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Petrobras to Sell Fully Owned Brazil's Shallow-Water Fields

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Petroleo Brasileiro S.A. or Petrobras (PBR - Free Report) announced plans to sell its stakes in the four offshore oil fields in shallow waters off the coast of Brazil's Ceara state, namely Atum, Curima, Espada and Xareu. Per management, the plan is in sync with its strategy to cut costs and improve capital allocation. This state-run energy giant is the sole owner of this stake and plans to sell 100% operating interest in the project.

Located at a water depth of 130 feet and 20 miles from the coast, the field came online in 1980s and produce oil as well as gas through nine platforms. The four fields have 4,200 barrels of daily oil output, on average, and 76,900 cubic meters of natural gas per day. 

The latest sales offer is part of the company’s strategy to regain its financial footing by selling assets and curtailing debt as it continues to grapple with issues since the breakout of a major corruption scandal years ago when it had accepted bribes from construction firms in return for awarding them contracts at inflated prices.

Petrobras targeted to sell assets worth $20-$30 billion over the next five years under its 2020-2024 investment plan. In early 2020, it put the Papa-terra deep-water oilfield besides Golfinho and Camarupim fields up for sale. Asset sales are part of the company’s portfolio optimization strategy and accordingly, it previously put more than 100 mature onshore and shallow-water offshore fields up for auction. Although some of the areas are already sold or are still in the sell-off process, divestiture of the deep-water oilfield in Campos Basin marks Petrobras’ transaction of higher-quality mature assets that still hold some upside potential.

Company Profile

Petrobras is the largest integrated energy firm in Brazil and one of the biggest in Latin America. The company’s activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons besides other energy-related operations.

Zacks Rank & Key Picks

Petrobras currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Gulfport Energy Corporation (GPOR - Free Report) , Devon Energy Corporation (DVN - Free Report) and Chesapeake Energy Corporation , each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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