Brazil's state-run integrated energy firm
Petroleo Brasileiro S.A.
) has announced a $236.7 billion capital spending plan for the
period 2013-2017, which remains almost the same as its investment
plan issued last year for 2012-2016.
For exploration and production activities, Petrobras has
increased its planned investment by 4% to roughly $147.5 billion,
which comprises 62% of the company's total investment budget.
In order to support the increased investment for upstream
operations, Petrobras has reduced its planned investment for
refining operations by 1.1% to around $64.8 billion. Petrobras
also intends to lower its expenditure for natural gas and energy
projects by 28% to $9.9 billion.
Petrobras expects liquid and gas production in Brazil by 2020 to
be roughly 5.2 million barrels of oil equivalent a day, the same
as forecast in 2012.
Management has not yet given an outlook for its production
outside Brazil, but noted that Petrobras has a plan to assign
roughly $3.2 billion to invest abroad over the period of
2013-2017, 90% of which will be allocated for exploration and
Headquartered in Rio de Janeiro, Petrobras is the largest energy
firm in Brazil and one of the largest in Latin America.
Petrobras' activities include the exploration, exploitation and
production of oil from reservoir wells, shale and other rocks,
and refining, processing, trade and transport of oil and oil
products, natural gas and other fluid hydrocarbons, in addition
to other energy-related activities.
Brazil is expected to be among the world's four largest oil
producers this decade due to the country's huge offshore crude
discoveries. Petrobras is thus expected to strengthen its
operations from these new discoveries and grow its earnings
significantly in the near future.
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, 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 one to three months.
In the energy sector,
Helmerich & Payne Inc
Range Resources Corporation
Calumet Specialty Products Partners LP
) display better fundamentals and currently carry a Zacks Rank #1
CALUMET SPECLTY (CLMT): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
PETROBRAS-ADR C (PBR): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
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