Brazil's state-run energy giant,
Petroleo Brasileiro S.A. or Petrobras
), has awarded three contracts - worth roughly $1.6 billion in
total - to Norwegian oilfield services firm
Subsea 7 SA
Per the deals, Subsea 7 will manufacture and operate three
new-build flexible pipe-lay support vessels (PLSV). The
operations will include engineering and project management
services and also the installation of flowlines, umbilicals and
tools. The contract period for each of the three developments
will be five years.
The three PLSVs - that are planned to be constructed at the IHC
Merwede shipyard in Holland - will be delivered by the third
quarter of 2016, fourth quarter of 2016 and second quarter of
2017, respectively. The vessels will be able to operate up to
water depths of 3,000 meters.
The estimated cost of the three PLSVs will be around $950.0
million, which also includes the cost of transporting the vessels
Petrobras is the largest integrated energy firm in Brazil and one
of the largest in Latin America. It produces substantially all of
Brazil's crude oil and natural gas and accounts for almost all of
the country's refining capacity.
On the flip side, 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 as the government's interest might not coincide with
that of the 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.
However, two firms in the energy sector with a favorable Zacks
Ferrellgas Partners LP
). Both the stocks currently retain a Zacks Rank #1 (Strong
DRIL-QUIP INC (DRQ): Free Stock Analysis
FERRELLGAS -LP (FGP): Free Stock Analysis
PETROBRAS-ADR C (PBR): Free Stock Analysis
SUBSEA 7 SA (SUBCY): Get Free Report
To read this article on Zacks.com click here.