Petrobras: company may increase investments by up to 10% – 08/07/2023 – Market

Petrobras will be able to increase by up to about 10% the investments foreseen in the next Strategic Plan for the period from 2024 to 2028, compared to the previous planning (2023-2027), to approximately US$ 86 billion (R$ 421 billion), he told the Reuters this Monday (7) the CFO of the state-owned company, Sergio Caetano Leite.

The possible increase in the plan, which is still being studied and elaborated and will only be published at the end of the year, considers current calculations of inflationary adjustments of around US$ 4 billion, which would take the total investments in five years to the minus $82 billion.

The likely entry of low-carbon projects, which will still undergo approval, would add a good part of the growth in contributions to the level of US$ 86 billion, versus the US$ 78 billion of the current plan (2023-2027).

“We are going to adjust for inflation and signal a greater investment value based on this correction, but there is actually more money in the investment,” said Leite, in an interview via videoconference.

“If the low-carbon projects prove to be economically advantageous, if they are profitable and technically applicable, we can reach an investment that from US$ 82 billion (only considering inflation correction) will take us to 86 (billion)”, he said. .

He did not detail which projects these would be, but they could be in the area of ​​renewable energies and decarbonization of operations, in line with what was indicated by the company’s management.

In a more conservative view, the executive admitted advances of US$ 84 billion to US$ 83 billion, including inflation and low carbon projects.

In June, the oil company informed that it decided to invest in low-carbon projects between 6% and 15% of the total investment of its Strategic Plan 2024-2028, against 6% in the current five-year plan. The percentage range will also be confirmed in the detailing of the project portfolio that will be taken to final approval together with the new plan in November.

Details of the numbers that may be invested have not yet been reported. In a previous interview with Reuters, the CEO of Petrobras, Jean Paul Prates, had stated that the investments in the next plan would be similar to the current one.

Leite pondered that, throughout the year, the oil company’s strategic planning goes through discussions, adjustments, gaining maturity. “Everything we are talking about is still being studied”, he pointed out.

Even with the increase in investments, the executive said that the company considers maintaining the reference range for gross debt between US$ 50 billion and US$ 65 billion.

The company’s gross debt ended the second quarter at almost US$ 58 billion, up 8.7% compared to the first quarter, mainly due to the increase in leases in the period with the entry into operation of chartered FPSOs.

The director stated that leverage is under control, and that the company’s business plan foresees that investments will be made with cash generation, in an organic way.

“There is leverage space of up to US$ 65 billion, but we would not like to use all the space”, said Leite, noting that the financial debt fell by US$ 608 million in the second quarter, compared to March 31, the $29.2 billion.

The company’s business plan says that the company’s growth is self-financing.

Petrobras “generates a lot of cash, so we will continue to use part of the cash to invest. We are very careful with the company’s indebtedness, we do not want to indebt Petrobras beyond what is reasonable, that is not the objective”, he said.

The CFO also reiterated that the company should take advantage of partnerships to enter certain segments, in addition to considering acquisitions and divestments, based on a constant analysis of the portfolio.

market valuation

Petrobras’ current management took over the company this year with the mission of preparing it for the future, with a longer-term view, including energy transition plans, with portfolio diversification, in addition to studying new investments in refining, fertilizers, petrochemicals, among others.

The direction shows a great change in relation to the administrations of the last years, which focused on oil exploration and production in areas of great financial return, at the same time that they carried out billionaire divestments in other segments.

The director pointed out that Petrobras’ new management “still continues to suffer from many rumors”, including government intervention, but that these risks have been eliminated. Proof of this, according to him, is the increase in the company’s market value. Preferred shares accumulate gains of about 47%.

“It is very likely that we will deliver a company at the end of the year that is more valuable in terms of market value and prepared for the future… looking at the transition in a different way, returning to invest in areas that in the previous strategy were not being contemplated, a stronger company, more resilient for the future and certainly with more value”, he said.

Petrobras’ net profit fell 47% in the second quarter compared to the same period last year, to US$ 28.8 billion, amid a drop in oil prices on the international market and fuel prices in Brazil.

Leite pondered that the company’s performance, in comparison with its global peers, was one of the least dropped.

Giant Exxon Mobil posted a 56% drop in second-quarter profit, joining rivals hurt by a sharp drop in fuel prices and lower fuel margins. Chevron, Shell and TotalEnergies reported declines in earnings of 48%, 56% and 49%, respectively.