Brazilian state-run energy giant Petroleo Brasileiro S.A. or Petrobras (PBR) has postponed its third-quarter 2014 earnings for a month amid escalating tensions owing to a multibillion-dollar money laundering and bribery case embroiling it. Petrobras was slated to release its third-quarter earnings last Friday but is now expected to provide the unaudited report on Dec 12.
Following the announcement, Petrobras ADR dipped more than 6% during intraday trading on the NYSE on Friday to touch a 52-week low of $9.51 per ADR.
Renato Duque − former director of engineering and services at the company – was arrested last Friday while 30 police teams was conducting a corruption investigation across Brazil. The detention of Duque was the second arrest of a former top Petrobras executive in 2014.
Including the imprisonment of the former company director, the Brazilian police also arrested 27 people in the raid. On top of that, the assets of the people under investigation – worth roughly $277 million – were frozen by the Brazilian courts.
Petrobras will take into account the outcome of the internal investigations related to the corruption for making necessary adjustments to its third-quarter earnings before releasing the report on the given probable date. The quarterly earnings release date is expected to be declared at least 15 days ahead.
Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil and one of the largest in Latin America. The company currently carries a Zacks Rank #3 (Hold) implying that it will perform in line with the broader U.S. equity market in the next one to three months.
Meanwhile, one can consider better-ranked players in the energy sector like Valero Energy Partners LP (VLP), Sandridge Mississippian Trust II (SDR) and SandRidge Mississippian Trust I (SDT). All these stocks sport a Zacks Rank #1 (Strong Buy).
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