Looks like investors are getting more and more comfortable with Brazil and one of its flagship companies, the energy giant Petrobras (NYSE:PBR). Though this oil and gas player isn't necessarily overvalued yet, it appears to have closed the valuation gap that once existed between itself and the likes of ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), or BP (NYSE:BP).

These are good times for energy companies on both sides of the Panama Canal. Petrobras' revenue was up about 31% in the quarter, while operating profits climbed 48%. Unlike some of its bigger brethren, Petrobras actually boosted its production by a meaningful amount -- up 11% overall and up 15% domestically. That, and higher prices, helped stave off the impact of higher lifting costs (up 33%) and a stronger average currency (up 19%).

It's worth keeping an eye on those costs, though. Petrobras has been willing to sign some pretty high-value contracts with drillers like Transocean (NYSE:RIG) to ensure that its future production targets and current-day lifting costs aren't too much better than they are in the Northern hemisphere. Strong production figures are important for getting ahead in the oil game, but so is firm control over production costs.

Petrobras still maintains robust reserves. Proven reserves were basically flat year over year, according to U.S.-mandated calculations, and the reserve replacement ratio was 101.3% -- not bad at all.

It seems like Brazilian companies always provide something to worry about. If it's not hyperinflation, it's government instability, corruption, or interference. Petrobras' current worry has to do with Brazil's neighbor Bolivia. Its new leader got elected on a populist platform; now there are worries about the security of Petrobras' energy assets in the country, and the cost of doing business with the new government. While the situation needs watching, I don't think Petrobras will come out too badly for it. Bolivia's government knows that it needs the income from the country's rich gas assets, and Brazil is a natural partner.

Petrobras' recent above-average appreciation has taken a lot of the easy money out of the shares. It's still a quality idea among large energy stocks, but perhaps not such a compelling buy as before.

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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).