In 2011, Brazil's Petrobras (NYSE: PBR) has over-promised and under-delivered, and most investors and analysts seem to agree with that statement. A month ago we posted an article here about how inefficient the company can be: too much investment for below-average production volumes.
Here are some of the issues the company experienced in 2011:
1. Production
The state-owned company frustrated investors with its production output, which will close this year below production forecast for the third consecutive year. Between January and September, Petrobras produced little more than 2 million barrels a day, the same pace of 2010. In other words, even though the company invested R$50B in this 9-month period, the output stayed the same.
2. Campo de Golfinho: no luck
One of the company's bets for 2011, the Campo de Golfinho exploration area, did not yield what was expected - actually, it produces more water than oil. Up to October, the field produced only about 26,000 barrels per day, less than 10% of the estimated 300,000.
3. Downtime and outages
The large number of unscheduled maintenance shutdowns also hurt Petrobras this year. Only in the third quarter, Petrobras has failed to produce 52,000 barrels per day with scheduled and unscheduled downtime.
Solution for 2012? Speed up, damn it!
According toExame magazine, Petrobras will have to accelerate the pace in 2012 if it wants to calm down investors. Its biggest challenge is to increase the pace of production in the short term. An output growth rate that can satisfy investors would be somewhere between 4% and 5%. But if the past is any reference, the market has reasons to remain skeptical about seeing any big shift in the company's operations next year.
After all, over-promising and under-delivering seems to be the company's motto so far.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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