Petrobras Lowers 2014 Oil Output Growth Target

November 17:

Petrobras, the Brazilian oil company that delayed an earnings report amid a corruption investigation, cut its 2014 output growth target because of delays in securing platforms and licenses.

Production in Brazil will increase 5.5% to 6% this year, the Rio de Janeiro-based company said in a presentation on its website Nov. 17. That’s below the 7.5% annual output rise previously targeted by the company. The prior forecast allowed for 1 percentage point deviation above or below the goal.

Petrobras, which has tumbled 26% this year in Sao Paulo to trade close to an eight-month low, is the worst performer among major global oil producers in the past four years amid a multibillion-dollar laundering and bribery case dubbed Car Wash. The company has missed its annual production targets for 10 straight years on oil services equipment delays.

The lower-than-expected output forecast stems from delays in construction and delivery of the company’s platforms and the connection of some wells, Petrobras said in the presentation. The producer is also experiencing delays for license approvals, it said.

Financial Losses

Petrobras is studying how to recover financial losses uncovered by the probe, CEO Maria das Gracas Foster said in a conference call today. Petrobras will set up a compliance division as it seeks to increase internal controls, she said.

The company expects to continue increasing fuel prices more frequently next year, helping to improve cash flow, Foster said. Petrobras has booked more than $44 billion in operational losses at its refining unit mainly from selling imported fuel at below-market prices since 2011.

The company said last week it would release unaudited third-quarter results on Dec. 12, a month later than originally scheduled, because of the corruption probe in Brazil involving a former head of refining.

Petrobras dropped 4.6% in Sao Paulo to 12.60 reais (US$4.85), the lowest since March 17.

Source: www.epmag.com/petrobras-lowers-2014-oil-output-growth-target-761541?