Brazilian state-run oil company Petróleo Brasileiro SA is implementing financial measures, including spending cuts and a proposal to postpone its dividend, to soften the impact of the new coronavirus pandemic and the recent oil price downturn on the business.
The company, also known as Petrobras, will lower planned investments for the year to $8.5 billion, from $12 billion, by deferring exploratory activities, well interconnections and construction of production and refining facilities, according to a March 26 news release.
Petrobras will accelerate the reduction of operating expenses, with an additional $2 billion decrease, in part by mothballing platforms in shallow water fields, which have a higher lifting cost per barrel. As a result of the low price environment, these assets started to have negative cash flow, the company said. Petrobras will also postpone new material contracts for 90 days and implement working capital optimizations.
The company also plans to reduce and postpone human resources spending of 2.4 Brazilian reais by laying off 50% of its employees on partial on-call in the next three months, as well as postponing overtime payment and 30% of the total monthly remuneration of the CEO, chief officers, executive managers and general managers, among other measures.
Petrobras will submit for shareholder approval a postponement of dividend payments amounting to 1.7 billion reais to Dec. 15.
The company also announced a disbursement of revolving credit lines amounting to $8 billion, which was encashed this week, and of two new lines amounting to 3.5 billion reais.
As a result of oversupply in foreign markets and lower global demand due to the coronavirus pandemic, Petrobras is slashing its oil production by 100,000 barrels per day by the end of March.
As of March 25, US$1 was equivalent to 5.04 Brazilian reais.