Petroleo Brasileiro SA, as Petrobras is formally known, reported quarterly net profit slid 9.1 percent from the year-ago period to 3.09 billion reais (791 million pounds). It postponed an initial plan to publish the results in November after a stream of corruption allegations snowballed into a nationwide scandal.

The much-anticipated results, however, did not include what investors most want to know: a rough estimate of how badly corruption over-valued the company's assets. The state-owned oil company reversed an initial decision to include such writedowns under pressure from its chairman, who is close to Brazil's ruling Workers' Party, a person with direct knowledge of the situation told Reuters.

Failure to deliver the results would have put Petrobras at risk of violating its bond covenants, although it remains to be seen whether the limited report will satisfy debtholders. The scandal itself had already cut Petrobras, the world's most-indebted and least-profitable major oil company, out of capital markets and put it at risk of losing its investment-grade credit rating.

Chief Executive Officer Maria das Graças Foster said it was "impractical" to quantify the writedowns because it was not easy to separate corruption-related charges from those caused by other factors, such as a changing business outlook.

Investors drove down Petrobras stock in the wake of the earnings release. Common and preferred shares fell nearly 10 percent in afternoon trading in São Paulo, with U.S.-listed American Depositary Receipts down a bit less.

"Without the writedown, what's the point?" wrote analyst Ricardo Kim of XP Investimentos, a Brazilian brokerage that recommends investors avoid the stock.

After initially deciding to take the writedown last week, the board reversed itself under pressure from Chairman and former Finance Minister Guido Mantega, the person with direct knowledge said.

"Essentially the government didn't want the writedowns to be interpreted as totally related to corruption," said the source, who is not authorized to speak with the media.

Since the first arrest of a Petrobras official a year ago, the case has become a major headache for President Dilma Rousseff. She was chairwoman of the board for seven years ending in 2010, a period when much of the alleged corruption took place.

The scandal has been another blow for Brazil's economy, which most economists expect to contract this year. As Petrobras cuts spending and reviews contracts with engineering firms, thousands of workers have lost their jobs and more layoffs are expected.

The company is now likely to take the writedowns in its fourth-quarter audited financial statement, which is expected by the end of April, the source added.

Wednesday's release gave a glimpse at the size of potential writedowns to come. It said Petrobras had found 88.9 billion reais of asset overvaluations and 27.2 billion reais worth of undervaluations. That would amount to net writedown of 61.4 billion reais.

The asset valuation estimates also include charges for a nearly 60 percent decline in oil prices since June, as well as changes in projections and business decisions that did not yield the expected results, the source said.

'IMPRACTICAL TO QUANTIFY'

CEO Foster acknowledged that graft and other corruption-related spending should have been booked in past financial statements, but she said the company was still looking at ways to account for the charges in accordance with securities regulations in Brazil and the United States.

"We concluded that it was impractical to quantify these values with precision, given that the payments were made by outside suppliers and cannot be traced to the company's accounting books," Foster wrote in a letter to shareholders and investors accompanying the earnings release.

Brazilian accounting experts questioned that explanation.

"There is no reason for the company not to have estimated, even in a provisional way, the writedowns related to corruption," said Reginaldo Gonçalves an accounting professor at Faculdade Santa Marcelina, a São Paulo university. "I have the strong impression that this is the government trying to avoid the inevitable."

According to police, prosecutors and individuals indicted in the case, Petrobras executives conspired with construction and engineering firms to overcharge for refineries, ships and other goods and services. Some of the revenue was then kicked back to executives, politicians and political parties as bribes and campaign contributions.

Police say that graft may have skimmed 3 percent or more off the value of Petrobras projects. Investigators have said total corruption in the case could top $28 billion, making it the biggest graft scandal in Brazil's history.

The third-quarter results were first delayed after PricewaterhouseCooopers declined to certify Petrobras' accounts due to the allegations.

Now that the results are out, some analysts have suggested that changes to the board may be forthcoming.

Adjusted third-quarter earnings before interest, taxes, depreciation and amortisation fell about 10 percent to 11.735 billion reais from a year earlier, Petrobras said.

The company did agree to take a 2.71 billion-real charge after cancelling two giant low-sulphur diesel refineries in the northeastern states of Maranhão and Ceará.

Budgeted at about $20 billion each, the plants were years behind schedule and expected to be among the most expensive ever built anywhere. Cost overruns at other refinery projects are a major part of the corruption investigation.

Petrobras said falling oil prices, which reduce the cost of fuel it imports, helped its cash position, giving it "room" to cover operational needs over the course of the year without issuing new debt.

To save cash, Petrobras plans to cut annual investments to between $31 billion and $33 billion from an average $44 billion in its latest five-year spending plan.

It also forecast a 3.5 percent to 5.5 percent increase in oil output in 2015.

(Additional reporting by Asher Levine; Editing by Todd Benson, Lisa Von Ahn and Christian Plumb)

By Jeb Blount and Marta Nogueira