BRASILIA • Petroleo Brasileiro or Petrobras, the oil producer at the centre of Brazil's largest corruption scandal, yesterday reported a record quarterly loss of more than US$10 billion (S$13.6 billion) that surprised analysts and sent shares tumbling in after-hours US trading.
The fourth-quarter net loss was caused by unprecedented asset writedowns linked to falling oil prices. At 46.4 billion reais (S$17.4 billion), the impairments equated to more than a third of its market capitalisation and exceeded the equity value of 97 per cent of publicly traded firms in Brazil.
The writedowns mark the latest blow in a stunning fall from grace for a state-run oil producer that ranked among the world's five largest companies as recently as 2008, and was a symbol of national pride for many Brazilians.
Its plight has hit Singapore rig builders like Keppel Offshore & Marine and Sembcorp Marine, which get half their orders from Sete Brasil, a Brazilian rig supplier that is teetering on the edge of bankruptcy after its sole customer Petrobras became engulfed in the graft scandal.
While Petrobras has slashed investment plans and announced asset sales to weather an expanding pay-to-play scandal, the company is getting battered by oil's 58 per cent slide over the past two years and a recession at home that has curbed demand for its fuel.
"Just when you think Petrobras can't get worse, it does," said Mr James Gulbrandsen, a Rio de Janeiro-based partner at NCH Capital.
Petrobras does not plan to pay any dividends from 2015 after reporting an annual loss, CEO Aldemir Bendine said on Monday.
Most of the impairments are from oil fields in production, Petrobras said. Some of the writedowns could reverse if prices improve, and the company continues to cut costs and sell assets to endure the downturn, said Mr Bendine, a former banker who took the helm at Petrobras just over a year ago to guide it through the corruption scandal and a mountain of debt.
"This is a four to five-year project to put Petrobras on more solid footing," he said. "Naturally, variables like Brent prices and currency variation are not within our control."
Petrobras cut its proven reserves by 20 per cent last year after lower oil prices made some of its fields uneconomical. Proven oil, condensate and natural gas reserves totalled 13.279 billion barrels of oil equivalent in 2015, down from 16.612 billion a year before.
Petrobras cut investments by 12 per cent last year to 76.3 billion reais, and continues to negotiate with suppliers to curb outlays. The company will continue to review its five-year business plan and will present a new version later this year, Mr Bendine said.
BLOOMBERG
