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Petrobras (PBR) Q1 Earnings Lag on High Pre-Salt Lifting Costs
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Petroleo Brasileiro S.A., or Petrobras (PBR - Free Report) , announced first-quarter earnings per ADS of 75 cents, missing the Zacks Consensus Estimate of 84 cents. Earnings also came in well below the year-ago profit of $1.11.
The underperformance can be blamed on rising pre-salt lifting costs that resulted in weak upstream profitability, plus higher refining outlay. This was partly offset by strong production.
Recurring net income, which strips one-time items, came in at $4,816 million compared with $7,392 million a year earlier. Petrobras’ adjusted EBITDA fell to $12,127 million from $13,956 million a year ago.
Brazil's state-run energy giant reported revenues of $23,768 million, which plunged 11.2% from the year-earlier sales of $26,771 million and missed the Zacks Consensus Estimate of $24,633 million.
Petroleo Brasileiro S.A.- Petrobras Price, Consensus and EPS Surprise
Along with the first-quarter earnings announcement, PBR added that it plans to shell out RMB 13.45 billion or roughly $2.61 billion in dividends.
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 first quarter reached 2,776 thousand barrels of oil equivalent per day (MBOE/d) — 81% liquids — up from 2,676 MBOE/d in the same period of 2023.
Compared with the year-ago quarter, Brazilian oil and natural gas production — constituting approximately 99% of the total output — increased 3.9% to 2,742 MBOE/d. The upside primarily reflected the ramp-up of the five FPSOs — Almirante Barroso, P-71, Anna Nery, Anita Garibaldi and Sepetiba.
In the January to March period, the average sales price of oil (or the average Brent crude price) rose 2.4% year over year to $83.24 per barrel. The increase in crude prices was aided by the higher production, thereby having a positive effect on upstream unit sales. Overall, the segment’s revenues improved to $16,077 million in the quarter under review from $15,730 million in the year-ago period.
But as far as the bottom line is concerned, an uptick in pre-salt lifting costs (which rose 11.9% from the year-ago period to $6.28 per barrel) meant that the upstream unit recorded a net income of $5,846 million, down 4.3% from the first-quarter 2023 earnings of $6,108 million.
Downstream (or Refining, Transportation and Marketing): Revenues from the segment totaled $22,190 million, 10.7% lower than the year-ago figure of $24,842 million, due to a decline in domestic sales volumes. Petrobras' downstream unit recorded a profit of $775 million, which compared unfavorably with earnings of $1,199 million in the first quarter of 2023. Apart from volume issues, the dip was due to higher unit refining costs.
Costs
During the period, Petrobras’ sales, general and administrative expenses were $1,780 million, 12.8% higher than the year-ago quarter. Selling expenses also rose from $1,221 million a year ago to $1,333 million. Moreover, surging “other expenses” led to a $713 million increase in total operating expenses.
The jump in costs and lower revenues meant that PBR reported an operating income of $8,984 million in the first quarter of 2024 compared with $11,553 million a year ago.
Financial Position
During the three months ended Mar 31, 2024, Petrobras’ capital investments and expenditures (excluding signature bonus) totaled $3,043 million compared with $2,482 million in the prior-year quarter.
Importantly, the Zacks Rank #3 (Hold) company generated a positive free cash flow for the 36th consecutive quarter, with the metric coming in at $6,547 million. However, it fell from $7,916 million recorded in last year’s corresponding period.
At the end of the first quarter of 2024, Petrobras had a net debt of $43,646 million, up from $37,588 million a year ago and $44,698 million as of Dec 31, 2023. The company ended the quarter with cash and cash equivalents of $11,547 million.
Petrobras’ net debt to trailing 12-month EBITDA ratio deteriorated to 0.86 from 0.58 in the previous year. It was 0.85 at the end of 2023.
Some Key Energy Earnings
While we have discussed PBR’s first-quarter results in detail, let’s see how some other energy companies have fared this earnings season.
Oil supermajor Chevron (CVX - Free Report) reported adjusted first-quarter earnings per share of $2.93, ahead of the Zacks Consensus Estimate of $2.84. The outperformance could be attributed to higher-than-expected U.S. production in the company’s key upstream segment. The unit’s domestic output of 1,573 thousand oil-equivalent barrels per day (MBOE/d) came in above the consensus mark of 1,544 MBOE/d.
CVX recorded $6.8 billion in cash flow from operations compared to $7.2 billion a year ago. The decrease in cash flow could be attributed to weaker price realizations in the upstream business. Chevron’s free cash flow for the quarter was $2.7 billion.
ConocoPhillips (COP - Free Report) , one of the world’s largest independent oil and gas producers, reported first-quarter 2024 adjusted earnings per share of $2.03, beating the Zacks Consensus Estimate of $1.99. The bottom line, however, declined from the prior-year quarter’s $2.38 per share. ConocoPhillips’ higher oil equivalent production volumes — up 6.1% year over year — led to a better-than-expected bottom line. The positives were partially offset by lower average realized oil equivalent prices.
As of Mar 31, 2024, ConocoPhillips had $5.6 billion in cash and cash equivalents. COP’s total long-term debt was $17.3 billion, while it had a short-term debt of $1.1 billion. Capital expenditure and investments totaled $2.9 billion. Net cash provided by operating activities was $4.9 billion.
Finally, we have refiner Marathon Petroleum’s (MPC - Free Report) first-quarter adjusted earnings per share of $2.78, which comfortably beat the Zacks Consensus Estimate of $2.53. The outperformance primarily reflects the stronger-than-expected performance of its Refining & Marketing segment. Operating income of the segment totaled $766 billion, surpassing the consensus mark of $660 million.
MPC’s total refined product sales volumes were 3,277 thousand barrels per day (mbpd), down from 3,352 mbpd in the year-ago quarter. Also, throughput dropped from 2,837 mbpd in the year-ago quarter to 2,664 mbpd and underperformed the Zacks Consensus Estimate of 2,728 mbpd. MPC’s operating costs per barrel increased from $5.68 in the year-ago quarter to $6.14.
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Petrobras (PBR) Q1 Earnings Lag on High Pre-Salt Lifting Costs
Petroleo Brasileiro S.A., or Petrobras (PBR - Free Report) , announced first-quarter earnings per ADS of 75 cents, missing the Zacks Consensus Estimate of 84 cents. Earnings also came in well below the year-ago profit of $1.11.
The underperformance can be blamed on rising pre-salt lifting costs that resulted in weak upstream profitability, plus higher refining outlay. This was partly offset by strong production.
Recurring net income, which strips one-time items, came in at $4,816 million compared with $7,392 million a year earlier. Petrobras’ adjusted EBITDA fell to $12,127 million from $13,956 million a year ago.
Brazil's state-run energy giant reported revenues of $23,768 million, which plunged 11.2% from the year-earlier sales of $26,771 million and missed the Zacks Consensus Estimate of $24,633 million.
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
Along with the first-quarter earnings announcement, PBR added that it plans to shell out RMB 13.45 billion or roughly $2.61 billion in dividends.
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 first quarter reached 2,776 thousand barrels of oil equivalent per day (MBOE/d) — 81% liquids — up from 2,676 MBOE/d in the same period of 2023.
Compared with the year-ago quarter, Brazilian oil and natural gas production — constituting approximately 99% of the total output — increased 3.9% to 2,742 MBOE/d. The upside primarily reflected the ramp-up of the five FPSOs — Almirante Barroso, P-71, Anna Nery, Anita Garibaldi and Sepetiba.
In the January to March period, the average sales price of oil (or the average Brent crude price) rose 2.4% year over year to $83.24 per barrel. The increase in crude prices was aided by the higher production, thereby having a positive effect on upstream unit sales. Overall, the segment’s revenues improved to $16,077 million in the quarter under review from $15,730 million in the year-ago period.
But as far as the bottom line is concerned, an uptick in pre-salt lifting costs (which rose 11.9% from the year-ago period to $6.28 per barrel) meant that the upstream unit recorded a net income of $5,846 million, down 4.3% from the first-quarter 2023 earnings of $6,108 million.
Downstream (or Refining, Transportation and Marketing): Revenues from the segment totaled $22,190 million, 10.7% lower than the year-ago figure of $24,842 million, due to a decline in domestic sales volumes. Petrobras' downstream unit recorded a profit of $775 million, which compared unfavorably with earnings of $1,199 million in the first quarter of 2023. Apart from volume issues, the dip was due to higher unit refining costs.
Costs
During the period, Petrobras’ sales, general and administrative expenses were $1,780 million, 12.8% higher than the year-ago quarter. Selling expenses also rose from $1,221 million a year ago to $1,333 million. Moreover, surging “other expenses” led to a $713 million increase in total operating expenses.
The jump in costs and lower revenues meant that PBR reported an operating income of $8,984 million in the first quarter of 2024 compared with $11,553 million a year ago.
Financial Position
During the three months ended Mar 31, 2024, Petrobras’ capital investments and expenditures (excluding signature bonus) totaled $3,043 million compared with $2,482 million in the prior-year quarter.
Importantly, the Zacks Rank #3 (Hold) company generated a positive free cash flow for the 36th consecutive quarter, with the metric coming in at $6,547 million. However, it fell from $7,916 million recorded in last year’s corresponding period.
You can see the complete list of today’s Zacks #1 Rank stocks here.
At the end of the first quarter of 2024, Petrobras had a net debt of $43,646 million, up from $37,588 million a year ago and $44,698 million as of Dec 31, 2023. The company ended the quarter with cash and cash equivalents of $11,547 million.
Petrobras’ net debt to trailing 12-month EBITDA ratio deteriorated to 0.86 from 0.58 in the previous year. It was 0.85 at the end of 2023.
Some Key Energy Earnings
While we have discussed PBR’s first-quarter results in detail, let’s see how some other energy companies have fared this earnings season.
Oil supermajor Chevron (CVX - Free Report) reported adjusted first-quarter earnings per share of $2.93, ahead of the Zacks Consensus Estimate of $2.84. The outperformance could be attributed to higher-than-expected U.S. production in the company’s key upstream segment. The unit’s domestic output of 1,573 thousand oil-equivalent barrels per day (MBOE/d) came in above the consensus mark of 1,544 MBOE/d.
CVX recorded $6.8 billion in cash flow from operations compared to $7.2 billion a year ago. The decrease in cash flow could be attributed to weaker price realizations in the upstream business. Chevron’s free cash flow for the quarter was $2.7 billion.
ConocoPhillips (COP - Free Report) , one of the world’s largest independent oil and gas producers, reported first-quarter 2024 adjusted earnings per share of $2.03, beating the Zacks Consensus Estimate of $1.99. The bottom line, however, declined from the prior-year quarter’s $2.38 per share. ConocoPhillips’ higher oil equivalent production volumes — up 6.1% year over year — led to a better-than-expected bottom line. The positives were partially offset by lower average realized oil equivalent prices.
As of Mar 31, 2024, ConocoPhillips had $5.6 billion in cash and cash equivalents. COP’s total long-term debt was $17.3 billion, while it had a short-term debt of $1.1 billion. Capital expenditure and investments totaled $2.9 billion. Net cash provided by operating activities was $4.9 billion.
Finally, we have refiner Marathon Petroleum’s (MPC - Free Report) first-quarter adjusted earnings per share of $2.78, which comfortably beat the Zacks Consensus Estimate of $2.53. The outperformance primarily reflects the stronger-than-expected performance of its Refining & Marketing segment. Operating income of the segment totaled $766 billion, surpassing the consensus mark of $660 million.
MPC’s total refined product sales volumes were 3,277 thousand barrels per day (mbpd), down from 3,352 mbpd in the year-ago quarter. Also, throughput dropped from 2,837 mbpd in the year-ago quarter to 2,664 mbpd and underperformed the Zacks Consensus Estimate of 2,728 mbpd. MPC’s operating costs per barrel increased from $5.68 in the year-ago quarter to $6.14.