Petrobras has further revised down its investment plans for 2015 and 2016, opting to cut US$3 billion in spending in 2015, and $8 billion in 2016, the Brazilian state-owned firm announced on 5 October.
In June, embattled operator approved a new five-year investment plan for 2015-2019, which then-slashed total investments by 41% to $130.3 billion, with exploration and production taking the largest chunk ($108.6 billion).
Petrobras' revised numbers would dropped the proposed investment from 2015, $28 billion, down to $25 billion. For 2016, it would taken the proposed $27 billion down to just $19 billion.
The Brazilian operator said that the decision to cut back further was due to the new levels of Brent crude oil prices and the exchange rate from US Dollars to Brazilian Reals. Currently, according to XE.com, one US Dollar amounts to 3.84 Reals. Only one ago the US Dollar was worth 2.4 Brazilian Real.
“Within the original 2015-2019 business plan, Petrobras had assumed a $60/bbl Brent price for 2015, rising to $70/bbl thereafter,” said analyst firm Simmons & Co. “YTD, Brent has averaged $55/bbl, while the 2016 forward strip is similarly priced. For foreign exchange rate, Petrobras had previously assumed a 3.1 R$/US$ foreign exchange rate for 2015 and a 3.26 rate for 2016. Spot rates are currently hovering around 4x, with the futures indicating they could head higher.”
Additionally, Petrobras plans to cut its manageable operating expenses from the $30 billion proposed in the 2015-2019 plan to $29 billion in 2015. The next year, it will reduce from the $27 billion projected in the plan to $21 billion.
Petrobras does not plan to change the projection for disinvestments in 2015-2016, opting to remain at $15.1 billion–$0.7 billion in 2015 and $14.4 billion in 2016. Simmons & Co. said “Despite the capex and opex reduction, Petrobras remains in a very challenged cash generation position in the current environment and needs to divest a material amount of assets in order to de-lever.”
Also unchanged, according to Petrobras, the targets of average daily production of oil and LNG in Brazil stated in the PNG 2015-2019 (2.125 MMb/d in 2015 and 2.185 MMb/d in 2016).
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