Brazilian state-run energy giant Petroleo Brasileiro S.A. or Petrobras (PBR) announced that its Cidade de Ilhabela offshore platform, located at Sapinhoa oil field, has commenced operations. The Sapinhoa field is situated in the pre-salt Santos basin, off the coast of Brazil.
Petrobras is the operator of the field with a 45% working interest. BG Group plc (BRGYY) − an upstream energy player − holds a 30% stake and Spain’s integrated energy firm, Repsol SA (REPYY) holds the remaining 25%.
Following the announcement, Petrobras ADR rose above 11% in the NYSE last Friday, two days after the company touched 52-week low of $8.80 per ADR.
The platform was set up by Petrobras at a water depth of roughly 2,140 meters. The company believes that the platform will produce roughly 150,000 barrels of oil every day and store roughly 1.6 million barrels of crude. The offshore platform will also compress natural gas at the rate of 6 million meters per day.
Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm in Brazil. The company’s deep sea pre-salt reserves include fields that are located deeper than 2,000 meters, and are further 5,000 meters below sand, rocks and salt, making explorations technologically complex, challenging and expensive. As such, the success of these projects remains uncertain and bears great financial risk.
As a result, the company currently carries a Zacks Rank #5 (Strong Sell) implying that it will underperform significantly in the broader U.S. equity market in the next one to three months.
Meanwhile, one can look at better-ranked player in the energy sector like Sandridge Mississippian Trust II (SDR). The firm sports a Zacks Rank #1 (Strong Buy).
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