Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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Just Discovered: 30
Billion Barrels of Oil... and ONE Firm Stands to Profit Most |
Published:
June 9, 2008Petroleo Brasileiro (Petrobras) (NYSE: PBR, $68.07) is Brazil's national
oil company. Brazil allows foreign firms to operate in the
country, however, PBR has at least a stake in most of the
nation's oil and natural gas production projects. The firm also
owns refineries and oil and gas pipelines.
Catalysts: Brazil is emerging as one of the most
promising deepwater oil plays in the world today, thanks to a series
of recent oil and natural gas discoveries. In December, PBR
announced the discovery of the Tupi oilfield off the coast of Rio
de Janeiro in waters roughly 10,000 feet deep.
According to PBR, the field contains 5 to 8 billion barrels of
crude; one of PBR's partners on the field has estimated it could
contain as much as 30 billion. But there is little doubt that
this is one of the largest and most significant oilfields
discovered anywhere in the world in at least two decades.
Soon after that, in the same general region, the firm announced
the discovery of a giant gas field known as Jupiter. And even
more recently, Brazil leaked news of yet another oilfield
discovery -- the Carioca field -- with billions of barrels in
potential reserves. PBR is the largest stakeholder in each of
these fields, with a 65% stake in Tupi and Jupiter and a 45%
stake in Carioca.
Many believe this is only the beginning. The Santos Basin of
Brazil is home to all of these recent discoveries, and there are
plenty of promising formations that have not yet been drilled
and tested. Many believe Brazil will sooner or later overtake
Venezuela as the most important oil producer in South America.
At any rate, PBR should benefit from steadily growing production
in coming years as it brings these giant fields (and several
smaller projects) online. And Petrobras is also doing further
drilling and testing work on these recent discoveries; my staff
and I believe there's a good chance the firm will be able to boost
reserve estimates as it completes its evaluation work.
Petrobras should have no problem attracting investment either
-- foreign oil companies are more than happy to partner with PBR
on these promising deepwater fields.
Competitive Advantages: PBR has two key
competitive advantages. First, drilling in the deepwater is no
simple task -- Tupi is located in water close to two miles deep,
the outer limit of technical capability for even the most
advanced drilling rigs. The test wells in the field were among
the longest wells ever drilled anywhere in the world.
However, more than 80% of Brazil's oil and gas production comes
from offshore oilfields and deepwater projects. The company has
significant experience and practical know-how with offshore and
deepwater wells. A solid understanding of its key reservoirs and
the complications inherent in drilling gives the firm an
advantage.
Secondly, PBR is 55% owned by the Brazilian government. While
Brazil is relatively friendly about allowing foreigners to own
stakes in its oilfields, it still tends to like to exert some
control. Thus, Petrobras is the operator and controlling
stakeholder in most large projects and has preferential access
to deals; 95% of oil production in Brazil is from fields
operated by PBR.
Valuation and Outlook: The stock has certainly
seen a nice run-up in recent years, returning about
+234% over
the past two years alone. Nonetheless, it doesn't look
overvalued -- PBR trades at just 14.5 times next year's earnings
estimates.
With a hand in three of the most promising deepwater oil and gas
projects in the world, PBR has one of the most exciting
production growth profiles of any oil firm. And with its
significant deepwater expertise and close relationship with the
Brazilian government, the firm is the partner of choice in all
Brazilian oil and gas projects. With these points in mind, the
stock looks like a solid "Buy" under $80 per share.
-- Paul Tracy
Editor
StreetAuthority
Market Advisor
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opportunities each month, plus access to five model
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Investing Doesn't Get Any Easier Than This |
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Calistri's strategy is as simple as investing gets -- just one idea
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