Petrobras PBR has made an oil discovery at the pioneer well in Uirapuru block, offshore pre-salt Santos Basin.
The well at the Araucária exploratory prospect was drilled 1,995 meter deep underwater, 200 kilometer offshore the city of Santos, unearthing oil in porous reservoirs. The Uirapuru block was acquired in the fourth production sharing round in June 2018.
Petrobras is the chief operator of the block with 30% interest along with ExxonMobil XOM and Equinor EQNR with 28% stake each and the rest held by Petrogal. The JV partners will now dissect the well statistics to know the commercial viability of the reserves.
Apart from the obvious addition to its recoverable resources, this new discovery in offshore Santos Basin comes at a time when global crude oil is grappled with the sudden global economic downturn as a result of the COVID-19 outbreak and is therefore an encouraging news for the company.
Petroleo Brasileiro S.A.- Petrobras Price
Petroleo Brasileiro S.A.- Petrobras price | Petroleo Brasileiro S.A.- Petrobras Quote
In an earlier release, this Brazilian energy player issued an update on the output reduction related to its prior-announced operational rejig. The Rio de Janeiro-based company further lowered its production guidance for 2020. Management stated that this year, production will come down by 200,000 barrels per day. The volume contraction will double the earlier-estimated production cut.
A few days ago, the integrated energy company notified a cutback in its oil production by 100,000 barrels per day by March-end due to reduced demand resulting from the COVID-19 pandemic. It will also trim production at its refineries.
The company is further planning to defer payment of salaries of the managerial staff by 10% and 30% and is also condensing working hours for 21,000 personnel by two hours a day. Among other measures to reflect the company’s fiscal responsibility when crude prices are depressed, management confirmed that it would postpone its already-approved dividend. The deferred dividends to shareholders total R$1.7 billion.
Through its slashed output, which is a strategicaction, the Zacks Rank #3 (Hold) Petrobras jumps on the bandwagon of other integrated energy players, namely Royal Dutch Shell, BP plc and Chevron CVX. These industry participants intend to navigate the tough times while maintaining financial flexibility and operational excellence. Notably, strengthening the companies’ cash-boxes at a time when oil prices look to yield zero profits to most producers is indeed a judicious step. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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