When true bull markets hit a sector, investors will often bid up any and all comers -- while ignoring solid players just outside the mainstream. Though Brazil's Petrobras (NYSE:PBR) is a major oil company by any reasonable meaning of the term, the stock trades at a single-digit P/E while other majors are valued in the low teens.

The company's financial and operational performance doesn't offer a ready explanation. Net revenue rose 16% in the second quarter as the company boosted hydrocarbon production by about 15% year over year (and 10% sequentially). While the appreciation of the Brazilian real vs. the dollar ate away a chunk of this quarter's growth, double-digit performance is still not bad.

Other line items offered good news as well. Operating margins improved annually and sequentially, and the company posted positive free cash flow despite ongoing investments in capital projects. Furthermore, the company reduced its debt and maintained a respectable dividend payout.

On another happy note, lifting costs improved in the quarter. Though up 18% over last year, the cost of getting oil out of the ground dropped by nearly 20% on a sequential basis. Although Petrobras has rather respectable lifting costs (in part because of lower wages in its home country), I would expect these to continue to rise. With the deals that Petrobras has signed with drillers such as Transocean (NYSE:RIG) and Noble (NYSE:NE), and the company's commitment to aggressive production increases, costs almost have to go up.

Given that these shares recently hit a 52-week high, it's hard to say that the corruption scandal in Brazil has really hurt this stock (as it has some other Brazilian equities). All the same, though, they still look quite reasonably priced relative to the likes of BP (NYSE:BP), ExxonMobil (NYSE:XOM), or Motley Fool Income Investor recommendation Total SA (NYSE:TOT). True, energy prices may head back down, but Petrobras has excellent margins, bold production targets, and a good yield -- some or all of which may help cushion any possible fall.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).