PDVSA, Venezuela’s state oil company, released its first-half financials, in English, as part of a bond prospectus last week. They aren’t yet on the PDVSA website, so please, allow me to fill you in on what the bigwigs in the bond market already know. Click here to download the prospectus. (Yes, I do PDVSA’s job of informing the public of its financial condition. We heart PDVSA’s commitment to transparency.)
A friend sent in the document and asked me, very generally, what I found interesting. I gave it a skim and, down below, you can see what I came up with.
Now that I haven’t lived in Venezuela in over a year, my depth of knowledge and understanding of PDVSA is gradually fading. So if you think this list is dumb, just tell me so, either in comments or e-mail. I’m sure that many of you out there know more about some details of this company than I do. With that out of the way, here are my notes:
P. 33: They say domestic fuel consumption declined. That’s probably because Guri Dam is back in action, reducing the need for diesel and fuel oil for power generation. In any case, they sell 622,000 barrels a day of refined products in venezuela. They claim production of 2,986,000 bbl/d and exports of 2,519,000. Now, refining oil sometimes increases its volume, but still, add up exports and consumption, 2,519,000 + 622,000= 3,141,000, that’s 155,000 barrels a day difference. Some part of that is refining gain, but I’d guess that they are importing some refined products. That would be expensive.
P. 41: Capex is barely above last year’s anemic level. Up 5%. This matches Oil Minister Ramírez’s statement in Feb. that capex would be $12b this year
P. 92: Executive pay seems lower than I remember: For the year ending December 31, 2010 the aggregate amount paid by us as compensation to our directors and executive officers for services in all capacities was approximately $0.74 million (based on the 2010 average exchange rate of Bs.4.30 to $1).
P. 143: Cash position improved 50% between 31 dec and 30 june, to $9 billion from $6 billion.
P. 143: Accounts payable down by $800 million but still huge at $9.3 billion, almost a month’s worth of annual sales.
P. 145: Oh funny – i never noticed this before – the company’s Fonden contributions under the windfall “special contributions” grew a lot, of course. Under the law those contributions are tax-deductible, which is part of why the company’s income tax dropped 80% year over year. That starves state governments, which by law receive a portion of income tax receipts.
P. 148: For some reason, sales within Venezuela from the refining segment quadrupled in 2q11 year over year. I don’t understand! And yet the operating loss of the Venezuelan refining unit extended to $3.6 billion in the quarter from $1.7 billion a year earlier. I don’t understand that either.
P. 152: I just saw that the accts receivable under “energy agreements” went up by something like 60% y-o-y. I thought PDV didn’t have to finance those agreements, and that the central govt paid them for the oil under the deals. I guess not.
“As a result of agreements and contracts entered into by the Bolivarian Republic of Venezuela and foreign governments, accounts receivable from related entities and companies at June 30, 2011 and December 31, 2010, include $10,739 million and $7,471 million, respectively, receivable to the Republic from the sale of crude oil and products.”
Shouldn’t that say FROM the Republic, not TO? If so, it indicates that PDVSA has handed over $10.7 billion worth of oil and products without getting paid, as part of these special deals. That can’t be good for the cash flow.
P. 154: WTF with PDVSA taking out loans from Banco de Venezuela?
“On June 3, 2011, PDVSA executed with Banco de Venezuela, S.A. Banco Universal (wholly owned by the Bolivarian Republic of Venezuela) two loans denominated in bolivars amounting to $930 million, both due in 2018 with an annual interest rate of 9.5% for the first quarter, and a variable interest rate for the subsequent quarters, upon mutual agreement between the parties, without exceeding rates established by the BCV for loan portfolios of the agricultural and manufacturing sectors.”
(Noting that El Universal has now reported this one.)
P. 154: Accounts payable to contractors actually rose, to $5.22 bln from $4.63 bln.
P. 158: I hadn’t heard about this before, I don’t think: “To meet guidelines established by MENPET and PDVSA’s strategic plans, the Company temporarily continued to financially support the activities of PEQUIVEN. During the six-month period ended June 30, 2011, PDVSA provided PEQUIVEN with $465 million to be used as working capital, included under accounts receivable from noncurrent related parties.”
Well, that’s enough for now. I’m sure there are more odd tidbits in there.
But to answer the question in the headline: No, no surprises. PDVSA is weird and provides money for all sorts of Venezuelan presidential priorities and is run outside of usual corporate methods. Anyone still surprised by that is probably also surprised by the sun rising in the east.