BY CHRONICLE STAFF
The company - Latin Americas largest - last week announced results for the first half of 2007, showing profits falling by 69 percent to $896 million, while revenue fell by 15.6 to $42.9 billion in the period, according to a Latin Business Chronicle analysis of PDVSAs earnings statement. That followed 2006 results when the companys net income fell by 26.4 percent to $4.8 billion on revenues of $101.8 billion (an increase of 18. 8 percent).
"PDVSA’s challenge is cash flow," says Jorge Piñón, a former president of Amocos Latin American operations who currently serves as an energy fellow at the
Gustavo Coronel, a former PDVSA board member, goes even further. "PDVSA is now a company in imminent danger of financial collapse," he says. "It has a very fragile cash flow, it has been acquiring new debt of up to $12 billion during 2007, mostly on behalf of the government, not for their own operations. The outlook is bleak."
Should oil prices continue at todays levels - or rise - PDVSA will get some relief. But if they fall, the company will face a significant negative impact, points out Thomas Coleman, senior vice president of the corporate finance group at Moodys Investors Service.