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Montevideo, September 19th 2018 - 15:13 UTC

Debt-overwhelmed Petrobras cuts further capital spending plans for this year and 2016

Tuesday, October 6th 2015 - 13:02 UTC
Full article 7 comments
Petrobras plans to cut 2015 investment by 11% to $25 billion from $28 billion and investment for 2016 will be cut 30% to $19 billion from $27 billion Petrobras plans to cut 2015 investment by 11% to $25 billion from $28 billion and investment for 2016 will be cut 30% to $19 billion from $27 billion
Last June Petrobras cut investment 41% to $130 billion from $221 billion for the 2015-2019 period Last June Petrobras cut investment 41% to $130 billion from $221 billion for the 2015-2019 period

Petrobras struggling with the biggest debt load among global oil firms, on Monday cut $11 billion from capital spending plans for this year and next as Brazil's currency and oil prices slump. Petrobras plans to cut 2015 investment by 11% to $25 billion from the previous $28 billion, according to a statement.

 Investment for 2016 will be cut 30% to $19 billion from $27 billion. Budgeted costs plus operating expenses excluding purchases of raw materials were also trimmed for this year and next.

The company is being battered by a whirlwind of bad news. In the last year, oil prices dropped nearly 50% and Brazil's currency, the Real, slipped by a third against the U.S. dollar, causing revenue to fall and debt to soar.

Meanwhile, the downgrade of its debt rating to junk status has raised the cost of borrowing, and a giant corruption scandal has tarnished its reputation with investors.

The cuts announced are the second round of retrenching in three months for the Rio de Janeiro-based company, which recently prided itself on having the world's largest corporate-investment plan.

In late June the company announced cuts to its five-year plan because rising interest payments and a weak currency made the program obsolete.

Hailed as a return to reality after years of missed output goals and a giant corruption scandal that led to $17 billion of write-downs in April, the June plan cut investment 41% to $130 billion from $221 billion for the 2015-2019 period.

Petrobras said that it still plans to sell up to $15.1 billion of assets by the end of 2016. Of that $700 million is expected to be raised this year. By the end of 2019, additional asset sales and other corporate reorganizations are expected to bring that total to $56 billion, an amount double the company's market value of $28 billion.

Top Comments

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  • Brasileiro

    Did not increase borrowing costs! Petrobras did not take Western money after the downgrade! All borrowings have fixed interest rates independent of downgrade or not.

    New loans are made only with Brazilian and Chinese financial institutions where interest rates are within acceptable standards.

    Therefore, the downgrade was a blessing!

    https://www.youtube.com/watch?v=-A4Su10E6B8

    Oct 06th, 2015 - 01:24 pm 0
  • Captain Poppy

    Pssssssssssssst Tobi (#1)....guess what hemisphere you are in?

    https://upload.wikimedia.org/wikipedia/commons/thumb/6/6c/Western_Hemisphere_LamAz.png/220px-Western_Hemisphere_LamAz.png

    Buy some new knee pads....your new owners are calling. At least Asian cocks are penecito.......lol. un pocotito pene. You won't even know you are getting fucked.

    Oct 06th, 2015 - 03:42 pm 0
  • golfcronie

    @1
    You hope that the class actions involving Petrobras are minimal? Good luck with that, BP has just decided to set aside U$ S 20 billion for costs, wait and see what happens to Petrobras.

    Oct 06th, 2015 - 05:03 pm 0
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