Page 4 - LatAmOil Week 47 2022

LatAmOil COMMENTARY LatAmOil

Petrobras hit an all-time production high in October 2022 (Photo: Petrobras)

Petrobras: About to come

down from a high point?

As Brazilian output hits an all-time high, Lula appears to be gearing up for major changes at Petrobras

IN September of this year, Brazil’s oil and gas special dividend yield came to an impressive
industry succeeded in pushing production 40% in the third quarter, according to the same
WHAT: above the level of 4mn barrels of oil equivalent interim report.)
UBS Group has changed per day (boepd) for only the second time in its It remains to be seen, though, whether state-
its recommendation on history. owned Petrobras can sustain this high level of
Petrobras stock from buy It had not done so since January 2020, shortly financial and operational performance. At least
to sell. before the outbreak of the coronavirus (COVID- one major investment bank suspects that it can-
19) pandemic. not, and the NOC’s stock prices have responded
WHY: Then in October the sector hit a new record to that suspicion.
Lula’s election victory high. According to preliminary data from the
over Bolsonaro has National Agency of Petroleum, Natural Gas UBS’ expectations
made market observers and Biofuels (ANP), the country had extracted Earlier this week, Switzerland’s UBS Group pub-
nervous.
4.18mn boepd last month, up by about 2% lished a note predicting an “upcoming switch in
on the previous month’s final figure of 4.1mn the company’s direction.” It explained its forecast
WHAT NEXT: boepd. by saying that Petrobras faced significant risks
One of the first changes
to be made could be a This record high follows several years of related to its organisational structure and debt
freeze on asset sales. strong growth – especially on the part of Petro- obligations, partly because of shifts in the global
bras, Brazil’s national oil company (NOC). It energy markets but also because of changes in
also comes on the heels of an interim report the Brazilian political scene.
showing that the company’s EBITDA (earn- “Six years have passed, and we now believe
ings before interest, taxation, depreciation and these phases are on a path of reversion, with
amortisation) amounted to $17.2bn in the third the upcoming years looking more sombre than
quarter of 2022, the second-highest quarterly the heights Petrobras has reached,” commented
figure ever posted. (Additionally, the NOC’s UBS analyst Luiz Carvalho

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