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TWM Today: Wall Street

|Includes: APC, BVF, Petrobras - Petroleo Brasileiro S.A. (PBR), VRX
Brazil's Petrobras Will Invest $224 Billion on Offshore Oil ~ Petroleo Brasileiro SA (NYSE:PBR), the Brazilian state-controlled oil company, plans to invest $224B through 2014 as it seeks to develop the Americas’ largest discovery in three decades and more than double output. About 95% of the total amount will be invested in Brazil, the Rio de Janeiro-based company said today in a regulatory filing. Petrobras, which expects to raise $58B through debt and equity sales over the five-year period, said it will spend about $118B on oil exploration and production. Petrobras is seeking to fund the development of offshore reserves in the so-called pre-salt region off Brazil’s coast, home to discoveries including Tupi, the largest find since Mexico’s Cantarell in 1976. Chief Executive Officer Jose Sergio Gabrielli plans to more than double output to 5.38 million barrels a day by 2020, compared with 2.7 million barrels now. The company said it expects oil to average about $80 a barrel through the five-year period and that refining capacity will rise to 3.2 million barrels per day by 2020, from about 1.8 million barrels a day at present. (Bloomberg)

China's Yuan Rises to Highest Level Against Dollar in Modern Era ~ The yuan rose Monday to its strongest level against the dollar in the currency's modern era as traders bet on the likelihood of long-term appreciation despite the Chinese central bank's surprise move to keep the exchange rate flat ahead of trading. The yuan's rise led to gains in China's stock market, where hopes of a stronger local currency buoyed demand for index heavyweights such as airlines and metals firms, which would likely benefit from lower yuan-denominated prices for imports of raw materials like fuel and iron ore. Yields on Chinese government bonds and local interest-rate swaps also fell on expectations that a stronger yuan will reduce the need for an imminent interest rate hike. The yuan was quoted at 6.8015 to the dollar in China's over-the-counter market Monday afternoon, up strongly from its opening level of 6.8261 and its close on Friday at 6.8262. The 6.8015 level was the yuan's strongest against the dollar since the 1980s, before the currency was allowed to be traded as part of China's market-oriented reforms. (WSJ)

Anadarko Petro: Breaks Silence and Blames BP for Tragic Spill ~ Oppenheimer notes Friday night, APC issued a statement accusing BP of reckless decisions that caused the rig explosion and the oil spill, which is likely to be one of the largest environmental disasters and probably the most costly ever. In doing so, APC is distancing itself from BP and setting grounds for not paying, or at least reducing, its 25% share of the cleanup costs and future liabilities. The statement came after a rating agency downgraded APC's debt to junk status; in response, BP over the weekend dismissed APC's charges and reiterated its position that according to the operating agreement, its partners, Anadarko and Mitsui, will share in all costs and future liabilities. (Oppenheimer)

Valeant Pharmaceuticals and Biovail Agree to Merge ~ Valeant (NYSE:VRX) and Biovail (BVF) announced that both companies' Boards of Directors have unanimously approved a definitive merger agreement under which the companies would combine to generate enhanced value for stockholders. The combined company will be called Valeant Pharmaceuticals International. Valeant and Biovail believe the new Valeant's scale, financial strength and complementary product lines will enable it to pursue substantial growth opportunities. The new Valeant, on a 12-month trailing basis as of March 31, 2010, would have experienced double-digit revenue growth. Under the terms of the agreement, Valeant stockholders will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own. The transaction is intended to qualify as a tax-free reorganization for Valeant stockholders. Upon the completion of the merger, which is expected to occur before the end of the year, Biovail stockholders will own approximately 50.5 percent and Valeant stockholders will own approximately 49.5 percent of the shares of the combined company on a fully diluted basis. For Biovail stockholders, this transaction represents a 15 percent premium based on a calculation of the stock prices over the last 10 trading days. (Briefing)

Disclosure: Long PBR, VRX