Petrobras Strikes Oil in Amazon
Brazilian state-run energy giant, Petroleo Brasileiro S.A. (NYSE:PBR - News) or Petrobras S.A., announced that it has discovered an accumulation of crude oil and natural gas in Solimoes Basin of the Amazon, onshore northwest Brazil.
Drilled to a total depth of 10,810 feet, the 1-BRSA-961-AMwell, informally known as Igarape Chibata Leste is located in the Coari, 15.5 miles from the Urucu Oil Province. Petrobras controls 100% exploration and production rights in the block.
Initial evaluation suggests that the well has a production capacity of 1,400 barrels of good quality oil per day (41º API) and 45,000 cubic meter of natural gas in the Juruá Formation.
This is Petrobras’ second successful exploration in Block SOL-T-171 since 2010. Currently, the company produces about 53,000 barrels of oil and 11,000 cubic meters of natural gas per day, along with 1,300 tons/day of liquefied petroleum gas from the Amazon.
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 about 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 operates in the industry along with other prominent players such as BP Plc (NYSE:BP - News) and Royal Dutch Shell plc (RDS.A).
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