PetroRio (PRIO3) jumps 20% with consortia selected to negotiate for Albacora: Why is this process so positive for business?

São Paulo – Company news is crowded due to earnings season, but the highlight of Ibovespa’s book is PetroRio’s actions (PRIO3) which rose by 21.21% in Friday’s session (5). At 1:37 pm (Brazilian time), the increase was 19.88% at R$28.04.

The oil company informed on Friday that the consortia it participates in has been selected to start exclusive negotiations on the final terms for the purchase of Petrobras’ Albacora and Albacora Leste fields (PETR3;PETR4).

According to the oil company, there is a possibility that there will be a final bid on the assets, in the Campos Basin, which helped fuel shares of PetroRio.

According to Credit Suisse analyst Regis Cardoso, the news is positive for the company. “Albacora and Albacora Leste are both important assets, more than doubling PetroRio’s production,” the bank said, noting that previous news from Brasil Energia indicated that the supply of the two fields could reach about US$4 billion. Previously, in September, Credit had already confirmed that PetroRio’s victory would be transformative for the company.

It is worth noting that the company’s shares already have Launched in September with positive signs About the process of buying fields.

The Albacora and Albacora Leste fields have an area of ​​about 960 square kilometers (square kilometres), and are located approximately 120 kilometers from the coast with water depths ranging from 100 m to 2,150 m in their wells.

“Both fields have great potential for oil and natural gas production and produce about 77,000 barrels of oil equivalent per day, which is the most sought-after group of assets under Petrobras’ liquidation plan,” Levante Ideas de Investments said on an occasion.

The day before, when commenting on the PetroRio result, BBI stressed that it sees the two Albacora fields with a high score.
Attractive to PetroRio, with ample room for production growth.

“If the estimated production numbers come to fruition, Albacora Oeste could add R$14/share to PRIO’s fair price, while Fields could add R$21/share, representing a 60%-88% increase over current levels (compared to previous Closing day. We believe that after bidding ends, management will be able to add more color to the development coming from one or both regions. With this, the market should start incorporating one or both regions into the PetroRio valuation,” he noted.

The day before, BBI repeated its recommendation to buy the asset, but lowered the target price from R$25 to R$24 per share, but in order to incorporate the higher risk scenario of the Brazilian stock market.

Analysts noted that the stock is trading at a significant premium of 95% over its Latin American peers, which is partly explained by the long-term value of the stock, but they noted that the albacore will be an important catalyst for the stock.

(with Reuters)

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