Pedro Parente, the CEO of Petroleo Brasileiro SA Petrobras (ADR)(NYSE:PBR) expressed that it is important to be a low-cost producer as a growth in U.S. shale output is toppling the oil market and as societies plan to reduce carbon emissions, in part by lowering their dependency on fossil fuels.
For this, they count on the pre-salt manufacturing because the level of fields productivity is extremely high, so the expense to extract oil from the pre-salt is extremely low. So, they are talking about extraction expenses below $7 per barrel. Really, what they have to perform to be on the winner’s front is to work on the cost and lower them. Parente expressed that he anticipates oil prices to remain in the range of $55 to $65 a barrel over the medium term.
Parente gave his comments after his firm Petrobras posted a third-quarter profit that came below analysts’ projections. The firm blamed weak margins in non-recurring and refining charges for the lackluster performance. Petrobras reported a net profit of $81.1 million, far below the average projection of market experts.
The quarterly performance painted a picture of a firm that seems to be gradually turning around its balance sheet irrespective of many headwinds. Petrobras introduced a plan in June to assess fuel prices more frequently in an attempt to regain market share it lost by maintaining wholesale prices to retailers above international benchmarks.
Petrobras reduced debt by 11% from 2016 to $85.15 billion in the reported quarter but continues to be the world’s most indebted oil firm, a deep decline in oil prices, a massive corruption scandal and blemished by years of poor management. Parente took the helm of company last year. He had expressed that the firm focus would be on improving overall operations. What they have to do is to follow their strategic plan in the most disciplined way.