NEW YORK (TheStreet) -- Shares of Petrobas Brasileiro S.A. (PBR) are tumbling 3.32% to $8.16 after the Brazilian state-run oil company said that it plans to lower investments by 37% over the next five years in order to reduce debt, The Wall Street Journal reports.
Over the 2015 to 2019 period, capital spending will total about $130 billion, down from its previous five-year plan of $206.8 billion, the Journal said.
The reduction deals a "significant setback to Brazil's ambitions of becoming a major player in the global industry," as the company reduced its domestic production target by 2020 to 2.8 million barrels of oil per day, down from 4.2 million barrels, according to the Journal.
The company also plans to sell off assets in a bid to preserve cash, as it expects to divest $15.1 billion in 2015 to 2016, an increase from a previous target of $13.7 billion.
Additionally, Petrobas stock is falling due to decreasing oil prices. Crude oil (WTI) is retreating 2.01% to $58.43 per barrel and Brent crude is sliding 2.12% to $61.92 per barrel, according to the CNBC.com index.
Separately, TheStreet Ratings team rates PETROLEO BRASILEIRO SA- PETR as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PETROLEO BRASILEIRO SA- PETR (PBR.A) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."