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Petrobras planning further divestitures as it looks to focus on upstream sector

Already almost $13 billion into a divestment plan that began in January, Petróleo Brasileiro SA is still looking to sell more assets and investments as it looks to establish itself as an asset-heavy oil and gas exploration and production company, executives said the company's second-quarter earnings call.

The Brazilian state-run oil major is planning to sell more stake in the fuel distribution firm Petrobras Distribuidora SA, CEO Roberto Castello Branco said Aug. 2.

"We still have a 37.5% stake in [Petrobras Distribuidora's] capital, which in the future we intend to sell partially or wholly," Branco said.

However, an executive said during the second-quarter earnings call that the sale of the shares might be until 2020.

In July, the company closed the secondary public offering for its fuel distribution unit, which raised 9.63 billion Brazilian reais. Petrobras initially had a 71.25% stake in the distribution firm.

Petrobras is also considering the sale of its stake in petrochemicals firm Braskem SA, in which it holds a 36.22% interest.

In addition, Petrobras is still working on selling eight refineries, deepwater fields and production fields, with target completion in 2021, Chief Financial and Investor Relations Officer Andrea Marques De Almeida said during the call.

"We almost sold all the assets that we put in the market and it is a very good competitiveness," she said.

Branco said Petrobras is realigning itself to be a world-class asset-heavy company in oil and gas exploration and production and an asset-light company in midstream operations.

The CEO said the company is committed to completely disengage from the natural gas transportation and distribution business and to reduce purchases to less than 50%.

Petrobras is working to eliminate its participation in the gas distribution concessions MontevideoGas SA and Conecta SA that consumed $200 million in 15 years, Branco said, after Petrobras completed an agreement with the Uruguayan government to return the concessions.

So far in 2019, the firm sold seven assets for a total of $12.78 billion.

Petrobras also revised its capital expenditures for the year to a range of $10 billion to $11 billion from the initial allocation of $16 billion. The amount does not include estimates to be invested in exploration block bid rounds in the second half of the year.

The company produced an average of 2.63 million barrels of oil equivalent per day during the second quarter, down from 2.66 million boe/d in the prior-year period.

Petrobras reported a net income of $4.81 billion, or 36 cents per share, for the second quarter, up from $2.79 billion, or 22 cents per share, a year earlier.

As of Aug. 1, US$1 was equivalent to 3.82 Brazilian reais.