(Recasts with comments from executives on capex, payroll,
details of output)
By Marta Nogueira
RIO DE JANEIRO May 12 Petroleo Brasileiro SA
has room to improve the efficiency of its investments and
payroll spending, executives said on Friday, underscoring that a
record first-quarter operating profit was just an early sign of
what their turnaround plan can accomplish.
Preferred shares of the company, known as Petrobras
, jumped as much as 5 percent to an 11-week high of
15.58 reais in early trading after it released first-quarter
results late on Thursday.
Rising offshore output, sales of non-essential assets and
rigorous cost controls helped Petrobras to beat profit forecasts
and generate the most earnings before interest, taxes,
depreciation and amortization in its history.
"It's great that the results are appearing, but we won't
relax our efforts," said Nelson Luiz Costa Silva, head of
strategy at Petrobras. "We're renegotiating contracts and
adopting all the techniques we can to reduce costs and capital
Petrobras cut its 2017 capital spending forecast by $3
billion to $17 billion, citing licensing delays, more efficient
investments and postponed payment on some contracts.
The company has turned more wary about contracting new drill
ships, for example, given the improving efficiency of its
exploration and production activity, executives said.
Those efficiency improvements, along with the ramp-up of oil
fields in the promising presalt regions off Brazil's coast,
boosted crude production 10 percent from a year ago, to 2.182
million barrels per day in the quarter. Strong output and weak
domestic demand boosted exports 72 percent, to 782,000 bpd.
Executives said ongoing efforts to reduce some employees'
workdays should yield 300-400 million reais ($96 million - 128
million) of annual savings, for example. About half the
employees given the option of shorter workdays have accepted and
the acceptance rate is expected to reach 80 percent within a
($1 = 3.12 reais)
(Reporting by Marta Nogueira; Additional reporting by Brad
Haynes and Roberto Samora in Sao Paulo; Editing by Lisa Von Ahn
and Dan Grebler)