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Petrobras (PBR) Breaks 6-Month Cold Streak in Brazil Output

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Petróleo Brasileiro S.A. or Petrobras (PBR - Free Report) recently announced its overall equivalent production of 2.68 million barrels of oil equivalent per day (MMBoed), for the month of April. The Brazilian state-run company’s domestic production during this period was 2.59 MMBoed, while international production totaled 95 thousand barrels of oil equivalent per day.

Notably, the company’s crude oil production for April surged 1.1% on a monthly basis, ending a six-month long cold streak. Crude output in Brazil averaged 2.09 MMBoed. In the month of April, natural gas production except liquids averaged 79 million cubic meters per day (MMcm/d), surging 1.2% month over month. The rise in output can be attributed to the completion of maintenance work on Cidade de Angra dos Reis named floating production storage and offloading (FPSO) unit, which is currently located in the Lula Field. Moreover, production commencement in the Búzios Field through FPSO P-74 added to the output rise.

However, production in April was marginally down from 2.10 MMBoed in the year-ago period. Additionally, crude production from abroad averaged 58 thousand barrels per day (MBPD), down 5% from March. Similarly, natural gas output was 6.3 MMcm/d, 1.6% below March level. The fall was due to maintenance works in the Saint Malo and Lucius fields, in the United States.

Full-Year Expectations

The company pumped first oil from the Búzios Field during April-end, operating on a single well. FPSO P-74 installed at the site has a production capacity of 150 MBPD, while processing natural gas of 6 MMcm/d. Búzios is anticipated to hold recoverable reserves of around 3.1 billion barrels. Naturally, production ramp up from the field will largely help the company reach its 2018 production target of 2.1 million barrels per day. It is expected to have a significant positive effect on the company’s 2018 revenues. For the full year of 2018, the Zacks Consensus Estimate for sales is pegged at $100.5 billion, higher than 2017’s top line of $88.8 billion.

However, Petrobras’ planned divestment (2017-18) program of assets can offset the production boost. The company has listed more than 100 blocks, both onshore and offshore, under its $21 billion divestment program.

Price Performance

Headquartered in Rio de Janeiro, Petrobras has gained 92.8% in the past year compared with 15.1% growth of its industry.

Zacks Rank and Stocks to Consider

Petrobras has a Zacks Rank #3 (Hold).

Investors interested in the Energy sector can opt for some better-ranked stocks in the same space like Nine Energy Service, Inc. (NINE - Free Report) , CNOOC Limited (CEO - Free Report) and BP p.l.c. (BP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based Nine Energy Service is an onshore service provider. For 2018, the bottom line is likely to be up 180.1%. In the last reported quarter, the company delivered a positive earnings surprise of 28.6%.

Hong Kong-based CNOOC is an integrated energy company. The company’s top line for 2018 is anticipated to improve 49% year over year, while its bottom line is expected to increase 83.3%.

London-based BP is an integrated oil major. For 2018, its bottom line is likely to be up 67.6%. In the last four reported quarters, the company delivered a positive average earnings surprise of 29.6%.

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