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Decline In Production And Lower Prices Impact Brazilian Company’s Results
The Brazilian oil giant Petrobras reported a 42% drop in profits in the first quarter compared to the same period in 2018, but continued to make progress with debt deleveraging. The state-owned company recorded a net profit of 4.03 billion reais (US $ 1.01 billion), down from 6.96 billion reais in the first quarter of 2018.
The decline was partly due to changes in accounting rules and the inclusion of chartering fees in debt calculations, but the drop was also attributed to a decline in production and lower oil prices, Petrobras stated.
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The results were also impacted by a provision of 1.4 billion in liabilities related to contracts with Sete Brasil, Petrobras added.
However, the quarterly result was 92% higher than in the last quarter of 2018, when Petrobras recorded a net profit of 2.1 billion reais.
Petrobras only returned to profitability in 2018 after four consecutive annual losses, exacerbated by high debt, falling oil prices, and the impact of the corruption scandal known as “Operation Car Wash.”
In a message to shareholders, Petrobras CEO Roberto Castello Branco emphasized the importance of debt deleveraging to improve the company’s risk profile in capital markets.
“Petrobras is firmly committed to the goal of regaining the investment grade lost a few years ago, which is so important for reducing the cost of capital,” the company stated.
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Gross debt fell to US $ 78.8 billion at the end of the first quarter, compared to US $ 102.4 billion in March 2018, although this figure did not account for the accounting change.
Petrobras’ production averaged 2.46 million barrels of oil equivalent in the first quarter, a 5% decline compared to the same quarter in 2018, due to the decline in production in mature fields. Production was also 4% lower than in the last quarter of 2018, when the average was 2.57 boepd.
The acceleration of growth in the pre-salt province is beginning to reverse the recent decline in global production.
At the latest milestone, oil production through the newly installed FPSO P-74 reached its total capacity of 150,000 barrels per day, Petrobras stated.
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