World

 

Español

 

Guyana


Trinidad
& Tobago

 






Very usefull links



PW
Bookstore





News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

 

Petrobras warns economy has changed forever as it take a strong setback

Petrobras

The company is now assuming long-term Brent prices of $50 per barrel.

By Gram Slattery/Reuters

RIO DE JANEIRO
Petroleumworld 05 15 2020

Brazil's Petrobras took a 65.3 billion real (9.2 billion pounds) impairment on its exploration and production assets on Thursday, warning investors that changes in consumer behavior resulting from the coronavirus pandemic would likely be permanent.

The impairment led Petroleo Brasileiro SA ( PETR4.SA ), as the firm is formally known, to book a first-quarter net loss of 48.5 billion reais. The company wrote off the entire value of its shallow-water assets, and said it did not expect to resume production at six high-cost production assets currently for sale.

Total impairments came to 57.6 billion reais for its deepwater assets, including the massive Marlim Sul oilfield, and 6.6 billion reais at its shallow-water fields. Other unspecified assets comprised the remaining 1.1 billion reais of writedowns.

The impairment served as a warning by the state-run oil giant that the oil market may never recover following the novel coronavirus pandemic, even as some major economies are already attempting to tiptoe back to normality following widespread lockdowns.

The company is now assuming long-term Brent prices of $50 per barrel, versus a previous assumption of $65, it said in its first-quarter results statement. The company projected that 2020 Brent prices would average $25 a barrel before increasing $5 every year until they reach $50 in 2025.

It added that it was now revising all exploration and production projects to make sure they make economic sense given the new pricing assumptions.

“The company expects a lower level of demand in the long term, taking into account ... structural change in the world economy, with permanent effects arising from this economic shock, including changes observed in consumer habits,” Petrobras said.

Petrobras reported recurring earnings, before interest, taxes, depreciation and amortization, or EBITDA, adjusted for some one-off factors, of 36.9 billion reais.

That figure was significantly above the Refinitiv consensus estimate of 32.9 billion reais.

The company said its first-quarter results were not significantly affected by the economic fallout of the coronavirus pandemic, which would only be meaningfully felt in coming quarters.

It added that it benefited from continued strong exports of crude and bunker fuel, a product used by ships.

In comments accompanying the results, Petrobras Chief Executive Roberto Castello Branco noted the company's debt increased “only $2.1 billion” in the quarter, despite adverse market conditions.

He added that the company's ambitious divestment program was still intact, although it may suffer delays. Its sale of eight refineries, by far the largest ongoing divestment, is still going forward.

“In particular, we are confident that at least a significant part of the refinery sales shall have purchase-and-sale contracts concluded by the end of 2020,” he said.

Reporting by Gram Slattery; Editing by Chris Reese and Peter Cooney from Reuters.

reuters.com
05 14 2020

TOP

Contact: editor@petroleumworld.com,

Editor & Publisher:Elio Ohep /
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2020, Elio Ohep A. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2020, Petroleumworld ™  / Elio Ohep - All rights reserved

 

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.