Good news for oil stock Petrobras (NYSE:PBR) today as it made a new oil discovery and helped ensure it could keep extracting for some time to come. Though investors aren’t exactly discouraged by this, they’re not particularly enthused, either, as shares went up fractionally in Wednesday afternoon’s trading.
Petrobras was drilling the Anhaugua exploration well, the second Potiguar well it’s drilled this year, down in the northern Equatorial Margin. The well revealed hydrocarbons, which makes it a likely spot for oil. While further testing will be needed to verify the well, and ensure that this wasn’t some one-off fluke, it’s looking like a good sign as this is just the early stage of Petrobras’ exploration plans.
Petrobras plans to drill 16 wells in the area over the next five years, and with the first two looking promising, it’s little wonder that the Equatorial Margin is considered one of the planet’s most promising new frontiers for oil and gas development.
A Lot At Stake
We know from a little less than a week ago that the current CEO of Petrobras, Jean Paul Prates, is facing a lot of government scrutiny over dividend issues and similar performance matters. We also know that Brazilian regulators aren’t exactly in a hurry to offer up drilling rights in the Equatorial Margin. However, Prates may have saved his job following today’s oil find and after reports suggested that a planned meeting between him and Brazil’s President, Luiz Inacio Lula da Silva, was canceled.
What Is the Future of PBR Stock?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PBR stock based on two Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 72.76% rally in its share price over the past year, the average PBR price target of $17.68 per share implies 10.36% upside potential.
