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Petrobras (PBR) Sells Full Papa-terra Stake for $105.6M

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Petroleo Brasileiro S.A. or Petrobras PBR recently inked a deal to sell its entire stake in the Papa-terra deep-water oilfield located in Brazil’s Campos Basin to 3R Petroleum Offshore S.A. The company is the chief operator of the project and has 62.5% operating interest while Chevron Corporation CVX owns the remaining 37.5% stake.

The transaction is worth $105.6 million. 3R Offshore, a firm with a plan to rejuvenate mature offshore assets, already paid Petrobras $6 million and disburse another $9.6 million at the transaction's close. The remaining $90 million will be cleared via contingent payments under the contract, which are tied to the asset's production levels and future oil prices.

Located at a water depth of 1,200 meters, Papa-terra field is part of the BC-20 concession. The oil field came online in 2013 and produces oil as well as gas through two offshore platforms, namely P-61 type Tension Leg Wellhead Platform and P-63 type Floating Production Storage & Offloading. Its average oil and gas output from January to June 2021 was 17,900 barrels of oil equivalent per day (BOE/D).

The divestiture perfectly fits the company's portfolio management strategy. It will contribute to enhancing the company’s capital allocation to maximize shareholder returns. Petrobras is concentrating its resources on world-class assets in deep and ultra-deep waters where it has demonstrated great competitive advantage over the years.

Earlier this month, Petrobras reached an agreement with Petromais Global Exploration and Production SA to divest its full ownership of the Polo Alagoas land and shallow-water fields, situated in the state of Alagoas, Brazil.

Petrobras’ divestment decision was part of its plans to offload non-core assets and focus on offshore deep-water development, mainly in the prolific pre-salt area. The company will receive $300 million for the assets. Of the total, $60 million will be paid immediately while the residual $240 million will be provided at the completion of the transaction.

About Petrobras

Headquartered in Rio de Janeiro, Petrobras S.A., 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 as well as refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons along with other energy-related activities.

Zacks Rank & Key Picks

Petrobras has a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energy  space are Diamondback Energy, Inc. FANG and Continental Resources, Inc. CLR, each 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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