Brazil’s Petrobras Cuts 2016 Loss, Trims Net Debt To Below $100B

Brazilian state-held oil company Petrobras – which has been at the center of a huge corruption scandal in the country – said on Tuesday that its 2016 net loss dropped to $4.838 billion from a $8.45 billion loss for 2015, as it managed to turn in a $754 million profit in the fourth quarter of 2016 versus a Q3 2016 loss of $5.38 billion. 

The fourth-quarter net profit was the result of reduced net finance expenses by 26 percent, increased exports by 12 percent, and operating profit of $3.577 billion -- compared to an operating loss of $3.401 billion in 3Q 2016 -- mostly due to lower impairment charges.

Operating profit for the full-year 2016 came in at $4.308 billion, versus an operating loss of $1.130 billion for 2015.

Petrobras reported progress in investments and costs efficiencies, with a 32-percent annual cut in investments, a 6-percent decline in manageable operating costs, a 6-percent decrease in selling, general and administrative expenses, and a 20-percent cut in workforce.

The company booked a free cash flow of $12.377 billion last year, 2.8 times higher than in 2015.

Petrobras also cut its massive net debt from $100.4 billion as of the fourth quarter of 2015 to $96.4 billion as of Q4 2016: a $4-billion decrease in the huge debt of the world’s most indebted oil company.  

The Brazilian company missed its target for asset sales, achieving 90 percent of the target, with the value of transactions agreed totaling $13.6 billion.

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In its 2017-2021 budget unveiled last September, Petrobras slashed planned investments over the next five years by 25 percent, to $74.1 billion, compared to $98.4 billion spent for the previous five years. Back then, Petrobras said that it still planned to sell $15.1 billion worth of assets by the end of 2016, and generate another $19.5 billion from asset sales and partnerships in the next two years.

By Tsvetana Paraskova for Oilprice.com

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