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MarketScreener Homepage  >  Equities  >  Bolsa de valores de Sao Paulo  >  Petroleo Brasileiro SA Petrobras    PETR4   BRPETRACNPR6

PETROLEO BRASILEIRO SA PETROBRAS

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Petroleo Brasileiro Petrobras : Brazil's Constellation Group Files for Bankruptcy in the U.S.

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12/07/2018 | 05:19pm EDT

By Tom Corrigan

Servicos de Petroleo Constellation SA, a Brazilian oil-and-gas drilling company, filed for bankruptcy in the U.S. on Thursday to help it restructure nearly $1.5 billion in debt.

The company sought chapter 15 protection, the section of the bankruptcy code that deals with international insolvencies, in U.S. Bankruptcy Court in New York.

Much of Constellation's debt is governed by New York law, court papers show, and it has several bank accounts in New York. Foreign companies with ties to the U.S. often use chapter 15 to seek court recognition of their insolvencies. If approved by a U.S. judge, it acts much like chapter 11, halting lawsuits and preventing creditors from seizing U.S.-based assets.

Constellation also filed for bankruptcy in Brazil on Thursday, but said it is continuing to operate normally while it works to shore up its balance sheet.

In court papers, Andrew Childe, Constellation's legal representative in the U.S., said the business' troubles stem largely from the global decline in the oil-and-gas sector as well as a recession in Brazil. Long-term charters and service contracts for seven of its eight offshore drillships have either expired or are set to expire soon, he said.

Constellation joins many other energy-sector businesses that have filed for bankruptcy in recent years after oil prices collapsed in 2014, falling to below $30 a barrel in 2016.

The company restructured its debt last year, closing an exchange offer with more than 80% of its bondholders. The deal greatly improved the company's creditworthiness, but Mr. Childe says it still wasn't enough. The company continued negotiating, and in late November it completed a comprehensive debt-restructuring agreement that is widely supported by both lenders and shareholders.

An initial hearing on the chapter 15 case, which will be overseen by Judge Martin Glenn, is scheduled for Monday. The oil-and-gas driller is being advised by the law firm White & Case LLP, and the case number is 18-13952.

Constellation's fleet, which is one of the largest in Brazil, comprises eight offshore rigs -- including three ultra-deepwater rigs -- nine onshore rigs and five so-called floating production storage and offloading units.

Brazilian state-controlled oil company Petróleo Brasileiro SA is its largest customer, providing 99% of its total gross revenue in 2016 and 2017, according to court papers.

Constellation has several offices in Brazil, as well as London, Luxembourg, Paraguay and Panama. It employs more than 1,200 people, about 93% of whom are in Brazil.

Write to Tom Corrigan at tom.corrigan@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
PETROLEO BRASILEIRO SA PETROBRAS 1.26% 27.34 End-of-day quote.19.05%
WTI 0.56% 59.11 Delayed Quote.29.60%
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Financials (BRL)
Sales 2019 365 B
EBIT 2019 74 986 M
Net income 2019 31 905 M
Debt 2019 263 B
Yield 2019 3,11%
P/E ratio 2019 10,19
P/E ratio 2020 7,95
EV / Sales 2019 1,76x
EV / Sales 2020 1,50x
Capitalization 380 B
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Mean consensus OUTPERFORM
Number of Analysts 9
Average target price 31,3  BRL
Spread / Average Target 16%
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Managers
NameTitle
Eduardo Bacellar Leal Ferreira Chairman
Rafael Salvador Grisolia Chief Financial Officer
Roberto Moro Chief Engineering & Technology Officer
Hugo Repsold Chief Technology & Production Development Officer
Segen Farid Estefen Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
PETROLEO BRASILEIRO SA PETROBRAS19.05%99 903
ROYAL DUTCH SHELL8.98%258 535
PETROCHINA COMPANY7.77%201 483
TOTAL7.04%147 731
EQUINOR ASA5.31%76 410
NK LUKOIL PAO--.--%67 266