President of Petrobras (PETR3 PETR4) defends market prices

Sworn in as the new president of Petrobras (PETR3;PETR4), José Mauro Coelho said this Thursday (14th), in a speech, that “the practice of market prices is a necessary condition for the creation of a competitive environment”.

In this way, according to him, it will be possible to “attract investments and expand infrastructure to guarantee supply”. Coelho said there are “big challenges” to guarantee supplies.

“Although we are self-sufficient and oil exporters, we are importers of various fuels, which imposes great challenges on market agents and the federal government to guarantee supply.”

Even defending the practice of market prices (when the value of fuels fluctuates according to the parity of a barrel of oil in the international market), he considered that the company has “social responsibility”.

According to him, this will be achieved through investments in socio-environmental projects and human rights programs.

Petrobras Management

In his speech, Coelho praised the company’s current management model implemented since 2017, during the government of former president Michel Temer, and maintained under Jair Bolsonaro since 2019.

He pointed out that in 2014 the company’s gross debt was around US$ 160 billion, “one of the largest in the corporate world”. “Today the debt is less than $60 billion and the lower debt makes room for new investment,” he recalled.

According to the executive, his intention is to improve communication, as a way of reinforcing “the importance that Petrobras has for the Brazilian people”.

Additionally, Coelho stated that, during his term, the company will have greater interaction with Congress and the Executive.

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Divestments

The new president of Petrobras also stressed that the divestments in mature fields will continue, defending the company’s focus on extraction and production in deep and ultra-deep waters.

“The Campos basin remains strategic for Petrobras and we will continue to seek reserves that make sense for the company’s vision of the future. Highlight for the Sergipe and Alagoas basins, of deep water”, he said.

“We will dedicate ourselves to reducing extraction costs, improving our competitiveness”, he added.

more production

In the speech, he highlighted that the company will increase its production by 500 thousand barrels or equivalent per day until 2027 and that this feat was only possible due to the management model imposed from 2017, which focused on exploration, leaving other arms aside.

“This allowed substantial investments to be made in the pre-salt region, with a consequent increase in oil and natural gas production,” he commented.

“We will continue to maximize the value of our portfolio with a focus on deepwater and ultra-deepwater assets.”

No route detours

In a report to clients distributed after the inauguration, Morgan Stanley wrote that it does not see “major deviations” from Petrobras’ current strategic plan.

According to the document, the new CEO emphasized that the company will continue to focus on exploration and production projects in deep and ultra-deep waters, followed by divestments in mature fields and refining projects.

“Coelho also mentioned that market prices are necessary to allow investments and guarantee the supply of final products to consumers”, highlighted Morgan.

However, the report ponders, “we remain on the sidelines of Petrobras’ actions, as we believe that the noise related to politics and the next electoral cycle will matter more than the fundamentals at this moment”.

Morgan Stanley’s recommendation is equal weight (performance in line with the market average), with a target price of the ADRs of US$ 14.00.

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