Petrobras (PBR) Stock on a Roll After It Decides to Sell Off Its Fully-Owned Ceara Cluster

The Brazilian based energy firm has decided to sell 100% of its stake in the Ceara Cluster in order to reduce cost and enhance capital allocation.

Shares of Petrobras (PBR) are continuously rising after the company increased its production guidance for 2020, reported in Q3 release earlier this month. Since the beginning of this week, PBR shares have lifted up with stronger momentum.


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Shares of PBR are driven by high volume (51 million on Tuesday), but what’s causing the investors to come in big numbers? Recently, the company announced that it will be selling all its stakes in the four fields of Ceara Cluster which includes, Tuna, Curimã, Espada, and Xaréu.

The largest integrated energy firm in Brazilis the sole owner of this Ceara Cluster and the basic cause of selling 100% operating interest in the project is to reduce its costs and strengthen its capital allocation. Petrobras plans to sync with its cut cost strategy to overcome the situation which has fallen upon the firm due to the global pandemic.

The four fields are situated in the shallow waters, almost 19 miles away from the coastline of the state of Ceara. The average production from these fields reported during 2019 was around 4,200 barrels of oil and 76,900 square meters of gas per day.

The company in another press release reported the sale of another oil field in Baúna, which was also entirely owned by Petrobras. The Baúna field was sold to Karoon Petróleo & Gás Ltda. The company aims to minimize its expenses and increase its shareholder value by improving its capital deployment. 

In the third quarter of 2020, Petrobrassurpassed the Zacks Consensus Estimate of earnings of 5 cents per ADS to an adjusted profit of 9 cents per ADS. Overall, the company made notable improvements compared to the last year despite the crisis situation of pandemic and lockdowns.

The company was able to achieve better earnings primarily from higher production and reducing its costs.

The cost-cut strategy seems to be working for the company and initially it looks like the investors are enjoying it. Petrobras already highlighted that it wants to maximize the wealth of shareholders.

Updating its production guidance, one of the largest oil and gas firms in the world, increased this year’s average output from prior anticipated 2,700thousand barrels of oil equivalent per day(MBOE/d) to 2,840MBOE/d.

Specifically, Petrobras expects the oil volumes to increase up to 2,280MBOE/d from 2,200 previously.

With things settling down, Petróleo Brasileiro S.A. – Petrobras (PBR) stock sees a bright future. PBR stock rose 7.33% to $8.79 at close on Tuesday, compared to the previous close of $8.19.

As we write this at 7:25 A.M. EDT, before hours, PBR was continuing the bullish run soaring at 1.71% to $8.94.

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