Petrobras Talks with CEMIG to Sell Gasmig Interest - Analyst Blog

On Jul 16, Brazilian energy giant, Petroleo Brasileiro SA or Petrobras (PBR) declared that it was in talks with the electricity company, Companhia Energética de Minas Gerais (CIG) or CEMIG to sell its 40% stake in Gasmig, a Brazilian natural gas distribution company. However, financial details of the transaction have not been revealed.

Petrobras stated that this anticipated sale is in accordance with its Business and Management Plan, which proposes non-core asset sales in Brazil as well as globally.

Gasmig, with a natural gas pipeline network of around 850 kilometers, is the only distributor in the Minas Gerais region and has a per-day distribution of 4.1 million cubic meters of natural gas.

Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil. The company's activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks. The company also engages in the refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.  

Last week, Petrobras announced that it anticipates roughly $15.0 billion decrease in its profits between 2014 and 2018 if it is obliged to suspend the oil platform deal with SBM Offshore − a marine service provider in Holland. Petrobras added that its production of oil and natural gas will be significantly reduced if it stops utilizing the floating oil production platforms of SBM Offshore.

Petrobras is expected to release second-quarter results on Aug 8 and the Zacks Consensus Estimate is currently pegged at 48 cents per ADR. The company currently has a Zacks Rank #2 (Buy).

One could also consider other emerging market oil integrated stocks like China Petroleum & Chemical Corp. (SNP) and CNOOC Ltd. (CEO), both of which have a Zacks Rank #2.

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