Galp Energia SGPS SA, Portugal's biggest oil company, and the U.K.'s BG Group Plc rose a second day after partner Petroleo Brasileiro SA said an offshore field may be Brazil's largest oil find.
Petroleo Brasileiro, known as Petrobras, said yesterday the Tupi Sul field in the Santos Basin, which is being explored by the three companies, may hold 5 billion to 8 billion barrels of crude oil and natural-gas reserves. Galp owns 10 percent of the field and BG has 25 percent. Petrobras operates the project.
``This is the biggest oil discovery'' since Kazakhstan's Kashagan, with at least 12 billion barrels in reserves, was found in 2000, Derek Butter, an analyst at energy consultant Wood Mackenzie Ltd., said yesterday from Edinburgh. ``Tupi is another super-giant field.''
The potential new deposits may raise Brazil's oil reserves from the world's 17th biggest to among the top 10, according to Petrobras. Tupi will help Galp reach its goal of doubling production by 2012 after lagging behind many of its European competitors in exploration.
Galp shares surged as much as 25 percent, their biggest one- day gain, to a record 15.43 euros in Lisbon. The stock, which advanced 14 percent yesterday, traded at 14.82 euros as of 11:53 a.m. local time....MOREHere's how pros write a page one headline, from the Wall Street Journal:
Brazil Discovers Large Oil Reserve In Deep Waters of Atlantic
From Dow Jones via easyBOURSE (love that name):
UPDATE: Galp Continues Rising On Tupi; Further Upside Seen
...The size of Tupi's reserves surprised analysts, as it doubles earlier estimates, and the news led to a rash of Galp share upgrades that have provided further support for the stock price.
Millennium BCP analyst Pedro Mendes said: "I wouldn't be surprised if Galp kept rising." Mendes, who rates Galp at buy with a EUR14.5 price target, notes Petrobras is typically conservative in its reserves estimates - and sees the shares rising to as much as EUR20.
Analysts at Morgan Stanley Friday said, despite its minor stake in the field, Galp "remains the most leveraged play on the Tupi discovery," ahead of both Petrobras and BG. They said Tupi could be worth between EUR3.6 and EUR5.7 per share for Galp.
"The risk reward is now heavily skewed to the upside," they said.
With a production of 1.5 million barrels a day, the Campos Basin, where the Tupi field is located, accounts for more than 80% Brazil's oil output.
The Tupi field lies beneath 3,000 meters of sand and rocks below the ocean ground, as well as a 2,000-meter-thick salt layer.
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-By Filipa Cunha, Dow Jones Newswires; +351-21-3191863; firstname.lastname@example.org