Brazilian oil giant Petrobras has slumped to a huge third quarter loss of R$16.5 billion ($4.8 billion), a result heavily impacted by asset impairments.

The company said the impairment test was conducted in the third quarter, in line with a revision of a set of assumptions, such as Brent crude prices and the long-term exchange rate, and changes to the company’s investment portfolio.

Losses arising from this test were recognized in the quarter’s results to the tune of R$15.7 billion, Petrobras explained.

The Exploration and Production segment accounted for 53% of the total impairment recorded in the quarter, notably some oil and gas fields in Brazil, which already underwent an impairment in 2015 and whose cash flows have been further depressed by the exchange rate and increase in discount rate, as well as uncertainty regarding the delivery of hulls for the P-71, P-72 and P-73 FPSOs.

The loss was also increased due to higher expenses as part of the new program to encourage voluntary severance, because of an increase in the number of participants.

Production in the quarter was 2.869 million boed, up 2% from the second quarter. Comparing the first nine months of 2015 output fell 1%, to 2.763 million boed.

In Brazil, production of oil and natural gas liquids rose 4% in the quarter, mainly due to the ramp-up of the FPSOs Cidade Maricá (Lula – Lula Alto area) and Cidade Itaguaí (Lula – Iracema Norte area), as well as the start-up of FPSO Cidade Saquarema (Lula – Lula Central area). These same factors contributed to a 5% rise in gas production in the country.

In September, Petrobras set new records for total oil and natural gas production in Brazil, which reached 2.75 million boed, and oil only production, which reached 2.24 million bpd. In the pre-salt layer, the company established a monthly production record for oil fields operated by it, of 1.46 million boed. It also set a new record for daily output on September 7, of 1.23 million bpd.

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