RIO DE JANEIRO, May 14 (Reuters) – Brazil’s Petrobras took a 65.3 billion real ($11.2 billion) impairment on its exploration and production assets on Thursday, warning investors that changes in consumer behavior resulting from the coronavirus pandemic were likely permanent.
The impairment led Petroleo Brasileiro SA PETR4.SA, as the firm is formally known, to book a first-quarter net loss of 48.5 billion reais. The company wrote off the entire value of its shallow-water assets, and said it did not expect to resume production at six high-cost production assets that are currently for sale.
Total impairments came to 57.6 billion reais for its deepwater assets, including the massive Marlim Sul oilfield, and 6.6 billion reais at its shallow-water fields. Other unspecified assets comprised the remaining 1.1 billion reais of writedowns.
The impairment served as a warning by the state-run oil giant that the oil market may never recover following the novel coronavirus pandemic, even as some major economies are already attempting to tiptoe back to normality following widespread lockdowns.