Petrobras Presented R$21.6 billion Loss in 2014

Source: www.gulfoilandgas.com 4/22/2015, Location: South America

We presented a loss of R$21.6 billion in 2014, mainly due to an asset impairment charge of R$44.6 billion and a R$6.2 billion write-down arising from improper payments identified within the scope of the Federal Police’s “Operaçao Lava Jato” anti-corruption investigation. Our results were also impacted by a provision for losses from power sector receivables (R$4.5 billion), write-downs related to the construction of the Premium I and II refineries (R$2.8 billion) and a provision for the Program to Encourage Voluntary Severance (PIDV) (R$2.4 billion).

In 2014, our operating cash flow reached R$59.1 billion and net earnings were R$80.4 billion, up 15% from 2013. These figures reflect increased demand and higher prices from the sale of oil products in the domestic market. We ended the year with R$68.9 billion in cash.

The sum related to the identified improper payments was calculated using a methodology based on statements made public within the scope of Operaçao Lava Jato. A margin of 3% was applied to contracts with the 27 companies cited as members of the cartel between 2004 and 2012. In the case of payments to companies outside the cartel, the specific figures cited in the statements were used. This write-down was recognized in the third quarter of 2014, during which a loss of R$5.3 billion was recorded.

The R$26.6 billion loss in the fourth quarter of 2014 reflected asset impairments. The activities most heavily impacted were refining (R$31 billion), mainly due to the postponement of the second complex at the Abreu e Lima Refinery (RNEST) and the Rio de Janeiro Petrochemicals Complex (Comperj). In exploration and production, the R$10 billion impairment resulted from the decline in oil prices.

We have carefully considered all the available information and we do not believe that new information arising from the investigations may significantly affect or change the methodology used.

We have not yet recovered any sum related to the identified improper payments and we are unable to reliably estimate any recoverable amount at this moment. We are taking the necessary legal measures to seek compensation for the losses suffered.

5% rise in production

Our oil and natural gas production (in Brazil and abroad) rose by 5% in relation to 2013, reaching an average of 2.699 million barrels of oil equivalent per day (boed) in 2014. Our pre-salt production contributed 381,000 boed, with record daily output of 713,000 boed achieved on December 21.

In refining, our total production of oil products was 2.170 million barrels per day, up 2% from 2013. The volume processed also rose by 2%, due to our refineries’ strong operational performance. Oil product sales in the domestic market amounted to 2.4 million barrels per day, up 3% from 2013.

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