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A Look Into Petrobras' Great Week And The Detention Of Brazil's Ex-President Lula da Silva

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A Look Into Petrobras' Great Week And The Detention Of Brazil's Ex-President Lula da Silva

Shares of Petroleo Brasileiro SA Petrobras (ADR) (NYSE: PBR) have gained 50 percent since last Monday, and almost 10 percent on Friday alone. Petroleo Brasileiro SA Petrobras (ADR) (NYSE: PBR-A) shares have surged even higher, as they rose more than 56 percent over the week.

In fact, many oil and gas stocks had a good week, as oil rallied, partly driven by strong U.S. jobs data and considerable technical buying as prices breached resistance levels.

However, a few company-specific news also helped Petrobras post such strong returns.

Last Monday, the state controlled company secured a $10 billion loan from the China Development Bank. In exchange, Petrobras agreed to supply petroleum to Chinese companies. Also on Monday, the company cancelled the sale of its 20 percent stake in two offshore oil fields it jointly operates with Royal Dutch Shell plc (ADR) (NYSE: RDS-A). Shares closed up 6.8 percent.

Related Link: Oil, Gas Having One Of The Best Days In Recent Memory

On Tuesday, the stock rose 5.28 percent as Reuters reported that the company plans to cut its five-year investment plan by roughly 20 percent next month. Among the motives cited by the source were low oil prices, huge debt and the consequences of the much discussed corruption scandal.

On Wednesday, the shares gained another 8.44 percent as news transcended that the Brazilian company was in exclusive talks with Pampa Energia S.A. (ADR) (NYSE: PAM) to sell its controlling stake (67.2 percent) in Petrobras Argentina SA ADR (NYSE: PZE) for about $1.2 billion.

On Friday, the Brazilian police took ex-president Luiz Inacio Lula da Silva in for questioning over alleged kickbacks from Petrobras. The police said they had evidence that Lula had had received payments and luxury real estate from the state controlled company. While some might see this as bad news, it seems investors took it as a sign of the company being “cleaned up” – meaning that corruption issues are being addressed by both the management team and the Brazilian state.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Image Credit: Public Domain

 

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