02/26/201408h23

The increase in the prices of oil and diesel late last year in addition to costs cuts and asset sales, eased the pressure on Petrobras cash flow and helped end the year with a US$ 10 billion profit, or 11% above the US$ 8.9 billion from the previous year. The increase came despite a drop in oil production and persistent outdated fuel prices.

Profit for the quarter, however, at US$ 2.6 billion, was 18% lower from the same period in 2012 when it reached US$ 3.2 billion. In 2013, the company’s revenue improved 8%, from US$ 119 billion to US$ 130 billion. Exploration and Production contributed to US$ 17.9 billion in profit, 7% less than in the previous year, reflecting a production decline.

Now, the supply area, responsible for importing fuel and investments in refineries, eroded the result in US$ 7.5 billion, though it was less than the US$ 9.7 billion from 2012. The country imports 400,000 of the 2.4 million barrels of oil consumed daily.

Debt, on the other hand, increased 50%, from US$ 63 billion to US$ 94.5 billion. The company debt level reached a record 3.52 times higher than its ability to generate cash, the result of investments in pre-salt and profit reduction.

In 2012, this indicator was 2.7. The company works with a 2.5 target. Late last year, the rating agency Moody downgraded Petrobras rating to Baa1 from A3, due to debt.

“There is no easy way out for Petrobras. The difficulty in bring international costs of imported fuel to prices in Brazil ruins the cash flow and ability to invest without debt increase,” says Fl├ívio Konder, chief economist at Gradual brokerage firm.

Besides the increase in fuel prices, debt could improve with an increase in production, which did not happen in 2013.

Daily, 1.93 million barrels were produced, less than in 2012 and at the same level of 2009. With problems to produce more, Petrobras will have to import more fuel, forecasts the Brazilian Center for Infrastructure, which estimates an increase of over 130% on purchase of foreign derivatives between 2013 and 2020, reaching US$ 30 billion.

Yesterday, Petrobras announced record production from 407 thousand barrels per day reached in pre-salt reservoirs, both in Bacia dos Campos. The company said it aims to achieve production in one million barrels of oil per day with pre-salt by 2017.