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Petrobras Unit Sale to Mitsui Permitted by Brazilian Judge

Zacks Equity Research
Updated

Brazil's state-run energy giant, Petroleo Brasileiro S.A. or Petrobras PBR, received clearance from a Brazilian federal judge to sell 49% stake in its Gaspetro natural-gas distribution unit to Japan's Mitsui & Co.

Petrobras sold the stake to Mitsui for 1.93 billion reais in December. The deal was, however, blocked by a federal judge a month later on allegations that the sale was not subject to an open public sale process. Also, questions regarding the company’s possible repetition of some of the actions that had led to a massive corruption scandal were raised.

However, the latest ruling by a different judge okayed the sale on grounds that the previous judgment was without merit.

PETROBRAS-ADR C Price

 

PETROBRAS-ADR C Price | PETROBRAS-ADR C Quote

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Petrobras, with around $123.92 billion in long-term liabilities, is the most indebted energy company in the world. Hence, the company is focusing on massive asset divestitures to reduce its debt and strengthen its balance sheet amid weak fuel demand in recession-stricken Brazil and lower oil prices in the international market.  The company aims to divest $15 billion in assets by the end of 2016. The Gaspetro stake sale is in line with this strategy of the company.

Headquartered in Rio de Janeiro, Petrobras SA, is the largest integrated energy firm in Brazil and one of the largest in Latin America. The company produces most of Brazil’s crude oil and natural gas and accounts for almost the entire refining capacity of the country.

Currently, the company carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Some better-ranked players in the broader energy sector are Murphy USA Inc. MUSA, Enbridge Energy Partners, L.P. EEP and China Petroleum & Chemical Corp. SNP. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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PETROBRAS-ADR C (PBR): Free Stock Analysis Report
 
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MURPHY USA INC (MUSA): Free Stock Analysis Report
 
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