Brazil Oil Giant Petrobras Cuts Production, Spending Outlook; Shares Hit 12-Year Low

Aditya Kondalamahanty – International Business Times, 01/13/2016

Brazil’s largest oil company, Petróleo Brasileiro S.A., reduced its production outlook till 2019 as the state-run oil producer made deeper cuts to its budget amid an extended decline in oil prices and a massive domestic corruption scandal. Shares of the company fell 9.2 percent to a 12-year low following the announcement Tuesday.

Commonly referred to as Petrobras, the company slashed its investment plan for the five years through 2019 to $98.4 billion, down about 25 percent from its original budget of $130 billion announced last year. The company still plans to divest assets worth $14.4 billion this year to fund expansion plans, according to the statement.

Production target for 2020 was reduced 3.6 percent to 2.7 million barrels a day, Petrobras said in a filing. The company also said it expected Brent crude oil price — a benchmark for global oil prices — to average at $45 per barrel in 2016.

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