Petrobras Reports Production Boost

By Gram Slattery and Marta Nogueira
Monday, August 5, 2019

Brazilian state-run oil company Petroleo Brasileiro SA, or Petrobras, posted a long-awaited production boost in July after a disappointing June, as it ramped up production in the promising offshore "pre-salt" region.

In a presentation to discuss record quarterly profits, Petrobras said it produced 2.76 million barrels of oil equivalent per day (boepd) in July, up from 2.633 million in the second quarter. On July 28, it said, production hit a record of 3 million boepd.

Last week, Petrobras posted lackluster second-quarter production figures and cut its 2019 guidance to 2.7 million boepd from 2.8 million, disappointing investors hungry for a long-promised production boost.

The July figures came a day after Petrobras posted a record quarterly profit, thanks largely to major asset sales.

Analysts generally saw non-recurring income and earnings before interest, taxes, depreciation and amortization (EBITDA) as in-line or slightly below expectations. But they cheered the execution of the divestments, which have brought nearly $13 billion into Petrobras coffers this year.

Preferred shares of Petrobras rose 3.7% in afternoon trade, after climbing almost 5% earlier in the day.

"We have a mixed evaluation of Petrobras' second quarter results," wrote analysts at XP Investimentos. "Nonetheless, we highlight as positives the generation of cash and reduction of debt during the quarter."

One potential area of concern were June production figures, which were in fact below expectations.

On Friday, during a Petrobras call with analysts, Brazilian oil regulator ANP said Petrobras June production came to 2.432 million boepd. Among the main reasons the ANP pointed to for the June reduction was a stoppage at Petrobras' Cidade de Mangaratiba FPSO, a type of ship used to produce and process oil.

Petrobras' exploration and production head, Carlos Alberto Pereira de Oliveira, also pointed to other one-off issues.

Executives also warned on the call that any dividend payments would be minimal until Petrobras reaches its goal of attaining a net debt to EBITDA ratio of 1.5. That ratio currently stands at 2.69.

To reach that goal, the executives said they would continue with aggressive divestments, such as the multi-billion sale of eight refineries.

Petrobras downstream head Anelise Lara said in a call with analysts that Petrobras had received many expressions of interest in the refineries from trading firms, local distribution firms and international oil companies.

The world's largest trading firms, including Vitol SA and Glencore PLC, are currently under investigation by U.S. and Brazilian authorities for a massive kickback scheme involving Petrobras.

Lara said in a press conference that Petrobras had concluded an internal investigation into the matter, and said no corrupt schemes were still occurring in the trading unit. She said the firm would allow the trading firms involved in the matter to buy the refineries.


($1 = 3.88 reais)

(Reporting by Gram Slattery; Editing by Marguerita Choy and David Gregorio)

Categories: Energy Deepwater Activity FPSO Production South America Floating Production

Related Stories

VAALCO Spuds Etame Appraisal

Baltim South West Gas Field Starts Production

Three Bills Threaten US Offshore Drilling

ExxonMobil Looks to Sell Australian Assets

Icon Offshore Wins Petronas Contract

Kim Heng Offshore Wins New HDD Contract

ClampOn: Ultrasonic Intelligent Sensors

Chevron to Boost St. Malo Production

Allseas Scores Gyda Platform Removal Job

Subsea 7 CEO Will Retire at Year End

Current News

Australia Reviewing Equinor Environmental Plan

Equinor, SSE Win Contract for Largest Offshore Wind Project

Liberator Pilot Well Plugged and Abandoned

Petrofac Sells Mexico Assets to Perenco

Petronas Q2 Profit Rises 8%

Allseas Scores Gyda Platform Removal Job

Monitoring, and Addressing, Crude Quality in Real-time

Dominion to Build Largest US Offshore Wind Farm

Maersk Drilling Rig Extended by Equinor

IUMI Reports Cut in Offshore Insurance Premiums

Subscribe for OE Digital E‑News

OE Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week