Will Petróleo Brasileiro S.A. (NYSE: PBR) Regain Its Position?


Petróleo Brasileiro S.A. (NYSE: PBR) is a well-known semi-public Brazilian multinational energy company based in Brazil. It’s the largest of its kind in the entire Southern Hemisphere in terms of market capitalization and is considered the largest in Latin America in terms of revenue measured back in 2011. The company is an important oil producer with over 2 million barrel production of oil per day. The company also owns many oil refineries, oil tankers as well as is a big distributor of oil products. In 2010, Petrobras (NYSE: PBR) sold off its $72.8 billion worth of shares on the BM&F Bovespa stock exchange, making it the fourth largest company in the world in terms of market capitalization.

But in the light of recent events it seems like investing in Brazil is a risk for the investors, regardless of the fact that a socialist leader has been elected. Petrobras (NYSE: PBR) to date hasn’t been able to file its third quarter financial statement. Instead they submitted audit reports required by regulators.

24/7 Wall St. has been on Petrobras (NYSE: PBR) toes ever since it started, as the company doesn’t operate under traditional norms. It’s a state run entity, hence has prices dictated to it about how much to spend on getting the oil out of the ground and how much to sell it for. Its governance and supervision also falls in the hands of the government and shareholders. All in all the government is fully in charge of every decision the company makes and the money flow is also controlled by them.

Recently Petrobras (NYSE: PBR) announced that its third quarter revenue will now be released on December 12th, without any audit review attached to it. Officials of the company stated that the company at this point is under investigation due to charges of money laundering and organized crimes committed by its former Director Paulo Roberto Costa. These are investigation conducted in connection to Lava Jato Operation and the former director is being investigated for embezzlement and other charges.

The official further went on to explain that Petrobras (NYSE: PBR) has also hired two independent law firms to carry out investigation into the allegations against the former director. The decision to hire independent firms came from the Audit Committee of the Board of Directors.

The delay in the submission of quarterly figures will give the company more time to look into the ongoing investigation and gain some sort of understanding of what has happened and be able to respond to the accusations made. This incident has also made the company realize the need for stronger internal controls needed that needs to be put in place.

According to sources, New York ADSs is down by nearly 6% at $9.60 against its 52 week standing of $10.09 to $20.94. It just isn’t a 52 week low, for Petrobras (NYSE: PBR) the shares haven’t been this down in the last 20 years. Petrobras (NYSE: PBR) ADS till 2008 ranged between $60 to $70 dollars.