PREVIEW-Petrobras seen reversing loss on higher oil, lower writedowns


By Guillermo Parra-BernalSAO PAULO, March 20 (Reuters) - Petróleo Brasileiro SA,
Brazil's state-controlled oil company, likely returned to a
profit in the fourth quarter, reflecting the impact of higher
average oil prices, lower asset writedowns and cost-cutting.
    Rio de Janeiro-based Petrobras probably earned 3.701 billion
reais ($1.2 billion) last quarter, reversing a net loss of
16.458 billion reais in the third quarter, according to the
average analyst estimate compiled by Thomson Reuters. Petrobras
lost a record 35.8 billion reais a year earlier.
    The company plans to unveil results after the market closes
on Tuesday, and executives will discuss the report with
investors on a conference call the following day.
    The results come as investigators continue a wide-ranging
probe into the country's biggest graft scandal in the country's
history at Petrobras and Odebrecht [ODBES.UL] among other
    Chief Executive Officer Pedro Parente has continued to rein
in costs and implemented fewer revisions to the value of some
assets, which had led to large writedowns in recent months,
analysts said.
    The average price for Brent crude oil rose $5 per barrel in
the fourth quarter, helping offset increases in gasoline costs,
analysts said.
    Even as Petrobras raised wages more than inflation for a
collective bargaining agreement, costs and expense controls will
be boosted by a large worker retirement program reflecting a
slimmer payroll, accident-reduction efforts and higher
productivity at some wells, Credit Suisse Securities analyst
André Natal said.
    For the full year, Petrobras probably posted a net loss,
which could lead the company to forgo dividend payments for
another year, analysts said.
    A stable currency, a product of growing confidence in Brazil
in the wake of former President Dilma Rousseff's ouster last
year, brought down costs for Petrobras, the world's most
indebted major oil firm. Analysts expect Petrobras to disclose
how it plans to record a provision against 185 billion reais in
contingent liabilities.
    The results underscore how Brazil's improved outlook is
starting to bolster corporate earnings. For the past two years
of political and economic turmoil dragged on results at some of
the country's largest companies.
    Preferred shares <PETR4.SA>, the company's most widely
traded class, are down 10 percent over the past three months,
compared with a 10 percent gain in the benchmark Bovespa stock
index <.BVSP> for the period.
    The stock performance is due in part to delays in Parente's
plan to divest assets not deemed essential, in the midst of
tougher regulatory oversight. Petrobras has a goal of about $19
billion in divestitures by December 2018.
    Net revenue probably rose to an average 74.762 billion reais
last quarter, up 6 percent from the prior three months. Adjusted
earnings before interest, taxes, depreciation and amortization
was seen falling 1.5 percent to 19.707 billion reais on a
quarter-on-quarter basis, according to the consensus estimate.
    Capital spending fell 8 percent in the fourth quarter,
estimates showed.
    Investors will also focus on management comments on the
status of the asset sale plan, the outlook for production and
capital spending for this year, and how a new domestic pricing
policy may help boost margins, analysts said.
    Money from divestitures could begin to flow more rapidly
this quarter, when Petrobras expects to conclude a few deals
after receiving clearance from state audit court TCU.
    The following is a table with analysts' consensus estimates
for key fourth-quarter indicators at Petrobras. All figures are
in Brazilian reais unless otherwise specified:

              Q4 2016   Q3 2016   Q4 2015       Pct Change
               (Est.)                       qtr/qtr    yr/yr
 Net Revenue   74.762    70.433    85.103   6.1 pct    -9 pct
                bln       bln       bln
               reais     reais     reais
 Net Income    3.703    - 16.458  - 35.582    N/A       N/A
                bln       bln       bln
               reais     reais     reais
  Adjusted     21.277    21.603    17.064   -1.5 pct  19.8 pct
   EBITDA       bln       bln       bln
               reais     reais     reais
  Adjusted    28.5 pct  30.7 pct  20.1 pct    N/A       N/A
    ($1 = 3.1023 reais)

 (Editing by Jeffrey Benkoe)
 ((; +55-11-5644-7714, +55-119-8346-7153;
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Referenced Symbols: PETR4

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