Petrobras Q1 Earnings Slump on Flat Production, Price Drop

Core Viewpoint - Petrobras reported disappointing first-quarter earnings, with earnings per ADS of 62 cents, missing the Zacks Consensus Estimate of 92 cents and down from 75 cents a year ago, primarily due to lower downstream production and declining oil prices [1][2]. Financial Performance - Consolidated net income was $4,029 million, down from $5,420 million a year earlier, while adjusted EBITDA fell to $10,446 million from $12,127 million [2]. - Revenues totaled $21,073 million, an 11.3% decline from $23,768 million year-over-year, and also missed the Zacks Consensus Estimate of $21,639 million [2]. Segment Analysis Upstream (Exploration & Production) - Average oil and gas production was 2,771 thousand barrels of oil equivalent per day (MBOE/d), slightly down from 2,776 MBOE/d in the same period of 2024 [4]. - The average sales price of oil fell 9.1% year-over-year to $75.66 per barrel, leading to a revenue decline in the upstream segment to $15,067 million from $16,077 million [5]. - Upstream net income decreased by 14.7% to $4,987 million from $5,846 million in the first quarter of 2024, impacted by a 12.7% rise in pre-salt lifting costs to $7.08 per barrel [6]. Downstream (Refining, Transportation, and Marketing) - Downstream revenues were $19,989 million, down 9.9% from $22,190 million year-over-year, with profits falling to $367 million from $775 million [7]. - The decline in production volume and lower utilization negatively affected the downstream unit's income [7]. Cost Management - Sales, general, and administrative expenses were $1,534 million, a 13.8% decrease from the previous year, while selling expenses fell from $1,333 million to $1,090 million [8]. - Total operating expenses decreased by 4.9%, but this was not enough to offset the revenue decline, resulting in operating income dropping to $7,276 million from $8,984 million [9]. Financial Position - Capital investments and expenditures totaled $4,065 million, up from $3,043 million in the prior-year quarter [10]. - Petrobras generated a positive free cash flow of $4,536 million, although it decreased from $6,547 million in the same period last year [11]. - At the end of the first quarter, net debt rose to $56,034 million from $43,646 million a year ago, with cash and cash equivalents at $4,695 million [12].