Clarification on Foreign Exchange Exposure and Derivatives
Posted on October 11, 2008 – 1:37 pm | by oilandgaspress.com
(Rio de Janeiro, October 10 2008) – PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA, BCBA: APBR/APBRA], a Brazilian international energy company, clarifies that it does not have any position in the foreign exchange derivatives market that may lead to gain or loss.
Petrobras, a company with international performance, has assets and liabilities abroad that are subject to exchange variations. On 06/30/2008, the net asset balance subject to exchange variations was R$7.7 billion, R$26.9 billion in assets and R$18.9 billion in liabilities, as stated on page 34 of the Financial Market Report, and on page 120 of the 2Q08 Quarterly Statement, indicating that in a scenario of a higher FX rate (dollar appreciation), the Company tends to realize gains on exchange variations.
The Petrobras Distribuidora subsidiary holds foreign exchange hedge agreements to cover aviation fuel marketing for the value of $120 million and currently standing negative at R$51 million. This financial loss in the derivatives market tends to be compensated by the increased revenues in aviation fuel sales at a higher exchange rate.
Petrobras and its Subsidiaries abroad carry out operations with oil derivatives and derivates at the New York Stock Exchange (NYMEX), in the London Stock Exchange (ICE) and in the Over the Counter market aiming at protecting and adding value to its commercial operations abroad. The volume of derivatives that is negotiated is below 35% of the entire cargos volumes that Petrobras and its Subsidiaries move abroad, and the accumulated result in 2008, market to market on October 09, stood negative at approximately $40 million.
These operations are carried out pursuant to the Corporate Governance Guidelines and are in compliance with the company’s risk policy.
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Tags: derivatives, Exposure, Foreign Exchange
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