State-controlled energy company -
Petroleo Brasileiro S.A.
) announced that it has encountered light hydrocarbons in the well
- 1-BRSA-1083-SES (1-SES-167) - in Sergipe-Alagoas basin, off the
northeastern coast of Brazil.
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Located in ultra-deep water block SEAL-M-426, the well is commonly
known as Farfan and was drilled to a depth of 8,923 feet. This
block forms a part of the concession BM-SEAL-11. Petrobras controls
60% stake in the concession along with operating rights, while the
remaining 40% is with IBV Brasil.
Petrobras performed electric log analysis and fluid sampling
through cable tests to confirm the discovery of a hydrocarbon
column of 144.3 feet. Most part of the column was made up of porous
sandstones containing light hydrocarbons.
Petrobras plans to conduct extensive drilling activities in the
above-mentioned area and put forward an Appraisal Plan (PAD) to the
National Petroleum, Natural Gas and Biofuels Agency (ANP).
Prior to this, Petrobras, in October, 2011, discovered superior
quality gas in 1-BRSA-851-SES (1-SES-158) well in Barra
accumulation in the same basin. In late August 2012, Petrobras hit
upon an oil and gas reserve in the Moita Bonita well.
Headquartered in Rio de Janeiro, Petrobras is a Brazilian energy
behemoth, dominating the country's energy sector. The company's
activities include: the exploration, exploitation and production of
oil from reservoir wells, shale and other rocks, and in the
refining, processing, trade and transport of oil and oil products,
natural gas and other fluid hydrocarbons, in addition to other
Petrobras - the fourth biggest company by market capitalization
Royal Dutch Shell plc
) - currently retains a Zacks #4 Rank, which translates into a
short-term Sell rating.
We also maintain a long-term Underperform recommendation on the
stock, reflecting the company's weak fundamentals and poor
performance in the last few months. We further remain concerned by
Petrobras' huge investment requirements, the possibility of
heightened state interference and caps on local fuel prices.