(PBR) Petroleo Brasileiro S.A. Hits Oil in Campos Basin

Petroleo Brasileiro S.A. or Petrobras (PBR) announced the discovery of an accumulation of crude oil in Marlin Complex, offshore Campos basin. However, Petrobras did not disclose the amount of oil discovered.

The presence of oil was traced in post-salt rocks through the well 4-VD-18-RJS (4-BRSA-994-RJS) – also known as Tucura – that is located 60.9 miles from the shore of Rio de Janeiro State. At a water depth of 1715.9 feet, the well lies between the production fields of Voador and Marlim.

This discovery, part of the Varredura Project, highlights the resource potential of the acreage and is expected to boost the volume output from the Marlin and Voador concessions. Initial evaluation reveals that the oil discovered is of the same quality found in the adjacent fields of Marlin and Voador. Petrobras plans to conduct extensive drilling activities in the area.

Headquartered in Rio de Janeiro, Petrobras primarily engages in exploration, exploitation and production of oil from reservoir wells, shale and other rocks; in refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons; as well as in other energy-related activities.

We continue to remain upbeat on the medium- to long-term outlook on Petrobras based on its encouraging portfolio of investments, particularly in the prolific Espirito Santo, Campos and Santos Basins of Brazil. The company is the operator in most of these exploration areas in which it holds interests ranging from 20% to 100%.

However, the company remains exposed to the volatile oil and gas fundamentals, which are expected to impact its performance. Moreover, we are concerned by Petrobras’ huge investment requirements, operational hindrances and international business risks.

As such, we expect the company to perform at par with the broader industry and maintain a long-term Neutral rating. Petrobras, which operates in the industry along with other prominent players such as BP Plc (BP) and Royal Dutch Shell plc (RDSA), currently retains a Zacks #3 Rank (short-term Hold rating).

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