A break for Brazil’s Petrobras?

January 4, 2013

Kenneth Rapoza – Forbes, 01/03/2013

Brazilian oil giant Petrobras (PBR) has been the ugly duckling of big oil companies. It’s high time it cleans up its act.

And, let’s be serious for a moment, Petrobras is a big oil company. It’s not Rosneft or ExxonMobil, but it’s a player. It discovered the biggest offshore oil find in years back in 2007, off the coasts of Rio de Janeiro and Espirito Santo states. But ever since that discovery, and ever since a massive share offering diluted shareholder value in 2009, this prime Brazilian investment has been nothing but a dud. Investors have punished the stock for the last two years. Shares are down over 40 percent since Jan. 1, 2010.

New management took time getting used to, and as an investment, Petrobras has been nothing but a let down. Considering it and mining major Vale account for a large portion of the BM&F Bovespa‘s Ibovespa index, Petrobras’s lackluster two years has been a drag on the broader equity market in Brazil too, and for holders of the popular iShares MSCI Brazil (EWZ) exchange traded fund. It’s the worst performer of the BRICs. EWZ is down 22 percent since the start of 2011 while the MSCI Emerging Markets index is down just 3.06 percent.

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In Brazil, energy finds put country at a whole new power level

October 11, 2011

Simon Romero – New York Times, 10/10/2011

A Petrobras oil platform off the Brazilian coast. Marcelo Sayao/European Pressphoto Agency

Of all those who might smile at Brazil’s unfolding oil boom, Walter Link could rank near the top. A U.S. oilman here at a time of nationalist fervor, he was the former chief geologist for Standard Oil Company of New Jersey whom Brazil hired to find its oil reserves.

The year was 1954. Petrobras, the newly created national oil company, put the blunt, Indiana-born Link to work creating Brazil’s oil exploration sector. Six long years ensued before he issued his polemical “Link Report,” describing tepid results. For Brazil to meet its oil needs, he recommended going offshore or abroad.

Petrobras grew at its own impressive pace for decades, mixing progress with setbacks as Brazil struggled with drawn-out dependence on foreign oil. But Petrobras’s huge offshore oil discoveries in recent years now enable its leaders to contend that it could surpass Exxon Mobil — called Standard Oil in Walter Link’s day — as the world’s largest publicly-traded oil company.

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