Brazil's state-run energy giant Petroleo Brasileiro S.A., or
), announced first quarter profit of $3,854.0 million, compared
with $5,212.0 million in the year-earlier quarter. Earnings per
ADR came in at 60 cents (1 ADR = 2 shares), below the year-ago
profit of 80 cents and in line with the Zacks Consensus Estimate
amid rising operational costs and weak production. These factors
were partially offset by higher domestic fuel prices.
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PETROBRAS-ADR C (PBR): Free Stock Analysis
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Petrobras' net operating revenues of $36,345.0 million surpassed
the Zacks Consensus Estimate of $33,472.0 million but were below
the year-earlier level of $37,410.0 million.
Petrobras' total oil and gas production during the first quarter
reached 2,552 thousand oil-equivalent barrels per day (MBOE/d),
down from 2,676 MBOE/d in the same period of 2012.
Compared with the first quarter of 2012, Brazilian oil and
natural gas production decreased 4.9% to 2,310 MBOE/d, while
international production came in at 242 MBOE/d (as against 246
MBOE/d in the year-ago period).
During the first quarter of 2013, the average sales price of oil
in Brazil decreased 7.8% from the year-earlier period to $102.91
per barrel. Average sales price of international oil was down
5.7% year over year, to $94.26 per barrel. Regarding natural gas,
average international sales price rose 14.2% from the first
quarter of 2012, while domestic price was down 9.0%.
Petrobras' exploration costs increased 12.2% to $642.0 million.
This pushed down the upstream (or exploration & production)
segment profit by 29.1% to $7,560.0 million.
Lifting cost per barrel (or cost to produce each barrel of oil)
moved up 14.3% in Brazil to $14.76, while overseas costs jumped
13.8% to $8.50.
During the first quarter, Petrobras' downstream unit incurred a
net loss of $3,276.0 million, 18.4% narrower than the loss of
$4,016.0 million a year ago. Petrobras was able to cut its losses
on account of the recent decision by the Brazilian government to
allow it to raise diesel and gasoline prices. This has helped
Petrobras to shift some of the burden of rising oil costs to its
Refining costs per barrel in Brazil were down by 16.0% to $3.14.
Internationally, it increased 17.0% to $3.79. Petrobras imported
an average of 860,000 barrels of oil per day, 12.6% higher
compared to the same period last year. However, oil product
imports were 7.4% less than the year-earlier period, favorable
impacting gross margins.
Capital Spending & Balance Sheet
During the three months ended Mar 31, 2013, Petrobras' capital
investments and expenditures totaled $9,907.0 million. At the end
of the quarter, the company had cash and cash equivalents of
$13,524.0 million and net debt of $74,820.0 million. Net
debt-to-capitalization ratio was approximately 31%.
Petrobras currently carries a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months.
Meanwhile, one can look at some domestic upstream energy firms
EPL Oil & Gas Inc.
Harvest Natural Resources Inc.
McMoRan Exploration Co.
) as attractive investments. These U.S. exploration and
production companies - sporting a Zacks Rank #1 (Strong Buy) -
offer value and are worth accumulating at current levels.