Brazil’s PETROLEO BRASIL/ADR (NYSE:PBR) has announced that its talks with the government are at an advanced stage to resolve a long standing dispute over offshore oil blocks. The company has however said that no conclusion has been reached yet.
Revising the 2010 “transfer of rights” contract
The company and the government are in talks to revise the terms of the 2010 “transfer of rights” contract. The contract, the government issued exchanged exploratory rights over subsalt oil exploration areas oil in return for Petrobras equity.
In a statement made by the company, the negotiations are aimed reaching an agreement to settle the matter. Commenting on the matter, Eliseu Padilha, the presidential chief of staff said that the two parties are likely to close the deal in a week’s time.
However, in another statement issued by the Brazilian Finance Ministry, the agreement reached by the two parties will come after consultations with the country’s audit court plus its ministries of energy, mines and planning. This is likely to delay the final deal.
First quarter results
In other developments, the company has recorded a 57% raise its profits for the first quarter of 2018. The company has attributed the raise to increase in oil prices and sale of assets. The announced has raised hopes that the oil company may be going over the massive corruption scandal.
The company recorded a net profit of $1.96 billion in the first quarter of 2018. This is the company’s biggest profit announced in the last five years as it continues to cut on its debt.
Petrobras recorded 25.669 billion reais in Adjusted earnings before amortization, depreciation and tax. This represents a 2% increase from what was reported the same period the previous financial year.
The company says the results represent the gains that it has made under Pedro Parente, the Chief Executive. Petrobras is coming out of fallout caused by an investigation which started in 2014. The probe involved alleged corruption of Petrobras officials and politicians to win inflated contracts.
Petrobras’ share price has been dropping because of the scandal. The scandal also let to rise in debt as well as a series of lawsuits.