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Petrobras reports $358 million loss on lower production and sales

Brazil’s state-owned oil giant, Petroleo Brasileiro (ticker: PBR), reported its first quarter results yesterday, showing a 1.25 billion reais ($358 million) loss in the first three months of the year.

Petrobras, as the company is commonly called, is the most in-debt oil and gas company in the world, and has been at the center of a corruption scandal in the country that has seen a number of top executives jailed. The company has been struggling to correct its course in the last year as low oil prices and a recession in Brazil compound problems with the company’s balance sheet.

“Petrobras is a company with very high cholesterol levels, which is leverage,” Chief Financial Officer Ivan Monteiro said. “We are working to cut cholesterol so that the company has a more healthy life.”

Petrobras’ first quarter results showed revenue declined 5.4% from the Q1 of last year to 70.3 billion reais ($20.2 billion). Total debt remain virtually unchanged from the fourth quarter at $126 billion. Rising debt maturities dragged down the company’s cash position 21% to 77.8 billion reais ($22.36 billion) from the end of 2015. Debt maturities are also expected to limit the company’s investment, according to Monteiro.

Lower spending did increase Petrobras’ first quarter cash position, however. The company reported more than double the amount it had on hand this time last year with 2.4 billion reais ($690 million) of positive free cash flow.

Brazil’s oil and gas producer also reported 7% lower production globally to 2.44 MMBOPD because of increased planned maintenance at offshore facilities.


Petrobras continues working toward $15.1 billion divestment goal

Petrobras continues to work toward a two-year $15.1 billion divestment plan as the company looks for ways to shore up its balance sheet. Earlier this month, the company sold parts of its assets in Chile and Argentina for a combined $1.4 billion. The company sold its entire 67.2% shareholding in Petrobras Argentina to Pampa Energia for $892 million, as well as 33.6% of the concession of Rio Neuquen, Argentina, and 100% of Colpa Caranda in Bolivia for an additional $52 million.

The company also announced earlier this month that it sold its subsidiary in Chile to Southern Cross Group, an Argentina-based private equity firm, for $490 million.

On Thursday, the company announced that it entered into exclusive talks with Canada’s Brookfield Asset Management Inc. to sell its gas pipeline unit Nova Transportadora do Sudeste (NTS), although it did not disclose the terms of the sale in its press release. A “reasonable valuation” for the business is $5 billion to $6 billion, Bank of America Corp. said.

The company is marketing offshore oil and gas fields worth as much as $2 billion, reports Bloomberg.

U.S. investigators stepping up corruption case involving Petrobras; impeachment for Rousseff a possibility

U.S. authorities are investigating more than a dozen companies as part of an international bribery probe centered on Petrobras, Bloomberg reported. The investigation has already led to more than 150 arrests in Brazil, including key members of President Dilma Rousseff’s inner circle.

Rousseff, who was at one point chairwoman for the oil-giant, has not been accused of any wrongdoing in the probe, but she was suspended from office by a Senate vote this week on allegations she doctored fiscal accounts to mask the size of a budget deficit. She is now facing an impeachment trial in the Senate.

Executive changes in major state-owned companies like Petrobras typically occur with new presidents. Petrobras CEO Aldemir Bendine did not appear at a news conference announcing the company’s first quarter results, and may be replaced soon. Brasilin Vice President Michel Temer announced a new cabinet Thursday, and said he has executives in mind to take the helm of the country’s state-owned companies.

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