PDVSA financials: pena ajena (updated)

There was a time when I took some pleasure in finding concealed admissions of weakness hidden within the rosy financial results of Venezuela’s state oil company. Today, I read them and I am just embarrassed. Writing about these numbers is like watching the end of bullfight. The once mighty beast is crippled, bleeding and it seems in bad taste to stare.

You can find plenty of articles about sales, production volumes, and “net income,” whatever that means for a company like this. Let me just point out a couple tables that show what’s going on:

Accounts payable

Yes that’s $21 billion with a B-sting in accounts payable to suppliers.

Dividends

Let’s be nice and ignore the incompetent translation. (Let’s not fall into a recursive spiral of passive-aggressive apophasis, either.) Almost every paragraph brings a new groan.

The first: the ongoing fiction that Petrocaribe and other cheap oil deals are liabilities of the Republic, and not of PDVSA, appears to be well-dead. “Dividends were declared for $10,000 million, paid by offsetting with account receivables from the Republic” means that the national state simply eliminated $10 billion worth of debt to the state oil company. That that came from “the sale of crude oil and oil products in the framework of contracts and agreements subscribed with the governments of other countries.” (If you follow the reference to note 8-b, it is just a description of Petrocaribe. It says oil supply under that framework has dropped to 377,000 bbl/day in 2013 from 463,000 in 2011.) This could set up some uncomfortable political situations in coming years. Some Caribbean countries, like Jamaica, have built up big debts to this program. PDVSA managers are going to be stuck playing the heavy, collecting debts from impoverished nations. It means that Venezuela as a state will avoid being in such an embarrassing position.

Under “Non-controlling interests,” we get:

On December 30, 2013, PDVSA sold to BCV 40% of the nominal value of its equity interest in Empresa Nacional Aurífera, S.A. (ENA) for $12,000 million, recording an account receivable from BCV.

BCV is the country’s central bank.

This was the second-biggest mining M&A transaction in the world last year, after the $37 billion merger of Glencore and Xstrata. Freeport McMoRan bought Plains Exploration for $6 billion. BCV bought 40% of ENA for $12 billion. Yup, sounds like a true arm’s-length transaction.

And there is a bunch of blah blah blah about “mixed companies” and their dividends. Translated into human talk, this is referring to joint ventures in which private companies, and state companies from other countries, are able to invest in oilfields in Venezuela. The bottom line is later in the report:

Debt to joint-venture partners is up 220 percent in 24 months. Good news, the rate of increase has slowed. I’m sure that will keep the nice people at Chevron HQ all happy.

Finally, just one odd item. Despite devaluations of the bolivar currency in Venezuela, at 31 December PDVSA had over $1.3 billion in accounts payable to employees. Worker’s paradise indeed.

Updated to make the link to the results a bit more obvious now that I have permission from my source to post the doc. In my source’s words, “Put it up. I don’t care. The goddamn thing is by fucking law a publicly available document.” And as one editor asked me this morning, “Why the hell are public entity debt prospectuses treated like state secrets?” Good question. Anyway, the document. Enjoy. <a href="” target=”_blank”>Here you go.