Petrobras Swings to Q2 Loss on COVID Impact

Brazilian state oil producer Petrobras suffered a reais 2.7bn ($524mn) loss in the second quarter, on the back of the collapse in oil demand and prices brought about by the coronavirus (Covid-19) pandemic.

The company posted a reais 18.9bn income in the corresponding period of last year. Its non-recurring net result in the latest quarter, which excludes one-off items, still came in at a loss of reais 13.7bn, versus a reais 8.9bn profit a year earlier.

Core earnings (Ebitda) were relatively strong, falling only 23.5% year on year to reais 25bn, while adjusted Ebitda was down 47% to reais 17.7bn. Revenues fell 29.9% to reais 50.9bn.

Petrobras' hydrocarbon production averaged 2.802mn barrels of oil equivalent/day in the three months, up 6.4% yr/yr, but down 3.7% quarter on quarter, after it mothballed 62 shallow-water platforms.

"As in a war, the unprecedented scale and speed of the global pandemic compelled us to move swiftly, as we know that serious crises produce winners and losers and winners tend to be those who respond faster," CEO Roberto Castello Branco said in a statement.

Petrobras has taken various steps to shore up its financial position, including a cut to its capital expenditure budget for 2020 to $8.5bn from $12bn. It has also raised $3.5bn in 10- and 30-year bonds and taken out $2bn in bank loans, Branco said, "in order to build a liquidity buffer to survive a worst case scenario of average oil prices of $25/b from April 2020 until year-end."

Petrobras is also undertaking a sweeping divestment programme, launched before the crisis, which has already seen it sell off dozens of non-core fields, pipelines and other assets.  It is saddled with considerable debt, although it managed to lower the net sum by $8bn over the first half of the year, from $87bn at the end of December.