Brazil's state-run energy giant Petroleo Brasileiro S.A., or Petrobras (PBR) announced first quarter 2012 earnings of R$9.2 billion or R$0.71 per share, compared with R$11.0 billion or R$0.84 in the year-earlier quarter.
The company reported net income of US$5.2 billion or 40 cents per ADR, down form the year-ago quarter result of US$6.6 billion or 51 cents per ADR. Quarterly earnings per share also missed the Zacks Consensus Estimate of 65 cents.
The company’s results were hurt by rising operating costs and impairment charges.
Petrobras’ net operating revenues of R$66.1 billion (US$37.4 billion) was up 21.5% from the first quarter 2011 level. The result also beat our projection of $35.8 billion, reflecting improved prices level along with a lift in production.
Segmental Performance
Upstream: Total oil and gas production during the first quarter of 2012 reached 2,676 thousand oil-equivalent barrels per day (MBOE/d), up from 2,670 MBOE/d in the previous quarter and 2,629 MBOE/d in the same period of 2011.
Compared with the first quarter of 2011, Brazilian oil and natural gas production increased 1.9% to 2,430 MBOE/d, while international production came in at 246 MBOE/d (up slightly from 244 MBOE/d in the year-ago period).
During the first quarter of 2012, the average sales price of oil in Brazil increased 18.6% from the year-earlier period to U.S.$111.56 per barrel. Average sales price of international oil was up 14.4% year over year, reaching U.S.$99.99 per barrel. Regarding natural gas, average international sales price increased 23.2% from the first quarter of 2011, while domestic price was up 5.8%.
This pushed up the upstream (or exploration & production) segment profit by 33.4% to R$12.4 billion.
Lifting cost per barrel (or cost to produce each barrel of oil) moved up 14.1% in Brazil to U.S.$12.98, while overseas costs hiked 35.0% to U.S.$7.63.
Downstream: During the first quarter, Petrobras’ downstream unit incurred a net loss of R$4.6 billion, compared with a loss of R$94 million a year ago. This was due to the company’s inability to cope with the rising oil costs, a higher level of imports during the period and a poor sales mix.
Though the Brazilian government came up with a decision to hike domestic fuel prices during late 2011, it was not enough to offset Petrobras’ refining losses.
Refining costs per barrel in Brazil were down (by 5.7%) at U.S.$4.27. Internationally, it dropped 32.0% to U.S.$3.27. Petrobras exported an average of 720,000 barrels of oil per day, 14.1% higher than the comparable quarter last year.