Brazilian energy firm Petroleo Brasileiro S.A. or Petrobras PBR has declared the sale of its Argentina assets. This is in accordance with the company’s prior announcement of a $13.7 billion divestment program.
The company announced that it has received approval from its board for the sale of its assets in the Austral Basin, in the Santa Cruz province. The assets will be sold to Compañia General de Combustibles S.A. for $101 million, subject to approval from Argentinean authorities. This is the first transaction under its recently announced divestment plan.
The assets being sold include 26 onshore exploration and production concessions and associated infrastructure for distribution, treatment and storage. The properties have an average production of 15,000 barrels of oil equivalent per day.
Petrobras added that payment for the deal was made during the signing of the contract and as such the outcome of the sale will be reflected in its first-quarter results. The company expects a $65 million impact on its net income.
Petrobras’ $13.7 billion divestment program during 2015 and 2016 is substantially higher than its prior divestment program of $5−$11 billion within 2018. The sharp increase in the expected asset sale might be a reflection of the company’s reduced access to capital from outside investors.
Many of Petrobras’ employees have come under the scanner amid the multibillion dollar money laundering case. Additionally, high debt level and falling credit rating has made securing funds difficult for the firm.
Headquartered in Rio de Janeiro, Petrobras currently carries a Zacks Rank #5 (Strong Sell).
Better-ranked players from the energy sector include Western Refining, Inc. WNR, Ferrellgas Partners LP FGP and Valero Energy Corporation VLO. All these stocks sport a Zacks Rank #1 (Strong Buy).
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