Petrobras Q3 results please the market

The Q3 results of Brazil’s federal oil firm Petrobras exceeded expectations, but the market is cautious about the future of the company after Luiz Inácio Lula da Silva takes office, Sidney Lima, analyst at Top Gain, told BNamericas. 

Petrobras reported recurring net income of US$8.8bn and revenues of US$32.4bn, up 164% and 40% year-on-year. 

Lima highlighted that all areas improved, including E&P, which grew 47%, diesel (71%), gasoline (22%) and derivatives (24%). 

"But there is caution with the change of government. [Lula’s Workers Party] defends using Petrobras as a social policy, so there’s uncertainty about the stability of the company's cash flow," Lima said. 

Another point of contention is the anticipated distribution of dividends, which totaled 43.7bn reais (US$8.63bn) in the third quarter. One day after the publication of the results, the public prosecutor’s office requested the suspension of dividend payments, alleging risks to financial sustainability.

The night before, oil workers federation FUP and the association of oil minority shareholders of Petrobras (Anapetro) said they would take legal action to prevent the distribution of dividends, which, in the accumulated total for the year, already amounts to 180bn reais – compared to a net profit of 145bn reais in the period.  

Mahatma dos Santos, a researcher at oil association Ineep said the increase in fuel prices and the reduction in exploration costs allowed Petrobras to practically triple the volume of dividends distributed . 

"Not even the decline in production and marketing of derivatives this quarter [compared to the same period in 2021] changed the company's strategy of prioritizing the generation of value for its shareholders," he said in a statement. 

Cláudio Araújo Pinho, a lawyer specialized in oil and gas, said that the distribution of dividends this year does not agree with the law on state-owned companies, undermining the possibility of future investment and ignoring its social function. 

According to Pinho, the board might not endorse the anticipated Q3 distribution of dividends once Lula takes office in January. "This will demonstrate the low governance of the current state-controller of Petrobras," he told BNamericas. 

Flavio Conde, analyst at Levante Investimentos, underlined that the dividend distribution was split, contributing to the public accounts of the Bolsonaro government and to Lula's early term. 

"It seems little to close the fiscal deficit of 2023, but all help is welcome," Conde told BNamericas.