Using words such as never, forever and other permanent periods comes with a huge risk. Either way, it was puzzling to see so much caution around the production numbers for 2015 and still to see shares rise in New York trading. Petroleo Brasileiro S.A. (NYSE: PBR), or Petrobras, showed in an SEC filing on Monday that its average oil and natural gas production amounted to 2.47 million barrels of oil equivalent per day (boed) in Brazil and 183,000 barrels per day (bpd) abroad, to 2.65 million barrels. Actual oil production averaged 2 million bpd in Brazil and 92,000 bpd abroad.
Perhaps the biggest driver is not that Petrobras will be losing less money by having lower production. News from the weekend showed that Petrobras was getting up to $10 billion in loans from China. That is part of an oil supply pact and it should cover most debt due in 2016.
At the current time, it is very difficult to find analysts on Wall Street with overly positive ratings in the oil patch. It is even harder to find positive analysts covering Petrobras, as they have been tricked into evaluating this as an oil company rather a forced-financial loss outfit under control of the Brazilian government.
Merrill Lynch has only a Neutral rating on Petrobras. Again, it’s hard to find positive analyst calls here. In fact, it is hard to find many analyst reports at all any longer. The firm pointed out that domestic crude oil production was down 8.3% month over month to 2.0 million bpd. The firm said that Petrobras started off 2016 with weak output numbers, which reversed an improvement in December. Its total domestic oil and gas output of 2.65 million barrels per day was 7.1% lower than in December.
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