torto

Petrobras Looks More Compelling Than Ever

Alan,

> Sorry to quibble.
> Exploration & Production 29% of 2006 revenues 81% of operating
> earnings
> International Operations 5% of 2006 revenues 1% of operating earnings

it's ok to be quibble when one's trying to show some concrete data -- this is YOUR (wrong) interpretation of the balance... "exploration and production" may carry many meanings of course, it's not only oil

the fact is, PBR is highly profitable today with high oil prices even though it's an oil IMPORTER, near breaking even. So falling oil prices in short term are good for them, as strange as it may sound -- it's long term oil that counts.

PBR exports gasoline (low demand in Brazil b/c of ethanol) and machinery, and imports diesel (high demand in Brazil b/c transport infrastructure depends mainly on trucks)

it's that simple >> uk.reuters.com/article...


regarding all other issues (dividends, political risk etc.), I totally agree with you

Petrobras Looks More Compelling Than Ever

People are not doing their homework when it comes to PBR. It is actually a net importer of light crude, because it is an integrated oil company and it does most of the light crude refining in Brazil. Before recent discoveries, PBR produced almost only heavy oil and exported it to be refined abroad, and only now it is coming closer to a dollar break even between imports and exports.

So its profit today is due to refining, distribution and exploration in foreign countries ONLY, and was actually hurt by higher oil prices and state subsidizing of gasoline prices. What one must think of when analyzing PBR is oil prices in the next 30 yrs (and ethanol etc.), because the recent spike in oil did nothing but reduce PBR's margins.

P/E may reach 7 if all speculative capital leaves Brazil in the short term but for long term investors it seems me very attractive right now (as Soros does: seekingalpha.com/artic...)

Petrobras: Brazilian Oil Takes One Step Closer to Nationalization

This story is totally uninformed the developments about this whole nationalization mess. There's probably going to be a new state-owned company that will license exploration in wells that haven't been auctioned yet, which means wells licensed to PBR will remain untouched (such as the recent Iara well).
This new company will be an office that will only sell exploration rights to other companies, amongst which PBR has a much more comfortable position.
One must understand the situation regarding the previous auctions and the many blocks/wells at stake in order to see the big picture here, which is not bad for PBR at all.