Price Hike Too Weak For Petrobras, Shareholder Loss Still Exceeds BP Losses

The talk had been for closer to 15% price hikes and that is what investors were expecting.  In all honesty, for a state-run public company to ever get a 15% price hike on the citizenry would not be a normal situation.  Global oil prices have been coming down substantially over the last seven weeks.  Had they been rising, then perhaps a double-digit request might be realistic.

After going through analyst reports and news reports, we have seen that analysts are not taking the low-percentage price hikes that well.  Banco Itau BBA SA and Credit Suisse have both chimed in that the hikes are not enough. The company’s CEO also admitted in a 2012 to 2016 business update on Monday morning that the production goals have not been realistic.

Petrobras shares are down over 2% around $19.15 right before the open of the ADRs in New York and the 52-week range is $18.16 to $35.10.  It is hard to imagine it, but the shareholder losses in this great Brazilian oil giant have been larger than the losses were for BP PLC (NYSE: BP) shareholders from the Gulf of Mexico rig disaster in 2010.

JON C. OGG