Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) is selling its Texas refinery for roughly $200 million which is a huge drop in value considering that the company acquired it for $1.2 billion.
Petrobras is currently divesting some of its assets in different regions and the Texas refinery fell into the category of assets that the firm is willing to let go. Some of the company’s assets under disposal are in Africa. The Pasadena oil refinery raised eyebrows due to the significantly low price at which it is being sold.
Things have not been looking so good for Petrobras
Petrobras is currently facing several corruption lawsuits and it is also facing bribery charges that revolve around the purchase of the Texas refinery. Reports state that the previous owner of the refinery bribed the company’s officials so that they could acquire the plant. There are also two ongoing litigation cases filed against the refinery and they might be passed on to the next owner. The litigation cases were filed against the Pasadena refinery plant by environmental groups and Harris County accusing it of violating the water and air Acts.
“Environmental liabilities also reduced the value of the refinery,” one anonymous source told Bloomberg.
The Texas refinery has also earned a bad reputation and has been described as one of the most contaminated and poorly managed facilities in Texas. Removing the refinery from the company’s asset portfolio might be a good idea considering the many cases associated with it. Petrobras is currently planning to divest assets worth $21 billion in 2017 and 2018. Divesting the oil refinery in Texas might bring the company closer to this goal.
The disposal of the Texas refinery and other assets is also part of the company’s plan to reduce its massive debt. The company has been working on its asset sale plan and has even submitted those plans seeking approval from the relevant authorities. However, the plan to dispose of the Texas refinery hit a bump after it was stopped by the court because Petrobras failed to offer enough transparency in its business dealings.
Petrobras stock closed the latest trading session on Thursday at 9.70 after a 0.1 percent decline from the previous close.
