Brazil's state-controlled oil company Petrobras cut planned investment by 25 percent under a five-year plan to reduce its massive debt, the largest among global oil firms, and revive investor confidence after a sweeping corruption scandal.
Petróleo Brasileiro SA,, as the company is formally known, pledged as much as $74.1 billion in capital spending for the 2017-2021 period, according to a Tuesday securities filing. The total of planned investments, which is Petrobras' smallest since 2006, compares with the previous 2015-2019 plan at $98.4 billion.
The new spending blueprint also came fell short of $82.7 billion predicted on average by eight analysts surveyed by Thomson Reuters.
The company reaffirmed it would complete the sale of $15.1 billion assets for 2015-2016 period and said it plans to sell an additional $19.5 billion in assets in the 2017-2018 period.
The spending cuts are part of Chief Executive Officer Pedro Parente's drive to reduce the company's nearly $125 billion of debt.
"Lower capital spending makes absolute sense as the company aims at decreasing cash burn to accommodate interest and debt payments and to avoid stretching even further its balance sheet," Rodolfo de Angele, an analyst with JPMorgan Securities in Sao Paulo, said in a note to clients.
Parente's efforts are complicated by oil prices at some of their lowest levels in a decade, a corruption scandal that has undermined investor confidence and huge losses on money-losing refineries and domestic fuel subsidies.
Of the money budgeted for investment, 82 percent will go to exploration and production.
The company also said it plans to produce 2.77 million barrels a day of crude oil in Brazil in 2021, about the same amount the last company plan foresaw for 2020.
Total production of domestic and international oil and natural gas equivalent is expected to rise to an average of 3.41 million bpd in 2021, 19 percent more than the 2.84 million barrels a day Petrobras produced in August.
The business plan is based on a price of Brent crude oil averaging $48 a barrel in 2017 rising to $71 a barrel in 2021. The plan expects the U.S. dollar to be worth an average of 3.55 reais in 2017, strengthening to 3.71 reais in 2012.
(By Jeb Blount and Guillermo Parra-Bernal, Additional reporting by Roberto Samora in São Paulo)