Inconclusive Drilling Proves Little Problem for Petrobras (NYSE:PBR)

It wasn’t the best news for oil stock Petrobras (NYSE:PBR), but it was good enough for investors, who sent shares up fractionally in Monday afternoon’s trading. Petrobras went drilling down around the Equatorial Margin near Brazil but didn’t exactly come back with the results it had hoped for. Specifically, Petrobras came back with “inconclusive” results when the test drilling was measured for overall economic viability.

It staged its test drilling in the deepwater part of the Potiguar Basin, known as the Pitu Oeste well. While it did run into hydrocarbons, the exact nature and quantity available were somewhat unclear. However, Petrobras isn’t calling it quits just yet. Instead, it’s planning to take a run at a second site in the Potiguar Basin next month. Petrobras plans to invest $3.1 billion into oil and gas research in the region, so a few dry test holes are likely to be expected.

That’s Not Slowing It Down Much

While this isn’t the best news for Petrobras, it’s clear that it’s still making progress. In fact, a recent report noted that its total gas and oil output for 2023 was actually up 3.7%. It ultimately reached 2.78 million barrels of oil equivalent per day and stepped up its proven reserves in other parts of the Equatorial Margin, which it’s working to further drive open with the previously-mentioned test wells. Still, this news comes with a bit of a downside as reports note several of Petrobras’ properties actually reached peak capacity during 2023, suggesting potential reductions in capability to come.

Is PBR a Good Stock to Buy?

Turning to Wall Street, analysts have a Strong Buy consensus rating on PBR stock based on five Buys assigned in the past three months, as indicated by the graphic below. After an 89.37% rally in its share price over the past year, the average PBR price target of $18.94 per share implies 10.47% upside potential.

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