Petrobras: Extremely Overvalued
-
Font Size:
On November 8, 2007, Petroleo Brasileiro (PBR) announced the conclusion of its formation tests on the ultra-deepwater Tupi field in the Santos Basin, claiming reserves of recoverable light oil and natural gas of between 5 billion and 8 billion boe, followed by a larger discovery of 33 billion boe in the Carioca field, with total new reserves “of at least 50 billion barrels, as a conservative estimate," according to Marcio Mello, head of the Brazilian Association of Petroleum Geologists.
How factual are these claims?
- The government quotes a figure of 70 billion barrels in Tupi-Carioca and some officials ventured an estimate of over 100 billion barrels. If proven, Brazil’s reserves would multiply tenfold, equalling those of Kuwait.
- After telling reporters at an industry event in Rio de Janeiro that Carioca contained 33 billion barrels of oil, Haroldo Lima, head of Brazil's oil and fuel market regulator, later backpedaled: “I haven't announced anything, nor did I use that word [announcement] at any moment.” Petrobras issued a clarification on its Portuguese language website, saying that Carioca's SPS-55 exploration well had not yet reached the sub-salt formation.
- The announcement of Tupi discovery created $55 billion market value in a single day. Technical information was “SEC disclaimered” and downright misleading as to gas/oil ratio, permeability, reservoir pressure, and the results of sub-salt seismic imaging that hasn't happened. Acquisition is scheduled to begin in October 2008 using a new Wide Azimuth Streamer vessel christened in Alesund, Norway on March 12, 2008.
Petrobras engineers are talking boldly about futuristic deep sea robots, but managers are negotiating a contract for an FPSO (Floating Production, Storage and Offloading) vessel and hope to produce first oil from Tupi in Q2 of 2009. They already contracted an FPSO to operate in 2600m of water in the US Gulf of Mexico Chinook and Cascade Fields, so there is no specific technical challenge of operating in the depth of water over Tupi. Nor is it particularly unusual to drill through halite. But the cost will be steep. At today's rate of deepwater exploration spend, PBR's planned appraisal program of ten wells will cost about $2 billion, no guarantee of recoupment.
Amortizing exploration and infrastructure, Tupi-Carioca lifting costs may be as little as $40/barrel if they produce 5+ billion barrels, or as high as $80/barrel if reservoirs are compartmentalized. And it's important to keep in mind that Brazil needs and wants production for its home market, not export. PBR's downstream revenue is regulated. They are mandated to supply natural gas for electric power generation (at a loss historically). When push comes to shove, PBR's investors and lenders will suffer.
Capital investment totaled $23.5 billion in 2007, and PBR's revised capital spending program has budgeted about $112.4 billion (or $22.5 billion per year) for 2008-12. These estimates exclude development of Tupi and exceed 100% of projected net income. To survey and appraise Tupi and to maintain its capital hungry projects around the world, Petrobras will have to borrow $10+ billion.
That brings us to the question of creditworthiness. The only rating firm with intact credibility is Fitch, which historically rated Brazil's currency and PBR debt as marginal BB junk below investment grade.
On May 19, 2008, Petroleo Brasileiro SA passed Microsoft Corp (MSFT) to become the world's sixth-largest company by market value and the third-largest company in the Western Hemisphere after Exxon (XOM) and General Electric (GE). PBR trades at 24 times profits, triple the price of Royal Dutch Shell (RDS.A).
There is absolutely no sense in PBR's premium valuation, except a momentum trade on announcement of big Tupi reserves, bigger Carioca reserves, and big profits in the future. None of those expectations is supported by factual information. Petrobras is a government-controlled monopoly with a nonprofit social agenda: to borrow and spend. Long-term debt is $17,245.0 million, while the net current assets are $4,672.0 million. Petrobras is draining cash reserves to pay dividends. Not good.
Because E&P accounts for 80% of PBR's earnings, the issue of finding and producing new reserves is crucial. Tupi and Carioca are geologically unrelated to oil-producing Campos reservoirs in a younger formation, and in contrast they are primarily gas plays because of burial age and maturation in a high temperature-high pressure environment.
Tupi and Carioca require 3-5 years of seismic study, interpretation, and further appraisal drilling. It is inconceivable that large scale production development can be achieved in less than 10 years. Anything can happen in 10 years (global GDP, global energy demand, Brazilian political risk, etc). Petrobras is planning to transport all future production from Tupi-Carioca 300km via undersea pipeline to supply domestic demand for natural gas. Profit and loss are not meaningful constraints.
- Price Target: No premium to industry peers
- Outlook: Negative
- Recommendation: SELL
Excerpted from CWSX Energy Analyst Assessment of Petrobras released May 30, 2008 and subject to disclaimers and terms of use contained therein.
Disclosure: none
This article has 65 comments:
Altendorf
Altendorf
g
I'm long PBR but I don't trade short-term. If you do then you would have different considerations.
ahead
Altendorf
PBR is Best In Breed ..Is the writer indicating the whole deal is a scam ?
I am quite sure the writer clobbered the stock for shorting reasons..
Because, the article is just too stupid to be real !
And, who the hell is this author ? Nobody !
Mer ups target to $94
GS ups rating
Altendorf
The rating upgrade reflects the dramatic improvement in Brazil's external and public sector balance sheet that has greatly reduced Brazil's vulnerability to external shocks and exchange rate ..."
You should stay current if you expect your readers to respect your views. I question your motives for writng such a purely negative account of a company that has dedicated over $112 bln for the capex on these projects. I give them more credit than that. I'm sure they're not doing this on some WAG as you imlpy
Stockaccumul
ator
Stockaccumul
ator
the company who got Brazil from a very bad point, and got it to a point where it dont need any forner oil country, way not look into PBR as the new world top oil company, they have dome a lot to show it!
What is Brazil Oil situation at this moment, and who changed it?
I can tell you was not any America company, look into the America suply and tell me who is the Greatest Oil Company at this Point?????
Stockaccumul
ator
Stockaccumul
ator
Altendorf
Stockaccumul
ator
Stockaccumul
ator
M O N E Y... what else...
Stay with PBR and buy more, for your future... Warmest regards ... your true friend...
\
The STOCKACCUMULATOR
Altendorf
www.searchanddiscovery...
Since this was written at least 8, possibly 11 or even 15 holes (depending on the vintage of the article) have been drilled through the deep salt and producible hydrocarbons were found every time. Of the several recent announcements of oil, they have found oil with similar viscosity leading some to suspect potential linkage between reservoirs or even one extremely large reservoir. Given the seismic images in the articles, it seems there may indeed be giant systems spanning tens of miles.
The author may be confused or befuddled about some things. Here are some examples:
Altendorf: "Tupi and Carioca..... It is inconceivable that large scale production development can be achieved in less than 10 years."
OK. So they might not have a hundred wells producing for ten years. So what. Investor's seek growth and opportunity. But this comment should be compared to Brazil's previous accomplishments at disproving the critics. Look at the 4th paragraph of this article recalling the development of the Campos basin:
www.rigzone.com/news/a...
excerpt:
"Pressured by high oil import costs and by the urgent need to trim Brazilian dependence on imported oil, it was at this basin (Campos) that Petrobras created one of the most advanced production development concepts in the world, one that would serve as a model for the industry. Seeking to slash the delay between discovery and production, company technicians opted to install the first Anticipated Production System (APS) on a floating platform in Enchova. The conventional offshore production systems adopted the world over had a very long maturation time, ranging from four to six years. With the APS, the delay between discovery and early production was slashed to a mere four months, leading to great agility, operating flexibility and huge savings in investments. This allowed the company to kick production off while definitive fixed platforms, which would be installed later on, were under construction."
Fred's comment: One can assume that PBR engineers are even more capable, confident and experienced today.
Altendorf: "Tupi and Carioca are geologically unrelated to oil-producing Campos reservoirs in a younger formation...."
Santos Basin, Campos Basin. Two different structures. Are you correcting your own misperception here? Or are you implying some dishonesty or exageration on the part of PBR?
www.rigzone.com/news/i...
Altendorf: "...and in contrast they are primarily gas plays because of burial age and maturation in a high temperature-high pressure environment."
PBR found oil. They intend to produce - oil. And where they found mostly gas, as at Jupiter, they stated that. You seem to think that the theory you were taught once upon a time is more important than what they are actually finding. By implying they are reporting oil when they only, actually found gas...is to basically impugn the honesty of PBR and every journalist who has reported on the subject. Is everyone missing something?
But the maturation issue is important. Everyone schooled in petroleum geology decades ago was taught about oil depth and temperature windows, below which or beyond which it would be silly to look because the oil would presumably... have been cooked to gas. But oil is where you find it and of late, it is being found at depths where they used to say it could not be. Arthur Eddington once said that "no fact should be accepted until confirmed by theory." I guess you are in Arthur's camp in this regard. But dozens of articles are reporting the API degrees (viscosity) of the oil being found and that is a rather brazen lie if all they are finding is natural gas.
Temperature? 400 degrees does not melt steel, and PBR is researching products made by companies like Aspen Aerogel who make efficient insulation systems for pipes that will keep the oil warm till it gets to the surface - which is an important point - you want it to stay warm until you get it to your separator. That way paraffins stay dissolved, and the lower viscosity encourages flow.
Here are articles that seem more careful or honest:
www.aapg.org/explorer/...
www.reuters.com/articl...
In summary, the Brazilian ANP has removed 41 blocks from auction surrounding the BM-S-8,9,21 and 22 area. And they have gone on a shopping spree for drilling rigs. In order for your criticisms to be taken seriously requires us to believe that this is all merely a show, and that the recent discoveries do not actually make PBR a better investment than another company which does not even claim to be making such discoveries. But even that does not make sense for XOM will be drilling at BM-S-22 this year, and are we to believe that they would change their plans about that if only they had your insights on the matter?
Altendorf
Petrobras has to find new reserves. I estimate they have 6-7 years recoverable (at 2 million boe per day) in Campos, no meaningful opportunities onshore. That's why PBR went on a shopping spree for deepwater rigs, and I think they plan on funding exploration with a bond issue, since they have a slightly negative cash flow. Most brokers and bankers call PBR a safe bet. I'm sure they'll get whatever cash they need.
BTW, mag and grav tell us basically nothing.
Stockaccumul
ator
"The Brazilian energy giant is now the second-largest company in the Americas. Deep-water drilling and sugarcane-based fuel have helped put it there
by Christopher Palmeri:
linkedin connections Step aside, Bill Gates and Jeffrey Immelt, make way for…Petrobras? With oil trading for more than $129 a barrel, Brazilian energy giant Petrobras (PBR) has passed Microsoft (MSFT) and General Electric (GE) in recent weeks to become the second-largest company in the Americas by stock market value. The Rio de Janeiro company's $310 billion market capitalization places it behind only ExxonMobil (XOM), at $488 billion.
Petrobras is riding high on a string of big oil discoveries in the deep water off Brazil's coast, leading to a 50% increase in the company's stock price in the past seven months. But at a May 15 speaking appearance at Los Angeles Town Hall, Alberto Guimaraes, president of the company's Americas unit, argued that Petrobras' success is no fluke. Rather, the company's leading positions in deep-water drilling and the distribution of automotive fuel made from sugarcane are the result of decades of research and investment, he said, and reflect a corporate culture that emphasizes long-term planning.
"This is a sustainable company," Guimaraes said. "That doesn't just mean we take care of turtles in the ocean. If you're running a New York teachers' pension fund and you're looking for a company you can invest in for 30 years, this is what you should be looking for."
Increased Output
Guimaraes painted a grim long-term picture for the world's energy supply. By 2030, global energy consumption is expected to rise 50%. Yet large discoveries of new oil reserves are increasingly rare, totaling just over 50 billion barrels in the first half of this decade. That's down from more than 450 billion barrels in a similar span during the 1970s.
Despite hefty increases in investment, the largest energy companies haven't been able to increase their output. Oil and natural gas production at the world's nine largest international energy companies was down 1.7% last year, to 23.5 million barrels per day. Petrobras was an exception. Its output rose, to 2.3 million barrels per day.
Guimaraes promised there would be more to come. He said the company's output target is 3.5 million barrels per day by 2012, an average annual increase of more than 7%. To get there, Petrobras will be spending $112 billion over the next four years, including massive investments in deep-water oil field development. "These are numbers the company can commit to," Guimaraes said. "They are not speculation."
Bringing Technology to the U.S.
Petrobras is drilling heavily in the U.S. Gulf of Mexico, where deep-water wells can cost $120 million each. The company hopes to transfer some of the technology it developed in Brazil, including floating production vessels that can fill up oil tankers in mid-ocean without extensive pipelines to shore. "Brazil is a big laboratory and the solutions we have found we're bringing to the U.S.," Guimaraes said.
Those solutions include sugarcane-based ethanol. This fuel, which Brazil first began developing in the 1970s, is now a 5 billion-barrel-a-year business worldwide. Petrobras, with its network of gas stations in Brazil, is the leading distributor. Nearly half of Brazil's energy supplies now come from sugarcane, hydroelectric power, and other alternative sources. The majority of cars in the country can run on gasoline, ethanol, or a combination of both. "These are not Brazilian carmakers," Guimaraes noted. "This is Ford (F), General Motors (GM), and Toyota (TM)."
Undeterred by the criticism, Petrobras is experimenting with all kinds of other fuel sources that are not food-related, including biodiesel made from castor and palm oil. Brazil would like to export more of its sugarcane-based ethanol to the U.S., which mainly uses the corn-based kind produced by domestic farmers who are protected by tariffs placed on foreign ethanol. Guimaraes was quick to point out that no single source will solve the world's energy problems, however.
"Biofuel is not the solution," he said. "It is one of the solutions."
Palmeri is a senior correspondent in BusinessWeek's Los Angeles bureau .
PBR sells its refined product to the US thru various oil companies (competitors). Raw products to make the refined though becoming rarer, are a problem for every oil company and oil producing nation, not just PBR... as a sort of peak oil is occuring, PBR will obviously have a jump and will be there keeping oil cheaper in the US than it would be otherwise. The US hence will continue to buy US product from PBR no matter where the Crude product comes from. PBR wells are all over Latin America, not just Brail... If Oil reaches $200 per barrel, PBR will have a (split adjusted)share price of $1,400 per share, no doubt... and it won't be long. Each quarter they have blow out record net profit quarter after quarter every year... BPR is the Microsoft of the oil world in many respects, with so many partnering deals with US distributors of its refined products, and so many lease deals in the Americas everywhere. Certainly the stock will not stay at today's $71... It was only last year that everyone warned that $15 per share for PBR was a really high price, outrageous... just look at the funny articles last year and 2006 warning about PBR... just like Alan Von whatever's spooky nonsense article above... yours truly... The Stockaccumulator
Stockaccumul
ator
I am new to Seeking Alpha and am impressed so far, but like other sites, has lots of name calling and emotional "reasons" for what is said.
I never pay attention to those. And try not to pay attention to cherry-picked stats, but that is more difficult.
Altendorf
"Although the Bratz are breathing down her neck, Barbie still has plenty of life in her, with overall sales expected to increase this year. In November, Mattel launched My Scene, an extension of the Barbie line whose characters are dressed suspiciously like those street-savvy Bratz."
First it's a puff piece on Mattel, then a smiley face for PBR. All knuckles and know-how, when you're *an american published (very well known unbiased) investigative reporter at BWEEK*
A colleague advised me not to engage the trolls, just ignore them, which is always good advice. However, I'm here in case anyone wants to talk more about the geology of the Santos basin.
The issue of Fitch upgrading Brazil to Investment Grade(BBB-) last week has been mentioned by Retdinvestr earlier.
The fact that Fitch upgraded Petrobras to Investment Grade(BBB-) on November 2 2007 seems to have gone unnoticed by the mysterious Alan von Altendorf.
Alan is it you CV posted on the CWSX website as "Chief Scientist" or do all the other people in your organisation have no names?
Also as you have no other articles noted in your bio, on your website or even through a search of Texas A&M's library and the web in general, have you written anything else?
"Fitch Rates Petrobras' US$1B Note Issuance 'BBB-'
Fitch Ratings-Chicago-02 November 2007: Fitch Ratings has assigned a 'BBB-' rating to Petroleo Brasileiro S.A.'s (Petrobras) US$1 billion 5.875% senior, unsecured Global Notes due 2018 issued through its wholly owned subsidiary, Petrobras International Finance Company (PIFCo). PIFCo is unconditionally guaranteed by Petrobras. Proceeds will be used for general corporate purposes.
Petrobras' ratings are supported by substantial proved hydrocarbon reserves and increasing upstream output, recognized leadership in offshore exploration and production, a favorable international product price environment, successful corporate and industry restructuring during the past decade, a transition to more transparent financial standards, and dominant domestic market share. Petrobras' controlling shareholder is the Federative Republic of Brazil, whose long-term foreign currency Issuer Default Rating is 'BB+.'
These supportive credit factors are tempered by Petrobras' vulnerability to fluctuations in international commodity prices and its exposure to local political interference. They also take into consideration currency risk, domestic-market revenue concentration, and significant medium-term capital investment requirements linked to the company's ambitious 2008-2012 strategic plan.
Petrobras' financial profile remains strong, with solid credit-protection measures continuing to benefit from increased production and the global rise in hydrocarbon and product prices. The company reported an adjusted total debt-to-EBITDA ratio of 1.3 times (x) and an operating EBITDA-to-interest expense of 20.1x under U.S. GAAP for the last 12 months (LTM) ended June 30, 2007. The company's EBITDA for the LTM was $24.1 billion. Petrobras maintains strong liquidity in relation to short-term debt obligations. The company had total adjusted debt (including pension liabilities) of $32.3 billion as of the LTM, of which approximately 18% was classified as short term, and $9.3 billion of cash and marketable securities. Petrobras' management has indicated its preference to maintain a substantial cash balance going forward, partially debt funded, to minimize its exposure to international capital market volatility.
Petrobras is an integrated international oil and gas company engaged in the exploration, development and production of hydrocarbons and in the refining, marketing, transportation and distribution of oil and a wide range of petroleum products, petroleum derivatives, petrochemicals and liquid petroleum gas. Petrobras is also an integrated power company with operations in electric power generation, transmission and distribution. By law, the federal government must hold at least a majority of Petrobras' voting stock."
You state that Petrobas hasn't actually reached Coricoa, but you already know what's down there is only gas -- based on the "oil window" theory? But that theory has been discredited many times over in the Gulf of Mexico, where the oil majors are drilling over 20,000 feet on a regular basis, and a couple are over 30,000 feet deep. Sakhalin Island has a well producing at over 30,000 feet deep. Producing light sweet crude.
There are many wells in Alaska drilled or drilling over 20,000 feet deep, and not for gas, but for oil.
The high pressure you cite, as a reason for gas, actually, is what holds the oil together at that temperature and depth. The "maturation" you cite isn't mentioned as a reason for oil cracking in "oil window" theory. The difference between 24 million and 75 million years, to "mature" into gas, doesn't seems like a credible distinction: At 24 million years the Campos reservoir would have plenty of time to be "cracked" into gas, if the other variables, depth and heat, where the determining factor you claim.
You mention halite -- rock salt, but neglect to mention the difficulty in getting accurate images through that salt -- others call it "abyssal salt" because of the difficulty of getting high resolution images because the salt absorbs and distorts energy waves. Until recently, nobody tried to explore through it because of that difficulty.
but you know exactly what's down there. Your assertion seems to be an overstatement based on the "oil window" theory.
Your follow up comments claim your analysis is based on geology. But by your own statements, there is no geological report, as they haven't reached the formation yet. I repeat: Your analysis is based on a theory that is obsolete and anachronistic -- disproven by geological FACTS, many times over, and by many OIL producing wells.
So, Petrobas has backed off their initial "slip of the tongue," which was possibly a bit giddy, but you fail to explain why Petrobas would come out with a "whole cloth" lie, because if you are correct, that's what it was.
Isn't it just as possible, that with the admitted difficulty of "lifting" the oil, that it was prudent to back off that intial giddy statement?
But you have a dilemma, you accuse them of lying -- their initial statements are much too detailed: 500 Fahrenheit, tremedous pressure, specific depths, and below the salt barrier -- over a kilometer of salt. Petrobas according to your analysis is either lying then or now.
This writer isn't interested in calling Petrobas a liar -- but suggests Petrobas realized "champaign popping" statements, which the 33 billion barrel statement certainly was, out ran their technological capability to get the oil -- therefore, the climb down. But this writer also suggests Petrobas and their field engineers and geologists know what is down there better than you do, sitting in your office.
Your analysis by implication states Petrobas is reckless, for to invest so much in ultra-deepwater, deep-drilling when Corioca is a potential failure -- gas only, wouldn't be worth the cost -- doesn't make sense. Petrobas already has enough drill ships leased for speculative exploration. Their investment, which you cite, only makes sense, if they are extremely confident of a whole series of discoveries along the same trend as a Corioca field that actually has the geological and oil properties first stated in their initial release.
Your analysis is based on an obsolete geological theory, the "oil window," a cynical view of Petrobas as liars, and a reckless company, acting like a drunken sailor in their investment decisions.
Your analysis doesn't fit the facts, as known to this writer, or Petrobas actions, and what is reasonable for an experienced exploration and production campany with specific expertise in the ultra-deepwater, deep-drilling field.
That calls into question the value of the analysis.
Mutual Fund Manager...whose fund was up 70% in 2007 believes
that PBR will prove to be the most profitable, successful investment of his (long) career. That statement was enough for me to not only invest in the Fund but a good deal more money in PBR . That man is nobody's fool. I certainly hope the guy is right.
Can't locate the average depth of Campos basin oil wells, have to assume current wells do not go below 15,000 feet deep below the sea floor. So, the objection on comparing relatively equal field depths versus different time allotments for your "maturation" statement goes by the boards, but does not change overall critque of "oil window" theory. "That dog don't hunt no more."
Altendorf
The goal of an appraisal program is to learn how big a prospect is and how it might be best developed. At the moment, all we have is a Monte Carlo projection based on a single well test (as far as I know). Use of statistical probability models in the oil industry is an pandemic mental illness. I recently attended a presentation by a statistics expert who said you could throw 21 darts at the continent of Africa and have a 95% chance of finding oil, without looking at geological provinces. That's how Petrobras and ANP came up with their new reserves guesstimates, using a statistical model. Nothing unusual about it, everybody in the industry does it, except geologists, geochemists, and geophysicists. Science is not a dice roll, nor 21 dice rolls based on arbitrary inputs.
The geological question is highly technical. My skepticism is based on Petrobras' published data. The BM-S-11 Tupi well found pay in "heterogeneous layered carbonates, variable reservoir quality." What they were expecting however was a pre-rift sandstone or trapped accumulation directly under the salt pillow. Like I said, it's a technical question with a lot of tangents and implications. But I take Petrobras at their word, and they reported that Tupi discovery is mostly gas (double the GOR of Ghawar).
This is okay for PBR. They need gas and are planning to build a 300km pipeline for domestic supply. It doesn't have to make financial sense.
Altendorf
Altendorf
I sold my shares and am more comfortable having reduced my downside risk. Yes, the rewards may be great, but there is simply too much risk now, and there's plenty of time to re-enter if and when more is known about what is really down there.
Do you subscribe to the "oil window" theory?
Altendorf
This is a very volatile stock, so short-term plays can be profitable in both directions.
By that response, I take it, that the "oil window" is inseperable from fossil theory? It would seem so, as your answer in a strict sense was non-responsive. But it does show that if the "oil window" is proved false, it brings into serious question the entire fossil theory.
That's not what my comment was about, but by your responses, particularly the last one, you have framed the issue, and made it clear what's really at stake, here.
And, this piece and responses, particularly, the gratuitous remark on Ghawar, mark you out as an acolyte of Mathew Simmons, a key Peak oil pusher, not 10 years from now, but imminent Peak oil.
That's what this piece was really all about -- a "hit job" on ultra-deepwater, deep-drilling, but without the courage to be explicit about the reasons for the "hit job," because should this oil find, be as big as initially stated, or anywhere near as big, it blows fossil theory out of the water.
Because it violates a cardinal principle of "fossil" theory -- the "oil window" and with your refusal to answer directly my question, but to skip over to the abiotic postulate, puts that in sharp relief.
This is really about the survival of fossil theory, isn't it?
And Mathew Simmon's reputation in the oil industry.
"...[A] single well test." True. The proof will be in the pudding, as they say.
But your piece was meant as a smear job. This is a quote from one of your responses: "It doesn't have to make financial sense." Obviously, American investors would strongly disagree.
And, that is the more explicit purpose of this piece -- scare investment away from Petrobas -- the stakes couldn't be higher!
Let the battle be joined.
The website Oil Is Mastery is an investment website forcussed on the ultra-deepwater, deep-drilling exploration and production sector of the oil industry.
P.S. Oh, by the way, it's about the geology and engineering -- if the oil is there, and can be "lifted' for production to market:
The financing will take care of itself -- and make everybody filthy rich.
Altendorf
www.bloomberg.com/apps...
Lifting costs for oil at Tupi. Around $8 per barrel.
www.reuters.com/articl...
Compare the above projections to Von Altendorf:
"Amortizing exploration and infrastructure, Tupi-Carioca lifting costs may be as little as $40/barrel if they produce 5+ billion barrels, or as high as $80/barrel if reservoirs are compartmentalized.&quo...
I concur with Anaconda that this was a hit piece. There are links to this article all over the internet and they give an impression of Petrobras that is utterly false.
Altendorf
It’s true that Heebner only increased the number of shares of Petrobras he held by about 10% since the incredible run that began last September, but he kept every single share he held and bought more during the rise.
Altendorf
www.gurufocus.com/hold...
Having checked the math from other sources, I stand corrected and acknowledge that PBR is 5% of his current portfolio holdings. The rest of what I said remains true: Heebner got in at $30 and doubled his position at $40. Let's see what he does six months from now.
Altendorf
July 9 (Bloomberg) -- Brazilian President Luiz Inacio Lula da Silva may boost the government's stake in oil fields after the largest discovery in the Americas since 1976 prompted a review of rules for how petroleum deposits are developed. "This oil is ours, it belongs to the people, not Petrobras or Shell,'' Lula said in a June 26 interview in Brasilia, referring to state-controlled Petroleo Brasileiro SA and Royal Dutch Shell Plc. Lula wouldn't elaborate in the interview. He said the changes being considered for the so-called pre-salt fields around Tupi are a ``state secret.'' Brazil's Oilworkers Confederation, part of the union movement that backed Lula, wants a return to monopoly status for Petrobras and state control of the oil industry.
Altendorf