Petrobras Plans $34B in Dividends by 2024 | Rigzone
Simon Casey and Sabrina Valle
Thursday, December 05, 2019
Petrobras plans to pay its shareholders $34 billion in dividends over the next five years as it cuts debt and sells assets to shore up its finances.
(Bloomberg) — Petroleo Brasileiro SA plans to pay its shareholders $34 billion in dividends over the next five years as it cuts debt and sells assets to shore up its finances, Chief Executive Officer Roberto Castello Branco said.
The plan is a major shift for the state-controlled oil producer that had kept payouts to investors at or close to the bare minimum required by law in Brazil since 2018, after suspending them altogether in 2015 as it grappled with an oil industry downturn and a massive corruption probe. Distribution for 2018 was about $1.7 billion.
The resumption of generous dividends the company was once known for is the latest step by Castello Branco to win back investors. The executive appointed by Brazilian President Jair Bolsonaro has been slashing costs, while also boosting the company’s crude output, as he focuses on tapping the company’s giant deep-water reserves.
The producer, once the most indebted company in the industry, has reduced net debt to about $75 billion at the end of the third quarter, from around $95 billion at the end of the first. Castello Branco took office in January.
The company has turned a profit since 2018, after four years in the red. Petrobras needed more than five years of its cash generation to pay its debt when it was downgraded to junk in 2015.
Petrobras should pay $3 billion in dividends next year, and raise the amount after 2021, when a reduction of gross debt to $60 billion triggers an internal rule for higher payments, Castello Branco said during a news conference in New York.
Petrobras has a target to reduce its debt to 1.5 times earnings before certain items by the end of 2020.
More from Petrobras’s investor day in New York
To contact the reporters on this story:
Simon Casey in New York at email@example.com;
Sabrina Valle in Rio de Janeiro at firstname.lastname@example.org
To contact the editors responsible for this story:
Simon Casey at email@example.com
Carlos Caminada, Millie Munshi
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
MORE FROM THIS AUTHOR