If you've been itching to grab shares of an international energy giant, the past month has been a real treat. Shares of Petrobras
A look at the firm's earnings report confirms my hunch that the sky is not making much headway in narrowing the distance to the ground. Revenue grew by double digits over last year, but cost inflation and currency appreciation cut into bottom-line profits slightly. Strong price realizations in the second quarter contributed to very strong comparisons with the first quarter, with operating profit up 34% and cash from operations up more than 80%.
Thanks to that felicitous cash flow, Petrobras is able to think big when it comes to growth. Not long after the firm released its results, it unveiled an ambitious investment plan for 2008 to 2012. The new spending target of $112 billion is a 29% hike over the last long-term plan. The remarkable thing is that not even half of the increase stems from new capital projects. As with net income, pricing pressures and unfavorable exchange rates have left their mark on this plan.
The point of this massive spending program is, of course, production growth. In my view, Petrobras has a good chance to meet its updated growth target of roughly 7% annually, due to the firm's massive reserves and deepwater expertise. This is also one of the better growth profiles among the large integrated energy firms.
While I'm somewhat more partial to Suncor
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