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Brazil’s state energy giant Petrobras reported a 41.5% decline in its profits for the third quarter of the year, missing analyst estimates. At the same time, the oil giant said it expected full-year oil and gas output to be higher than previously estimated.
Petrobras reported a recurring net profit of 27.2 billion reais, lower than the expected 28.74 billion reais.
The company said it now expected to produce an average of 2.4 million barrels of oil equivalent daily this year, up from an earlier projection of 2.3 million boed.
Petrobras attributed the higher expected production rate to its strong performance in the third quarter of the year and plans to add more producing wells in the final quarter of the year.
Related to these plans, Petrobras also announced an update on its capex for the year, which the company now expects to come in at $13 billion. This would be 30% higher than its capex for 2022. At the same time, it is lower than the previously projected 2023 capex of $16 billion.
The revision resulted from lower exploration and production capex, which was revised down by $2.1 billion, “due to the challenging scenario faced by the supply market in the post-pandemic inflationary context, which influenced the capacity to supply the growing demand for critical resources for the oil and gas industry,” the company said.
Earlier this year, reports emerged that Petrobras was planning to expand internationally, after years of no major discoveries.
The company hasn’t made a large domestic discovery in more than a decade, which might make a change in its exploration policy desirable and motivate it to look to grow outside Brazil instead of focusing domestically and shrinking its foreign presence as it has done over the past decade.
The direct reason for the possible U-turn in exploration and production strategy was the rejection of a drilling project in the Foz do Amazonas area in the so-called Equatorial Margin where the Amazon River meets the Atlantic.
Petrobras had bet big on the Equatorial Margin to replenish its reserves but Brazil’s environmental protection agency refused to grant the company a license for the offshore exploration project.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com