Brazil’s Petrobras not facing cash flow difficulties – president

Fox Business/Dow Jones Newswires, 05/22/2013

Brazil’s state-run oil company Petrobras (PBR, PETR4.BR) remains well financed and isn’t facing cash flow difficulties as suggested by some market rumors, its president said Wednesday.

Responding to questions from lawmakers on a Brazilian congressional committee, Petrobras President Graca Foster said company initiatives to raise cash didn’t indicate it was undergoing problems.

“Petrobras has a cash reserve of $20 billion,” she said. “This information isn’t correct.”

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Total and BP outbid oil rivals for Brazil Amazon coast licenses

Rodrigo Orihuela, Juan Pablo Spinetto – Bloomberg, 05/14/2013

BP Plc (BP/) and Total SA (FP), Europe’s biggest oil companies after Royal Dutch Shell Plc (RDSA), won exploration rights in the Amazon basin as Brazil’s first oil auction in five years attracts a record level of bids.

Total, based in Paris, gained exploration access to operate five blocks at the Foz do Amazonas basin in northern Brazil together with partners BP and Petroleo Brasileiro SA, the oil regulator said today. London-based BP won an additional license to operate a block at the same basin in partnership with Petrobras, as the state-controlled oil company is known.

Brazil, home to the largest crude discovery in the Americas in more than 30 years, is holding its first oil exploration round since 2008, attracting more than 60 prospective bidders for a total of 289 blocks in 11 basins. The country is set to break the $1.1 billion record in auctioning licenses, according to Joao Carlos de Luca, the head of the Brazilian Oil Institute.

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Brazil’s Petrobras: Transpetro fuel spill totals about 22 barrels

Jeff Fick – Fox Business/Dow Jones Newswires, 04/09/2013

Brazilian oil company Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, said Tuesday that environmental regulators had estimated a weekend fuel spill totaled about 22 barrels.

The spill happened Friday at the Terminal Almirante Barroso operated by Transpetro, Petrobras’s logistics unit. More than 50% of the oil consumed in Brazil passes through the terminal, which is located in the city of Sao Sebastiao along the coast of Sao Paulo state.

Late Monday, Transpetro said it completed cleanup at nine beaches soiled by the spill. Petrobras Chief Executive Maria das Gracas Foster said that Transpetro expected to determine the cause of the accident by Friday.

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Brazil’s oil production drops 8.5 pct in February

Global Post/Agencia EFE, 04/03/2013

Oil production in Brazil averaged 2.017 million barrels per day in February, down 8.5 percent from the same month of 2012, when output totaled 2.205 million bpd, the National Petroleum Agency, or ANP, said.

Compared with January’s 2.054 million bpd, oil production declined by 1.8 percent, the ANP said.

The regulator said the fall in production was due to maintenance work on existing oil platforms.

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Petrobras avoiding bond market as selloff deepens: Brazil Credit

Boris Korby & Julia Leite – Bloomberg, 04/01/2013

Petroleo Brasileiro SA (PETR4), which sold a combined $13 billion of bonds in the first quarters of 2011 and 2012, is holding off on issuing new debt as borrowing costs rise to the highest in two years versus investment-grade peers.

Declining earnings at the state-controlled company spurred by government-imposed limits on fuel-price increases and waning offshore oil output have helped push yields on its $5.25 billion of bonds due 2021 up 0.55 percentage point this year to 4.16 percent. The jump is triple the increase for emerging-market credits rated BBB- or better, which yield an average 4.18 percent, according to data from JPMorgan Chase & Co.

The bond rout is prompting the oil producer to delay plans to raise about $12 billion in debt this year, according to Vinicius Pasquarelli, an emerging-market debt trader at Standard Credit Group LLC. Petrobras, which is developing the biggest crude discoveries this century beneath the Atlantic Ocean, faces rising borrowing costs as leverage climbs to the highest in at least a decade and concern mounts that government interference is damping profits.

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Petrobras, Vale drag down Brazil stock market

Kenneth Rapoza – Forbes, 03/29/2013

In 2008, Goldman Sachs set a target price for Brazilian oil company Petrobras (PBR) of around $60.  It never came close.  Four and a half years later, Petrobras is dragging the entire Brazilian stock market down. It’s trading in the high teens and is down 14.89%, year-to-date.

Iron ore giant Vale is doing even worse. It’s underperforming Petrobras at a 17.51% loss year to date.

Anyone who thought that low interest rates were an overall positive for equities can look to Brazil for contrary evidence.  While some consumer stocks did very well, the index as a whole got weighed down by its financial and commodities-driven exporters.  For Bovespa, Petrobras and Vale are public enemy No. 1 and No. 2.  The beleaguered oil giant accounts for 10.6% of the Ibovespa index while Vale accounts for around 11%.

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Petrobras, Brazil’s oil giant, struggles to regain lost swagger

Simon Romero – The New York Times, 03/26/2013

Brazil’s oil production is falling, casting doubt on what was supposed to be an oil bonanza. Imports of gasoline are rising rapidly, exposing the country to the whims of global energy markets. Even the nation’s ethanol industry, once envied as a model of renewable energy, has had to import ethanol from the United States.

Half a decade has passed since Brazilians celebrated the discovery of huge amounts of oil in deep-sea fields by the national oil company, Petrobras, triumphantly positioning the country to surge into the top ranks of global producers. But now another kind of energy shock is unfolding: the colossal company, long known for its might, is losing the race to keep up with the nation’s growing energy demands.

Saddled with a nationalist mandate to buy ships, oil platforms and other equipment from lethargic Brazilian companies, the oil giant is now facing soaring debt, major projects mired in delays and older fields, once prodigious, that are yielding less oil. The undersea bounty in its grasp also remains devilishly complex to exploit.

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Rio: loser in Brazil’s oil royalty row

Thalita Carrico – The Financial Times, 03/15/2013

The credit ratings agencies have become the latest to weigh into the debate over Brazil’s oil royalties bill, with Fitch warning this week it could lead to a review of the ratings of Rio de Janeiro.

Rarely has a new law inspired so much bitter disagreement between Brazil’s states. The controversy potentially has implications over whether Rio de Janeiro will be able to successfully host the World Cup final next year and the Olympics the following year.

The argument is over how states and municipalities should split their share of revenue from Brazil’s burgeoning offshore oil wealth. The majority of states argue the present regime favours the so-called “producing states”, particularly those near the vast deepwater fields of South-eastern Brazil: Rio de Janeiro, Espírito Santo and São Paulo.

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Brazil says subsalt oil finds could triple total reserves

Brazil’s giant subsalt oil and gas region could yield 35 billion barrels of recoverable oil equivalent, more than double Brazil’s existing reserves, an energy ministry representative said on Tuesday.

Analysts have said the total amount of oil in the New York State-sized subsalt region that was discovered in 2007 could be about 100 billion barrels of recoverable oil, or enough to provide all current U.S. oil needs for about 14 years.

“Subsalt discoveries that have been evaluated so far suggest a volume of recoverable oil more than double Brazil’s proven reserves,” said Marco Antonio Martins Almeida, secretary of oil and gas at Brazil’s Ministry of Mines and Energy.

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Brazil’s Petrobras: latest subsalt oil find opens new frontier

Jeff Fick – Dow Jones Newswires, 02/26/2013

Brazilian state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or  Petrobras, said late Monday that a new subsalt oil discovery opens a new  exploration frontier in the Santos Basin, where billions of barrels of crude  have already been discovered.

The first well drilled in the offshore BM-S050 block, dubbed Sagitario, was  found to contain high-quality oil, Petrobras said. Petrobras operates the block  with a 60% stake. The local unit of BG Group PLC (BG.LN) holds 20%, while Repsol  Sinopec Brasil retains the remaining 20%.

The discovery is significant because it was made to the west of the cluster  of oil discoveries made deep under a thick layer of salt off Brazil’s Atlantic  Ocean coast in the mid-2000s. The Lula field, which holds estimated recoverable  reserves of between 5 billion and 8 billion barrels of oil equivalent, or BOE,  and is currently producing about 100,000 barrels a day, and the Sapinhoa field  that started pilot production earlier this month both sit due east of the  Sagitario discovery. Sapinhoa is estimated to hold recoverable reserves of 2.1  billion BOE.

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