Net income fell to $3.15 billion, the state-owned oil company known as PDVSA said today in a statement posted on its Web site. Crude exports fell 4.9 percent to 2.75 million barrels per day, while production of crude and natural gas liquids dropped 5.4 percent to 3.22 million barrels, the company said.
PDVSA froze workers’ wages and cut managers’ pay by 20 percent in April after oil prices plunged. The company has sold $6.3 billion in bonds this year to cover shortfalls and to pay down debts with service suppliers. Oil prices fell 50 percent at the end of the first half, compared with a year earlier.
“PDVSA’s numbers not only reflect a lower oil price in revenues compared to a year earlier, but most importantly reflect a company that is struggling with production,” Patrick Esteruelas, a Latin America analyst at Eurasia Group in New York, said today in a phone interview.
Venezuela, one of OPEC’s 12 members, agreed to cut output by more than 350,000 barrels per day this year to stem price declines after the economic crisis curbed demand for oil.
Venezuela’s oil sector shrank 9.5 percent in the third quarter of this year, as part of a 4.5 percent contraction in the economy, dragging the country into its first recession since a two-month oil strike crippled the economy in 2003.
Venezuelan Economy
The economy may contract 2.2 percent this year and grow a “modest” 0.5 percent in 2010, Finance Minister Ali Rodriguez said on Nov. 17.
“This drop is mainly due to the fall of prices for Venezuelan oil exports and the production cuts in compliance with the decisions made by OPEC at the end of 2008,” PDVSA said about the profit declines in today’s earnings statement.
Revenue in the first half of the year fell 52 percent to $32.5 billion and cash transfers to the government dropped 65 percent to $7.07 billion, the company said.
The company’s contributions to government-run social programs including health clinics, subsidized grocery stores and public schools plunged 50 percent to $642 million, according to the statement.
PDVSA didn’t transfer any money to an off-budget development fund, known as Fonden, in the first half of the year after providing $5.85 billion a year earlier.
Total Assets
The oil company’s total assets rose 4 percent to $137.2 billion, mostly due to the nationalizations of oil services companies this year, according to the statement.
Debt to suppliers rose to $8.15 billion at the end of June, up 7.8 percent from the end of last year.
PDVSA President Rafael Ramirez said on Nov. 4 that the oil company plans to sell more dollar-denominated bonds before yearend. Ramirez is also the country’s oil minister.
The company’s debt to suppliers, declining output in conventional fields and a drop in active oil rigs highlight diminishing profits and a growing cash flow problem for the company, according to Esteruelas.
Venezuelan President Hugo Chavez, who replaced PDVSA’s board of directors and fired more than 18,000 workers after an oil strike in 2003, expropriated more than 70 oil service companies this year including assets of Houston-based Exterran Holdings Inc. and Tulsa, Oklahoma-based Williams Cos.
Helmerich & Payne
Helmerich & Payne Inc., a U.S. drilling company, said today in a statement that it has received $32 million in payments from PDVSA and that about $73 million remains outstanding. All 11 rigs that operated in the country are currently idle.
PDVSA´s total debt climbed 7.4 percent to $16.2 billion in the first half, or 12 percent of total assets. PDVSA sold $7.5 billion of bonds in 2007, the largest corporate bond sale ever in Latin America.
“PDVSA’s growing debt is a source of concern,” Esteruelas said. “As much as PDVSA still has a manageable debt load, the rate at which they’re increasing their exposure should begin to raise some concerns.”
Bloomberg - By Daniel Cancel
To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net.




















