Petrobras ended 2010 with a profit of R$35.2 billion, the highest in its history and the best result among publicly traded companies in Brazil. The performance − up 17% compared with the previous year's R$30 billion − reflected the expansion of the Brazilian economy in 2010, which grew 7.5% according to the Brazilian Institute of Geography and Statistics (IBGE); the surge in oil and natural gas production; the higher oil product sales volumes on the Brazilian market; and the recovery of the international oil prices. Domestic sales rose 13% compared to 2009, especially of diesel, gasoline, jet fuel, and natural gas.
The greater participation of domestic oil in feedstock processed, rising from 79%, in 2009, to 82%, in 2010, and the increased use of the refineries' rated capacity, averaging 93% in 2010, also tipped the result up. The historical financial performance coincided with operating records: the company ended the year producing 2.583 million barrels per day (bpd), 2% more than a year earlier.
In line with its strategy to attain sustainable integrated growth in the energy market, the company invested R$76.4 billion in 2010, up 8% over 2009. Emphasis was on oil exploration and production and on the Downstream, Gas & Power, Distribution and International areas.
Operational cash generation, measured by the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), was a record R$60.3 billion, 1% more than 2009 (R$59.5 billion). The EBITDA margin (EBITDA/net sales ratio) was 28%, down five percentage points compared to a year earlier.
The equity issuance, which provided R$120.2 billion in cash to Petrobras, contributed to reduce its level of leverage to 17% in 2010, down from 31% in the previous year. This has made the company even more robust to carry on with its investment program for the coming decade. The net debt/EBITDA ratio fell from 1.23, in 2009, to 1.03, in 2010. The net debt decreased to R$62.1 billion in 2010, from R$73.4 billion a year earlier.
Petrobras maintained its pricing policy, which seeks the long-term alignment of the domestic oil price to the international ones. On the domestic market, prices remained stable in 2010. In Reais, the oil products price on the domestic market stood at R$158.43 per barrel. Rising oil prices on international markets were partially offset by the 12% appreciation of the Real against the Dollar in the period.
Petrobras' trade balance was affected by fuel imports increases caused by the heated domestic market, which grew the demand for oil products. Oil and oil products exports in 2010 amounted to 697,000 bpd, similar to the 2009 mark, while oil and oil product imports rose 12%, to 615,000 bpd, up from 549,000 bpd in 2009. Oil products procurement abroad alone soared 96%, to 299,000 bpd, on account of the high demand. In 2010, net oil and oil products exports dropped to 82,000 bpd, and the financial balance declined to $1.534 billion as a result of the more expensive import prices. The financial balance calculation basis does not include LNG, natural gas, and nitrogenated products.
Due to the increased number of interventions in wells, the average drilling cost, not including government take, climbed 14% in 2010, to $10.03 per barrel of oil equivalent (boe). Excluding currency effects, the indicator plunges to 5%. Including government take, lifting costs were up 20% over 2009, closing the year at $24.64/boe. Disregarding the exchange rate, the increase was 16%, driven mainly by the higher average reference price of domestic crude oil.
In Real, the average drilling cost was R$17.58/boe, 2% more than in the previous year. Including government take, the cost was R$43.48, up 10% over a year earlier, again influenced by the 17% surge in the average reference price for domestic crude oil, in Real.
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