Wed, Mar. 4, 7:49 AM
- Brazil's Attorney General has asked the country's top court for permission to proceed with investigations against several politicians, launching a new phase of the corruption case at Petrobras (NYSE:PBR).
- Testimony by suspects already in police custody suggests that members of Pres. Rousseff’s Workers’ Party and some of its allies could be ensnared.
- Federal prosecutors say Brazil’s biggest construction firms colluded for years to inflate prices on PBR contracts, kicking back some of the ill-gotten proceeds to politicians, major political parties and former executives at the company.
Tue, Mar. 3, 10:59 AM
- Analysts say Petrobras' (PBR +1.8%) more aggressive divestment plan is a step in the right direction, and shares are higher following the company's plans to sell $13.7B in assets over the next two years after previously planning to sell $5B-$11B in assets in the five years through 2018.
- The news "reflects the new management’s focus and sense of urgency in addressing the company’s need to reduce leverage, preserve cash, and rationalize investments,” Banco Santander analysts say, adding that “its execution will be key."
- PBR is developing the largest group of offshore discoveries this century, but it emerged from the recent commodities boom with $135B of total debt after missing output targets and years of subsidizing imported fuel.
Mon, Mar. 2, 5:57 PM
- Petrobras (NYSE:PBR) says it plans to sell ~$13.7B worth of assets in 2015 and 2016, far above the $5B-$11B outlined in its five-year $221B capital spending plan previously announced in February 2014, as the company continues to slim down in the wake of the vast corruption scandal in Brazil.
- PBR expects divestitures in exploration and production locally and overseas to account for 30% of asset sales targeted in the period, while gas and energy assets account for 40% and the remaining coming from assets related to distribution.
- The moves are part of a plan “to reduce leverage, preserve cash and focus on priority investments,” PBR says.
Mon, Mar. 2, 10:55 AM
- Braskem (BAK -3.7%) says it has agreed to a revised naphtha supply contract with Petrobras (NYSE:PBR), averting a threatened shutdown of its Brazilian plants.
- The contract extends the supply agreement by six months to Aug. 31, but the revised contract will use a price retroactive to March 1.
- PBR has 36% stake in BAK but a controlling interest is held by Odebrecht Group, one of the several dozen construction companies implicated in Brazil's corruption scandal; PBR has stopped signing new contracts with many implicated contractors, which made it a difficult task for BAK to revise its contract with PBR.
- BAK has said last month that several of its chemical and plastics plants faced the possibility of a shutdown without a contract.
Fri, Feb. 27, 5:41 PM
- Petrobras (NYSE:PBR) denies it has hired JPMorgan Chase to handle the sale of oil exploration licenses in deep-sea areas off Brazil's coast.
- In a securities filing, PBR reiterated the need to reduce capital investments, dispose of assets and step up divestitures to preserve cash, but it also said JPM did not have a mandate to map out potential investors interested in acquiring licenses for its subsalt oil reserves.
- Reuters reported earlier this week that Petrobras had hired JPM to advise on the sale of ~$3B in assets, as fallout from Brazil's corruption scandal had shut access to financing.
Fri, Feb. 27, 9:58 AM
- Derivatives traders are signaling that government support alone may not be enough to stave off more ratings cuts for Petrobras (PBR +2.3%), according to a Bloomberg report.
- Compared with the cost to protect Brazil’s debt against default, contracts on PBR bonds have more than doubled since the allegations of kickbacks and bribes at the oil producer surfaced in November; the premium jumped to 3.50 percentage points last week, the most on record.
- Brazil's government reportedly has offered PBR as much as 6B reais ($2.1B) from state banks to strengthen the company’s cash position, but it will not be sufficient to prevent more downgrades to junk, says a Brazilian credit analyst.
- Earlier this week, Moody’s cut PBR's rating to Ba2, two levels below investment grade and its second cut in less than a month.
Thu, Feb. 26, 10:58 AM
- Petrobras (PBR -2.1%) says it is seeking financing options and studying cost cuts following a downgrade to junk by Moody’s.
- PBR plans to release audited results “as soon as possible” and is taking steps to preserve cash and cut its debt load, according to a statement released late yesterday; the company’s board will meet Friday to discuss writedowns for costs related to corruption that have prevented it from releasing audited results, a source tells Bloomberg.
- PBR needs to sell at least $20B in assets and reduce capex to ~$25B this year to improve finances, Bank of America says in a new report, adding that the potential to raise funds from E&P assets should improve if oil prices recover in 2016.
- "Petrobras needs to open up,” says the chief energy strategist at Macro Risk Advisors. “They own 100% in a lot of these offshore fields. They have the opportunity to attract offshore partners in the Campos and Santos basins."
Wed, Feb. 25, 3:58 PM
- Petrobras (PBR -5.8%) has hired JPMorgan Chase to handle $3B in planned asset sales this year, Reuters reports, as fallout from Brazil's corruption scandal has shut the company's access to financing.
- Potential bidders could include Middle East investors, mainly sovereign wealth funds familiar with oil and gas projects, according to one source.
- Asset sales have become critically important for PBR now that Moody's has stripped the company of its investment-grade rating and has warned that further cuts are possible (I, II).
Wed, Feb. 25, 12:53 PM
- Brazil has no plans now to capitalize Petrobras (PBR -7.1%) despite fears the state-run oil company could need cash after Moody's stripped it of its investment grade credit rating (I, II), Reuters reports as it cites two government officials.
- However, one of the Reuters sources says the government is concerned that the Petrobras downgrade could end up having a contagion effect on Brazil's sovereign rating.
- Moody's cut PBR's rating by two notches late yesterday and kept the company on review for further downgrade.
Wed, Feb. 25, 10:19 AM
- Petrobras (PBR -8.3%) plunges in early trading after Moody's downgraded the heavily indebted company's long-term debt to a junk Ba2 rating from Baa3 with a negative outlook.
- Brazil's finance minister reportedly made a last-minute attempt to the rating agency to try to reverse the decision, offering a guarantee that the government would support the company if necessary.
- "The main concern now will be another cut to junk by Fitch or S&P, which could lead the company’s bonds to be sold by many institutional investors," says the head of fixed income at Andbanc Brokerage.
- Separately, PBR reportedly will not renew leases on at least four drilling rigs from Seadrill (SDRL +0.2%), Pacific Drilling (PACD -2.2%) and Diamond Offshore (DO -1.6%) that have been under negotiation since last year; DO already had disclosed the cancellation in its latest 10-K, and SDRL recently warned that contract extensions with PBR likely would fail.
Wed, Feb. 25, 9:24 AM| 3 Comments
Tue, Feb. 24, 8:43 PM
- Moody’s cuts Petrobras’ (NYSE:PBR) ratings to Ba2, two steps into junk status, and keeps its review for downgrade, reflecting increasing concern about corruption investigations and liquidity pressures that might result from delays in delivering audited financial statements.
- The ratings agency also believes PBR will be challenged to make meaningful reduction in its very high debt burden over the next several years.
- It was the fourth Petrobras downgrade in five months by Moody's.
Tue, Feb. 24, 8:44 AM
- Diamond Offshore (NYSE:DO) -4.9% premarket after disclosing via its 10-K filing that Petrobras (NYSE:PBR) had notified the company that it intends to terminate its drilling contract on the Ocean Baroness.
- DO also says Mexico's Pemex intends to exercise its contractual right to terminate its drilling contracts on the Ocean Ambassador, the Ocean Nugget and the Ocean Summit, and to cancel its drilling contract on the Ocean Lexington.
- Cowen analysts cut their DO price target to $26 from $28 on news of the cancellations, which they say is not a surprise given the current environment but the magnitude of the potential terminations is serious (Briefing.com).
Fri, Feb. 20, 5:15 PM
- Petrobras (NYSE:PBR) is ripe for credit downgrades, with Moody's perhaps poised as the first credit agency to act, J.P. Morgan says.
- Moody’s is only giving PBR until the end of the month to show some progress regarding the publication of audited financials, including expected impairments, JPM writes.
- Even though PBR's credit ratings for the three rating agencies are still investment grade, the stand-alone credit rating - without factoring the sovereign support - already is high-yield; the common factor for all the agencies for a downgrade would be an acceleration of debt in the case that the company breaches the reporting covenant.
- Meanwhile in Brazil's ongoing corruption scandal, federal prosecutors say they are seeking ~$1.5B in compensation from six companies accused of paying bribes to PBR and want to ban those companies from government contracts.
Fri, Feb. 20, 10:38 AM
- Some big international investors have been selling shares in Petrobras (NYSE:PBR), WSJ reports, as George Soros, BlackRock and Fidelity all cut their stakes during Q4 as the oil company's involvement in Brazil's corruption scandal gained force.
- Soros slashed his stake in PBR by 60% to 2M of the company’s ADRs at the end of Q4 from the previous quarter, BlackRock sold 8.28M shares in Q4 to leave it with 89.2M shares at the end of 2014, and Fidelity cut its stake by 690K shares to 5.9M.
- However, some big investors are keeping their stakes in PBR for the time being; Templeton's Mark Mobius says he remains committed to Latin America’s largest economy despite its current struggles with slow growth and high inflation, and his fund will maintain its ~$100M investment in the company.
Tue, Feb. 17, 7:31 AM
- Rolls-Royce (OTCPK:RYCEY) will cooperate with Brazilian authorities if they press ahead with an investigation into allegations that it paid bribes to win a contract from Petrobras (NYSE:PBR).
- The British engineering firm has been accused by a former Petrobras executive of paying bribes via an agent in exchange for a $100M contract to provide "modules of energy generation" for the oil company’s platforms.
- "We will take all necessary action to ensure compliance, including cooperating with authorities in any country," announced Rolls-Royce.
PBR vs. ETF Alternatives
Petroleo Brasileiro SA Petrobras operates as an integrated oil & gas company in Brazil. Its business is structured into segments such as Exploration & Production; Refining, Transportation & Marketing; Distribution; Gas & energi; Biofuel; & International.
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