This Unloved Oil Province Just Hit a Record

This article was written by Oilprice.com -- the leading provider of energy news in the world. 

I'm a contrarian by nature. Whenever observers are apathetic or downright hostile toward a play, I always get interested.

Especially when the fundamental data from the space is positive, which appears to be the case in one major oil play, judging from news this week.

That's offshore Brazil -- a sector that's lately gone from golden to goat with worldwide petroleum investors. A few years ago, the Brazilian presalt play was the hottest thing going, with E&Ps and stock buyers alike lining for a chance at billion-barrel oil discoveries here.

But high costs, steep government fiscal terms, and a softening of the Brazilian economy have weighed on the play lately, with recent bid rounds attracting underwhelming interest from global oil players.

That in itself is interesting. But a key piece of data this week makes the picture downright intriguing.

That comes from Brazilian state oil producer Petrobras (NYSE: PBR  ) , who reported that the company has just hit a production record for its presalt fields.

As of April 15, Petrobras' presalt production jumped to 428,000 barrels per day, driven by 50,000 b/d of output from the new P-58 platform in the Campos basin, a development that came online in mid-March.

This is a timely event for Petrobras -- and for Brazil's oil sector -- coming after the company had been struggling of late to ratchet up its presalt production, which had been hampered by high costs and complex engineering for the deep wells in the play.

The new high watermark in output should thus give some comfort to the wider oil sector, and to investors. The presalt play apparently is manageable -- it just took some time to get it on track. This may help to jump-start a "second wave" of interest in new presalt drilling and development. Especially if Petrobras can keep the production growth going.

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