Brazilian state-run energy giant, Petroleo Brasileiro S.A. or Petrobras (PBR - Analyst Report) recently announced its plan to divest its stake in Brazilian petrochemical company, Braskem SA (BAK - Snapshot Report) , before the end of 2018. The strategy is targeted to reduce Petrobras’debt and finance its business plan.
The Rio de Janeiro-based state-run producer has included the Braskem stake in its divestment plans in keeping with its aim to raise $19.5 billion through asset sales in 2017 and 2018. The time of divestment, however, has not been decided as yet.
Petrobras is the second-largest shareholder in Braskem, wherein it owns 36% stake of the total capital, 47% of Braskem's common shares and 21.8% of its non-voting preferred stock.
Petrobras, with net debt of around $103.56 billion, is the most indebted energy company in the world. The company is in a deep financial crisis due to low oil prices and the loss of goodwill owing to the discovery of massive corruption within its ranks.
PETROBRAS-ADR C Price
For the 2015–16 period, Petrobras plans asset sales of as much as $15.1 billion. The company intends to raise an additional $19.5 billion through divestments and partnerships between 2017 and 2018. Petrobras also foresees divestitures worth $40 billion over the next 10 years. Through these sales, the company intends to reduce debt and exit from peripheral businesses such as biofuels, fertilizers and petrochemicals to focus on the most profitable deep water projects.
Recently, the company sold 90% stake in its natural gas pipeline and storage unit – Nova Transportadora do Sudeste – to Canadian investment fund, Brookfield Asset Management Inc., for $5.2 billion.
Petrobras engages in the exploration, development, and production of crude oil, natural gas, and natural gas liquids. Additionally, the company sells crude oil and oil products produced at natural gas processing plants in domestic and foreign markets.
Petrobras currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the broader energy sector include Enbridge Inc. (ENB - Snapshot Report) and China Petroleum & Chemical Corp. (SNP - Analyst Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last four quarters, Enbridge posted an average positive earnings surprise of 4.8%.
China Petroleum & Chemical, on the other hand, posted an average positive earnings surprise of 1,383.3% in the last four quarters.
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