Brazil's state-run energy giant,
Petroleo Brasileiro S.A.
) announced that it has made a fourth oil discovery in the Jupiter
area in the Block BM-S-24 in the Santos Basin. The discovery was
made through the well 3-BRSA-1246-RJS or Apollonia, located about
296 kilometers offshore Rio de Janeiro.
The well, a depth of 2,183 meters, has struck a 313 meter column of
hydrocarbon. An oil column, about 87 meters thick, has been
confirmed. The drilling of the well is continuing and is expected
to reach a maximum depth of 5,700 meters.
Petrobras is an 80% partner in the consortium working toward
development of the area, along with Petrogal Brasil that holds the
remaining 20% stake. Petrobras also acts as the operator of the
Headquartered in Rio de Janeiro, Petrobras is the largest
integrated energy firm in Brazil and one of the largest in Latin
America. However, the company has not fared well in the past few
quarters in terms of earnings results. Petrobras has a negative
earnings surprise of 19.51% for the trailing four quarters.
On Aug 8, Petrobras reported second-quarter earnings per ADR of 36
cents (1 ADR = 2 shares), lower than the year-ago profit of 46
cents and below the Zacks Consensus Estimate of 49 cents.
Significant higher exploration expenses hampered the results.
Moreover, a cap on pump prices fixed by the government dragged the
company's profit considerably.
The company ADRs have been on a negative trend since the earnings
report. It fell about 4.5% in the NYSE to close at $15.46 on Aug
13. Yesterday's fall was, however, a reflection of the news of the
death of the Brazilian presidential candidate Eduardo Campos.
Presently, Petrobras carries a Zacks Rank #3 (Hold). Meanwhile, one
can consider better-ranked players from the broader energy space
like Sunoco Logistics Partners L.P. (
), Patterson-UTI Energy Inc. (
) and Cameron International Corporation (
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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