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

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.

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Comments (6)
  • june1234
    , contributor
    Comments (4504) | Send Message
    maybe they're just pumping slat water out of there
    24 Jun 2014, 07:09 PM Reply Like
  • GrowthGeek
    , contributor
    Comments (3203) | Send Message
    Poor Petrobas--what other oil company has its stock go down when it discovers more oil than expected? Being the servant of the Brazilian government sucks for this company and its management.
    24 Jun 2014, 07:21 PM Reply Like
  • The Rebel
    , contributor
    Comments (2928) | Send Message
    So much for Barron's big buy call on PBR.
    24 Jun 2014, 10:24 PM Reply Like
  • osooro
    , contributor
    Comments (88) | Send Message
    Too bad PBR got caught with this socialistic administration. She has sucked Brazil's two main companies dry, ie PBR and VALE.
    24 Jun 2014, 11:23 PM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1466) | Send Message
    Funny if they were allowed to simply lay off the workers and stop pumping crude that they have to refine and sell at prices well below the true costs, this stock might actually be worth something.
    25 Jun 2014, 01:25 AM Reply Like
  • ea1000
    , contributor
    Comments (181) | Send Message
    “If you put the federal government in charge of the Sahara Desert, in five years there'd be a shortage of sand.”
    ― Milton Friedman
    25 Jun 2014, 10:11 AM Reply Like
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