Image courtesy of Petrobras.

Brazil’s Petrobras reported a massive fall in third quarter net income  Friday as the company continues to grapple with a corruption probe and an open-ended strike.

The company reported a third quarter net loss attributable to shareholders of $1.062 billion on $1.63 billion of operating income, down from an operating income of about $3 billion in the prior year quarter.

Sales revenues dipped 11 percent to $23.17 billion while gross profit slid down to $6.69 billion from $8.98 billion during the same quarter last year.

The state-owned company cut capital expenditures and investments to $5.44 billion in the third quarter, down from $9.25 billion in the year-ago quarter.

Total production jumped 8 percent over the last quarter to 2.6 million barrels per day in the third quarter.

Refining costs decreased by 15 percent in the first nine months of 2015 compared to the same period last year,  mainly due to a depreciation of the Brazilian Real against the U.S. dollar.

The company’s total debt fell 4 percent since December to $127.5 billion and no impairment charges were taken for the quarter.

Addressing the ongoing corruption probe into its contracts, Petrobras said that it received two payments between May and August totaling $72 million from former services executive Pedro José Barusco Filho.

The payments, part of a plea agreement Filho entered into with Brazilian authorities, were recognized as “over-payments incorrectly capitalized.”

Petrobras has been at the center of a probe that has uncovered bribery, money laundering and embezzlement schemes tied to company contracts.

Brazilian prosecutors allege that Petrobras employees collaborated with other firms to inflate the cost of contracts and skim off the excess funds, a plot that has landed several former executives in jail and prompted investor lawsuits.

The company added that it may be entitled to receive more funds resulting from the corruption probe, known as Operation Lava Jato, if plea or leniency agreements are reached with alleged cartel members.

Petrobras has defended itself against the allegations, claiming that it was also a victim of fraud.

An open-ended strike called by Petrobras workers nearly two weeks ago is continuing after a wage-hike offer failed to win support from Brazil’s oil worker unions.

Petrobras offered workers a 9.54 percent salary adjustment earlier this week, far less than the 18 percent wage increase the unions are seeking.

The unions are also demanding that Petrobras scraps plans to sell up to $15.1 billion worth of assets and ensure that the company will remain the sole operator in Brazil’s pre-salt play among other demands.

The unions are now seeking a meeting with Petrobras CEO Aldemir Bendine to discuss their demands, Reuters said.

The strike’s estimated impact on oil production has hovered around 115,000 barrels per day since November 7, Petrobras said.


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