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Petrobras (PBR) to Operate 6 Blocks in Foz do Amazonas Basin

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Zacks Equity Research
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Petroleo Brasileiro S.A. or Petrobras PBR recently informed that it will be taking over BP p.l.c.’s BP operatorship and its stakes in the six exploration blocks located in the Foz do Amazonas Basin, precisely 120 kilometers offshore Brazil. This development happened following the to-be-acquired entity’s decision to resign from its role of an operator of these blocks. These exploration blocks are usually referenced as FZA-M-57, FZA-M-59, FZA-M-86, FZA-M-88, FZA-M-125 and FZA-M-127.

This investment is in sync with Petrobras' portfolio management process, which mainly focuses on boosting its shareholder value and prioritizing its investments in world-class assets in deep and ultra-deep waters.

Management stated that this agreement will enable the company to gain full ownership of the fields. The conclusion of the negotiation is thus contingent on the consent of the Organs regulatory bodies.

Notably, the six blocks in the Foz do Amazonas Basin were acquired by a group of three companies during the National Agency of Petroleum’s 11th Block Bidding round.The consortium comprised TOTAL SE TOT with 40% interest alongside Petrobras and BP plc with 30% stake each in five of the six blocks.

Last September, Petrobrasannounced that it will buy TOTAL’s operatorship and its stakes in the five exploration blocks located in the Foz do Amazonas Basin, which are referred to as FZA-M-57, FZA-M-86, FZA-M-88, FZA-M-125 and FZA-M-127.

TOTAL had not revealed the reason behind exiting its operatorship of the blocks located in the environmentally-sensitive basin. However, Petrobras, TOTAL and BP put in a lot of effort into acquiring a license to carry out drilling activities in the basin but the Brazilian regulators considered such operations to pose a threat to the reefs as well as the local biodiversity.

Also, recently, Petrobras concluded the divestiture of its Mangue Seco 3 and Mangue Seco 4 wind farms. Per management, the deal is in sync with its strategy to trim costs and enhance capital allocation.

Upon fulfilling all the necessary conditions, Petrobras was paid R$78.2 million to draw the transaction to a close. The amount disbursed to the company upon the divestment’s closure adds to its earlier received sum of R$ 22.5 million at the time of sealing the sale deal, which expanded the total to R$100.7 million.

Company Profile

Petrobras is the largest integrated energy firm in Brazil and one of the biggest in Latin America. The company’s activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks. The activities also include refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons besides other energy-related operations.

Zacks Rank & Key Pick

Petrobras currently has a Zacks Rank #3 (Hold). A better-ranked player in the energy space is Matador Resources Company MTDR presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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TOTAL SE (TOT) : Free Stock Analysis Report
 
Petroleo Brasileiro S.A. Petrobras (PBR) : Free Stock Analysis Report
 
Matador Resources Company (MTDR) : Free Stock Analysis Report
 
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