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Petrobras (PBR) Slashes 2021-2025 CapEx Guidance Amid Coronavirus

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Petroleo Brasileiro S.A. or Petrobras (PBR - Free Report) recently curbed its capital spending guidance for the next five years in response to the coronavirus-induced weak market scenario. The company lowered its five-year capital spending guidance to $55 billion, indicating a 27% decline from the year-ago five-year capital budget forecast.

Further, Petrobras anticipates spending approximately $46 billion on exploration and production between 2021 and 2025 — 70% on pre-salt assets — compared with $64 billion projected a year ago. The company is planning to limit its spending approval and is now targeting projects that will produce break-even results when oil price is trending at $35 per barrel.

As the company focuses on regaining its financial footing by selling assets and curtailing debt load, it assumes its gross debt to be $67 billion for 2021 and intends to lower the same to $60 billion in 2022.

Coronavirus-induced tepid demand and increased asset sales indicate short-term decline in production for the company. Petrobras projects 2021 output at 2.23 thousand barrels per day, lower than 2.28 thousand barrels per day expected in 2020.

Further, the company announced plans to lessen the total greenhouse gas emissions from its operations by 25% within 2030. 

Company Profile

Petrobras is the largest integrated energy firm in Brazil and one of the biggest in Latin America. The company’s activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks. The operations also include refining, processing, trading and transportation of oil and oil products, natural gas and other fluid hydrocarbons apart from other energy-related operations.

Zacks Rank & Key Picks

Petrobras currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are CNOOC Limited (CEO - Free Report) , Noble Corporation (NE - Free Report) and Transocean Ltd. (RIG - Free Report) , each presently holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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