Petrobas is the Oil Most Likely to Succeed

I don't own Petrobras (PBR) directly but through the iShares Brazil (EWZ) ETF in which it holds a very large position, but I have been debating adding Petrobras (PBR) as a stand alone company as it is increasingly looking like one of the few oil companies which can meaningfully increase production over the next decade. I don't see much in terms of specific news other than this Reuters article which states a new rig delivering 180,000 barrels of oil is finally starting up.

• Brazil's state oil company Petrobras has started up a new 180,000 barrel-per-day rig, meeting its 2007 goal for new capacity, if not production, after months of delays.
• It is the second rig with that production capacity to start working on Roncador in the past two weeks and the third platform to go on-stream since Nov 16
• The rigs are slowly ramping up production and should reach capacity by the end of the first half of next year, when more platforms are expected to be launched.
• All the rigs have suffered delays due to problems with suppliers in an overheated market as well as the complexity of the projects, but still, Petrobras added 560,000 bpd capacity this year as planned, proving that Brazil is a key area of new world crude output growth.
• Because of the long delays with bringing on-stream the new rigs and slow ramp-up at others, Petrobras output should rise just between 1 percent this year from last year's average of 1.78 million bpd, below the initial growth target of about 10 percent.
• Domestic oil output by Petrobras fell 2.3 percent in October to 1.73 million bpd from September in its fourth straight monthly drop and was a steep 5 percent below year-ago levels, but the company says November presented an ascending production curve again.

While Petrobras (PBR) could be a victim of any drop in crude prices (baby thrown out with bathwater), the market discount 6+ months ahead, and while output increases in 2007 failed miserably to meet goals, 2008 looks much more promising. Much like the coal stocks, the market is discounting current issues and looking ahead. Chart wise, you can not ask more from Petrobras of late - at worst it's generally fallen only to its 20 day moving average. Again, I will be considering adding this stock as a stand alone position (in addition to the iShares Brazil position) if we get a nice pullback.

Long Petrobras through iShares Brazil in fund; no personal position

Comments

[jmmx:]

THE REPUBLICANS ARE WH0RES TO THE OIL INDUSTRY

From NY Times

WASHINGTON — Pared-down energy legislation cleared the Senate on Thursday by a wide margin after the oil industry and utilities succeeded in stripping out provisions that would have cost them billions of dollars.

The legislation still contains a landmark increase in fuel-economy standards for vehicles and a huge boost for alternative fuels. But a $13 billion tax increase on oil companies and a requirement that utilities nationwide produce 15 percent of their electricity from renewable sources were left on the floor to secure Republican votes for the package.

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To hell with global warming - the poor oil companies need charity from the american people in order to survive!!!!

The republicans continue to give liberal handouts of taxpayer $$$ to the oil companies which are making record profits!

DISGUSTING!!!!

2007 Dec 15 04:30 AM

[James Cullen:]

And ethanol gets more than 50x the subsidies relative to the energy it offers... I wonder what Ron Paul would say.

2007 Dec 16 05:54 PM