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Brazilian Oil Bonanza

Posted July 25, 2008

Krista Das on TFN Market Insights Consumers may be painfully aware of how much a barrel of oil costs these days, but those in the oil industry aren’t suffering. Juan Munoz, publisher of ADR Traders talks oils stocks.

by Krista Das

Baltimore — (TFN): Consumers may be painfully aware of how much a barrel of oil costs these days, but those in the oil industry aren’t suffering. Joining us today to shed some lights on the oil industry is global trading expert Juan Munoz, publisher of ADR Traders. Juan, welcome to the program. 

So you promised me a stock pick before the show.  Which oil company are you so excited about?

Juan Munoz: Well, basically probably there’s no new news, but basically my recommendation is for ADR, international ADR called PetroBras.

Krista Das: Really. PetroBras. So a lot of analysts recommended that stock over a year ago.  Are you saying it’s not too late?

Juan Munoz: Of course, it’s never too late.  One example is when people start investing in Saudi Arabia and four years ago so this still a good business?  Yes, it’s still.

PetroBras is basically coming up recently with new discoveries which make them increase the volume in terms of their assets and their inventory and that’s great news. Not just last year, but it will continue for the next five, ten years.

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Krista Das: It also doesn’t hurt that PetroBras and its Japanese financing partner, Mitsui, have a 10-year contract with the drilling company, Trans Ocean that is renewable for another decade. Would you recommend investing in Mitsui and Trans Ocean as well?

Juan Munoz: Well, let’s go back first to PetroBras. PetroBras has increased their inventory recently. They found approximately 150 million, that’s a calculation, in research in new offshore drilling. It’s called Espiritu Santo and that is going to give them a lot of space in the oil industry. PetroBras is going to become the third biggest oil company in the world.

So now talking about these two, the drilling company. Yes, of course. I prefer Trans Ocean because they just got a three billion contract for five years – for the next five years of drilling with PetroBras, which means guarantee them that these new discoveries are going to be drilled by Trans Ocean and that’s a lot of benefit for both companies.

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Krista Das: Now what are some of the upcoming projects that PetroBras has in the works?

Juan Munoz: Well, basically they are planning to invest approximately $112 billion capital expenditure. PetroBras basically invested during the last five years in research and trying to discover more fields. Now’s a good time. 

They found some big offshore Brazil and they continue doing business with Bolivia, with Argentina. So there is a lot of potential for PetroBras to keep growing. It’s a good investment, as you said at the beginning, last year. It will become a very good investment for the next five years.

Last year one example, it was 63 percent return on the stock of the ADR in the United States. Other projects that they have: They’re planning also to diversify in other resource of energy, too.

Krista Das: What buy price would you recommend?

Juan Munoz: Right now it’s between 60 and $70. The stock has been moving up. Of course now that this week, the price of oil has been going down, this probably will become between 59 or 65. But in general I will estimate appreciation of 25 percent, which is great in this market.

Krista Das: Juan, thanks for talking oil today. Great information.

If you are interested in playing the foreign markets, it’s easier than you think. Be sure to check out Juan’s trading research service, ADR Traders by clicking on the screen or go to Today’s Financial News.com.

That’s all for this week. Until next time here’s to great profits from smart investing.

 

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Posted by Krista Das · Filed Under Featured Video, Oil and Energy, Podcast, Videos 

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