Petrobras falls 4% as exploration success means billions more in expenses

|About: Petrobras - Petroleo Brasil... (PBR)|By:, SA News Editor

Petrobras (PBR) plunged more than 4% today on news it will have to pay another 2B reais ($900M) this year to tap more crude at its giant Buzios field and surrounding area than its license authorizes.

PBR has found as much as 4x the amount of crude it is authorized to produce at the offshore license it acquired four years ago, and is already struggling to develop all the oil it has found in other sections of the pre-salt region; investors would rather see the company increase production than make discoveries after four years of flat output.

PBR is investing ~$100M/day to expand its capacity to produce and refine crude, contributing to the biggest cash flow deficit of any oil company, according to Bloomberg data.