Petrobras will issue 2014 results by end-May
OREANDA-NEWS. Brazilian state-controlled Petrobras will file its audited 2014 results by the end of May in order to avoid an acceleration on bond payments, the company said in a securities filing last night.
Covenants for some of the around \$50bn in bonds owed by Petrobras require audited financials be delivered by the end of June, at the latest.
The announcement has quelled some concern that a major kickback scheme that is under investigation could push the heavily indebted company into technical default.
According to various testimonies, a cartel formed of the Brazil's biggest construction firms diverted funds from inflated work contracts to the coffers of Brazil's ruling Workers party (PT) and other coalition allies.
The scheme is expected to reduce the value of some of Petrobras' assets, mainly downstream and midstream assets, by billions of dollars, though the actual cost is unknown.
A delay by Petrobras in assessing the cost of the corruption scheme has raised concern over the extent of the damage, and contributed to a recent management overhaul. Last week, Maria das Gracas Foster, Petrobras chief executive since 2012, resigned and was quickly replaced by Aldemir Bendine, former chief executive of state-controlled Banco do Brasil.
Earlier this week, Bendine said the company is working closely with independent auditor PricewaterhouseCoopers (PwC) to make sure audited 2014 results are filed before the June deadline. In October, PwC refused to sign off on the company's third quarter results pending more information on the corruption allegations.
Petrobras typically bridges a financing gap by tapping the bond market in the first quarter of the year. Absent clearance from PwC, the firm has been blocked from issuing new bonds and has been forced to cut costs and look for other sources of cash.
Last month, the company said investment spending for 2015 would be cut from around \$44bn to \$31bn and around \$3bn in assets could be sold this year.
"Petrobras is reviewing its financial planning and considers that it should be necessary to reduce investments, raise divestitures, as well as explore other funding opportunities and increase cash flow," the company said, dismissing the possibility of issuing of new shares.
A reduction in the company's ambitious upstream and downstream expansion plans has already squeezed Brazilian contractors, and is now starting to impact service providers from abroad as well.
Bermuda-based offshore driller Seadrill has cut \$1.1bn from its \$20bn order backlog as a result of Petrobras' problems.
"Due to recent developments within Petrobras, the company no longer believes the contracts will be concluded in the timeframe or on the previously approved commercial terms," Seadrill said today.
The company?s contract for the lease of two ultra-deepwater drillships to be used in the 8bn-12bn bl sub-salt Libra block have been finalized and are expected to start operations in the second quarter.
A Petrobras-led consortium that includes partners Shell, Total and Chinese state-owned firms CNPC and CNOOC is developing Libra, which is expected to produce up to 1.4mn b/d from 12 to 18 production units within 15 years.
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