Petrobras Q4 Earnings Beat Despite a Decline in Production

Core Viewpoint - Petrobras reported fourth-quarter earnings per ADS of 49 cents, exceeding the Zacks Consensus Estimate of 37 cents, driven by higher downstream volumes and lower refining costs, although profits fell from $1.27 a year ago due to lower production and weak commodity prices [1][2]. Financial Performance - Consolidated net income for the quarter was $3,083 million, down from $7,642 million a year earlier, while adjusted EBITDA decreased to $7,165 million from $13,470 million [2]. - Revenues totaled $20,815 million, a decline of 23.2% from $27,107 million year-over-year, missing the Zacks Consensus Estimate of $21,135 million [2]. Segmental Performance Upstream (Exploration & Production) - Average oil and gas production was 2,628 thousand barrels of oil equivalent per day (MBOE/d), down from 2,935 MBOE/d in the same period of 2023 [4]. - Brazilian oil and natural gas production decreased by 10.5% to 2,597 MBOE/d, primarily due to maintenance-related interruptions in the Búzios field [5]. - The average sales price of oil fell 11% year-over-year to $74.69 per barrel, negatively impacting upstream unit sales [6]. - Upstream revenues declined to $13,388 million from $18,506 million year-over-year, with net income down 55.8% to $2,094 million [7]. Downstream (Refining, Transportation, and Marketing) - Downstream revenues totaled $19,291 million, a 23.7% decrease from $25,278 million year-over-year, attributed to lower diesel volumes [8]. - The downstream unit recorded a profit of $15 million, significantly down from $711 million in the fourth quarter of 2023 [8]. Cost Analysis - Sales, general, and administrative expenses were $1,520 million, down 14.8% year-over-year, while selling expenses decreased from $1,329 million to $1,080 million [9]. - However, a 76% increase in "other expenses" led to a $564 million rise in total operating expenses, resulting in a drop in operating income to $2,787 million from $8,022 million year-over-year [9]. Financial Position - Capital investments and expenditures totaled $5,729 million, up from $3,558 million in the prior-year quarter [11]. - Petrobras generated a positive free cash flow of $3,766 million, although it fell from $8,073 million in the previous year [11]. - At the end of 2024, net debt increased to $52,240 million from $44,698 million a year earlier, with cash and cash equivalents at $3,271 million [12]. - The net debt to trailing 12-month EBITDA ratio worsened to 1.29 from 0.85 in the previous year [12].