Core Insights - Petrobras (PBR) reported second-quarter earnings per ADS of 64 cents, missing the Zacks Consensus Estimate of 70 cents due to lower downstream production and a decline in realized oil prices [1][10] - Consolidated net income was $4,101 million, down from $5,394 million a year earlier, while adjusted EBITDA fell to $9,242 million from $9,627 million [2] - Revenues for the quarter totaled $21,037 million, a 10.4% decrease from $23,467 million year-over-year, slightly missing the Zacks Consensus Estimate of $21,040 million [2] Upstream Segment - Average oil and gas production reached 2,909 thousand barrels of oil equivalent per day (MBOE/d), an increase from 2,699 MBOE/d in the same period of 2024 [4] - Brazilian oil and natural gas production improved by 8.1% to 2,879 MBOE/d, driven by ramp-up of existing fields and the startup of FPSO Alexandre de Gusmao [4] - The average sales price of oil fell over 20% year-over-year to $67.82 per barrel, negatively impacting upstream unit sales and revenues, which declined to $14,404 million from $15,668 million [5] - The upstream segment recorded a net income of $3,974 million, down 24.1% from $5,237 million in the second quarter of 2024 due to increased pre-salt lifting costs [6] Downstream Segment - Revenues from the downstream segment totaled $19,795 million, a 10.3% decrease from $22,061 million year-over-year, attributed to lower production volumes [7] - The downstream unit's profit fell to $217 million from $279 million in the second quarter of 2024, impacted by higher operating costs [7] Costs and Financial Position - Sales, general and administrative expenses were $1,750 million, a 3.7% decrease from the previous year, while selling expenses rose to $1,286 million [8] - Total operating expenses decreased by 7.2%, but the decline in revenues led to a drop in operating income to $5,349 million from $6,705 million year-over-year [8] - Capital investments totaled $4,431 million, up from $3,393 million in the prior-year quarter, with positive free cash flow of $3,445 million, down from $6,148 million [11] - Net debt increased to $58,563 million from $46,160 million a year ago, with cash and cash equivalents at $6,996 million [12]

Key Takeaways Zacks Rank & Key Picks BP and PBR currently carry a Zack Rank #3 (Hold). Investors interested in the energy sector may look at a couple of better-ranked stocks like Antero Midstream Corporation (AM) and Enbridge Inc. (ENB) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. BP plc (BP) is exploring the possibility of partnering with Petróleo Brasileiro S.A. – Petrobras (PBR) to develop its Bumerangue oil and gas dis ...

Analyst's Disclosure:I/we have a beneficial long position in the shares of PBR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any inv ...

Oil Production and Exploration - Brazil, a major oil producer, surpasses the United Arab Emirates in oil production [1] - Brazil's oil boom is projected to peak in the next few years, with production declining from the early 2030s [1] - Petrobras plans a major offshore exploration campaign near the Amazon [1] Global Oil Demand and Supply - The world needs to discover more oil to ensure stable supplies during the transition to cleaner fuels [2] - Even with declining global demand from the 2030s, the world will require 18 million barrels per day in 2040, exceeding current US production levels [2] - Consultancy Ricead Energy projects a global demand of 18 million barrels per day in 2040 [2] Location Context - The exploration campaign is planned near Berlin, a city of 1.3 million people, located near the Amazon [1]

Financial Data and Key Metrics Changes - In Q2 2025, Petrobras reported a net income of $4.1 billion and EBITDA of $10.2 billion, both excluding one-off events, which are consistent with the previous quarter despite a 10% decline in Brent prices [11][12] - Operating cash flow decreased to $7.5 billion compared to the previous quarter, primarily due to known events such as tax credits and higher selling expenses related to increased crude oil export volumes [13][14] - The company maintained a financial debt level under control, with over 60% of total indebtedness related to leases of platforms, vessels, and rigs [14][15] Business Line Data and Key Metrics Changes - Petrobras increased its gas supply to the market by 15%, mainly due to the progress of the Route 3 pipeline and the Bua Ventura gas processing unit [2][10] - Total production reached a record of 4.2 million barrels of oil equivalent per day, with a 5% increase in production volume in Q2 [10][12] - The company achieved a midpoint of its 2025 production target of 2.3 million barrels per day in the first half of the year [8] Market Data and Key Metrics Changes - Brent prices fell by 10% quarter-over-quarter, impacting revenue, but increased production helped mitigate the effects on financial results [8][12] - The company expects average oil and gas production in 2025 to be at the upper end of the target range, with a potential additional revenue of $2.5 billion at a price of $70 per barrel [21] Company Strategy and Development Direction - Petrobras is focused on increasing production efficiency and reducing costs in response to the challenging geopolitical environment and fluctuating oil prices [4][5] - The company aims to optimize its projects and maintain a strong commitment to generating value for investors and Brazilian society [6][22] - Future projects will be evaluated based on profitability and alignment with the company's strategic goals, ensuring capital discipline [49][52] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by falling oil prices but emphasized the company's ability to adapt through increased production and cost reductions [4][5] - The management expressed confidence in achieving production targets and maintaining financial robustness despite external pressures [22][83] - The company is committed to complying with all contracts and ensuring profitable projects are prioritized [83][85] Other Important Information - Petrobras plans to distribute 45% of its free cash flow from Q2, amounting to 8.7 billion Brazilian reals, to shareholders in two equal installments [22][23] - The company has successfully executed a public offering of debentures totaling 3 billion Brazilian reals, allowing for competitive funding in the local market [15] Q&A Session Summary Question: What advancements can be expected in natural gas distribution and how does it integrate with the business plan? - Petrobras is focused on increasing gas production and exploring synergies, but currently has no projects to acquire LNG [25][26] Question: Can you discuss the risk factors that lead to a more conservative production curve? - Management highlighted the importance of connecting fields to maximize production and acknowledged the impact of scheduled shutdowns on output [35][38] Question: What is the flexibility regarding CapEx in light of lower oil prices? - The company will reassess projects based on profitability and may postpone or optimize projects as needed, while maintaining its CapEx guidance for the year [72][75] Question: How does Petrobras plan to handle potential movements in the ethanol sector and pre-salt layer auctions? - Petrobras will participate in pre-salt layer auctions if economically viable, while also focusing on renewable fuels and energy transition projects [69][70] Question: Can you clarify the partnership with Accent and its synergies with Guyana and Suriname? - The partnership with Accent is aimed at sharing risks and knowledge, leveraging similarities in the operational environment [64]

Operational Highlights - Petrobras' total production of oil and natural gas reached 2.91 MM boed, a 5% increase compared to 1Q25[9] - Total operated production reached a record level of 4.19 MM boed[9] - Pre-salt layer own production also reached a record of 2.39 MM boed[9] - FPSO Alexandre de Gusmão started production in the Mero Field with a capacity of 180 thousand barrels of oil per day and process 12 million m³ of gas[10] - The company signed new contracts in the free gas market, increasing volumes by 170% in 1H25[21] Financial Highlights - Commercial oil and gas production in Brazil increased by 5% from 1Q25 to 2Q25[29] - Operating cash flow was US$7.5 billion in 2Q25[32] - Net income was US$10.2 billion in 2Q25[32] - Total utilization factor of refining system was 91% in 2Q25 with 68% yield of high value-added oil products[16] - Shareholder remuneration was R$8.7 billion in 2Q25[49]

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Brazil’s state-controlled oil producer Petrobras reported weaker-than-expected results and cut its dividend after lower oil prices offset stronger production figures https://t.co/uuSt9U7NeB ...

Group 1 - The analysis of Suncor Energy Inc. and Petrobras was conducted on June 5 and June 3 respectively, indicating a focus on these companies within the energy sector [1] - The core investment style emphasizes providing actionable and clear ideas derived from independent research, suggesting a commitment to transparency and thorough analysis [1] Group 2 - The service has demonstrated the ability to help members outperform the S&P 500 and avoid significant losses during periods of high volatility in both equity and bond markets, highlighting its effectiveness [2] - A trial membership is offered to potential clients, suggesting confidence in the proven methods used by the service [2]

Core Viewpoint - Petrobras (PBR) is expected to report second-quarter earnings of 71 cents per share on revenues of $20.8 billion, reflecting a significant year-over-year growth in earnings but a decline in revenues compared to the previous year [1][3]. Group 1: Previous Quarter Performance - In the first quarter, Petrobras reported adjusted earnings of 62 cents per ADS, missing the Zacks Consensus Estimate of 92 cents, with revenues of $21 billion also falling short of the $21.6 billion estimate [2]. - The company has beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 3.3% [3]. Group 2: Production and Operational Highlights - Petrobras is projected to have a strong second quarter, with total oil, gas, and natural gas liquids production increasing by 5% quarter-over-quarter to 2.91 million barrels of oil equivalent per day (MMboed) [4]. - The company brought 14 new wells online, contributing to production milestones, including a record 4.19 MMboed of operated production and 2.39 MMboed of pre-salt output [5]. - Refining performance improved, with overall oil product production rising by 1.4% to 1,730 mbpd, and diesel output increasing by 2.4% to 680 mbpd [6]. Group 3: Challenges and Outlook - Despite the positive production growth, Petrobras faced higher losses due to stoppages and maintenance, along with a natural decline in production [7]. - The Zacks model does not predict an earnings beat for PBR this time, as the Earnings ESP is 0.00% [10].