The first quarter of the year turned out good for Brazil’s embattled state energy major Petrobras. The company reported a net profit of US$1.417 billion, up from a net loss of US$318 million for the year-earlier period.
Adjusted EBITDA came in at US$8.03 billion, up 48 percent on the year, and free cash flow jumped to US$4.25 billion at end-March 2017, seven times higher than the figure for end-March 2017. Operating profit surged by 118 percent to US$4.538 billion.
The company attributed the positive performance to 72-percent higher exports, at 782,000 bpd, at higher prices, as well as to lower oil and gas import costs. The latter were a result of higher production of oil and gas at home, which led to a 40-percent decline in imports.
Domestic oil production rose 10 percent on the year to 2.182 million bpd, and overall output went up 9 percent to 2.248 million bpd. Asset sales also contributed to the results but they also accounted for a reduction in income from international operations, notably the sale of Petrobras’ Argentine and Chilean operations.
As a result, Petrobras managed to slim down its debt—still the highest in the global oil industry—by 3 percent on a gross basis, to US$115.124 billion, from US$118.37 billion at the end of 2016. Net debt went down by 1 percent to US$94.99 billion.
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CEO Pedro Parente said the first-quarter results allowed the company to continue with its cost-cutting activities and reduce its debt burden to 2.5 times its annual EBITDA, from 3.2 times at the end of the first quarter ahead of schedule. Originally, the company aimed to achieve the 2.5x ratio by the end of 2018.
On the news of the best financial performance in two years, Petrobras’ stock added 3 percent in after-hours trading, recouping some of the losses incurred since the start of the year.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.