Petroleo Brasileiro SA (NYSE: PBR), known as Petrobras, announced a discovery in the Gulf of Mexico today. The diversified oil and gas company confirmed the discovery of hydrocarbons in ultra-deep waters in the Central Gulf of Mexico. The Stones #3 well, located in Block WR 508, found oil in multiple sandy lower tertiary reservoirs and is 25% owned by Petrobras. Future drilling and assessment activities are planned to define size and viability.

These results confirm the potential of significant oil reserves in these reservoir in the Gulf of Mexico, where Petrobras operates the Cascade and Chinook fields which at the present are in the production development and facility construction phase. Petrobras will be the pioneer company, both in ultra-deep waters in Lower Tertiary reservoirs and in using an FPSO type platform in the region, the production of which is slated to go online in June 2010.

In this same area, Petrobras also holds 25% stakes in the Saint Malo field. This field is operated by Chevron and is in the assessment and extension exploratory drilling phase. Also, studies are being done to select the production development project for Saint Malo. These discoveries help the company diversify its holdings and enhances the value of its Exploration and Production project portfolio in deep waters in the Gulf of Mexico.

Petrobras also announced its first quarter results today, which came in ahead of expectations. Consolidated net income rose 68% year-on-year thanks to a decline in operating expenses and the reduced appreciation of the Brazilian Real currency. The increase in oil and gas production and the upturn in oil and oil product prices also contributed to the improved performance. EBITDA climbed 26% year-on-year as production edged up 2%.

Meanwhile, Petrobras also saw its market cap increase 69% year-on-year due to oil and gas discoveries in the pre-salt layer, the new exploratory frontier, and potential production growth. Ironically, one of its biggest problems was obtaining offshore support vessels from companies like Transocean Inc. (NYSE: RIG), which have been booked for years in advance following the rapid run-up in oil prices in recent months - a bullish sign for these companies.

Interestingly, Petrobras also saw a significant decline in its US volume as the economic crisis worsens. This caused a sharp drop of 14.96% in its international sales volume, but was also helped down by the sale of its Bolivian refineries. This means that domestic refiners in the US are likely to continue to see problems in the near future. Luckily, Petrobras was able to offset this with strong growth in domestic sales volume.

Lehman Brothers analyst, Paul Cheng, also raised his price target for Petrobras to $62 per share. He maintains his "equal weight" rating on the company, saying also that he expencts the first quarter to come in at $1.02 and full year 2008 to come in at $5.10.

Dell Inc. (NDAQ: DELL) shares surged higher today on stronger than expected earnings. The PC-maker announced sales of $16.1 billion, which exceeded analyst estimates of $15.7 billion. Revenues in Asia jumped 19% as overseas sales finally topped those in the U.S. for the first time. The only unit that didn't see an advance in sales was the desktop PC market, which continues to struggle.

Michael Dell has attributed the gain to a new turnaround fueled by a retail-driven sales strategy. The company has added 13,000 retail outlets in the world's 20 largest economies over the past year to help it expand beyond the United States. Dell abandoned its strategy of selling only over the phone and internet, which led to its recent recapture of market share from competitor Hewlett Packard.

Dell is also targeted developing countries with cheaper machines. The PC maker is aggressively entering these markets with lower-priced products, which is driving the company's average price down but increasing its overall revenues. The effect on the bottom-line may be somewhat negative, but it appears to be a trade off that many investors are willing to accept.

Finally, Dell has also taken many cost-cutting measures. The company cut 1,000 jobs in the first quarter and plans to trim its expenses by $3 billion annually over the next three years. This will be accomplished through a combination of workforce reductions and a move to lower-cost manufacturers.

"We still have much work to do to restore our competitive position," said Dell on a conference call. "I am encouraged by the acceleration in our growth - you will see much more."

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UAL Corporation (NYSE: UAUA) and US Airways Group (NYSE: LCC) have decided not to merge, according to the chief executives of both airlines. The executives noted that certain issues could significantly dilute the benefits of a merger transaction right now. They admitted that consolidation was necessary in the industry, but is unlikely to happen in 2008. The comments conclude months of merger talks in hopes of combating rising fuel costs.

Rising jet fuel prices have put substantial pressure on airlines, who were already in a fragile financial state. In fact, several airlines had just recently emerged from bankruptcy last year. Since then, several more have entered into bankruptcy. Mostly, these have been regional players like Frontier Airlines and Honolulu Airlines. However, rising fuel costs threaten to put the major carriers at risk if they cannot find a solution.

Mergers are considered healthy in these situations because a larger company is able to realize better economies of scale. That is, one entity purchasing more jet fuel at one time can get a better deal due to the greater quantity. Additionally, the transportation costs and other associated costs are also lowered for the same reason. Combined with rising fares, this could be enough to save many of the airlines now experiencing problems.

The problem is that the pilot unions are often unwilling to work together or accept steep pay cuts. The strong airline unions have been the culprit behind many of the failed talks, including those involving Northwest. UAL and US Airways did not cite these reasons, but media reports have said that opposition from labor unions and the costs of integration were the two key factors behind the decision not to merge.

Ultimately, the decision not to merger could cost both airlines a lot of money if jet fuel prices continue to rise at their current rates.

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