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Petrobras Shifts Focus to Oil and Gas, Reveals New Strategic Plan
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Brazil's state-owned energy giant, Petrobras S.A. (PBR - Free Report) has unveiled its new strategic plan that will mark a shift toward a greater emphasis on oil and gas exploration and production as the company seeks to rebuild its conventional reserves.
A Sneak Peek Into PBR’s New Plan
The chief financial officer (“CFO”) of the company, Fernando Melgarejo, announced that Petrobras neither plans to make any new mergers and acquisitions as part of its new strategic plan for 2025-2029 nor does it require more cash and debt.
While the Brazilian energy major did not announce anything explicitly, it is likely to concentrate on upstream operations. PBR added that it might face the “uncomfortable” scenario of a reduction in oil and gas reserves by the end of the decade.
Petrobras’ upstream focus can be gauged from the fact that it has been planning to explore the Equatorial Margin, Brazil's most promising and environmentally sensitive oil frontier.
Confidence in Petrobras’ New Management
As part of a major shake-up, Brazilian President Luiz Inacio Lula da Silva replaced former chief executive Jean Paul Prates with Magda Chambriardas he wanted to push the oil giant to speed up investments. Also, Melgarejo was appointed as the new CFO in the month of June.
The company recently completed the issuance of $1 billion in dollar-denominated global bonds, which is seen as a validation of the confidence that the markets have in Petrobras under the leadership of Chambriard.
This strategic turnaround of the company came after years of efforts to diversify itself into renewable energy and other sectors. According to the 2024-2028 plan of Petrobras, it intended to make an investment of $102 billion,which would include prospective acquisitions and low-carbon schemes such as biorefinery, wind and solar energy.
Petrobras doesn’t foresee any major acquisitions in the new investment plan and therefore, it would also not require contracting much debt.
PBR’s Zacks Rank and Key Picks
Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil and one of the largest in Latin America. Currently, PBR has a Zacks Rank #3 (Hold).
Royal Vopak NV is a tank terminal operator. The company is engaged in the storage and handling of oil products, liquid chemicals, gases, biofuels and vegetable oils. The Zacks Consensus Estimate for VOPKY's 2024 earnings indicates 2.5% year-over-year growth.
VAALCO Energy is an independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas. The Zacks Consensus Estimate for EGY’s 2024 earnings indicates 4.8% year-over-year growth.
Founded in 1936, Amsterdam, Netherlands-based Core Labs is an oilfield services company operating in more than 50 countries. CLB’s expected EPS growth rate for three to five years is currently 22.2%, which compares favorably with the industry's growth rate of 1.5%.
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Brazil's state-owned energy giant, Petrobras S.A. (PBR - Free Report) has unveiled its new strategic plan that will mark a shift toward a greater emphasis on oil and gas exploration and production as the company seeks to rebuild its conventional reserves.
A Sneak Peek Into PBR’s New Plan
The chief financial officer (“CFO”) of the company, Fernando Melgarejo, announced that Petrobras neither plans to make any new mergers and acquisitions as part of its new strategic plan for 2025-2029 nor does it require more cash and debt.
While the Brazilian energy major did not announce anything explicitly, it is likely to concentrate on upstream operations. PBR added that it might face the “uncomfortable” scenario of a reduction in oil and gas reserves by the end of the decade.
Petrobras’ upstream focus can be gauged from the fact that it has been planning to explore the Equatorial Margin, Brazil's most promising and environmentally sensitive oil frontier.
Confidence in Petrobras’ New Management
As part of a major shake-up, Brazilian President Luiz Inacio Lula da Silva replaced former chief executive Jean Paul Prates with Magda Chambriardas he wanted to push the oil giant to speed up investments. Also, Melgarejo was appointed as the new CFO in the month of June.
The company recently completed the issuance of $1 billion in dollar-denominated global bonds, which is seen as a validation of the confidence that the markets have in Petrobras under the leadership of Chambriard.
This strategic turnaround of the company came after years of efforts to diversify itself into renewable energy and other sectors. According to the 2024-2028 plan of Petrobras, it intended to make an investment of $102 billion,which would include prospective acquisitions and low-carbon schemes such as biorefinery, wind and solar energy.
Petrobras doesn’t foresee any major acquisitions in the new investment plan and therefore, it would also not require contracting much debt.
PBR’s Zacks Rank and Key Picks
Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil and one of the largest in Latin America. Currently, PBR has a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Royal Vopak (VOPKY - Free Report) , VAALCO Energy (EGY - Free Report) and Core Labs Inc. (CLB - Free Report) . While Royal Vopak currently sports a Zacks Rank #1 (Strong Buy), VAALCO ENERGY and Core Labs Inc. carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here
Royal Vopak NV is a tank terminal operator. The company is engaged in the storage and handling of oil products, liquid chemicals, gases, biofuels and vegetable oils. The Zacks Consensus Estimate for VOPKY's 2024 earnings indicates 2.5% year-over-year growth.
VAALCO Energy is an independent energy company principally engaged in the acquisition, exploration, development and production of crude oil and natural gas. The Zacks Consensus Estimate for EGY’s 2024 earnings indicates 4.8% year-over-year growth.
Founded in 1936, Amsterdam, Netherlands-based Core Labs is an oilfield services company operating in more than 50 countries. CLB’s expected EPS growth rate for three to five years is currently 22.2%, which compares favorably with the industry's growth rate of 1.5%.