PETROBRAS: Company Hedges Around 15% Of Its Oil Output For 2018

(RTTNews) - The Brazilian state-owned oil company Petrobras hedged 128 million barrels - or around 15% - of its oil production scheduled for this year, the firm said Wednesday in a statement.

The transactions were carried out over February and March. Petrobras acquired put options with an average strike price of $65 per barrel through the end of 2018, and an average cost of US$3.48 per barrel.

"The transaction aims to shield part of the operating cash generation projected by the company for 2018, ensuring a minimum price level for the production volume under the transaction without, however, locking the price, should the average price of Brent in the year exceed the reference value", said Petrobras.

"Hedging is achieved in low price scenarios, yet profit from higher prices is nevertheless earned from hike scenarios in the price of Brent." the company added.

The state-owned oil company said it maintains its preference for exposure to the price cycle, but the implementation of an occasional derivative protection strategy may be applicable according to the business environment and prospects of accomplishing the business plan.