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Petrobras Reevaluates Assets and Registers US$ 4.85 Billion Loss

11/11/2016 - 11h08

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LUCAS VETTORAZZO
NICOLA PAMPLONA
FROM RIO

After a decent second trimester, Petrobras started registering losses again. The company lost R$ 16.458 billion (US$ 4.85 billion) between the months of July and September after the value of its assets fell again.

When adjusted, the amount totals R$ 15.7 billion (US$ 4.6 billion) and reflects the effects of rises in both country risk and the exchange rate, as well as the postponement of certain projects - factors that have all changed when compared to the company's previous assessment in December of 2015.

"This is a one-time event and Petrobras does not expect there to be similar negative results as significant as this latest one during the next couple of trimesters", said Ivan Monteiro, the company's financial director.

The adjustment regarding the equity value of assets takes into consideration the company's projected revenue from each of its projects throughout its lifespan. A stronger Brazilian real has also impacted conversions regarding future projections of revenue in dollars.

During the third trimester of 2015, the state-run company registered R$ 3.76 billion (US$ 1.1 billion) in losses, which were also caused by a fall in asset values.

During the second trimester of 2016, the company made a profit for the first time in 9 months, earning R$ 370 million (US$ 108 million) in revenue.

Another key provision has to do with the deals it struck with investment funds that brought the company to trial for R$ 1.2 billion (US$ 350 million) in New York. In October, the company announced that it reached a deal with four separate funds, bringing the lawsuits to an end.

The company reached the end of the trimester with a free cash flow of R$ 16.4 billion (US$ 4.85 billion) meaning that it made more money than it spent.

"The money is being used to pay off debt", said Mário Jorge da Silva, the company's executive performance manager.

However, by September the company's debt had reached R$ 398.165 billion (US$117.107 billion), whereas by the end of the second trimester the amount of debt was R$ 397.760 billion (US$116.988 billion).

Translated by THOMAS MATHEWSON

Read the article in the original language

Sergio Moraes - 16.dez.2014/Reuters
A view of the Petrobras headquarters in Rio de Janeiro
A view of the Petrobras headquarters in Rio de Janeiro

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