HOUSTON - SLB (NYSE: SLB) has secured a significant contract from Brazilian oil major Petrobras (NYSE: PBR) for the supply of subsea production systems to support the further development of the Atapu and Sepia oil fields in the Santos Basin. The contract was awarded to SLB's OneSubsea joint venture following a competitive tender process.
Under the terms of the contract, OneSubsea will provide standardized pre-salt vertical trees, subsea distribution units, subsea control systems, and pipeline systems, along with installation, commissioning, and life-of-field services. A substantial portion of the technology and equipment, including vertical trees and subsea control systems, will be produced and serviced locally at OneSubsea's facilities in Brazil.
Mads Hjelmeland, CEO of SLB OneSubsea, stated that this award strengthens the partnership with Petrobras and supports the development of critical assets for Brazil. Emphasizing the local production, Hjelmeland noted that the use of locally developed technology platforms ensures timely delivery and maximizes local content.
The development projects in the Santos Basin are part of Petrobras's significant investments in the pre-salt area. The projects will lead to the deployment of two new floating production, storage, and offloading (FPSO) platforms, P-84 for the Atapu field and P-85 for the Sepia field, each with a capacity to produce 225,000 barrels of oil and process 10 million cubic meters of gas per day.
SLB is a global technology company that focuses on energy innovation and operates in over 100 countries. Its joint venture, SLB OneSubsea, aims to optimize oil and gas production and support the energy transition with digital and technological innovations.
This contract announcement is based on a press release statement and contains forward-looking statements regarding the anticipated benefits of SLB's new technologies and partnerships. These statements are subject to various risks and uncertainties, and actual results may differ materially from those projected.
The information provided in this article does not include speculation or subjective assessments but rather focuses on the key facts of the contract award and its significance to the involved parties.
In other recent news, Petrobras, the Brazilian state-controlled oil company, is nearing the completion of its due diligence process to potentially repurchase the Mataripe refinery, which it previously sold to the Abu Dhabi-based sovereign fund Mubadala. The state-owned company is considering a bid to buy back the refinery, aligning with President Luiz Inacio Lula da Silva's aim to reverse the sale of Petrobras refineries and boost investment in job-creating segments of the industry.
Petrobras has also announced plans to redeem €271,945,000 in outstanding 4.750% Global Notes due in 2025. The redemption price will be the greater of the full principal amount or a sum calculated based on the present value of remaining payments of principal and interest.
Citi has reaffirmed its Neutral rating on Petrobras, following a recent discussion held at the company's headquarters with its new CEO, Magda Chambriard, and new CFO, Fernando Melgarejo. The financial institution noted that while the new management is committed to maintaining high levels of corporate governance and investing in potentially lucrative projects, there is an expectation of a bearish oil market ahead.
In terms of leadership changes, CEO Jean Paul Prates has offered to resign, with former energy regulator Magda Chambriard expected to take over. This transition has led to adjustments in stock target prices by financial research firms such as CFRA, which increased the price target to $14.00, and Jefferies, which downgraded the company from Buy to Hold and adjusted the price target to $17.70.
Finally, Venezuela's international bondholders, including Petrobras, have appointed Orrick, Herrington & Sutcliffe LLP as legal advisors for anticipated debt restructuring. This follows Venezuela's default on its international debt in 2017, which encompasses around $60 billion owed by the government and the state oil company PDVSA.
InvestingPro Insights
As Petrobras (NYSE: PBR) continues to invest in the development of the Atapu and Sepia oil fields, the company's financial metrics and market performance provide a deeper understanding of its current standing. Petrobras is trading at a low earnings multiple, with a P/E Ratio (Adjusted) of 4.05 as of the last twelve months leading into Q1 2024, signaling potential undervaluation relative to earnings. Moreover, the company boasts a strong free cash flow yield, a key indicator of financial health and the ability to invest in new projects like those in the Santos Basin.
Petrobras also stands out for its commitment to returning value to shareholders, offering a significant dividend yield of 17.21% as of the most recent data. This is particularly notable as the company has maintained its dividend payments for 7 consecutive years, demonstrating a stable financial policy amidst the volatile energy sector. Petrobras's status as a prominent player in the Oil, Gas & Consumable Fuels industry is further solidified by a robust gross profit margin of 52.45% over the last twelve months, which is indicative of its efficient operations and pricing power.
For investors seeking more detailed analysis and additional insights, there are 8 more InvestingPro Tips available, offering a comprehensive look at Petrobras's financials and market outlook. These can be accessed at https://www.investing.com/pro/PBR, providing valuable information for making informed investment decisions.
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