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Petrobras’ Barbassa promises return to debt targets

Mar 19, 2014

Petrobras' chief financial officer Almir Barbassa pledges to return debt to ebitda ratios to the target, as the firm set records in the bond markets

Petrobras, Brazil's biggest oil company, will return to targeted leverage limits in the next two years, chief financial officer Almir Barbassa has told LatinFinance. The firm's debt reached 3.52 times ebitda last year, above the firm's 2.5x target.

The Brazilian quasi-sovereign issued $8.5 billion in the bond market earlier this month, following a $5.17 billion equivalent bond issue in euros and sterling at the beginning of January - the biggest ever issuance in Europe by an emerging market company, according to Barbassa.

But Barbassa says the company is committed to bringing down debt. " Debt and leverage indicators must return to the limits that were specified in the 2013-2017 business and management plan, within 24 months," Barbassa told LatinFinance in the March/April edition.

Petrobras is required by law to invest billions of dollars in ultra-deep pre-salt reserves in Brazil, and hopes to double output by the end of the decade. But the firm's investment program has suffered delays. It has seen scant increase in production, and commensurate drags on cash-flow.

"Last year, we managed to put nine offshore units afloat, which will allow for an increase in output. As a result, 2014 is an inflection point in our curve," said Barbassa. "Thanks to the planned output increase, we intend to reach a positive free cash flow by 2016, even if we maintain the current high level of investments."

"Programs to increase operational efficiency and to optimize costs are going full steam ahead, which will contribute to getting better results. Our best defense in difficult times is precisely to develop projects with operational efficiency and low production costs, as we have discovered large volumes of oil in Brazil." LF

See also:

PETROBRAS: On troubled watersWhen it comes to pursuing its ambitious investment program, Petrobras remains undeterred by a mounting debt burden. Concern among equity investors, however, is growing



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