Petrobras shares closed up 3% yesterday amid corruption scandal, accusations and falling crude oil price.
Corruption scandal has arisen to haunt Petroleo Brasileiro Petrobras. The scandal did not only ruin the reputation of the Brazilian company, but has caused liquidity issues for the company. The corruption scandal arrived at the time, when the crude oil prices of fell by more than 50%, causing decline in exploration margins.
The latest Petrobras management controlled by CEO Aldemir Bendine is working on plan to safeguard the confidence of investors and simultaneously managing the liquidity issues of the company in an effective and efficient way. One method that was implemented by the company is divesting its 13.7 billion real worth of assets by the end of 2015. As per the strategy, the oil company is all set to sell its ownership in Braskem SA and its valuable deep water assets to some extent.
Petroleo Brasileiro Petrobras at this time holds almost 36% ownership in Braskem, and ranked as the second biggest stockholder after Odebrecht SA, that has almost 38.3% ownership in the petrochemical firm.
The natural gas and oil company has not disclosed any buyer for these assets. Keeping in mind the low commodity pricing, to attract buyer for these assets will be a challenging task for Petrobras.
Petrobras specified that it can sell its production and exploration, energy and gas assets. However, the asset divestment would initially depend on the negotiation and current market conditions.
The management and the company have been under great pressure from its shareholders since the corruption scandal takes place. The stock price of Petrobras has gone down by more than 80% and most of the economic activity in the country is ceased because of the state run company. Even if Petrobras finds a potential buyer for its assets, it could witness further opposition. Company's plan of selling its deep water assets are well thought out as the most promising latest oil frontlines.
Two sources of Bloomberg, while commenting on Petrobras plan of divestment said, "Petrobras will need to consider Royal Dutch Shell plc.'s pledge to sell $30 billion of assets globally as part of its planned purchase of BG Group plc before pursuing sales in a crowd market."
Petrobras shares have surged, which may specify that shareholders are appreciating the company's decision of divestment. Lately, a latest development took place when Dilma Rousseff, President of Brazil announced that Petrobras is now free from corruption. These kind of announcements are important for the company in revitalizing confidence of investors and liquidity.