uploads/2016/03/DMA5.jpg

Petrobras’s Stock Price Has Doubled since Mid-February

By

Updated

Integrated energy stocks rise

In 2016, integrated energy stocks have been rising since February due to firming oil prices backed by the possibility of consensus among major oil producers to support oil prices. From mid-February until March 22, 2016, Petrobras (PBR) saw its stock price almost double amid volatility.

PBR’s peers like Statoil (STO) and YPF (YPF) also rose by 21% and 18%, respectively, during the same period. ENI SPA (E) increased by 24%. For exposure to integrated energy sector stocks, you can consider the iShares U.S. Energy ETF (IYE). The ETF has ~44% exposure to integrated stocks.

Petrobras's Stock Price Has Doubled from Mid-February

Article continues below advertisement

Petrobras’s stock performance

Last year, Petrobras’s (PBR) stock fell on plunging oil prices. Continuing the trend, PBR’s stock had a weak opening in 2016. Petrobras traded below its 50-day and 200-day moving averages. PBR’s downward movement halted in mid-February, whereby the stock started rising amid volatility.

In January 2016, PBR announced that it began negotiations for the sale of its interest in Petrobras Argentina. On the reserves front, Petrobras (PBR) posted a decline in proved reserves from 13 billion barrels of oil equivalent (or Bboe) to 10.5 Bboe. This was followed by credit rating agency Standard and Poor’s downgrading PBR’s rating. Petrobras also signed a term sheet with China Development Bank for the financing of $10 billion. Plus, per its divestment program, Petrobras is considering the sale of its stake in BR Distribuidora. PBR is also in the process of selling its onshore fields spread through five states in Brazil.

Petrobras’s stock is marginally below its 200-day moving average

On the other hand, oil prices, which hit a multiyear low in January 2016, started witnessing positive spikes. In February, Petrobras began operating the Cidade de Marica platform in the Lula field. The platform has a daily production capacity of up to 150,000 barrels of oil and six million cubic meters of gas.

In fact, PBR’s stock gained considerably and crossed over its 50-day moving average, which was likely led by oil price spikes coupled with positive news on the Lula field. Currently, Petrobras trades above its 50-day moving average and marginally below its 200-day moving average.

In the next part, we will analyze Petrobras’s (PBR) analyst ratings and present an overview of its strategy.

Advertisement

More From Market Realist