Net income dropped to 5.05 billion reais ($2.9 billion), or 39 centavos a share, from 10.6 billion reais, or 1.07 reais, a year earlier, the Rio de Janeiro-based company said yesterday in a regulatory filing. The company, Latin America’s largest, was expected to earn 69 centavos a share excluding some items, the average of six analyst estimates in a Bloomberg survey.
Costs rose because of the installation of new production equipment in the so-called pre-salt region, an increase in platform maintenance and stoppages, and higher salaries, Petrobras said. A weaker real also curbed profit because it boosted foreign debt payments and increased fuel import costs.
“Results were surprisingly weak,” Auro Rozenbaum, an analyst at Bradesco SA in Sao Paulo, said by telephone. “We had a confluence of factors - not only the increase in gasoline imports but also the increase in the exchange rate.”
The Brazilian real fell to an average of 1.79 per dollar in the fourth quarter, compared with 1.70 per dollar in the year- ago period. Gasoline imports last year also quadrupled to 30,000 barrels a day, refining head Paulo Roberto Costa has said.
Petrobras said it cost $12.49 to produce each barrel of oil -- the so-called lifting cost -- up from $10.29 a year earlier. Costs from unscheduled stoppages and installing equipment in the exploration and production division increased to 863 million reais in 2011, from 460 million a year earlier.
Rising Investments
Petrobras will invest 87.5 billion reais in 2012, up from 73 billion reais in 2011. About 48 percent of its investment budget will be spent on exploration and production.
The company plans to spend about $224 billion over five years to develop the largest discoveries in the Western Hemisphere since Mexico’s Cantarell in 1976. Brazilian reserves that sit miles below the floor of the Atlantic Ocean trapped under layers of rock and salt hold an estimated 50 billion barrels of oil, according to the country’s oil regulator.
Petrobras also confirmed yesterday that Maria das Gracas Foster, the company’s natural-gas and energy chief, is replacing Jose Sergio Gabrielli as chief executive officer.
Jose Formigli was named as the head of the company’s exploration and production business. Formigli was previously the head of Petrobras pre-salt unit that is in charge of developing the country’s largest oil fields. Jose Alcides Santoro Martins will take over as head of the gas and energy unit.
Proven Reserves
Petrobras’s proven reserves reached 16.4 billion barrels of oil equivalent, 2.7 percent more than a year earlier. The so- called reserve replacement ratio was 148 percent, according to the statement. Total oil and gas production averaged 2.62 million barrels a day last year, compared with 2.58 million in 2010. Average production in Brazil was 2.02 million barrels.
Petrobras announced in a separate statement that it will lease 21 rigs from Sete Brasil Participacoes SA and five from Ocean Rig UDW Inc for 15 years. It will pay Sete Brasil $530,000 per day for the rigs and $548,000 per day to Ocean Rig.
“There was a large increase in costs, imported fuel was a little bit more expensive and there was more exploration,” Rafael Andreata, an analyst at Planner Corretora de Valores, who has a “buy” rating on the stock and doesn’t own any, said in a telephone interview from Sao Paulo before results were released.
Petrobras rose 7 centavos to 25.50 reais in Sao Paulo. The stock has gained 19 percent this year, compared with a 16 percent gain for Brazil’s benchmark Bovespa Index. The report came after the close of market yesterday.
Record Sale
Petrobras sold a record $7 billion in dollar bonds last week to help finance the biggest investment plan in the industry at a time when investors are seeking alternatives to European assets and lower-yielding investment-grade debt.
The company plans to borrow as much as $18 billion a year through 2015, mainly from international markets.
The sale matched SABMiller Plc’s $7 billion offering last month as the largest dollar-denominated corporate bond issue this year, according to data compiled by Bloomberg.
Refining costs increased because Petrobras has to import expensive light oil because most of its plants can’t process the heavy, lower quality oil the company produces in Brazil, Gianna Bern, president of Chicago-based risk-management adviser Brookshire Advisory, said yesterday in a telephone interview.
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