Brazilian state controlled energy company Petroleo Brasileiro (PBR) or Petrobras announced the discovery of light oil in sandstone reservoirs to the south of Santos Basin. However, the company did not disclose the estimated amount of oil found.
As per the company spokesperson, the oil discovered was similar to those found in the accumulations of Tiro and Sidon.
The exploratory well, situated in block S-M-1352 of the BM-S-41 Concession, is about 280 kilometers off the coast of the State of Sao Paulo and 15 km off the Tiro and Sidon region. The company continues to drill the well, with the objective of finding more reserves.
Petrobras holds 100% interest in this concession and the transfer of 20% of the participation interest to Australia based Karoon Petroleum and Gas Company is under ANP analysis.
Petrobras’ endeavors to search oil reserves in the various basins of Brazil highlight the company’s confidence in its exploration strategy and mechanism.
Headquartered in Rio de Janeiro, Petrobras dominates Brazil’s oil and gas sector and accounts for most of the country’s crude oil and natural gas production and refining capacity.
We remain positive on Petrobras in the medium to long term, thanks to its encouraging portfolio of investments, particularly in the pre-salt reservoirs that lie below the Espírito Santo, Campos and Santos basins in deep and ultra-deep water.
However, Petrobras faces operational risks typical to an exploration and production company and tough competition from peers, such as BP Plc (BP) and Royal Dutch Shell plc (RDS.A).
We are maintaining our long-term Neutral recommendation on the stock.
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