Petrobras (PBR) Awarded 40% Stake in Controversial Brazilian Oil Field

NEW YORK (TheStreet) -- Oil company Petroleo Brasileiro (PBR), commonly referred to as Petrobras, has won a 40% stake in the controversial Libra oil field in Brazil. The auction process was hotly contested by Petrobras workers who picketed over international firms bidding for a majority stake.

Brazilian state-run Petrobras will lead a consortium including Royal Dutch Shell, Total (TOT), China National Petroleum (PTR) and China National Offshore Oil Corporation (CNOOC) (CEO). Shell and Total each have a 20% stake while PTR and CNOOC both hold 10%.

Libra, located 140 miles off the coast of Rio de Janeiro, is one of the world's largest offshore oil discoveries and has an approximate 8-12 billion barrels of recoverable resources available to be mined. The Brazilian government will reap 41.65% of profits on surplus oil (that is, oil mined after the companies have broken even on initial investments).

Shares closed 4.4% higher to $16.21, leading the S&P 500 which closed flat.

TheStreet Ratings team rates Petrobras as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate Petrobras (PBR) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."

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