Boston, MA 10/14/2013 (wallstreetpr) – Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), the world’s 10th largest business has little to show for its towering status these days. This Brazilian state-owned oil company is ailing and there have been several attempts to add more life to its wilting fortunes in the oil and gas industry.
The troubles facing PBR are linked to increased state regulatory in almost all business sectors. Brazil has assumed more restrictive policies in a bid to stem inflation rise beyond the current 6%. But these policies are hurting businesses like PBR which has now announced $236 billion investment to span 2013 to 2017.
The company has also increased its production by 50% in a bid to raise revenue and improve performance at a time when it’s dealing with rise in oil price as well as losses.
PBR has lost its status as the most valued brand in the Latin America region. The company has been a worrying steady decline in market capitalization. Once holding over $200 billion in market cap justless than three years ago, today PBR clings to $101.81 billion in market cap.
Whether PBR regains its lost ground next year as the CEO has announced following the installation of nine new production units so that it adds one more million barrels a day, remains to be seen. But the company’s management acknowledges that “from 2011 to 2013”, it has “had problems” to deal with in the oil market. The rising oil prices make it difficult for the company because it buys oil at a price higher than it can sell in its markets.
By 2020, PBR has a target production goal of 4.2 billion barrels daily. This can mean a lot of revenue for the company and earning to investors, but it is subject to how the Brazilian government behaves between now and then. If policy status quo prevails then very little can be expected in PBR rebound.
