Brazilian state-run energy giant, Petroleo Brasileiro SA or Petrobras (PBR - Free Report) reported that it has started operating the well 7-SPH-04-SPS on Apr 3, 2014. The well is situated in the company operated Sapinhoá field, at water depths of roughly 2,120 meters. Petrobras expects the well to produce roughly 26,000 barrels of oil per day (Bpd).
7-SPH-04-SPS, which is the third oil generating well of the Sapinhoá pilot development, is connected to FPSO (Floating, Production, Storage and Offloading) Cidade de São Paulo. The FPSO unit, which has a processing capacity of up to 120,000 Bpd, is in service since Jan 5, 2013.
Additionally, Petrobras stated it achieved a monthly production record of 387,000 Bpd from the pre salt layer operations in March. With this, the integrated oil firm beat the record of 385,000 bpd, achieved in the previous month.
Petrobras is the largest integrated energy firm in Brazil and one of the largest in Latin America. The company’s activities include: exploration, exploitation and production of oil from reservoir wells, shale and other rocks.
However, the Brazilian government, the company’s majority shareholder, has a history of political interference in Petrobras’ affairs. We do not expect this situation to change in the short run. This may impact the company’s performance, since interests of the government might not coincide with those of minority shareholders.
Headquartered in Rio de Janeiro, Petrobras currently holds 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 look at better-ranked players in the energy sector like Range Resources Corporation (RRC - Free Report) , Helmerich & Payne Inc. (HP - Free Report) and Patterson-UTI Energy Inc. (PTEN - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy).