Petrobras records loss in second quarter

Brazilian state-owned oil giant Petrobras reported a net loss in the second quarter, attributed to unfavourable exchange rates and a one-time tax charge.

Net income was about $470 million, but without the tax charge, Petrobras said, net income would have been $5.4 billion. The company, however, presented the tax charge in a positive light.

“The main events were the exchange rate fluctuations during the period – an effect between companies in the Petrobras System that has no impact on cash or even equity – and the impact of compliance with the tax transaction – a decision that was considered positive by the market as it ended multi-billion disputes that introduced great uncertainty to the company’s cash flows.”

Petrobras boasted its lowest debt level since the third quarter of 2008, at $26.3 billion, and saw its first-half capital expenditures rise 12.5% ​​to $6.4 billion. However, future investment is set to ease, with the full-year figure revised down to $13.5 billion-$14.5 billion from $18.5 billion in previous plans.

Petrobras plans a 31% increase in planned investments to $102 billion over the next five years. Of that, 72% is earmarked for oil and gas investments to boost the company’s oil and gas production to 3.2 million barrels of oil equivalent per day from the current 2.8 million barrels of oil equivalent.

Earlier this week, Reuters, citing unnamed sources, said Petrobras had obtained environmental licenses to increase production at two offshore oil fields — Mero and Buzios, both in the Santos basin. The increase in production at the two fields should increase Brazil’s total production by 66,000 barrels per day, with 46,000 barrels per day from Mero and 20,000 barrels per day from Buzios. Of that total, 36,000 barrels per day will go to Petrobras, with the rest going to the company’s partners in the fields.

By Charles Kennedy for Oilprice.com

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