MercoPress. South Atlantic News Agency

Petrobras releases long delayed 3Q results but did not include reserves for corruption scandal

CEO Graças Foster said testimony indicates bribes were “improperly recognized as part of the cost of our fixed assets, therefore requiring adjustments.”

Brazil’s embattled Petrobras released its long delayed third quarter results Wednesday but did not include any reserves tied to an ongoing corruption scandal that has already landed three former executives in jail. The company recorded a third quarter 2014 net profit of 1.18 billion dollars, down from 1.32 billion during the same period last year.

 Total revenue rose to 34.35 billion, up from 30.20 billion over last year. Earnings before interest, taxes, depreciation and amortization fell almost 10% year over year to 4.55 billion.

Petrobras saw crude exports jump 134% to 118,000 thousand barrels per day and domestic crude and natural gas liquids production spike 6% to 118,000 bpd thanks to new deepwater start ups and ramp ups.

The company also took a 1.05 billion impairment charge tied to two scrapped refinery projects.

The results were not audited by a third party and did not include any impairments tied to a corruption scandal that Brazilian officials believe is worth at least 1 billion dollars.

Petrobras said it has been working to assess the impairment charges that should be attributed to the corruption allegations but believes that releasing the results now would be “impracticable.”

CEO Maria das Graças Foster said testimony indicates bribes were “improperly recognized as part of the cost of our fixed assets, therefore requiring adjustments.”

“Consequently we have concluded that it is impracticable to correctly quantify these improperly recognized values, since the payments were made by external suppliers and cannot be traced back to the company’s accounting records,” Foster said.

The company said it will continue to investigate the matter and adjust its third quarter results where necessary but did not provide a timetable for those adjustments.

Lenders had threatened to declare a credit event if Petrobras did not disclose its results this week. After releasing its results Petrobras, already the most indebted oil company in the world, said it will not need to take out any new debt in 2015.

The U.S. Department of Justice and the Securities and Exchange Commission have reportedly opened investigations into Brazil's largest company.