SAO PAULO - Brazil's state oil company Petroleo Brasileiro S/A on Thursday said it would spend more over 2012 to 2016, but will produce less than it had previously forecasted.
Petrobras, as the company is also known, is increasing its investments over five years to $236.5 billion, up 5% from the previous investment plan--one of the largest corporate investment plans in the world.
But the company, which is developing hard-to-tap oil and gas reserves off the country's southeast coast that are the largest discovered anywhere in the last 20 years, has slashed estimates for output.
By 2020, Petrobras now aims to be producing a total of 5.7 million barrels a day of oil and gas world-wide, down 11% from its previous estimate of 6.4 million barrels of oil and gas. The company expects to be producing 2.5 million barrels per day of oil and natural-gas liquids in Brazil in 2016, down nearly 30% from its previous target of 3.07 million barrels per day in 2015.
"Petrobras's production has been disappointing and is below what has been projected for the last two years," said Erick Scott, an analyst at Sao Paulo's SLW brokerage. "The reason for that, according to Petrobras, is because of stoppages for maintenance. This performance below what's expected explains in part the weak performance of the company's shares."
Petrobras's preferred shares are down 25% over the last three months, while the Ibovespa blue-chip index is down 2% over the same period. The shares were 2.1% lower on Thursday, trading at BRL18.49, while the Ibovespa was flat.
In the latest five-year investment plan, which is revised annually, the largest slice of the spending, 60%, will go to exploration and production, the company said in a statement. The company said it wants to "recover the production curve for oil and natural gas" and will prioritize its efforts in Brazil.
Some analysts expressed concern that in the plan, the firm distinguished between projects that are being implemented, and those that are being evaluated. Investments for the former total $208.7 billion, while the projects under evaluation make up the remainder of the investment budget.
One analyst, who asked not to be identified, said in a note that he wondered how Petrobras's management would try to pitch this to investors.
"We have the impression that they will be talking about $208.7 billion...as the real [investment] figure," the analyst said. If so, that would be a reduction of about 7% from the previous investment plan.
The company said it has budgeted Brent crude oil prices at between $90 to $100 a barrel for the next five years between 2012 and 2016 and aims to borrow $16 billion to $18 billion per year during the period.
The company said it has increased its goal for raising revenues from asset sales to $14.8 billion, up from $13.6 billion previously, and reiterated that the sales will focus on overseas assets.
Copyright (c) 2012 Dow Jones & Company, Inc.
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