MercoPress. South Atlantic News Agency

Petrobras record earnings and rising extraction costs

Brazilian government owned Oil Company Petrobras announced Friday a record high third-quarter net profit on a rise in output and fuel prices. Net consolidated profit was the equivalent of 2.6 billion US dollars, below market estimates, plus signs of rising oil extraction costs.

Petrobras said in a statement profit rose 27% from approximately 2 billion US dollars a year earlier, excluding a one-time tax benefit obtained in the third quarter of last year. But when compared to its total profit of 2.57 billion, the increase from a year earlier was only about 1%.

Earnings before interest, taxes, depreciation and amortization rose to 5.74 billion dollars from 4.39 billion a year earlier, Petrobras said. Analysts, on average, expected Brazil's industrial flagship to post net consolidated profit of about 2.7 billion and gross earnings of 6 billion US dollars. Net consolidated revenues rose 18% to 16.52 billion dollars.

Petrobras' domestic oil output rose a steep 13% from year-ago levels, reaching nearly 1.73 million barrels per day on average as two new rigs started operating on the Barracuda and Caratinga fields in the Campos basin.

However the costs of oil extraction in Brazil between January and September rose 33% from a year earlier to 5.54 US dollars per barrel despite an increase in output. They also rose 19% in the third quarter from the previous quarter.

Petrobras attributed the increase to a 16% appreciation of the local currency against the dollar and a rise in drilling and production equipment costs on the world market. Refining costs rose 50% in the period due to the currency effect and programmed maintenance stoppages at four refineries.