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Petrobras (PBR) Q4 Earnings Beat Estimates But Revenues Falter
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Brazil's state-run energy giant Petroleo Brasileiro S.A., or Petrobras (PBR - Free Report) announced fourth-quarter earnings per ADS of $1.25, beating the Zacks Consensus Estimate of $1.10 and significantly improving from the year-ago profit of 65 cents. The outperformance can be attributed to higher oil prices that resulted in strong upstream results, which more than offset the rising pre-salt lifting costs.
Recurring net income, which strips one-time items, came in at $8,163 million compared to $4,266 million a year earlier. Petrobras’ adjusted EBITDA rose to $13,903 million from $11,276 million a year ago.
The company reported revenues of $30,171 million, which jumped 25.6% from the year-earlier sales of $24,031 million but came in slightly below the Zacks Consensus Estimate of $30,691 million due to lower oil and gas production.
In further good news for investors, Petrobras plans to pay RMB 35.8 billion or roughly $6.9 billion in total payouts.
Petroleo Brasileiro S.A.- Petrobras Price, Consensus and EPS Surprise
Coming back to earnings, let's take a deeper look at the recent performances of PBR’s two main segments: Upstream (Exploration & Production) and Downstream (or Refining, Transportation and Marketing).
Upstream: The Rio de Janeiro-headquartered company’s average oil and gas production during the fourth quarter reached 2,646 thousand barrels of oil equivalent per day (MBOE/d) — 80% liquids — down from 2,704 MBOE/d in the same period of 2021.
Compared with the year-ago quarter, Brazilian oil and natural gas production — constituting approximately 99% of the total output — decreased 2% to 2,611 MBOE/d. The downside was blamed on divestments, decommissioning of the Marlim facilities, maintenance-related downtime, plus Petrobras’ lower working interest in the Buzios field, following a production-sharing contract.
In the October-to-December period, the average sales price of oil in Brazil improved 8.3% from the year-earlier period to $83.99 per barrel. The increase in crude prices more than offset the dip in production and thereby had a positive effect on upstream unit sales. Overall, the segment’s revenues moved up to $16,973 million in the quarter under review from $15,781 million in the year-ago period.
But as far as the bottom line is concerned, an uptick in pre-salt lifting costs (which rose 8.4% from the fourth quarter of 2021 to $5.70 per barrel) meant that the upstream unit recorded a net income of $5,751 million, down 11.3% from fourth-quarter 2021 earnings of $6,483 million.
Downstream (or Refining, Transportation and Marketing): Revenues from the segment totaled $27,542 million, up 30.9% from the year-ago figure of $21,044 million on higher fuel sales price. However, Petrobras' downstream unit came up with a profit of $1,474 million, which compared unfavorably with earnings of $1,751 million in the fourth quarter of 2021. The dip was on account of lower production volume and higher unit refining cost.
Costs
During the period, Petrobras’ sales, general and administrative expenses were $1,669 million, 19.4% higher than the year-ago period. Selling expenses also rose from $1,092 million a year ago to $1,293 million. Moreover, surging exploration costs and an impairment loss of $893 million (compared to a reverse impairment in the year-ago period) led to a $3,203 million increase in total operating expenses.
The jump in costs was more than neutralized by soaring revenues, which meant that PBR reported an operating income of $11,119 million in the fourth quarter of 2022 compared with $10,322 million a year ago.
Financial Position
During the three months ended Dec 31, 2022, Petrobras’ capital investments and expenditures (excluding signature bonus) totaled $2,876 million compared with $2,631 million in the prior-year quarter.
Importantly, the Zacks Rank #3 (Hold) company generated a positive free cash flow for the 31st consecutive quarter, with the metric rising to $9,287 million from $7,511 million recorded in last year’s corresponding period.
At the end of 2022, Petrobras had a net debt of $41,516 million, down from $47,626 million a year ago and $47,483 million as of Sep 30, 2022. The company ended the year with cash and cash equivalents of $7,996 million.
Meanwhile, Petrobras’ net debt to trailing 12 months EBITDA ratio improved to 0.63 from 1.09 in the previous year. It also bettered 0.75 at the end of the third quarter of 2022.
Some Important Q4 Energy Releases
While we have discussed PBR’s fourth-quarter results in detail, let’s take a look at some key energy releases of the October-December period.
SLB (SLB - Free Report) , the largest oilfield contractor, announced fourth-quarter 2022 earnings of 71 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 69 cents. SLB recorded total revenues of $7.9 billion, outpacing the Zacks Consensus Estimate by 0.7%.
SLB’s strong quarterly earnings resulted from strong activities in land and offshore resources in North America and Latin America. The company’s board approved a quarterly cash dividend of 25 cents per share, indicating a 43% increase from the last paid dividend.
U.S. energy powerhouse Chevron (CVX - Free Report) reported fourth-quarter earnings per share of $4.09, missing the Zacks Consensus Estimate of $4.16. The underperformance could be attributed to lower-than-expected bottom line in both the company’s segments. CVX’s upstream segment profit of $5.5 billion came 19.8% below the consensus mark, while the downstream business missed the Zacks Consensus Estimate by 3.4%.
The company recorded $12.5 billion in cash flow from operations compared to $9.5 billion a year ago. The increasing cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was $8.7 billion. Further, Chevron paid $2.7 billion in dividends and bought back $3.8 billion worth of its shares.
Refining giant Marathon Petroleum (MPC - Free Report) reported adjusted earnings per share of $6.65, which comfortably beat the Zacks Consensus Estimate of $5.54 and compared with a profit of merely $1.30 per share in the year-ago period. MPC’s bottom line was favorably impacted by the stronger-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $3.9 billion, beating the Zacks Consensus Estimate by 38%.
In the reported quarter, Marathon Petroleum spent $849 million on capital programs (59% on Refining & Marketing and 35% on the Midstream segment) compared to $651 million in the year-ago period. As of Dec 31, MPC had cash and cash equivalents of $8.6 billion and total debt, including $26.7 billion of MPLX, with a debt-to-capitalization of 43.9%.
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Petrobras (PBR) Q4 Earnings Beat Estimates But Revenues Falter
Brazil's state-run energy giant Petroleo Brasileiro S.A., or Petrobras (PBR - Free Report) announced fourth-quarter earnings per ADS of $1.25, beating the Zacks Consensus Estimate of $1.10 and significantly improving from the year-ago profit of 65 cents. The outperformance can be attributed to higher oil prices that resulted in strong upstream results, which more than offset the rising pre-salt lifting costs.
Recurring net income, which strips one-time items, came in at $8,163 million compared to $4,266 million a year earlier. Petrobras’ adjusted EBITDA rose to $13,903 million from $11,276 million a year ago.
The company reported revenues of $30,171 million, which jumped 25.6% from the year-earlier sales of $24,031 million but came in slightly below the Zacks Consensus Estimate of $30,691 million due to lower oil and gas production.
In further good news for investors, Petrobras plans to pay RMB 35.8 billion or roughly $6.9 billion in total payouts.
Petroleo Brasileiro S.A.- Petrobras Price, Consensus and EPS Surprise
Petroleo Brasileiro S.A.- Petrobras price-consensus-eps-surprise-chart | Petroleo Brasileiro S.A.- Petrobras Quote
Coming back to earnings, let's take a deeper look at the recent performances of PBR’s two main segments: Upstream (Exploration & Production) and Downstream (or Refining, Transportation and Marketing).
Upstream: The Rio de Janeiro-headquartered company’s average oil and gas production during the fourth quarter reached 2,646 thousand barrels of oil equivalent per day (MBOE/d) — 80% liquids — down from 2,704 MBOE/d in the same period of 2021.
Compared with the year-ago quarter, Brazilian oil and natural gas production — constituting approximately 99% of the total output — decreased 2% to 2,611 MBOE/d. The downside was blamed on divestments, decommissioning of the Marlim facilities, maintenance-related downtime, plus Petrobras’ lower working interest in the Buzios field, following a production-sharing contract.
In the October-to-December period, the average sales price of oil in Brazil improved 8.3% from the year-earlier period to $83.99 per barrel. The increase in crude prices more than offset the dip in production and thereby had a positive effect on upstream unit sales. Overall, the segment’s revenues moved up to $16,973 million in the quarter under review from $15,781 million in the year-ago period.
But as far as the bottom line is concerned, an uptick in pre-salt lifting costs (which rose 8.4% from the fourth quarter of 2021 to $5.70 per barrel) meant that the upstream unit recorded a net income of $5,751 million, down 11.3% from fourth-quarter 2021 earnings of $6,483 million.
Downstream (or Refining, Transportation and Marketing): Revenues from the segment totaled $27,542 million, up 30.9% from the year-ago figure of $21,044 million on higher fuel sales price. However, Petrobras' downstream unit came up with a profit of $1,474 million, which compared unfavorably with earnings of $1,751 million in the fourth quarter of 2021. The dip was on account of lower production volume and higher unit refining cost.
Costs
During the period, Petrobras’ sales, general and administrative expenses were $1,669 million, 19.4% higher than the year-ago period. Selling expenses also rose from $1,092 million a year ago to $1,293 million. Moreover, surging exploration costs and an impairment loss of $893 million (compared to a reverse impairment in the year-ago period) led to a $3,203 million increase in total operating expenses.
The jump in costs was more than neutralized by soaring revenues, which meant that PBR reported an operating income of $11,119 million in the fourth quarter of 2022 compared with $10,322 million a year ago.
Financial Position
During the three months ended Dec 31, 2022, Petrobras’ capital investments and expenditures (excluding signature bonus) totaled $2,876 million compared with $2,631 million in the prior-year quarter.
Importantly, the Zacks Rank #3 (Hold) company generated a positive free cash flow for the 31st consecutive quarter, with the metric rising to $9,287 million from $7,511 million recorded in last year’s corresponding period.
At the end of 2022, Petrobras had a net debt of $41,516 million, down from $47,626 million a year ago and $47,483 million as of Sep 30, 2022. The company ended the year with cash and cash equivalents of $7,996 million.
Meanwhile, Petrobras’ net debt to trailing 12 months EBITDA ratio improved to 0.63 from 1.09 in the previous year. It also bettered 0.75 at the end of the third quarter of 2022.
Some Important Q4 Energy Releases
While we have discussed PBR’s fourth-quarter results in detail, let’s take a look at some key energy releases of the October-December period.
SLB (SLB - Free Report) , the largest oilfield contractor, announced fourth-quarter 2022 earnings of 71 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 69 cents. SLB recorded total revenues of $7.9 billion, outpacing the Zacks Consensus Estimate by 0.7%.
SLB’s strong quarterly earnings resulted from strong activities in land and offshore resources in North America and Latin America. The company’s board approved a quarterly cash dividend of 25 cents per share, indicating a 43% increase from the last paid dividend.
U.S. energy powerhouse Chevron (CVX - Free Report) reported fourth-quarter earnings per share of $4.09, missing the Zacks Consensus Estimate of $4.16. The underperformance could be attributed to lower-than-expected bottom line in both the company’s segments. CVX’s upstream segment profit of $5.5 billion came 19.8% below the consensus mark, while the downstream business missed the Zacks Consensus Estimate by 3.4%.
The company recorded $12.5 billion in cash flow from operations compared to $9.5 billion a year ago. The increasing cash flow could be attributed to strong price realizations in the upstream business. Importantly, Chevron’s free cash flow for the quarter was $8.7 billion. Further, Chevron paid $2.7 billion in dividends and bought back $3.8 billion worth of its shares.
Refining giant Marathon Petroleum (MPC - Free Report) reported adjusted earnings per share of $6.65, which comfortably beat the Zacks Consensus Estimate of $5.54 and compared with a profit of merely $1.30 per share in the year-ago period. MPC’s bottom line was favorably impacted by the stronger-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $3.9 billion, beating the Zacks Consensus Estimate by 38%.
In the reported quarter, Marathon Petroleum spent $849 million on capital programs (59% on Refining & Marketing and 35% on the Midstream segment) compared to $651 million in the year-ago period. As of Dec 31, MPC had cash and cash equivalents of $8.6 billion and total debt, including $26.7 billion of MPLX, with a debt-to-capitalization of 43.9%.
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