Petrobras International Braspetro BV, a wholly-owned
subsidiary of Brazil's state-run energy giant
Petroleo Brasileiro S.A.
) has entered into a joint venture with Brazilian investment bank
- Banco BTG Pactual SA. The parties have teamed up for upstream
operations in Africa.
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Per the venture, BTG Pactual will buy 50% interests of the total
oil and gas upstream assets based in Angola, Benin, Gabon,
Namibia, Tanzania and Nigeria. The assets are fully owned by
Petrobras International. The total cash consideration for the
transaction is estimated at $1.5 billion. The deal, already
approved by the Petrobras board of directors, is slated to be
completed by June end.
Petrobras added that this deal, which is representing its
divestment plan, is aimed at expanding its African upstream
operations through investment sharing opportunities - a
cost-effective way of developing properties.
BTG Pactual will benefit no less from this venture. The project
will help in diversifying BTG Pactual's client portfolio, by
investing in the African oil and gas exploration and production
Headquartered in Rio de Janeiro, 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. Petrobras is also engaged in refining,
processing, trade and transport of oil and oil products, natural
gas and other fluid hydrocarbons, in addition to other
Petrobras produces substantially all of Brazil's crude oil and
natural gas and accounts for almost all of the country's refining
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 to medium term. This may impact the company's
performance, since interests of the government might not coincide
with those of minority shareholders.
Petrobras currently retains a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next 1 to 3 months.
Meanwhile, one can look at
Ferrellgas Partners LP
EQT Midstream Partners LP
) as good buying options. These energy stocks - sporting a Zacks
Rank #1 (Strong Buy) - have solid secular growth stories with
potential to rise significantly from the current levels.