Petrobras Hikes Investment Plan By 24% to $68B

Petroleo Brasileiro SA (PBR), or Petrobras, revealed its plan to increase investments to $68 billion over the next five years from 2022 to 2026. The company aims to direct the investments towards oil production from the subsea pre-salt area, according to Reuters.

The hike represents a huge 23.6% spike from the $55 billion investment announced last year for the period 2021 to 2025.

Shares of the Brazil-based company, which produces and sells oil and gas gained 1.8% to close at $10.48 on November 25.

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Details of Investments/Divestments 

The company provided further bifurcation of the planned investment. About 84% of the investment will be utilized towards oil and gas exploration and production, with majority allocation towards the promising subsea pre-salt area.

Meanwhile, the company plans to divest assets worth $15 billion-$25 billion over the next five years.

Production Forecast Cut for FY2022

However, for 2022, due to the effect of the pandemic, the company slashed its average production expectations to 2.1 million barrels of oil a day with a probable variation of 4%. Earlier, the company had expected an average production of 2.3 million barrels of oil per day.

The company forecasts oil production of 2.6 million barrels per day by 2026.

Wall Street’s Take

Overall, the stock has a Strong Buy consensus rating based on 3 Buys and 1 Hold. The average Petroleo Brasileiro SA price target of $13.85 implies 32.16% upside potential from current levels.

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