Fitch Ratings expects the average before-tax, full-cycle cost for Latin American oil producers to remain unchanged for full year 2023, according to a new report. Brazilian producer PRIO is on track to become the most efficient producer in Fitch’s rated portfolio as production and reserves in the country are likely to grow significantly.

Industrywide half-cycle cost of production decreased to USD22.67/barrel (bbl) in 2022, compared with USD23.62/bbl in 2021. Reserves increased at a steady pace, with finding, development and acquisition costs per barrel increasing by 40% for independent producers.

Full-cycle costs tracked half cycle costs in 2022, except for issuers whose three-year average finding, development and acquisition (FD&A) costs rose steeply. Development of 1P reserves has become increasingly difficult in certain areas in Colombia, and Fitch expects that production costs in the country might also increase as reserves decline.
Source: Fitch Ratings