Petrobras Sells Colombian Assets


Brazilian state-run energy giant, Petroleo Brasileiro SA or Petrobras (PBR), formed an agreement with the Anglo-French oil company Perenco Corp., to sell 100% of shares issued by Petrobras Colombia Limited (:PEC) for a consideration of $380 million.

However, the transaction is subject to the consent of Colombia’s oil regulator, National Hydrocarbons Agency.

The deal includes sale of the company’s Colombian assets which comprise the Colombia and Alto Magdalena oil pipelines and 11 onshore exploration and production blocks. The Colombia and Alto Magdalena pipelines have a carrying capacity of 14,950 barrels per day (bpd) and 9,180 bpd respectively. The oil blocks have a capacity of 6,530 barrels of oil equivalent per day (boed).

Petrobras will, however, not forego its Colombian assets completely. It will retain possession of one onshore exploratory block, its offshore exploratory blocks and the distribution network.

The Colombia sale is in support of Petrobras’ asset divestment program and will contribute to the $9.9 billion that it plans to generate to develop its Brazilian offshore fields. These fields are expected to hold reserves of approximately 50–80 billion barrels of crude that could aid the nation in becoming a major crude oil exporter.

The company also plans to sell assets in Argentina to support its 2013–17 business plan. The $237 billion investment proposed in the five-year business plan includes over 60% investment in exploration and production.  

Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil and one of the largest in Latin America. The company operates in 6 different segments, Exploration and Production, Refining, Transportation and Marketing, Distribution, Gas and Power, Biofuels and International.  

Petrobras currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, other stocks such as Magellan Midstream Partners LP (MMP), Range Resources Corp. (RRC) and Dril-Quip, Inc. (DRQ) are good buying options. These stocks currently hold a Zacks Rank #1 (Strong Buy).

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