Petrobras Settlement With US Authorities To Be Around $1.6 Billion

The article discusses what the final settlement of Petrobras and US regulatory authorities can amount to, and how this could impact the state run company.

According to Reuters, Petroleo Brasileiro Petrobras SA will be imposed $1.6 billion to cover its United States related civil and criminal probes. The source also cited that the settlement might take up to 2 to 3 years. Two of the other Reuters sources also confirmed the statement identifying the settlement is several years away; the amount is expected to be huge.

All Reuters’ sources demanded to remain anonymous and specified that the authorities of United States are still involved in investigations. The settlement size is still in the beginning stages and is still to be indomitable.

Last year, Petrobras was blamed of inflating the contract’s value with a number of engineering firms. The surplus amount was then used to bribe the politicians and prior company officials. The IS regulatory body, including the United States Department of Justice and the Security & Exchange Commission, began investigations in November 2014 against the Brazilian oil giant.

Petrobras is the biggest foreign company on the New York State Exchange and owns an oil refinery in Texas. The Annual Depository Receipts of the company since last year have fallen more than 64%. United States therefore have lost large sum of their investment in the Brazilian company.

However, the authorities of Brazil was not able to prove any sort of corruption in Petrobras, the Brazilian giant can still be find guilty to maintain accurate and proper financial records.

Petroleo Brasileiro Petrobras calls itself a victim of this outrage. The market capitalization of the company has fallen by more than $110 billion and has now reached $40 billion from $150 billion last year. The company in its deferred earnings report took a $16.8 billion charge contrary to its earnings, while over 50% decline in oil prices impacts the company earnings.

If the penalty on the world’s most indebted energy firm is imposed, it may be a major blow t=for the company. As mentioned earlier, the company is facing serious problems and is experiencing major liquidity issues. This might be the biggest settlement with United States SEC and DoJ. Earlier Siemens was penalized by U.S. regulatory authorities for around $800 billion for its immersion in a bribery scandal.

Petrobras stock was down 1.52% and stood at $5.83 at market close on Tuesday August 18. The Rio de Janeiro based company has 52 weeks high and low of $5.96 and $5.64, respectively. The company has current market capitalization of $36.50 billion.