For Immediate Release
Chicago, IL – June 21, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Petroleo Brasileiro S.A. (PBR), Exxon Mobil Corp. (XOM), PetroChina Co. Ltd. (PTR), Royal Dutch Shell plc (RDS.A) and Principal Financial Group Inc. (PFG).
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Here are highlights from Wednesday’s Analyst Blog:
Petrobras Presents 5-Year Plan
As per the 2012–2016 business plan of Brazilian oil giant Petroleo Brasileiro S.A. or Petrobras (PBR), management will incur an average annual capital expenditure of $47.3 billion, netting $236.5 billion for five years.
Of the total budget, Petrobras plans to invest approximately $131.6 billion in Brazilian Exploration and Production (E&P) segment, with 69% being allocated for production development. Exploration activity and infrastructure development will respectively have 19% and 12% of the assigned budget. The company will invest almost 51% of the total E&P amount in the pre-salt cluster.
Management has directed almost $51.7 billion for the ongoing Downstream segment projects. The refining capacity expansion projects that are expected to come online by 2016 include the Abreu and Lima refinery and the first phase of Comperj unit.
For the Tres Lagoas Fertilizer Plant, the Ammonia Sulfate Fertilizer Plant, and the Thermoelectric Power Plant of the Gas & Energy segment, Petrobras has allocated $7.8 billion.
Petrobras will invest about $3.8 billion in the Biofuels segment, of which $1.9 billion will go toward projects under implementation and acquisitions. The Ethanol projects executed by the subsidiary Petrobras Biocombustível will absorb the majority of budget for the segment.
With $3.3 billion invested in logistics projects of the Distribution business unit, the company aims to satiate the growing domestic market demand as well as secure a strong footing in the sector.
The international operations of Petrobras will receive approximately $6 billion, particularly for its E&P activities that represent 83% of total investments.
Apart from the planned investments of Petrobras, the other partner companies are set to contribute about $34 billion during the 2012–2016 for capital programs.
Keeping in line with the investment plans, Petrobras expects oil and natural gas liquid (NGL) production worldwide to reach 3.3 million barrels of oil equivalent per day (MMboe/d) in 2016. In Brazil, the volume is expected to be 2.5 MMboe/d.
Much of the output growth will take place 2014 onward, supported by an estimated increase of 5–6% per year from 2014–2016. Production will remain at the same level as in 2011 for the next two years.
Petrobras’ long-term plan includes global production of 5.7 MMboe/d (5.7 MMboe/d in Brazil) of oil and natural gas in 2020.
The divesture and asset restructuring initiatives of Petrobras will focus on disposing overseas properties. The company targets to sell off assets worth $14.8 billion.
We maintain a long-term Neutral recommendation on Petrobras. The stock, which operates with other global energy players such as Exxon Mobil Corp. (XOM), PetroChina Co. Ltd. (PTR) and Royal Dutch Shell plc (RDS.A), currently, retains a Zacks #3 Rank that translates into a short-term Hold rating.
S&P Upgrades Principal Financial
Standard & Poor's Ratings Services (“S&P”) upgraded the long-term counterparty credit ratings to 'BBB+' from 'BBB' of Principal Financial Group Inc. (PFG) and Principal Financial Services Inc., an intermediary holding company.
Concurrently, the rating agency upgraded the long-term counterparty credit and financial strength ratings (“FSR”) to ‘A+’ from ‘A’ of Principal Life Insurance Co., a subsidiary of Principal Financial.
The outlook remains stable.
The upgrade came on the back of the company’s better capital adequacy position, sustained solid operational results and strong foothold in the markets in which it operates.
The rating agency stated that though the capital position is improving, yet it has not lived up to the rating agency’s expectations. Nevertheless, sustained earnings growth, strong liquidity, better asset quality with solid enterprise risk management (“ERM”) dwarfs the underperformance. Also, the company remains focused on lowering its commercial mortgage-backed securities.
The rating upgrade of Principal Financial Services was based on its dominant position in the U.S. small-to-midsize group pension market, and its position in individual and group life and health markets. The company is also strengthening its foothold in the rapidly growing international retirement and asset management markets. Therefore, the rating agency expects the company to sustain its strong position, earnings stream and liquidity alongside the ERM.
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