The woes of Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) is getting compounded as its stock nose-dived to a new low for the 12-week period. The fall was attributed to worldwide slump in crude oil prices apart from the rejection of austerity measures by the people of Greece. The two negative sentiments forced investors to dump riskier assets. The latest is in addition to other issues like bribery scandal hurting the company’s performance.
Strong Dollar
It was not a fault on the part of Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR). However, the primary fall out of the Greece rejection was the strong Greenback; Bloomberg reported quoting Marcelo Ribeiro, who is a strategist. Crude dropped the most after February as it fell 7.3% in New York. That apart, the S&P’s GSCI gauge of commodities witnessed a 4.9% drop thus percolating the drop to raw-materials makers also.
The company’s stock fell 2.1% in the Brazilian stock exchange, which was more than the benchmark index fall of 0.7%. That came back on the back of an 11% drop recorded last week. Brazil’s exports to Greece are only 0.1% of its total exports. Therefore, the country is not worried about the rejection of austerity measures. However, some of the biggest markets might face some vulnerable situation due to the crisis.
Risk-Aversion
The fall of Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) is the overall reaction to the risk-aversion that is spread across the globe due to the Greece crisis, Clear Corretora analyst told Bloomberg.
Only last week, the company announced its intention to slash its capital expenditure by 37% for the five-year period ending in 2019. The company’s dream of becoming the world’s biggest oil firm also shattered as the global oil price weakened since September last year. There appears to be no respite for oil sector and Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR). The stock will continue its struggle to perform in the bourses.
Petroleo Brasileiro S.A. – Petrobras (Petrobras), incorporated on October 3, 1953, is an integrated energy company in the oil, gas and energy industry. The Company, through its subsidiaries, is engaged in prospecting, drilling, refining, processing, trading and transporting crude oil from producing onshore and offshore oil fields and from shale or other rocks, as well as oil products, natural gas and other liquid hydrocarbons. Petrobras also carries out energy-related activities, such as research, development, production, transport, distribution and trading of all forms of energy, as well as other related or similar activities. It operates in the segments: Exploration and Production (E&P); Refining, Transportation and Marketing (RTM); Gas and Power; Biofuels; Distribution, and International.
Exploration and Production (E&P)
The Company’s E&P segment covers the activities of exploration, development and production of crude oil, natural gas liquid NGL) and natural gas in Brazil for the purpose of supplying, primarily, its domestic refineries, and also selling the crude oil surplus and oil products produced in the natural gas processing plants to the domestic and foreign markets. The E&P segment also operates through partnerships with other companies. Its domestic portfolio in the exploration segment consists of 158 exploration blocks, totaling an area of 90,000 square kilometers, of which 38,000 square kilometers are located onshore and 52,000 square kilometers are offshore. The Company is working on 56 Discovery Evaluation Plans (PAD), of which 40 are in pure exploration areas and 16 in ring fence areas. Its portfolio of Production Development and Operation has 351 fields under concession agreements and 10 fields under Assignment Agreements totaling 361 fields of oil and natural gas.
During the year ended December 31, 2014, the Company’s average production in Brazil was 2.034 million barrels of oil per day (bpd) and 67.8 million cubic meters of gas per day, excluding natural gas liquids (NGL). In total, the Company produced 2.460 million barrels of oil equivalent per day (boe/d), as of December 31, 2014.
Refining, Transportation and Marketing (RTM)
The Company’s RTM segment covers the refining, logistics, transport and trading of crude oil and oil products activities, exporting of ethanol, extraction and processing of shale, as well as holding interests in petrochemical companies in Brazil. As of December 31, 2014, its 13 refineries in Brazil processed 2.106 million bpd of oil and NGL and produced 2.170 million bpd of oil. The Company traded 2.458 thousand bpd of by-products in the domestic market, as of December 31, 2014. The Company’s subsidiary, Petrobras Transporte S.A. (Transpetro), is responsible for handling and storage of oil, by-products, biofuels and natural gas. Transpetro operates 49 terminals (21 onshore and 28 waterway), 54 ships, 7,517 kilometers of oil pipelines and 7,151 km of gas pipelines, as of December 31, 2014. With the operation of a network of 7,151 kilometers of pipelines and 11 compressor stations, totaling 400,000 horsepower installed capacity, Transpetro Natural Gas Area carried an average of 75.8 million cubic meters of gas per day of gas, during the year ended December 31, 2014.
Gas and Power
The Gas and Power segment covers the activities of transportation and trading of natural gas produced in Brazil and imported natural gas, transportation and trading of liquid natural gas (LNG), generation and trading of electricity, as well as holding interests in transporters and distributors of natural gas and in thermoelectric power plants in Brazil, in addition to being responsible for the fertilizer business. The Company generated 4,637 megawatts average (average MW) of electricity to the National Interconnected System (SIN), as of December 31, 2014. Its generation facilities, with an installed capacity of 6,407.5 MW, consist of 21 owned and leased power plants, fueled by natural gas or fuel oil.
The Company’s Gas and Energy area is responsible for three fertilizer plants: Fafen-BA, Fafen-SE and Fafen-PR. In the year ended December 31, 2014, the Company produced 882,000 tons of ammonia (of which 637,000 tons were used in the urea production process) and 1,109 million tons of urea. As of December 31, 2014, it sold 228,000 tons of ammonia and 1,046 million tons of urea.
Biofuels
The Company’s Biofuels segment covers the activities of production of biodiesel and its co-products, as well as ethanol-related activities: equity investments, production and trading of ethanol, sugar and the surplus electric power generated from sugarcane bagasse. Its Biofuels segment operates through its subsidiary Petrobras Biocombustivel S.A. Petrobras Biocombustivel S.A. has total production capacity of 821 thousand cubic meters of biodiesel per year, through participation in five plants in the country. The subsidiary has three own plants: Candeias (BA), Quixada (CE) and Montes Claros (MG), with a total installed capacity of 478 thousand cubic meters. Petrobras Biocombustivel holds interests in ten plants producing ethanol, sugar and electricity in Minas Gerais, Sao Paulo, Goias and Mozambique in Africa.
Distribution
The Distribution segment of the Company includes the activities of its subsidiary Petrobras Distribuidora S.A. Petrobras Distribuidora S.A. operates through its own retail network and wholesale channels to sell oil products, ethanol and vehicle natural gas in Brazil to retail, commercial and industrial customers, as well as other fuel wholesalers.
International
The Company’s International segment covers the activities of exploration and production of oil and gas, refining, transportation and marketing, gas and power, and distribution, carried out outside of Brazil in a number of countries in the Americas, Africa, Europe and Asia. Its overseas production totaled 115,900 barrels per day (bpd) of oil and 15.9 million cubic meters per day of natural gas, totaling 209,300 barrels of oil equivalent per day (boepd). Its three refineries outside Brazil processed 163,400 bpd of oil, equivalent to 69% of the installed capacity of 230,200 bpd. International’s proved reserves of oil, condensate and natural gas, as of December 31, 2014, totaled 429.3 million of barrels of oil equivalent.
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