Dallas, Texas 10/15/2013 (Financialstrend) – Oil and gas major Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) is a public sector undertaking of the Brazilian government. Investors in the stock which has 6.2 billion shares outstanding were jarred when the ratings agency downgraded the company’s debt rating on October 4, sighting deteriorating financial and operating conditions of the company.
The oil firm mandarins then swung into action to limit any possible damage to investor confidence in their stock. Petrobras CEO Maria das Gracas Foster issued press statements designed to shore up the investor sentiments. The CEO explained that PBR is implementing steps to substantially increase its oil and gas output over the next few months. They have determined that the increased production will help offset the difficult cash flow crunch due to subdued pricing for crude oil in the international markets. The oil major which accounts for close to 80% of Brazil’s oil output is also hoping for a helping hand from the Brazilian government. It is hoping that the domestic price of fuel will be upped in the near future and believes this will allow enough elbow room for the firm to better its financial operations over the next few months.
CEO Foster has acknowledged that the downgrade by the ratings agency is being regarded as a red flag by PBR and has stated their determination to take incremental steps which will improve the situation. To buttress these claims PBR announced the completion of a new production platform on October 6. The P-55 platform has the potential to churn out close to 180 K of barrels per day of oil is expected to commence production activities over the next forth night.
Over the past month the stock of this Brazilian behemoth with annual sales of $143 billion has appreciated by close to 4.1%. At end of trading on October 14, share price of PBR had settled at $15.7.