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Editorial

 

 

 

Oliver L Campbell :PDVSA'S
financial results for Jan/Jun 2011


 

 

PDVSA has not yet published its financial results for the first semester of 2011 on its website, but they have just become available as information supporting the offer of 9% senior notes due 2021. Just why PDVSA has not officially published its results is a mystery since I learnt from a reliable source they have been ready since August.

Both Petrobras and Pemex published their results in August and there is no good reason why a company the size of PDVSA, with 100,000 employees, should not have done the same.

I have compared the first semester of 2011 with the whole year 2010 since I believe this is more meaningful than comparing it with the first semester of 2010. Oil prices have shot up in 2011 and what happened in the first semester of 2010 is out of date.

Readers will recall I have stated on several occasions that in a state company the net profit is of little significance and one should look at the total national take. This amounted to $30.2 billion in the first six months in comparison with $24.6 billion in the year 2010. This is good news for the country since the national take for the whole year 2011 could exceed $60.0 billion.

 

Petróleos de Venezuela S.A.
Statement of Net Income
(Figures in millions of US$)

 

 

Jan/Jun

2011

Year

2010

Note

Sales abroad

62,589

92,744

1

Sales in Venezuela

1,039

1,400

 

Income from services

507

785

 

Sub-total

64,135

94,929

 

Less purchases of oil

(20,325)

( 36,849 )

2

Sales less purchases of oil

43,810

58,080

 

Equity in earnings of associated companies (loss)

 

3

 

(184)

 

 

Discontinued operation (loss)

1,343

(558)

3

Other expenses

(30)

(1,950)

 

Total income

45,126

55,388

 

 

 

 

 

Operating costs

6,628

11,892

4

Exploration costs

82

147

 

Selling, administrative and general costs

1,786

3,729

 

Financial income

(107)

(419)

 

Financial costs

2,102

8,810

5

Depreciation, depletion and asset impairment

 

3,140

 

6,037

 

Income taxes abroad

-

(223)

 

Total costs

13,631

29,973

 

 

 

 

 

Income before royalties, contributions for social development and income taxes

 

 

31,495

 

 

25,415

 

Royalties*

8,539

11,218

1

Contribution for housing project*

2,387

-

6

Contribution for social development*

15,776

6,923

7

Income before income tax

4,793

7,274

 

Venezuelan income tax*

607

4,072

8

Net income

4,186

3,202

 

Less minority interests

(1,257)

(855)

9

Net income belonging to the shareholder*

 

2,929

 

2,347

 

National take*

30,238

24,560

 

 

 

 

 

National crude oil production b/d

2,986,000

2,975,000

10

Volume of oil exported b/d

2,519,000

2,415,000

 

Crude

1,947,000

1,911,000

 

Products

572,000

504,000

 

Average export price per barrel

$97.38

$72.18

 

 

 

 

Long term debt in millions US$

31,226

24,950

11

Capital expenditure in millions US$

5,772

12,858

12

 

Notes:

1) The average export price of oil in 2011 was 35% higher than in 2010.

2) CITGO had to pay more for its purchase of crude oil and products.

3) The profit arose mainly from the sale of Ruhr Oel.

4) Costs went up due to higher charges for labour and third party services

5) Large losses were incurred in 2010 on the sale of currency to the Central Bank.

6) This was a new contribution in respect of "Gran Misión Vivienda Venezuela."

7) A higher pre-tax profit allowed a greater contribution to be made.

8) In 2010 an increase in taxable income arose from changes to the exchange rate in January that year.

9) The minority associates also benefitted from the increase in oil prices.

10) The production figures quoted by PDVSA have been questioned by some experts.

11) The long-term debt-to-equity ratio has gone up from 33% at end 2010 to 39% at the end of June 2011 which is now on the high side.

12) The expenditure in 2011 of $5.8 billion seems unduly low when compared with $18.2 billion for social development projects.

 

It is incredible that PDVSA has made a provision for litigation and claims of only $1.5 billion when the total of claims under arbitration exceeds $30.0 billion. It is certain the amounts awarded to claimants will not reach this figure, but a provision of some $10,000 million would have been commercially prudent. It is most surprising the external auditors have not insisted on a higher provision being made.


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Oliver L Campbell , MBA, DipM, FCCA, ACMA, MCIM was born in El Callao in 1931 where his father worked in the gold mining industry. He spent the WWII years in England, returning to Venezuela in 1953 to work with Shell de Venezuela (CSV), later as Finance Coordinator at Petroleos de Venezuela (PDVSA). In 1982 he returned to the UK with his family and retired early in 2002. Petroleumworld does not necessarily share these views.


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Petroleumworld News 12/12/2011

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