Petrobras is reviewing its investment strategy to possibly increase oil production earlier, as stated by CEO Magda Chambriard. The company reported unexpectedly high investments for 2024, leading to a decline in share prices. Analysts expressed concern over lower dividends due to increased expenditures, while Petrobras maintains its capital spending guidelines and long-term investment plans.
Petrobras, a Brazilian state-run oil company, is adjusting its investment strategy to potentially increase oil production sooner, according to Chief Executive Magda Chambriard. During the presentation of the company’s 2024 financial results, she indicated that the firm may advance its investments if it can lead to earlier production gains. This comes after the company revealed higher-than-expected capital expenditures for 2024, surprising analysts and causing a notable decline in share prices.
On Thursday, Petrobras’ non-voting shares fell over 3% on the Sao Paulo B3 exchange, while voting shares dropped more than 5% based on initial data. The broader Brazil equity benchmark Bovespa IBOV remained largely stable, reflecting mixed market reactions. Its increased investments for the upcoming year have led to some dissatisfaction among analysts, particularly regarding the lower-than-expected dividends due to the company’s spending patterns.
Last year, Petrobras exceeded its investment guidance by 15%, amounting to $16.6 billion—approximately $2.1 billion higher than projected. The firm had initially revised its guidance downward from $18.5 billion in August, aiming for a more realistic spending outlook. Historically, Petrobras has typically underperformed against planned expenditures but has shown a shift under current leadership, reflecting a commitment to enhance investments for economic growth and local job creation.
Chambriard has acknowledged analysts’ concerns, stating her understanding of their frustration regarding dividends, which are expected to total 9.1 billion reais ($1.57 billion) for the fourth quarter. The company maintains its capital expenditure guidance for 2025, with a potential variation of 10%, aiming for growth while being cautious with investor expectations. As the first quarter of the coming year approaches, it is suggested that capital expenditures will likely align with the lower end of this variance.
The long-term spending plan for 2025 to 2029, which amounts to $111 billion, remains unchanged, ensuring that Petrobras continues to prioritize strategic investments within its operational framework. These adjustments reflect both a response to market conditions and an alignment with governmental pressures to stimulate Brazil’s economy through increased activity in the energy sector.
In summary, Petrobras is shifting its investment strategy to potentially enhance oil production. Despite reporting higher capital expenditures for 2024, the company faces scrutiny from analysts concerning dividend payouts. Chief Executive Magda Chambriard has acknowledged this frustration while reaffirming the company’s commitment to boost investments in alignment with governmental priorities and long-term growth plans.
Original Source: www.tradingview.com
