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Petrobras, Shell and CNOOC Sign Contracts to Expand in Brazil

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Brazil's state-owned energy giant, Petrobras S.A. (PBR - Free Report) , has inked three important concession agreements with London-based oil major Shell and China’s CNOOC for acquiring blocks in the Pelotas Basin offshore southern Brazil. The company received these contracts during the fourth cycle of the permanent concession offer held in December 2023 by the National Agency of Petroleum, Natural Gas and Biofuels (“ANP”).

Overview of PBR’s Concession Agreements

During the fourth cycle of the permanent concession offer held last year, PBR was awarded 29 blocks in the Pelotas Basin by the ANP. Twenty six of these contracts were in partnership with Shell, wherein PBR, being the operator held 70% of the stake and Shell held the remaining 30%.

For the remaining contracts (P-M-1737, P-M-1739 and P-M-1797), PBR formed a consortium with Shell and CNOOC wherein PBR held a 50% stake serving as the operator of the block and the other two companies had 30% and 20% stakes, respectively.

PBR’s Long-Term Strategy

Per the company’s 2024-2028 strategy, PBR has a $102 billion spending plan wherein it is set to make significant investments into oil and gas and the abovementioned contracts are part of this strategy. The aim of the company’s long-term strategy is not only to diversify its portfolio but also to strengthen its position in the oil fields located in deep waters.

The main point of focus for the company is energy transition and it plans to set up 14 new floating production storage and offloading vessels over the next five years.

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. As part of its diversification strategy, the company has been working on multiple projects in countries like Colombia and South Africa. Currently, PBR has a Zacks Rank #4 (Sell).

Investors interested in the energy sector might look at some better-ranked stocks like PEDEVCO Corp. (PED - Free Report) ,Nine Energy Service, Inc. (NINE - Free Report) and MPLX LP (MPLX - Free Report) .While Pedevco currently sports a Zacks Rank #1 (Strong Buy), Nine Energy and MPLX carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Houston, TX, PEDEVCO Corp. is an oil and gas company engaged in the acquisition and development of energy projects in the United States and Pacific Rim countries. Over the past 60 days, the Zacks Consensus Estimate for PED's 2024 earnings has improved by 60%.

Nine Energy Service, Inc. provides onshore completion and production services for unconventional oil and gas resource development. NINE’s expected EPS growth rate for the current quarter is 23.08%, which compares favorably with the industry's growth rate of 6.36%.

MPLX LP is a master limited partnership, engaged in providing a wide range of midstream energy services, including fuel distribution solutions. MPLX’s expected EPS growth rate for three to five years is currently 8.50%, which compares favorably with the industry's growth rate of 5.70%.

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