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Petrobras (PBR) to Sell Carmopolis Cluster to Carmo Energy

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Petroleo Brasileiro S.A. or Petrobras PBR recently decided to sell a group of onshore producing assets and associated infrastructure in the Sergipe Basin to Carmo Energy S.A. for $1.1 billion.

Brazil's state-run energy giant Petrobas began divesting 11 mature fields in Sergipe during October 2020. The line-up comprises one of PBR's oldest and largest onshore assets in the South American country.

The 11 concessions of onshore producing fields, including integrated facilities, are known as the Carmópolis Cluster. All are located in several municipalities around the state of Sergipe. From January to November, the concessions produced 7600 barrels of oil per day, on average, and 43,000 cubic meters of natural gas per day.

The Tecarmo canal port, the Bonsucesso-Atalaia oil pipeline, 11 oil treatment stations, a gas treatment station, and another 300 kilometers of pipeline infrastructure and production facilities are part of the selling package.

Per the terms of the deal, Carmo Energy will make a $275million down payment to PBR, followed with an amount of $550 million at the transaction's conclusion and another $275 million a year after the sale is complete. The deal is contingent on certain conditions, including National Petroleum, Natural Gas and Biofuels Agency approvals (ANP).

PBR began production at Carmopolis in October 1963, making it one of the country's oldest fields. The hub is also the country's largest onshore development, with 1.76 billion barrels of oil equivalent in situ at the start.

Petrobras is involved in an extensive divestment program to pay off debt and free up capital for deepwater offshore projects. The latest transaction is in line with PBR’s portfolio optimization strategy as it focuses its resources on high-quality assets in deep and ultradeep waters, thus adding to its competitive edge over the years.

Earlier this year, Petrobras inked a deal to sell its overall stake in the Rabo Branco field to PetromProdução de Petróleo&Gás Ltda. (Petrom). The deal value of $1.5 million was deposited in a guarantee account in favor of PBR. Management confirms that the plan is consistent with its overall cost-reduction goal and capital-deployment efforts. The onshore field of Rabo Branco is located to the south of the Carmópolis field in the Sergipe-Alagoas Basin of Sergipe.

Zacks Rank & Key Picks

Petrobras currently has a Zack Rank #3 (Hold). Investors interested in the energy  sector might look at the following stocks worth considering with a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

PDC Energy PDCE is an independent upstream operator dealing in the exploration, development and production of natural gas, crude oil and natural gas liquids. PDCE, which reached its present status following the January 2020 merger with SRC Energy, is currently the second-largest producer in the Denver-Julesburg Basin. As of 2020 end, PDCE's total estimated proved reserves were 731,073 thousand barrels of oil equivalent.

In the past year, shares of PDC Energy have gained 169% compared with the industry's growth of 108.6%. PDCE's earnings for 2021 are expected to surge 273.4% from the prior-year reported figure. In the past 60 days, the Zacks Consensus Estimate for PDC Energy's 2021 earnings has been raised 26.8%. Earnings of PDCE beat the Zacks Consensus Estimate in all the last four quarters, the average being 51.06%.

SM Energy SM is a leading upstream player with a strong top-tier asset footprint. SM is delivering the best-in-class well performances. Since the beginning of 2021 to the third-quarter 2021 end, SM completed 78 net wells with 82 more in the pipeline.

Over the past seven days, SM Energy has witnessed upward earnings estimate revisions for 2021. So far this year, SM has gained 373.9%, outpacing the surge of 98.7% of the composite stocks belonging to the industry.

Sunoco LP SUN is a master limited partnership engaged in distributing motor fuel to roughly 10,000 customers, including independent dealers, commercial customers, convenience stores and distributors. In the United States, Sunoco is among the largest motor fuel distributors in the wholesale market by volume. In 2020, the partnership sold 7.1 billion gallons of motor fuel.

SUN's earnings for 2021 are expected to surge 743.4% from the year-ago reported figure. Sunoco currently has a Zacks Style Score of A for both Value and Growth. For 2021, SUN expects fuel volumes of 7.25-7.75 billion gallons, indicating a rise from the 2020 reported level of 7.09 billion gallons.


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