Nov. 9 -- 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.
Market Value Gains
Today's stock gain raised Galp's market value to 12.3 billion euros ($18.1 billion) from about 10.2 billion euros at yesterday's close, making it the second-largest company in Portugal's benchmark PSI-20 Index.
Shares of BG, the U.K.'s third-largest gas producer, rose as much as 81 pence, or 8.2 percent, to 1,070 pence, after gaining 9.8 percent yesterday. They traded at 1,028 pence in London.
Petrobras depositary receipts traded in Germany added as much as 9.6 percent to 68.10 euros.
The Tupi find is just a ``tiny'' part of a new oil province that Petrobras believes is beneath existing fields, Chief Executive Officer Jose Sergio Gabrielli said yesterday. The oil at Tupi is a light grade, more valuable and cheaper to refine than the heavy crude that dominates Brazilian output.
The Tupi announcement was made as oil traded at record levels. Crude for December delivery closed yesterday at $95.46 a barrel on the New York Mercantile Exchange. Futures touched $98.62 on Nov. 7, the highest since trading began in 1983.
Expand E&P
Galp ended June with proven reserves of 35.6 million barrels of crude oil. The company plans to expand its exploration and production division to represent 25 percent of earnings before interest, taxes, depreciation and amortization, up from 8 percent in 2006 and 17 percent in the first half of this year.
Last month Galp signed an agreement with Venezuelan state oil company Petroleos de Venezuela SA to develop an oil block in that country's Faja del Orinoco region.
``Galp's progress in the exploration and production arena continues to be impressive,'' Hootan Yazhari, an analyst at Merrill Lynch & Co., said in a research note. ``Galp remains our preferred pick within the European refining space.''
Galp's stock recommendation was upgraded to ``neutral'' from ``sell'' by analysts at UBS AG, and the share-price estimate lifted 37 percent to 12.70 euros. The share forecast was raised 38 percent to 17.10 euros at Morgan Stanley and 18 percent to 16 euros at Merrill Lynch.
The stock's surge enabled Galp to overtake the market capitalization of former telephone monopoly Portugal Telecom SGPS SA and Banco Comercial Portugues SA, Portugal's biggest publicly traded bank. Utility EDP-Energias de Portugal SA is the country's biggest company by market value.
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