Petrobras Loses $622M In Lawsuit Against Vantage Drilling

Petróleo Brasileiro S.A. or Petrobras PBR recently lost an arbitration dispute against Vantage Drilling. The state-run energy company was ordered by an international tribunal to pay a fine of $622 million, resulting from a 2009 contract that was breached in 2015.

Petrobras America and Petrobras Venezuela Investments & Services, the two subsidiaries of Petrobras were found to breach a drilling contract with Vantage Deepwater Company and Vantage Deepwater Drilling, the two affiliates of Vantage, which resulted in the fine. On Aug 31, 2015, Petrobras claimed that Vantage had breached the conditions of the drilling contract and terminated the agreement for the Titanium Explorer drillship. It was followed by an arbitration claim from the offshore drilling contractor.

The fine comes as another blow for Petrobras - the world's most indebted oil company. Notably, a few days back, it lost a wage lawsuit when Brazil’s Labor Court voted in favor of the workers seeking higher wages. It was notably the biggest lawsuit that the company has faced in the Brazil’s Labor Court, which is expected to cost the company around 17 billion reals or $4.5 billion.

Headquartered in Rio de Janeiro, Petrobras has gained 25.3% in the past year compared with 32.5% growth of its industry.

Zacks Rank and Stocks to Consider

Currently, Petrobras has a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for some better-ranked stocks like CNOOC Ltd. CEO, Delek US Holdings, Inc. DK and HollyFrontier Corp. HFC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hong Kong-based CNOOC is an integrated energy company. The company’s top line for 2018 is anticipated to improve 64.4% year over year, while its bottom line is expected to increase 124.3%.

Brentwood, TN-based Delek is an energy company. The company’s top line for 2018 is anticipated to improve 39.2% year over year, while its bottom line is expected to increase more than 300%.

Dallas, TX-based HollyFrontier is an independent refining company. For 2018, its bottom line is likely to be up 153.5%. In the last four reported quarters, the company delivered an average positive earnings surprise of 41.3%.

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