Petrobras (PBR) Q1 Earnings Lag on High Pre-Salt Lifting Costs

Core Insights - Petrobras reported first-quarter earnings per ADS of 75 cents, missing the Zacks Consensus Estimate of 84 cents and down from $1.11 a year ago [1] - The decline in earnings is attributed to rising pre-salt lifting costs and higher refining expenses, despite strong production [1][2] Financial Performance - Recurring net income was $4,816 million, down from $7,392 million a year earlier [2] - Adjusted EBITDA decreased to $12,127 million from $13,956 million year-over-year [2] - Revenues fell to $23,768 million, an 11.2% decline from $26,771 million a year ago, and missed the consensus estimate of $24,633 million [2] Segment Analysis - Upstream Segment: - Average oil and gas production reached 2,776 thousand barrels of oil equivalent per day (MBOE/d), up from 2,676 MBOE/d in the same period of 2023 [5] - Brazilian oil and natural gas production increased 3.9% to 2,742 MBOE/d, primarily due to the ramp-up of five FPSOs [6] - Average sales price of oil rose 2.4% year-over-year to $83.24 per barrel, contributing to improved upstream revenues of $16,077 million [7] - Upstream net income was $5,846 million, down 4.3% from $6,108 million in Q1 2023 due to an 11.9% increase in pre-salt lifting costs [8] - Downstream Segment: - Revenues totaled $22,190 million, a 10.7% decrease from $24,842 million year-over-year, attributed to lower domestic sales volumes [9] - Downstream profit was $775 million, down from $1,199 million in the first quarter of 2023, impacted by higher unit refining costs [9] Cost and Investment Overview - Sales, general, and administrative expenses rose to $1,780 million, a 12.8% increase from the previous year [10] - Total operating expenses increased significantly, leading to an operating income of $8,984 million, down from $11,553 million a year ago [10] - Capital investments totaled $3,043 million, up from $2,482 million in the prior-year quarter [11] Financial Position - Petrobras ended the quarter with a net debt of $43,646 million, up from $37,588 million a year ago [12] - Cash and cash equivalents stood at $11,547 million, with a net debt to trailing 12-month EBITDA ratio deteriorating to 0.86 from 0.58 a year earlier [12]