Petrobras turnaround could yield first dividend in years in 2017

NEW YORK: Brazil's state-controlled oil company Petrobras will pay its first shareholder dividend in three years if the company turns a profit in 2017, said Chief Executive Officer Pedro Parente.

Parente took the helm of the world’s most indebted energy company a year ago and said he is ahead of schedule with an aggressive restructuring plan to cut its $95 billion debt, reduce costs and sell assets.

Petroleo Brasileiro, or Petrobras, made a record operating profit in the first quarter and if that continues throughout the year, chances are good that the firm will pay a dividend, Parente told Reuters in an interview in New York.

“We really are keen to start paying dividends as fast as we can,” he said. “If at the end of the year I have a profit, we would be more than happy to start paying dividends.”

Petrobras’ bylaws say that shareholders are entitled to dividends if the company turns a profit, pending approval from the board and considering factors such as cash requirements and investment opportunities. Company executives have in the past said Petrobras is not obliged to pay dividends on its profits.

Rising output in Brazil’s prodigious offshore fields is helping Parente turn Petrobras around from its nadir in 2014, when the firm last paid dividends.

Then, investors lost confidence as Petrobras sank into a political and financial maelstrom with the oil price fall reducing its revenues, a corruption scandal swamping the company and losses mounting due to government fuel subsidies.

Ratings firms downgraded Petrobras’ creditworthiness, landing the firm with a huge interest bill to service its debt, which then stood at around $130 billion, accumulated to finance development of massive reserves in Brazil's deep Atlantic waters.