Brazilian state-run energy giant Petroleo Brasileiro S.A. or Petrobras (PBR) declared the findings of natural gas at Orca – 1 exploratory well located at Tayrona Block, offshore the Colombian coast. This signifies the first discovery in the exploratory history of the Colombian Caribbean deep waters. Following the announcement, Petrobras’ ADR rose 3% on the NYSE to reach $9.27.
Petrobras completed the drilling activities at the well in the Tayrona Block this September and reached a depth of 4.240 meters. The company confirmed accumulation of natural gas after reaching roughly 3.600 meters in the Orca – 1 well. Petrobras will now work on the evaluation activities of the well’s discovery.
Petrobras, having a 40% stake, is the operator of the well. Bogotá, Colombia-based integrated energy player Ecopetrol SA (EC) owns 30% while Repsol S.A. (REPYY) holds the remainder.
In the Tayrona block of exploration activities, the Petrobras and Ecopetrol partnership became the pioneer after getting the first allowance from National Hydrocarbons Agency of Colombia in 2004.
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 with tremendous financial risk remains uncertain.
As a result, the company currently carries a Zacks Rank #4 (Sell) implying that it will underperform the broader U.S. equity market in the next one to three months.
Meanwhile, one can look at better-ranked players in the energy sector like Murphy USA Inc. (MUSA). The stock sports a Zacks Rank #1 (Strong Buy).
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