Petrobas Buys Remaining Stake in Pasadena
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Petrobas (NYSE: PBR) recently announced that it will pay a total of $820.5 million to acquire a 50% stake in Pasadena Refining Systems Inc, assuming full control of the company. Petrobas acquired its first 50% stake in Pasadena in 2006 for $360 million. It will be purchasing the remaining stake from Belgium Transcor Astra. According to the company, “Petrobas executed an agreement to end all existing lawsuits between the companies in the Petrobas System and the Belgian group Transcor Astra, controller of Astra Oil Trading. The lawsuits stemmed from the partnership period between Astra and Petrobas America Inc., a subsidiary of Petrobas, in the Pasadena Refining System, Inc., owner of the Pasadena Refinery in Texas and the Trading Company.”
Petrobas, a state-owned company in Brazil, primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. Petrobas’ operations are worldwide, with operations throughout the Americas, Africa, Europe, and Asia. Pasadena Refining Systems is an independent refiner and marketer of petroleum products, including petrochemical feedstock with a related crude oil capacity of just over 100,000 barrels per day.
This deal provides Petrobas with a slightly more competitive edge in the industry, especially when facing competitor British Petroleum (NYSE: BP). BP is one of the world’s leading international oil and gas companies. It provides its customers with fuel for transportation, energy for heat and light, retail services, and petrochemical products for everyday items. BP’s presence can be found in over 70 countries.
Petrobas and BP are close competitors when it comes to many things. Their market share is neck and neck, along with quarterly revenue growth. However, BP’s revenue is approximately double that of Petrobas. This deal will provide Petrobas with a larger share of Pasadena’s revenue than it has had in the past, getting Petrobas just that much closer to BP’s numbers. With this deal, Petrobas will no doubt increase revenue without seeing much of a change in operating costs, leading to higher profits for the company and shareholders alike.
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