Petrobras Tops Q3 Earnings Estimates Despite Price Pressure

Core Insights - Petrobras (PBR) reported third-quarter earnings per ADS of 82 cents, surpassing the Zacks Consensus Estimate of 79 cents, driven by strong production growth, although down from 93 cents a year ago due to lower realized oil prices and increased lifting costs [1][9]. Financial Performance - Consolidated net income for the quarter was $5,235 million, a decrease from $5,474 million a year earlier, while adjusted EBITDA rose to $11,728 million from $11,480 million [2]. - Revenues reached $23,477 million, a slight increase of 0.5% from $23,366 million year-over-year, but fell short of the Zacks Consensus Estimate of $23,715 million [2]. Segment Analysis Upstream (Exploration & Production) - Average oil and gas production was 3,144 thousand barrels of oil equivalent per day (MBOE/d), an increase from 2,689 MBOE/d in the same period of 2024, with Brazilian production improving by 17.3% to 3,114 MBOE/d [4]. - The average sales price of oil fell nearly 14% year-over-year to $69.07 per barrel, but production increases positively impacted upstream unit sales, leading to revenues of $15,737 million, up from $15,383 million a year ago [5]. - The upstream segment's net income was $5,168 million, down 4.6% from $5,416 million in the third quarter of 2024, affected by a 13.3% rise in pre-salt lifting costs to $6.91 per barrel [6]. Downstream (Refining, Transportation, and Marketing) - Downstream revenues totaled $22,083 million, a 1.6% increase from $21,739 million year-over-year, attributed to higher domestic sales volumes [7]. - The downstream unit's profit rose to $583 million from $255 million in the third quarter of 2024, supported by increased revenues and lower operating costs [7]. Cost Structure - Sales, general, and administrative expenses were $1,861 million, up 16.2% year-over-year, while selling expenses increased from $1,193 million to $1,360 million [8]. - Total operating expenses decreased by 10.1% due to significant reductions in other expenses and exploration costs, alongside an impairment reversal [8]. Financial Position - Capital investments and expenditures for the quarter were $5,510 million, compared to $4,454 million in the prior-year quarter [11]. - Petrobras generated positive free cash flow for the 42nd consecutive quarter, amounting to $4,967 million, although down from $6,857 million in the same period last year [11]. - At the end of the quarter, net debt was $59,053 million, up from $44,251 million a year ago, with cash and cash equivalents of $8,964 million [12].