Petrobras (PBR) Receives $1 Billion Loan to Pay Off Debt
Petroleo Brasileiro S.A. or Petrobras’ PBR recently secured a loan of $1 billion from a banking syndicate led by Standard Chartered PLC. The loan will be guaranteed by Petrobras’ P-56 platform located at Marlim Sul Module in Brazil’s Campos Basin. The integrated energy firm — which is grappling with over $88-billion debt — will use the proceeds to pay off its debt obligations. Notably, Petrobras has already repaid Standard Chartered’s $500-million debt, ahead of schedule.
Petrobras’ involvement in the bribery case — Operation Carwash — burdened the company with huge debt and scarred its credit metrics. Last year, Petrobras was downgraded to the lowest speculative level by the rating agency Moody’s Investors Service due to high debt, oil slump and severe corruption charges. However, Petrobras has managed to position itself better on the back of its debt refinancing transactions and disciplined operational management which resulted in the upgrade in its ratings in April 2017. The company is making efforts to trim its massive debt load. At the end of September 2017, Petrobras had net debt of $88,143 million, reflecting a decrease from $96,381 million as of Dec 31, 2016.
In a separate release, the Brazilian energy giant announced plans to offload its entire stake in Petrobras Oil & Gas B.V. which is a joint venture between the company and Brazilian investment bank BTG Pactual. Notably, the company has also started the non-binding phase of divestment (announced in August 2017) of three groups of onshore fields (totaling 50 oil and gas fields) located in Rio Grande do Norte and Bahia states.
The asset sale is part of Petrobras’ 2015-2018 divestiture program. The company already sold more than $13.6 billion assets by 2016 and intends to raise another $21.4 billion over the next two years. The move is in line with the company’s aim to generate $35 billion from asset sales. These divestment plans are also in sync with the company’s strategy to reinstate investors’ faith in the stock. Further, it will also help the company gain additional liquidity as it intends to increase investment in ultra deepwater projects. The company is entering into various strategic partnerships with foreign oil giants to drive exploration momentum. In this regard, Petrobras has inked deals with major players like TOTAL S.A. TOT, Royal Dutch Shell plc RDS.A and Statoil ASA STO.
Headquartered in Rio de Janeiro, Petrobras is the largest Latin American oil and gas integrated company. It is involved in the exploration, production, refining, retailing and transportation of petroleum and its byproducts, both domestically and internationally. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Petroleo Brasileiro S.A.- Petrobras Price
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