other energy-related activities.

Petrobras – which recently entered into a $1.1 billion (R$2.2 billion) subsea contract with GE Oil & Gas, a unit of General Electric (GE - Analyst Report) – retains a Zacks #4 Rank, which translates into a short-term Sell rating. Moreover, considering the fundamentals, we are maintaining a long-term Underperform recommendation on the stock.

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