Petrobras PBR, Brazil's state-controlled oil giant, has announced a significant increase in its investment plans for the next five years, with a total of $102 billion reserved for capital expenditures. This represents a substantial boost from the $78 billion previously projected for the 2023-2027 period.
Petrobras is set to invest heavily in its exploration and production operations, with a planned outlay of $72 billion, accounting for 72% of its total investment. This will enable the company to ramp up its production from 2.8 million barrels of oil equivalent per day (boed) in 2024 to 3.2 million boed by 2028.
Additionally, Petrobras has allocated $7.5 billion for exploration activities, including $3.1 billion specifically earmarked for exploration at the Equatorial Margin, which is considered its most promising new frontier for oil and gas exploration.
Further investments include $17 billion for refining, transportation and commercialization activities. Petrobras is also making a comeback to the fertilizer sector, resuming operations at one plant and completing the construction of another.
Low-carbon initiatives have also gained significant traction, with an allocation of $11.5 billion, which is more than double the amount set aside under the previous plan. This commitment to low-carbon initiatives will see the sector's share of Petrobras's spending increase from 6% in 2024 to 16% by 2028.
The increased investment is expected to drive growth in Petrobras' key production areas, including the pre-salt region off Brazil's southeast coast. The company aims to increase its oil and gas production.
A significant portion of the investment will be allocated to exploration and development activities, with a focus on unlocking the full potential of Brazil's vast offshore reserves. Petrobras also plans to expand its refining and gas processing capacity to meet growing domestic demand.
The increased investment and diversification efforts are expected to position Petrobras as a major player in the global energy transition. The company is committed to reducing its greenhouse gas emissions and developing low-carbon technologies.
In conclusion, Petrobras' $102 billion investment plan represents a bold step for Brazil's energy sector, signaling the country's unwavering commitment to enhancing energy independence, stimulating economic growth and embracing a more sustainable future. While the environmental implications of increased oil and gas production warrant careful consideration, Petrobras' strategic focus on exploration, production and renewable energy development positions it well to play a key role in shaping Brazil's energy landscape for the next five years and beyond.
Zacks Rank and Key Picks
Currently, PBR carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Liberty Energy Inc. LBRT sporting a Zacks Rank #1 (Strong Buy), Oceaneering International, Inc. OII and USA Compression Partners, LP USAC, each carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Liberty Energy is valued at $3.33 billion. LBRT currently pays a dividend of 20 cents per share, or 1.01% on an annual basis.
LBRT is a leading provider of hydraulic fracturing and other auxiliary services to North American onshore exploration and production companies.
Oceaneering International is worth approximately $2.11 billion. In the past year, its shares have risen 45.5%.
The company provides engineered services and products, and robotic solutions to the offshore energy, defense, aerospace, manufacturing and entertainment industries worldwide.
USA Compression Partners is valued at around $2.37 billion. USAC currently pays a dividend of $2.10 per unit, or 8.71% on an annual basis.
USAC provides natural gas compression services. The company offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil. It also operates stations.
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