Petrobras to Spend $6B on Retiring Offshore Platforms, Wells

In a securities filing, Petroleo Brasileiro S.A. or Petrobras PBR recently expressed its intentions to spend $6 billion on dismantling 18 offshore platforms, underwater gas pipelines and offshore wells through 2024.

This is in accordance with Petrobras’ five-year (2020-2024) investment budget plan comprising the following five strategies:

i) achieving greater return on capital, ii) lowering the cost of capital, iii) minimizing costs, iv) meritocracy and v) addressing environmental concerns.                                                    

Per the plan, 18 production platforms are projected to be decommissioned by 2024, compliant with the best global practices.

Further, the state-run energy giant expects to earn $1 billion from this year’s asset sales after receiving the proceeds of $14.4 billion from last year’s divestments.

Petrobras aims to sell assets worth $20-$30 billion over the next five years under its 2020-2024 investment plan. In early 2020, the company put the Papa-terra deep-water oilfield along with the Golfinho and Camarupim fields up for sale. Asset sales are part of its portfolio-optimization strategy and accordingly, it had put more than 100 mature onshore and shallow-water offshore fields up for auction in the past.

Earlier this month, Petrobras informed about startingthe sale process of its fertilizer firm Araucária Nitrogenados S.A., located in the state of Parana. The company is the sole owner of this stake and plans to divest its full ownership of the project. Per management, the divestiture is in line with the company’s strategy to minimize expenses and enhance its capital deployment, thereby boosting its shareholder value.

Company Profile

Petrobras 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. The operations also include refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons apart from other energy-related operations.

Zacks Rank & Key Picks

Petrobras currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Murphy USA Inc. MUSA, Laredo Petroleum, Inc. LPI and SilverBow Resources Inc. SBOW, each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Petroleo Brasileiro S.A. Petrobras (PBR) : Free Stock Analysis Report
 
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