- Address: Los Angeles
- City: Los Angeles
- State: Los Angeles
Net income swung from a $600 million loss a year ago to $3.4 billion in the second quarter, Petrobras announced, while earnings per share came in 6% ahead of estimates at 48 cents in Brazilian reais. Sales revenue rose 8.2% to $32.72 billion at Monday’s exchange rate, while production remained relatively flat at 2.56 million barrels of oil equivalent per day, in part due to planned maintenance. Petrobras is banking on its pre-salt fields to help it take production to the next level, rivaling Exxon Mobil in the next several years. And what’s encouraging is that average output at pre-salt fields reached a record 310,000 daily barrels in June, peaking at 326,000, the company said. Brazil’s pre-salt fields are one of the most encouraging discoveries of the past decades, with 16 billion proven barrels and the potential to be nearly twice as high. Being partially a government owned company, with the state holding about 56% of shares outstanding, Petrobras’ domestic sales revenues are tied to prices fixed in conjunction with the administration of Dilma Rousseff. Realized prices in Brazil, where the company derives 90% of production, rose 15% in the first half of the year to 205.50 reais, or $91.33 per barrel, while Brent averaged $107.50. Internationally, crude oil sales prices fell 5% to $92.08 per barrel. The company headed by Maria das Gracas Silva Foster also managed to keep production costs contained, with lifting costs in Brazil including production taxes and royalties to the state flat at fut coins $32.05 per barrel. Lifting costs internationally actually decreased 1.2% to $8.75 per barrel. Brazil’s economy has suffered a slowdown that has threatened social stability, as thousands hit the streets to protest government policies ahead of the FIFA World Cup next year. After growing 7.5% in 2010, Brazilian GDP slowed to 2.7% in 2011 and 0.9% in 2012. Economists now expect output to expand 2.24% this year and 2.6% next. Brazil is currently the eighth largest economy in the world, yet in a per capita basis it ranks 106. Still, Petrobras is seeing incredible demand for its energy products, and this is showing in its downstream operations. Utilization capacity at its refineries in Brazil was 99% in the second quarter, as oil processing increased 10% to 2.092 million barrels per day; Brazilian fields, the company noted, were responsible for 81% of processed crude. As the company has increased production in the first half of the year, it managed to reduce oil product imports 19%, its trade balance closing with a deficit of 400,000 barrels per day, a 264% increase over the first six months of 2012. The company is therefore engaged in an ambitious, $237 billion, five-year investment program to boost production and refining capacity. Petrobras spent nearly $20 billion in the first half, 54% of it in exploration and production, and 33% to upgrade and expand refineries. Net debt hit $65.70 billion, or 2.77 times adjusted EBITDA, while cash and equivalents rose 50% to $32.34 billion.
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