The new chief executive of Brazil's state-run energy giant Petroleo Brasileiro S.A., or Petrobras PBR is likely to shift the company’s focus away from deep water drilling toward renewables. Jean-Paul Prates — named by president-elect Luiz Inacio Lula da Silva as the next CEO — further indicated that he plans to alter the fuel pricing policy that is currently aligned to global oil prices.
At the same time, the incoming head of PBR assured investors that prices won’t be totally detached from the international markets. Investors should know that pricing policy is a sensitive issue for the company, which caused the ouster of three CEOs during the term of outgoing president Jair Bolsonaro after an increase in fuel prices stoked voter frustration in an election year.
A senator for Lula’s Workers’ Party and former company official, Prates has previously stressed on the need to invest in the energy transition, with a primary focus on renewables. PBR has often come under fire for not focusing enough on greener energy and, while shelling out hefty dividends to investors.
Considering the tricky job at hand with the company coming under regular political pressure over fuel prices, Prates’ lawmaker background should come in handy to manage Petrobras.
Zacks Rank & Key Picks
Petrobras — the largest integrated energy firm in Brazil and one of the largest in Latin America — currently carries a Zacks Rank #3 (Hold).
Meanwhile, investors interested in the energy sector might look at operators like Murphy USA MUSA, Nine Energy Service NINE and Patterson-UTI Energy PTEN, each carrying a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA: Over the past 90 days, this El Dorado, AR-based Murphy USA has seen the Zacks Consensus Estimate for 2022 improve 11.2%. MUSA, which surpassed third-quarter bottom-line estimates by 18.7%, is valued at around $6.3 billion.
Murphy USA has a trailing four-quarter earnings surprise of roughly 51%, on average. PTEN has seen its shares gain 41.5% in a year.
Nine Energy Service: Nine Energy Service is valued at some $482.7 million. The Zacks Consensus Estimate for NINE’s 2022 earnings has been revised 1,325% upward over the past 60 days.
Nine Energy Service, headquartered in Houston, TX, delivered a 137.5% beat in Q3. NINE shares have surged 1,131.4% in a year.
Patterson-UTI Energy: PTEN beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 169.2%, on average.
Patterson-UTI is valued at around $3.7 billion. PTEN has seen its shares gain 85.6% in a year.
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