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Petrobras takes another government punch, Morgan Stanley downgrades

  • It's not that the asset the Brazilian government is bestowing upon Petrobras (PBR +0.1%) is junk: Morgan Stanley analyst Bruno Montanari likes the geology, but thinks that "more barrels was the last thing Petrobras needed right now.”
  • The deal means more capex for a company that is already highly leveraged, so Montanari - who used to be a Petrobras bull - downgrades shares to Hold from Buy and cuts his price target to $16 from $17 previously.
  • Bloomberg reports PBR is now considering asset sales to help buffer the total ~15B reais ($6.7B) bill to the government, with some analysts worrying about the possibility of fire-sale prices.
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Comments (9)
  • saratogahawk
    , contributor
    Comments (2400) | Send Message
     
    I think that PBR will now have no choice but to increase its offshore drilling with commercial vendors rather than waiting for Sete to build out new drill rigs (they are already years behind schedule). So this probably creates very quick new opportunities for RIG, SDRL, ESV, etc in the offshore drilling segment. PBR's major business plan cutbacks came on the refining segment side rather than offshore development. They need revenue desperately and offshore development can get the most in the shortest time period.
    25 Jun 2014, 10:10 AM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1427) | Send Message
     
    If the Brazil government would only allow them to sell refined products at or near their true costs, instead they expect and demand that PBR subsidize and eats a lot of the costs and sells it's products at ridiculously low prices.
    25 Jun 2014, 10:21 AM Reply Like
  • saratogahawk
    , contributor
    Comments (2400) | Send Message
     
    Capt. that has been so unusual for me to watch Brazil screw over its own companies by managing the product pricing to below fair value (and even true costs levels). PBR can't make money on refined products when they have to sell at such low levels. However, they have a Capex budget of well over $200 billion for the next five years so the place to be remains as a PBR contract vendor.
    25 Jun 2014, 10:25 AM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1427) | Send Message
     
    http://bit.ly/SwWfNK
    25 Jun 2014, 10:24 AM Reply Like
  • GreenGrowthGeek
    , contributor
    Comments (952) | Send Message
     
    Poor Petrobas and its investors--is it any wonder that the stock has been a dog for six years. Just when it looks as if the stock might be gaining some momentum; hold the presses, the company gets screwed again. World Cup score
    Government 7 Petrobas 0
    25 Jun 2014, 10:40 AM Reply Like
  • saratogahawk
    , contributor
    Comments (2400) | Send Message
     
    Greengrowth. very good!!!
    25 Jun 2014, 11:20 AM Reply Like
  • JZ0726
    , contributor
    Comments (5) | Send Message
     
    It seems that Brazilian government is just like a vampire sucking all the profits from PBR and its investors. PBR and its management teams are the puppies and cronies of its incompetent president, Dilma Rousseff. Without the overhaul of its management teams and board members, the future is not promising for its investors.
    25 Jun 2014, 07:14 PM Reply Like
  • saratogahawk
    , contributor
    Comments (2400) | Send Message
     
    I sure won't buy PBR stock until this is cleared up. Brazil is a hell-hole right now.
    25 Jun 2014, 07:25 PM Reply Like
  • Bogie 1
    , contributor
    Comments (124) | Send Message
     
    Ahh !! Socialism at it finest. Half the country is on the dole, wanting more and more. For politicos to remain in power they suck their industries dry, stash a few bucks themselves and throw the masses a few bones until the next march on the capital. Been going on for years and will not change soon. Stay away and invest here or in the companies the government will desperately hire to keep the pumps, electric working, mines operating etc. because their five year plan ended 6 years ago.
    26 Jun 2014, 06:29 AM Reply Like
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