sabre_jenn

4 Reasons to Like SBS

Jeff - SBS trades on NYSE

The state of Sao Paulo owns 50.3%, 26% is traded on NYSE, and the remaining trades locally in Sao Paulo

That said, I am unable to get any reliable info on SBS dividends. The author claims 10%, various websites say 0%, and SBS's investor presentation says 2.1% ???

4 Reasons to Like SBS

Victor84 -- if you have held SBS for a while, could you tell us what dividends it actually pays?

The author's 10% yield claim is not supported by any financial website I could find -- they all claim the payout is "zero" (no regular payment). One site says it paid 2.5% this year so far, but nothing for 2007 and 2008

SBS's own investor presentation says 2.1% yield now, and less last year (they say they paid a dividend in 2008, though small)

What is the correct dividend?

4 Reasons to Like SBS

I just checked the investor presentation directly from SBS's own website... they say the yield *was* in the high single digits two years ago, but the current yield according to SBS itself is 2.1%

4 Reasons to Like SBS

SBS does not appear to pay regular dividends -- and based on the most recent 12 months, it has paid a yield of about only 2.5%?

Before that, it paid no dividends for two years. If dividends resume at their old rate (not guaranteed), SBS would be paying about 3.6% yield

Yahoo, Google and Seeking Alpha all say SBS pays no dividend at all

So where do you get 10% yield from?

Stay Away from U.S. Treasuries - Invest in Energy Stocks

Fitz -- there must be a great disturbance in the force: I have to agree with this article 100%

5 Reasons to Follow Soros's Oil Rebound Play

Soros is averaging down -- his initial investments in PBR have enormous unrealized losses. Several analysts have wondered if PBR is generating sufficient revenue to even pay its dividend -- although you can't answer this question without factoring in the huge payments PBR makes (in excess of taxes) to the Brazil government.

As for PBR's offshore experience -- it depends on your definition of "deep". PBR has done a lot of drilling -- with partners -- along the continental shelf immediately off Brazil. It is not obvious how much experience from those wells was transferred to PBR internally, and how much of it was simply partner experience paid for. Regardless, these wells are in 1000 feet of water (which sounds deep to novice investors, but is child's play by oil industry standards). The wells are tens of miles offshore, and thus easily serviceable from land.

Petrobras itself defines "deep" as greater than about 3000ft and less than ~6500 ft (actually they define it as 1000m to 2000m since they use metric). PBR has done a number of joint ventures at these depths -- with the partners providing the expertise. Petrobras defines wells from 6500ft to 10500ft (2000m to 3500m) as "ultra deep" -- and here they have very limited experience. The new fields are around 14000-15000ft ...

The Tupi and Carioca fields are the fields that have sparked the most interest from investors. A Brazilian minister suggested Carioca might contain 33 billion barrels -- which is more than all of north america so it got everyone's attention. The Brazilian government very soon after "clarified" the remark as being based on something the minister had read in a U.S. magazine-- not based on facts. Then the CEO of Petrobras came out and dismissed the estimate entirely -- saying it was too early to make any estimates.

In that same statement, the CEO of Petrobras said the new discoveries are in deeper waters, and deeper below the ocean floor, than anything drilled to date -- in other words **NO ONE** has experience at these depths. Both fields are sub-salt layer, meaning the salt tends to close in and re-seal anything you drill.

The bigger field -- Carioca -- is so deep that Earth temperatures will literally melt the drill bits and pipes used by offshore platforms today. Temperature gradients (differences in temperatures at different depths) will twist and snap well bores. Pressures are so high that existing pipes would burst almost immediately. Its one thing for PBR to drill an exploratory well to locate the fields -- its a whole different ballgame to drill a production well that has to survive temperatures and pressures for years. The CEO thinks it will be possible to develop new technologies -- drill bits and pipes -- to withstand this pressure, but nothing exists at the moment.

The two discoveries are hundreds of miles offshore -- meaning they cannot be easily serviced from land, like PBR's existing offshore wells. It also means that new platforms would have to withstand the massive open ocean storms and waves.

Petrobras has brought in Statoil (from Norway) and BG Group (from the UK) as consultants to advise on how new technology might be developed. These firms have far more deep ocean experience than PBR, but they have never developed anything like Tupi or Carioca.

Even if Petrobras can buy the needed experience, and even if new technologies can be developed to withstand the temperatures and pressures involved -- we are talking tens of billions in development costs. PBR does not have that money; it will need to raise additional funds from investors (good luck in this environment) or else Brazilian taxpayers will need to provide it.

Joes wrote:
> Mr. Soros has donated Billions to educate, feed and provide health
> care to people of all races and ethnic back ground. He is a finer
> man on a bad day than our phony "conservative" president was on his
> best.

This comment has no place here. No matter how much money Soros has donated to worthy causes -- it doesn't say anything about Petrobras as an investment.

The partisan rant about Bush is unlikely to sway the opinions of conservatives, but even if it did -- what would this tell us about Petrobras?

5 Reasons to Follow Soros's Oil Rebound Play

PBR has lots of deep water experience?

Does Seeking Alpha do **ANY** checking on these articles?

Petrobras itself has said lack of deepwater experience is an issue -- and they have already been working on getting firms who have expertise to be minority partners -- Statoil of Norway was their first choice

Seriously guys -- if Seeking Alpha keeps publishing garbage, its going to go the way of the Yahoo stock message boards

Petrobras: Opportunity or Trap?

The Tupi oil fields would represent a tremendous technical challenge to any company with substantial offshore drilling experience. The pressures and temperatures that far down far exceed anything done before -- that doesn't mean technology cannot be developed, but it does mean a company with essentially no offshore experience is unlikely to succeed on its own.

In addition, even if PBR were to somehow go straight from crawling to running a marathon -- the costs of developing these fields will rival the biggest oil projects ever attempted in the world.

As the article mentions, the Brazil government depends heavily on tax revenue from Petrobras. Providing the needed capital will definitely crimp the Brazilian government's revenues in the near term -- but does not necessarily guarantee increased revenue in the future. Politicians the world over don't like to pay costs now and defer benefits for the next office holder.

In addition, many Brazilian bureaucrats have made comments suggesting how the new revenues might be spent! When they find out that revenues (if any) will be years from now, and the immediate future will involve government outlays...