Financially troubled Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) searches to improve performance disposing of non-core assets. An agreement has been reached between the Brazilian state-owned company and Perenco UK Ltd for the sale of 100% of the shares issued by Petrobras Colombia Limited (PEC). The operation is said to be worth $380 million, and includes: 11 onshore exploration and production blocks with an average production of 6,530 BOE, and the Colombia and Alto Magdalena oil pipelines complete the deal with a carrying capacity of 14,950 BOE and 9,180 BOE each.
The cash obtained from the deal by Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) will be destined to finance developments of pre-salt oil reserves below the Brazilian seabed. The divestiture is part of the firm´s announced Petrobras Divestment Program (PRODESIN), a restructuring plan part of the Business and Management Plan that is expected to be concluded in 2017. Last month’s sale of 50% stakes in African assets to Grupo BTG Patcual, is also part of the same plan and added $1.5 billion in cash. Funds are necessary to carry out the current aggressive exploration strategy.
The deal is pending approval from Colombia’s National Hydrocarbons Agency, but no surprises are expected to rise and approval is said to be granted before the end of the year. The deal does not mean the end of Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR)’s presence in Colombia. The company continues to operate offshore exploratory blocks, retains an important distribution business, and is moving ahead with its single-block onshore exploratory operation.
Additional sales are rumored to be completed further down the road in Colombia and Peru, and the most interested buyer is said to be China National Petroleum Corp.
Another source of funds for further developments in the Campos Basin is a price hike on gasoline prices. The raise is said to equal 8% and will come into place next October 21st. The price increase will be excised at the refinery’s gate, and will reduce the discount at which gasoline is currently being sold. However, gasoline will continue to be sold at a discount, while troubling Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) finances and putting at risk new developments.
Disclosure: Jodor Jalit holds no position in any of the mentioned stocks.