(Bloomberg) -- Petroleo Brasileiro SA’s new chief executive officer is close to overcoming his first major hurdle: getting auditors to approve financial results.
His next big task will be figuring out how to generate the cash needed to pay the oil industry’s largest debt load, while simultaneously developing massive offshore fields.
Petrobras, embroiled in a corruption scandal that has all but locked it out of credit markets, rallied 60 percent in the month through Wednesday, making it Brazil’s best stock, on the expectation the state-controlled oil company will release its long-delayed earnings report next week. Rio de Janeiro-based Petrobras said in a statement this week it will present audited results to the board for approval on April 22. Shares fell 4.3 percent Thursday to 12.76 reais at 11:16 a.m. in Sao Paulo.
Once approved by auditor PricewaterhouseCoopers LLP and the board, it will validate Brazilian President Dilma Rousseff’s decision to appoint state bankers -- CEO Aldemir Bendine and Chief Financial Officer Ivan Monteiro -- to run an oil company. Bendine took over the Petrobras helm after decades at state- controlled Banco do Brasil SA.
“In the short term, a major problem will be resolved,” said Adriano Pires, the head of Rio de Janeiro-based consultancy CBIE. “The government is selling this idea that after the results are published that all is resolved, but we know better. The fundamentals are still bad.”
Petrobras is slashing investments and reviewing production targets in the face of lower crude prices, a weaker currency that’s boosting debt costs and a supply chain that’s in disarray after the company halted new contracts with more than 20 contractors cited in the corruption investigation.
It’s that perfect storm, coupled with the delay in earnings, that has prevented Petrobras from tapping bond markets that helped it finance about $40 billion in capital expenditures in recent years. Payments on some of the company’s $135 billion in debt could be accelerated if audited annual earnings are not released by the end of May.
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Copyright 2016 Bloomberg News.
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