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Petrobras Signs $4.35B Credit Facility, Sale Plan On Track


Petróleo Brasileiro S.A. or Petrobras PBR recently announced that it has entered into a new revolving credit facility worth $4.35 billion, with the final maturity due in March 2023. The company signed the deal with a syndicate of 17 banks.

Per the company, the facility, a first for Petrobras, requires it to pay 0.51% every year as maintenance cost. The deal is expected to benefit the company with an alternative source of cash for financing operations through 2022. The company can also use the facility for early repayment of its current debts, which will enable the company to incur lesser carrying cost of debt.

In a separate announcement, the Brazilian state-run company recently announced the commencement of the binding phase of complete divestment of Petrobras Oil & Gas B.V., an African subsidiary. Petrobras first mentioned the plan of divesting the subsidiary last November. The binding phase is designed to guide the interested clients to proceed with their proposals. This move was in line with the company’s strategy of offloading $21 billion worth of assets through 2018.

Petrobras expects the divestment to reduce its debt burden, which peaked in 2014 and is gradually decreasing since then. At the end of September 2017, the company had a humongous net debt of $88,143 million.

Through the African unit, the company engages in two deepwater oil exploration blocks located offshore Nigeria that incorporates the Akpo and Agbami fields, which are operated by TOTAL S.A. TOT and Chevron Corporation CVX, respectively.

About the Company

Headquartered in Rio de Janeiro, Petrobras is one of the largest integrated energy firms in Latin America. The company’s activities include exploration, exploitation, and production of oil from reservoir wells, shale and other rocks, as well as refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons, along with other energy-related activities. It mainly operates through six segments — Exploration and Production, Refining, Transportation and Marketing, Distribution, Gas and Power, and Biofuels and International.

Price Performance

The company has gained 54.2% in the last year compared with 33.5% growth of its industry.

Zacks Rank and Stock to Consider

Petrobras carries a Zacks Rank #3 (Hold).

A better-ranked stock in the oil and energy sector is ConocoPhillips COP, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based ConocoPhillips is an upstream energy player. Its revenues for first-quarter 2018 are anticipated to improve 9.6% from the prior-year quarter. The company witnessed a positive average earnings surprise of 144.5% in the trailing four quarters.

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