Much of the chatter relating to Brazil's massive subsalt oil reserves has centered around the national energy champion Petrobras. Petrobras counts British Gas and Galp Energia as junior partners in these subsalt projects.
Less know is Galp Energia - the privatized assets of what was once Portgual's energy company. Galp has projects in Brazil and Angola, another emerging oil powerhouse. Galp is thinly traded on the pink sheets under ticker GLPEF.PK. The stock currently trades at $16.85 a share, down from a 52-week high of $28.00. As oil prices appear to have bottomed - at least for the time being - and well of its high we view Galp as an especially enticing speculation.
Jason Kenney an analyst at ING Bank described the company's Brazilian prospects as having a "transformational impact." We do not disagree with his assessment.
While rhetoric surrounding increased government ownership or even the a dilution of Petrobras, Galp, and BG's ownership of these subsalt reserves is certainly worrying, we view the threat of outright nationalisation or outright theft to be rather low. Please read the Bloomberg article below for greater clarity.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aU1eORtnAxmA
We are buyers and indeed willing to speculate on Galp's pink sheet listed shares as offering potentially phenomenal returns going forward.
As always we are not making recommendations for anyone, but outlining our personal investment decisions. We are not registered investments advisors and do not give investment advice.
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