Petrobras, the Brazilian state-owned energy company, today announced the discovery of new reserves of light crude in the Santos basin. The company’s endeavors in the oil sector are of importance to the further development of the Brazilian biofuels industry, as projects in fossil fuel exploration, refining, and distribution will inevitably dilute the company’s capital base.
Today’s announcement comes on the heels of the massive find of the Tupi oilfield, with ultimately recoverable reserves of between four and six billion barrels, disclosed in early November 2007. The new discovery adds further momentum to Petrobras’ activities inside the traditional oil sector, a course supported by high oil prices, but constrained by rising costs and a global shortage of equipment and personnel.
Bloomberg reports that strong projected earnings for 2008 led Citigroup today to change its recommendation from “hold” to “buy” for Petrobras’ papers on the NYSE. Investors may take that recommendation as they wish, in light of Citigroup’s (ticker: C) dismal financial performance this year, which has seen shares of the nation’s largest bank tumble by 47.56% against their 52-week high – a fall with origins in the subprime imbroglio, but also supported by the quality of the bank’s financial judgment and of the leadership of the CEO formerly known as Prince.
On a separate but related note, the Emerging Markets Bond Index for Brazil was up 2.24%. The EMBI relates to the price of credit and is considered a reliable gauge of investors’ confidence in the Brazilian economy. It is prepared by New York-based JP Morgan Chase (ticker: JPM), whose shares are also significantly down – 18.63% from their 52-week high. JP Morgan Chase has recently announced that it will “cut about 100 subprime jobs”; Reuters reports that “JPMorgan (…) has reduced subprime originations and operations staff because of home price weakness and tighter credit standards”. Meanwhile, it will continue to rate the soundness underlying the financial securities issued by Brazil.
2 comments:
A major new oil discovery in Brazil putting the country on a par with Saudi Arabia is excellent news for potential property investors. Investment in Brazil property is already an extremely attractive option with the country's growth, and this new discovery means that there has not been a better time to look at Brazilian property/real estate
Post a Comment