Barclays Reiterates Overweight Rating On Petrobras

Barclays reiterated an "overweight" rating on Brazil's state-controlled oil producer Petrobras PBR on Monday evening, citing a positive view of Brazil's booming oil and gas industry. Petrobras said it will not need to sell any more debt within 10 years as its production swells to 6.4 million barrels of oil per day by 2020, which will allow cash flow from operations to cover financing obligations and exploration costs. Last Friday, Petrobras unveiled a 2011-15 spending plan of over $224 billion, more than any of the world's oil majors plan to spend over the next five years. To finance that plan, Petrobras plans to issue $91 billion in bonds and sell up to $13.6 billion in assets. "We see the decision as positive given that it reinforces our view that the Petrobras board is concerned about the company's debt covenants/ratings and avoidance of accessing equity markets in the future to fulfill its capex at any cost," Barclays said in a note to clients. Despite rising access and the company's access to what could turn out to be some of the largest oil reserves the world has ever seen, shares of Petrobras have slumped in the past year, falling about 10%. That puts the Brazilian oil giant well behind the returns delivered by Dow components Exxon Mobil XOM and Chevron CVX, the two largest U.S. oil companies, and Royal Dutch Shell RDS and BP BP, Europe's two biggest oil companies.