Petrobras Signs Chinese Funding and Oil Supply Deal for $5B
Brazil's state-run energy giant Petroleo Brasileiro S.A. or Petrobras PBR recently announced that it has inked definitive terms for a $5 billion, 10-year financing agreement with China Development Bank Corp. Also, the company declared that it has entered into an oil supply accord with Chinese companies. We believe that through these moves the company is seeking stable revenues for the futurefollowing the corruption scandal and its struggle with huge debt load.
Under Petrobras’ 10-year financing deal with China Development Bank Corp., the company will be selling a total volume of 100,000 bpd to China National United Oil Corporation, China Zhenhua Oil Co. Ltd, and Chemchina Petrochemical Co. Ltd. over a period of 10 years.
Petrobras, with net debt of around $103.56 billion, is the most indebted energy company in the world. The company is undergoing a deep financial crisis due to low oil prices and the loss of goodwill owing to the discovery of massive corruption within its ranks.
Price Movement
Year to date, the Zacks categorized U.S. Oil and Gas Emerging Markets Integrated industry has registered an impressive growth of 61.91%. However, shares of Petrobras have outperformed the industry by registering growth of 143.02%.
PETROBRAS-ADR C Price
PETROBRAS-ADR C Price | PETROBRAS-ADR C Quote
Petrobras engages in the exploration, development and production of crude oil, natural gas, and natural gas liquids. Additionally, the company sells crude oil and oil products produced at natural gas processing plants in domestic and foreign markets. It is also involved in the refining, logistics, transport, and trading of crude oil and oil products. Moreover, the firm exports ethanol and invests in petrochemical companies.
Petrobras currently 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.
Some better-ranked players from the broader energy sector include Braskem S.A. BAK, Ocean Rig UDW LLC ORIG and McDermott International Inc. MDR. Braskem and McDermott sport a Zacks Rank #1 (Strong Buy), whereas Ocean Rig carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last four quarters, Braskem posted an average positive earnings surprise of 105.5%.
Ocean Rig, on the other hand, delivered an average positive earnings surprise of 66.39% in the last four quarters.
In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.
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