Petrobras Finds Oil in Santos Basin - Analyst Blog

Petroleo Brasileiro S.A. or Petrobras ( PBR ) confirmed the discovery of superior quality oil in the south Santos Basin well 4-SPS-91 (4-BRSA-1002-SPS). As per the oil sampling tests, the find was in an approximately 2,160 meters deep sandstone reservoir in the post-salt area known as Tiro and Sidon.

Located about 200 km from the coast of Sao Paulo State and in a water depth of 299 meters, the well - informally known as Patola - is estimated to contain oil of around 36 degrees API that is similar to the oil discovered in the neighboring wildcats well. However, Petrobras did not disclose the amount of oil discovered.

Petrobras plans to conduct extensive drilling activities in the area and go ahead with the Extended Well Test, which is currently in progress in other wells.

Headquartered in Rio de Janeiro, Petrobras primarily engages in exploration, exploitation and production of oil from reservoir wells, shale and other rocks; in refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons; as well as in other energy-related activities.

We continue to remain upbeat on the medium- to long-term outlook on Petrobras based on its encouraging portfolio of investments, particularly in the prolific Espirito Santo, Campos and Santos Basins of Brazil. The company is the operator in most of these exploration areas in which it holds interests ranging from 20% to 100%.

In early October, the Brazilian oil giant announced the discovery of an oil and gas reserve in the Sergipe-Alagoas sedimentary basin, off the coast of northeast Brazil. In mid September, Petrobras commenced operations at its offshore Lula-Mexilhao Gas Pipeline in the Santos Basin. The pipeline connects the Lula field and the Mexilhao platform and has a flow capacity of up to 10 million cubic meters per day.

However, we maintain a long-term Neutral rating on the stock, considering the company's huge investment requirements, operational hindrances and international business risks.

Petrobras, which operates in the industry along with other prominent players such as BP Plc ( BP ) and Royal Dutch Shell plc ( RDS.A ), currently retains a Zacks #3 Rank (short-term Hold rating).

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

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

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