Brazil's state-owned energy giant, Petrobras S.A. PBR has unveiled its new strategic plan that will mark a shift toward a greater emphasis on oil and gas exploration and production as the company seeks to rebuild its conventional reserves.

A Sneak Peek Into PBR’s New Plan

The chief financial officer (“CFO”) of the company, Fernando Melgarejo, announced that Petrobras neither plans to make any new mergers and acquisitions as part of its new strategic plan for 2025-2029 nor does it require more cash and debt.

While the Brazilian energy major did not announce anything explicitly, it is likely to concentrate on upstream operations. PBR added that it might face the “uncomfortable” scenario of a reduction in oil and gas reserves by the end of the decade.

Petrobras’ upstream focus can be gauged from the fact that it has been planning to explore the Equatorial Margin, Brazil's most promising and environmentally sensitive oil frontier.

Confidence in Petrobras’ New Management

As part of a major shake-up, Brazilian President Luiz Inacio Lula da Silva replaced former chief executive Jean Paul Prates with Magda Chambriardas he wanted to push the oil giant to speed up investments. Also, Melgarejo was appointed as the new CFO in the month of June.

The company recently completed the issuance of $1 billion in dollar-denominated global bonds, which is seen as a validation of the confidence that the markets have in Petrobras under the leadership of Chambriard.

This strategic turnaround of the company came after years of efforts to diversify itself into renewable energy and other sectors. According to the 2024-2028 plan of Petrobras, it intended to make an investment of $102 billion,which would include prospective acquisitions and low-carbon schemes such as biorefinery, wind and solar energy.

Petrobras doesn’t foresee any major acquisitions in the new investment plan and therefore, it would also not require contracting much debt.

PBR’s Zacks Rank and Key Picks

Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil and one of the largest in Latin America. Currently, PBR has a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at some better-ranked stocks like Royal Vopak VOPKY, VAALCO Energy EGY and Core Labs Inc. CLB. While Royal Vopak currently sports a Zacks Rank #1 (Strong Buy), VAALCO ENERGY and Core Labs Inc. carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here