Brazil's state-led oil company, Petrobras , said on Friday it plans to cut as much as 15 billion reais ($7.5 billion) from operational costs next year, in a move aimed at reinstilling investor confidence and ending years of missed output targets.
The cuts are part of Petrobras' "Procop" cost-optimization program that will start in January.
Continue Reading Below
The plan is aimed at helping Chief Executive Maria das Gra��as Foster find ways to revive stagnant production and boost cash flow to pay for a $237 billion, five-year expansion, one of the world's largest corporate investment programs.
Despite heavy spending and the discovery of some of the world's largest offshore oil fields in the past five years, Petrobras has missed its annual production targets for a decade. Oil and gas output fell to a 22-month low in August.
Petrobras posted a 1.35 billion real loss, its first in 13 years, in the second quarter.
Preferred shares of Petrobras , the company's most widely traded class of stock, ended 1.1 percent lower at 22.25 reais on Friday, compared with a 1.4 percent drop in the Bovespa stock index . Shares of the company are up about 19 percent this year.
Details of the cost-cutting program will likely be unveiled in December, the company said in a securities filing.
The Procop program focuses on 63 billion reais ($31 billion) of Petrobras' 2011 budget considered the "manageable portion" of its cost of goods and operating expenses, the company said on Thursday.
The company said on Thursday it had identified 28 areas where costs and "optimizations" could be made.
The focus on operating costs comes as the company undertakes an ambitious investment plan, among the world's largest corporate capital spending programs, in order to tap its massive offshore oil reserves.
($1 = 2.02 Brazilian reais)
(Reporting by Jeb Blount and Sabrina Lorenzi; Editing by Lisa Von Ahn, Gerald E. McCormick, Leslie Gevirtz and Matthew Lewis)