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Petrobras cuts production target for 2019 in search of a more realistic target, according to statement by its president, Roberto Castello Branco
Petrobras cut its production target in 2019, reducing its activities due to concerns about the lack of time the company will have until the end of the year to be able to increase production.
The state-owned company now expects production to reach an average of 2,7 million barrels of oil equivalent per day (boe), in line with 2018, discarding a previous forecast that it could grow to 2,8 million boe.
In comments to Reuters, the chief executive of Petrobras, Roberto Castello Branco, said that he still sees a chance, within the margin, of the new production target to grow this year and next. He said the smaller goal is an effort to regain credibility.
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“Transparency is always better,” said Castello Branco, appointed in January. “Petrobras has a history of promising and not delivering, which is why I made a point of lowering the target and setting a more realistic one.”
Along with the lower target, Petrobras said in a press release that second-quarter oil and gas production rose 3,8% from the previous quarter to 2,633 million boe.
The pre-salt
The increase fell short of investor expectations for the company, which is dramatically increasing production in the “pre-salt” fields. Petrobras preferred shares in Sao Paulo fell 2,5% on Friday afternoon.
"While today's news carries some downside risk to our 2019 estimates due to the delay in increasing production at some platforms in the Búzios field, such delays are unlikely to change the 2020 production outlook," Goldman Sachs analysts wrote. , adding that they were holding their positive view on the stock.
Petrobras has put seven new platforms in operation since last year in the Búzios and Lula pre-salt fields and in the Tartaruga Verde post-salt field. However, the company's production was little changed from the previous year due to the sale of some assets and declining production in its mature fields.
Regarding the Campos Basin, which is home to many of Petrobras' mature assets, Castello Branco said that the company intends to stabilize production, that is, it expects to maintain production around 1 million barrels per day.
Even so, the president of Petrobras declared that the pre-salt area will be Petrobras' main growth tool. More than 60% of 2019 production will likely come from the pre-salt layer, he told Reuters. Lifting costs in the pre-salt fields are at $6 a barrel, he says.
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