Brazilian state-run energy giant,
Petroleo Brasileiro SA, or Petrobras
) was the dominating bidder in the auction organized by Brazil's
National Petroleum Agency, or ANP, acquiring 49 out of the 72 oil
and natural gas blocks that received bids.
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The 49 blocks that the company won was one less than what it bid
for. Among the blocks won by Petrobras in this 12th bidding round
of ANP, 22 were in partnership, 16 of which will be operated by
Petrobras and the remaining by its partners.
The total signature bonus to be paid by the company is around
R$143 million, which amounts to 87% of the total bonus collected
in the round. The consideration comprises R$120 million to be
paid by Petrobras and the remaining R$ 23 million to be paid by
The blocks that were put up for auction are located in remote
areas that are yet to be explored or in mature regions, that have
already produced oil and may not have much more to offer. As a
result, the 240 blocks put up for the auction received lukewarm
response. Out of the 21 companies registered to participate in
the bid, only a handful of oil majors like Petrobras,
Royal Dutch Shell
) were visible.
The bid by Petrobras, however, is a move to increase acreage near
its existing operations, facilitating growth in production and
reserves. In the mature areas, the company has acquired 19 blocks
in the Sergipe-Alagoas basin and 20 blocks in the Recôncavo
basin, near its existing facilities. In the new frontier basins,
it has acquired 1 block in the Acre-Madre de Dios basin and 9
blocks in the Paraná basin, with the objective of locating new
natural gas focused producing areas.
This investment is in line with the company's exploration plan as
per the Business and Management Plan 2013-2017.
Headquartered in Rio de Janeiro, Petrobras currently carries 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
Meanwhile, one can consider better-ranked energy sector stocks
) that currently sports a Zacks Rank #1 (Strong Buy).