Petrobras Makes Fourth Oil Find in Jupiter, Santos Basin - Analyst Blog

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Brazil's state-run energy giant, Petroleo Brasileiro S.A. or Petrobras ( PBR ) announced that it has made a fourth oil discovery in the Jupiter area in the Block BM-S-24 in the Santos Basin. The discovery was made through the well 3-BRSA-1246-RJS or Apollonia, located about 296 kilometers offshore Rio de Janeiro.

The well, a depth of 2,183 meters, has struck a 313 meter column of hydrocarbon. An oil column, about 87 meters thick, has been confirmed. The drilling of the well is continuing and is expected to reach a maximum depth of 5,700 meters.

Petrobras is an 80% partner in the consortium working toward development of the area, along with Petrogal Brasil that holds the remaining 20% stake. Petrobras also acts as the operator of the wells.

Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil and one of the largest in Latin America. However, the company has not fared well in the past few quarters in terms of earnings results. Petrobras has a negative earnings surprise of 19.51% for the trailing four quarters.

On Aug 8, Petrobras reported second-quarter earnings per ADR of 36 cents (1 ADR = 2 shares), lower than the year-ago profit of 46 cents and below the Zacks Consensus Estimate of 49 cents. Significant higher exploration expenses hampered the results. Moreover, a cap on pump prices fixed by the government dragged the company's profit considerably.

The company ADRs have been on a negative trend since the earnings report. It fell about 4.5% in the NYSE to close at $15.46 on Aug 13. Yesterday's fall was, however, a reflection of the news of the death of the Brazilian presidential candidate Eduardo Campos.

Presently, Petrobras carries a Zacks Rank #3 (Hold). Meanwhile, one can consider better-ranked players from the broader energy space like Sunoco Logistics Partners L.P. ( SXL ), Patterson-UTI Energy Inc. ( PTEN ) and Cameron International Corporation ( CAM ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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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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