Eventful first half for Petrobras ends with income down 43%

During a first half in which it endured a massive anticorruption probe and a large-scale tax dispute with Brazilian authorities, Petroleo Brasileiro SA (Petrobras) reported net income of $1.69 billion, down 43% compared with first-half 2014 (OGJ Online, May 18, 2015). Its second-quarter net income plunged 90% year-over-year to $154 million.

The company attributes the first-half drop in part to net finance expenses of $3.37 billion mainly due to foreign exchange variation losses and higher interest expenses, attributable to an increase in the company’s debt and a decrease in capitalized borrowing costs.

Petrobras in the second quarter received $45.6 million related to amounts recovered by the Brazilian Public Prosecutor’s Office in the “Lava Jato” investigation. Chief Executive Officer Maria das Gracas Foster and five other executives resigned in February in the midst of the scandal (OGJ Online, Feb. 4, 2015).

The company during the quarter reported tax expenses of $1.13 billion, including interest paid and back taxes owed to the Brazilian government. It also reported impairment losses of $372 million from its gas and power, refining, transportation and marketing, and exploration and production assets, attributed to projects removed from the company’s 2015-19 business and management plan.

Petrobras in April reported a $2.1-billion write-down from improper payments identified in the anticorruption probe (OGJ Online, Apr. 23, 2015). The company in June reported plans to divest $15.1 billion in 2015-16, up from the $13.7 billion reported in March (OGJ Online, Mar. 3, 2015). It also plans to divest $42.6 billion in 2017-18.

During the half, Petrobras reported a 107% increase in crude oil export volumes to 178,000 b/d, which was driven by a 9% increase in domestic crude production to 184,000 b/d. Domestic demand for oil products fell 7% to 168,000 b/d.

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