Vale to Sell Gas Stake - Analyst Blog

By
A A A

Vale S.A. ( VALE ), a Brazilian player in the metals and mining industry, declared its stake sale in the concession BM-ES-22A in Brazil's Espirito Santo Basin. The company owned 25% of the stake in partnership with Statoil Brasil, the Brazilian branch of Norwegian energy company, Statoil. The total stake is valued at $40 million, payable in cash.

As per the company, the stake sell-off will save the company from spending around $80 million for the project as capital expenditure. Without having any expiry date fixed, the transaction is subject to regulatory conditions and approvals. The main reason behind the proceedings is the company's objective of focusing on the core activities.

The decision to sell-off came within a month of the company announcing its capital and R&D expenditure plans for the year 2013. In the coming year, the company plans to spend $16.3 billion in capex, around a 7% decline from the $17.5 billion estimated in the year 2012.

In the latest reported quarter, 3Q12, the company reported a revenue decline of 9.8% sequentially and 34.5% y/y; ascribing the fall in revenue to the plummeting selling prices of its major products. Earnings faced a sharp decline of 37.3% sequentially and 66.2% y/y. Since then, Vale has been trying to dispose of its stake in the non-core projects so that it can shape up its core business well.

Vale S.A. is one of the world's largest producers and exporters of iron ore and pellets. Vale holds a Zacks #3 Rank, which translates into a short-term (1-3 months) 'Hold' rating. The company keeps improving its competitiveness against rival companies, such as Rio Tinto Plc. ( RIO ) and BHP Billiton Ltd. ( BHP ), both holding a Zacks #3 Rank.



BHP BILLITN LTD (BHP): Free Stock Analysis Report

RIO TINTO-ADR (RIO): Free Stock Analysis Report

VALE SA (VALE): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BHP , RIO , VALE

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Lies Retailers Tell
Lies Retailers Tell                 

Stocks

Referenced

Most Active by Volume

38,039,655
  • $42.50 ▲ 5.77%
27,201,473
  • $103.6928 ▲ 1.19%
22,248,592
  • $8.19 ▲ 0.24%
20,385,507
  • $16.64 ▲ 0.24%
15,910,136
  • $79.53 ▲ 1.07%
14,377,988
  • $12.51 ▲ 3.99%
13,987,189
  • $97.21 ▲ 0.35%
12,590,441
  • $13.325 ▲ 0.95%
As of 10/22/2014, 11:26 AM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com