Petroleo Brasileiro SA or Petrobras
) apprehends a roughly $15.0 billion decrease in its profits
between 2014 and 2018. The profits of this Brazilian energy giant
will shrink if it is obliged to suspend the oil platform deal with
SBM Offshore − a marine service provider in Holland.
The obligation might stem from SBM Offshore's suspected payment of
roughly $250.0 million as bribes in Africa and South America and
$139.0 million in Brazil. The payments are currently the subject
matter of investigation in Brazil, the U.S and the
Petrobras added that its production of oil and natural gas will be
significantly reduced if it stops utilizing the floating oil
production platforms of SBM Offshore - one of the largest leaser of
floating production, storage and offloading (FPSO) vessels in the
Headquartered in Rio de Janeiro, Petrobras is the largest
integrated energy firm in Brazil. The company's activities include
exploration, exploitation and production of oil from reservoir
wells, shale and other rocks. The company also engages in the
refining, processing, trading and transportation of oil and oil
products, natural gas and other fluid hydrocarbons, in addition to
other energy-related activities.
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
term. This may impact the company's performance, since interests of
the government might not coincide with that of minority
As a result, Petrobras currently has 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 three months.
Meanwhile, one can consider better-ranked players in the energy
QEP Resources Inc.
Pembina Pipeline Corporation
TC PipeLines LP
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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PETROBRAS-ADR C (PBR): Free Stock Analysis
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