Brazilian oil giant Petroleo Brasileiro, or Petrobras (PBR) announced the discovery of gas reserve in the South American country, Peru. The company drilled an exploratory block at the Lot 58 of the country’s Amazon region.
This happens to be Petrobras’ second discovery in Lot 58, near the Camisea gas field while the first, named Urubamba 1X, was announced in late 2009. The Picha 2X exploratory well, which was drilled to a depth of 14,425 feet, is currently under assessment.
On the basis of preliminary estimates, the company commented that both Urubamba 1X and Picha 2X wells hold a potential and recoverable gas volume of 1.7 trillion cubic feet (tcf).
Petrobras Energia Peru S.A. (“PEP”), the Peruvian subsidiary of Petrobras, holds a 100% operating interest in the consession area.
In an effort to transform itself into a net energy exporter country, Peru is making way for foreign companies to invest in the country’s resource laden Amazon forest, a region thought to be the home of unexplored reserves of oil and natural gas. Primary estimates indicate that Peru offers a proven natural gas reserve of almost 8.79 tcf to 14.1 tcf.
Braziilain state controlled company, Petrobras started operating in Peru in 1996, and generates production of almost 16,000 barrels per day at Lot X, in the northeastern region. The company’s current total production of oil and gas reached 2.5 million barrels per day at its domestic and foreign fields.
We believe that Petrobras’ long-term growth visibility remains compelling, given its robust pipeline of development projects and impressive exploration successes. However, we are concerned about the considerable increase in its downstream investment level in the face of a bearish refining margin outlook.
We are maintaining our long-term Neutral recommendation on the stock. Petrobras currently retains a Zacks #3 Rank (short-term Hold rating).
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