Petroleo Brasileiro S.A. or Petrobras PBR has been trying all means to raise funds to lower its escalating debt level, which is probably the highest among oil companies. In its latest attempt, Petrobras has agreed to enter into a leasing contract with Industrial and Commercial Bank of China Leasing (ICBC), as per Reuters.
According to the contract, Petrobras is expected to lease the platforms P-52 and P-57 for a period of 10 years. It is to be noted that the deal will help the company raise $2 billion which will likely be used to pay off a large chunk of its debt.
If the agreement materializes, it will be at an opportune moment as Petrobras has been striving hard to raise cash from both equity and debt markets after its involvement in a multibillion-dollar money laundering scam last year came to the limelight.
Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil and one of the largest 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, in addition to other energy-related activities.
However, Petrobras’ upstream operations continue to face the challenges of weak crude prices. Despite an increase in production volume, second-quarter upstream segment earnings demonstrated in a year-over-year decline of over 62% owing to a sharp fall in commodity prices.
As a result of these mixed factors, Petrobras carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, better-ranked players in the energy sector include NuStar Energy LP NS, Matrix Service Company MTRX and Exterran Partners LP EXLP. All the stocks sport a Zacks Rank #1 (Strong Buy).
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