Petrobras Hits Record Volumes in Brazil for 4 Years in a Row

Petróleo Brasileiro S.A. or Petrobras PBR recently announced that it has accomplished a record for its average oil production in Brazil for four years in a row. The state-run company produced 2.15 million barrels per day (bpd) of oil in 2017.

The production is 0.4% higher than 2016's volumes. Moreover, Petrobras met its projected output for three consecutive years, which increases the reliability of the company's projections. Its natural gas production in 2017 reached 79.6 million cubic meters per day mark. It helped the company's total production in Brazil to attain 2.65 million barrels of oil equivalent per day (Boe/d) level, 0.9% above 2016 levels.

In the pre-salt layer, average annual production - including the company's partners' portions - was 1.29 million bpd, representing a 26% year-over-year increase. Per the company, increased production in the Santos Basin's Lapa and Lula fields has driven the results. In addition, initiation of production at the FPSO Pioneiro de Libra in the Santos Basin's pre-salt layer boosted the company's output.

Production outside Brazil took a hit from divestments like the sale of Petrobras Argentina, which was targeted toward reducing the huge debt burden (more than $100 billion) of the company. Average international oil production in 2017 was recorded at 64,000 bpd, 20% lower than 2016. At 8.3 million cubic meters per day mark, average natural gas output was down 39% year over year.

In December 2017 alone, oil equivalent production was 2.72 million Boe/d. Of this, 2.62 million Boe/d was generated in Brazil while 100,000 Boe/d was produced overseas.

Price Performance

The company has gained 8.5% in the last year compared with 14.7% growth of its industry .

About the Company

Headquartered in Rio de Janeiro, Petrobras is one of the largest integrated energy firms in Latin America. The company's activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons, besides other energy-related activities. It mainly operates through six segments - Exploration and Production, Refining, Transportation and Marketing, Distribution, Gas and Power, and Biofuels and International.

Petrobras recently released its five-year Business Management Plan with focus on production ramp-up and debt reduction. The company targets net debt/EBITDA of 2.5 in 2018, as against 5.3 in 2015. Furthermore, Petrobras has plans to reduce its operating expenses to $136.8 billion from $153 billion projected in the five-year plan earlier. The company's divestment program of $21 billion throughout 2017-2018 is expected to support debt reduction. These ambitious plans make us optimistic on the stock.

Zacks Rank and Other Stocks to Consider

Petrobras carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the oil and energy sector are Cabot Oil & Gas Corporation COG , Denbury Resources Inc. DNR and Royal Dutch Shell plc RDS.A . Both Cabot and Denbury Resources sport a Zacks Rank #1 (Strong Buy) while Shell carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Houston, TX -based Cabot is an independent energy company. Its sales for the fourth quarter of 2017 are expected to grow 39% year over year. Earnings for the year 2017 are expected to be up 357.14%.

Plano, TX -based Denbury Resources is an integrated energy company. Its sales for the fourth quarter of 2017 are expected to increase 11.2% year over year. The company delivered a positive average earnings surprise of 125% in the last four quarters.

Shell, based in The Hague, the Netherlands, is an integrated energy company. Its earnings for 2017 are expected to increase 99.5% year over year. The company delivered a positive earnings surprise of 18.1% in the third quarter of 2017.

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Petroleo Brasileiro S.A.- Petrobras (PBR): Free Stock Analysis Report

Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report

Cabot Oil & Gas Corporation (COG): Free Stock Analysis Report

Denbury Resources Inc. (DNR): Free Stock Analysis Report

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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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