Petrobras Posts Net Loss for Q2 after Brazil Tax Settlement

Brazil’s state-controlled oil producer Petroleo Brasileiro SA announced a surprise net loss of 2.6 billion reais ($470 million) after reaching a tax settlement with the government in the first results under Chief Executive Officer Magda Chambriard. 

Despite the loss, the company approved 13.6 billion reais ($2.45 billion) in second-quarter dividends. It compares to $2.7 billion expected by analysts, according to the average of seven forecasts reviewed by Bloomberg. Petrobras said it will use part of a capital reserve for extraordinary dividends that weren’t paid in 2023 to make the dividends payment for the second quarter, it said in a filing. 

The payouts and a tax agreement that Petrobras announced in June will help the government, its biggest shareholder, shore up a fiscal deficit that has weighed on Brazilian financial markets. Rio de Janeiro-based Petrobras is under pressure to accelerate investments to help grow the economy while also making payouts to the government, its biggest shareholder.

Net income was impacted by the tax settlement and a weaker exchange rate, the company said. Petrobras was also selling fuel at a discount to international benchmarks under a policy to shield consumers from short-term volatility in oil markets. In July, Petrobras raised gasoline prices for the first time in almost a year in response to higher oil prices and a weakening local currency. The move was interpreted as a sign that the new CEO is less vulnerable to political pressure than her predecessor. 

Petrobras reported adjusted earnings before items of 49.74 billion reais, compared to a 66.47 billion-real consensus of analysts tracked by Bloomberg. The company cited weaker margins on gasoline and diesel as well as imports for the decline. Petrobras’s quarterly oil output was impacted by scheduled maintenance shutdowns and natural declines at mature fields, partially offset by the ramp-up of new offshore units. 

Other oil majors reported mixed results in the quarter due to lower refining margins even though crude prices averaged about $85 a barrel from April through June. Chevron Corp. and TotalEnergies SE reported lower-than-expected profits, while Exxon Mobil Corp. beat estimates after a major acquisition boosted its production. 

Petrobras also reduced its estimate for 2024 capital expenditures for 2024 to $13.5 to $14.5 billion, it said Thursday in a statement. The revision still represent an increase of up to 15 percent from last year and won’t impact its production growth targets, it said. 

Since taking over the oil giant in late May, Chambriard has made clear she’s aligned with President Luiz Inacio Lula da Silva’s mission to deliver economic growth by boosting investments in refining, natural gas and fertilizers plants, while pledging to deliver robust profits and ensure good governance. 

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