Petrobras Busts The Price & Ignores Oil Trends (PBR, BP, XOM, CVX, COP)

Crude oil has been on fire and prices were as low as $74 per barrel less than 3 weeks ago before recent highs  of $84.00.  Generally a rise in the commodity price garners a rise in the price of the key underlying shares in companies that drill black gold.  Petroleo Brasileiro (NYSE: PBR) or Petrobras, was trying to do well after its mammoth secondary offering.  That came to an end and Petrobras is now trading as a busted deal once again.  We wanted to see how this compares to other oil giants and we took a look at BP plc (NYSE: BP), Exxon Mobil Corporation (NYSE: XOM), Chevron Corporation (NYSE: CVX), and even ConocoPhillips (NYSE: COP).

The original deal of about 2.9 billion shares went off at an ADR price of $34.49.  On September 24 the ADRs traded more than 111 million shares and closed down at $34.92 versus $35.59 the day before.  It was just this Tuesday, less than two weeks after the offering, that shares hit a high of $36.90 and its highest close was also that day at $36.71.  What a difference 48-hours can make…Today shares are down 4.35% at $33.56 and shares closed down $1.61 at $35.09 yesterday.

Whether this is true is something we weren’t able to confirm,but there are market rumors that local weekly news outfits are going to reveal information which could bring on a corruption scandal involving the ruling Workers’ Party.  Brazil is supposed to be the hottest of the BRIC nations with what is supposed to be.  There is still the notion that this is Latin America and scandals have a long history to overcome throughout the region.  Petrobras this week noted that it would fall short of its annual production targets.

Yesterday’s drop was exacerbated because of a downgrade from Barclays.  The rating went to Equal-Weight from Overweight.  Morgan Stanley also maintained an overweight rating but lowered its fair value target down to $45 from $61 after the effects of the stock offering.  UBS gave Petrobras a SELL rating back in August and we recently gave the two varying takes on Petrobras and Brazil where a key technician and a key fundamental analyst were both effectively at the same conclusion.

How this compares to elsewhere….

BP plc (NYSE: BP) is down the least now, amazing considering its woes of 2010 and considering that it is back above the $40 handle.  Shares are down 0.4% at $41.45.  Shares hit a high of $42.08 this morning and that marked a high in the stock since this was trading under $30 as recently as the week before the Fourth of July break.  The 52-week range is $26.75 to $62.38.

Exxon Mobil Corporation (NYSE: XOM) is down only 0.55% today at $63.59 and its 52-week range is $55.94 to $76.54.  Shares hit a high of $64.00 this morning, but Exxon has also lagged as this was a $61 stock at the start of September.

Chevron Corporation (NYSE: CVX) is down almost 1% today at $83.07 and shares hit a new 52-week high of $84.50 this morning and this was just a $77 stock at the start of September.

ConocoPhillips (NYSE: COP) is down only 0.5% today at $59.39 and its 52-week range is $46.63 to $60.53.  Shares hit a high of $60.00 this morning and this was just a $54.00 stock at the start of September.

Whatever is happening at Petrobras is not pretty.  Many investors now have to be wondering whether they should have participated in the largest share offering in history.

JON C.  OGG