Petrobras (PETR3; PETR4) plans to announce its production and sales report on July 29, followed by financial results on August 7.
According to XP Investimentos, Brazil’s state-owned oil major is predicted to post consistent operating earnings in the second quarter, despite a considerable decline in worldwide oil prices.
Earnings resilient as crack spreads offset Brent weakness
Petrobras EBITDA is projected at around US$10.5 billion by XP analysts Regis Cardoso and João Rodrigues, only 1% below last quarter.
The strength is due to positive domestic crack spreads and a small production increase that should offset lower Brent prices.
Brent crude averaged US$67 per barrel in 2Q25, down 12% from US$76 in1Q25.
This drop came on the heels of the US import tariffs widely referred to as “Liberation Day” upon importation on April 2nd.
Petrobras domestic gasoline and diesel prices did not decline along with the global benchmark, resulting in widening crack spreads in local terms.
“Brent oil was lower during the period, but higher crack spreads and production show compensation,” Cardoso and Rodrigues said.
Petrobras’ average daily production is expected to increase to 2.3 million barrels per day (MMbpd) in 2Q25, up from 2.2 MMbpd in Q1.
FX normalisation leads to a decrease in net income
XP expects net profits to be $4.8 billion, a 20% decrease from the previous quarter.
The decline is mainly due to reduced foreign exchange gains compared to the prior period, while analysts predict FX to continue to contribute positively.
Capital expenditure (capex) levels are expected to remain largely unchanged, resulting in a Free Cash Flow to Equity (FCFE) of US$2.6 billion, or 3.5% yield.
According to Petrobras’ current dividend policy, ordinary dividends are estimated to be around US$2.2 billion, representing a 3.0% yield relative to the share price.
XP’s model suggests wider EBITDA range
To account for marginal changes, XP utilised a differential model that adjusted earlier results. This resulted in an EBITDA range of US$9.3 billion to $11.6 billion, with an average of US$10.5 billion.
Despite short-term volatility, XP maintained a “buy” rating on Petrobras shares, with targets of R$46 for PETR3 and PETR4.
Sector-wide headwinds with select bright spots
Elsewhere, wider results from Brazil’s oil and gas sector are seen as more likely to reflect the effects of the global oil price fall.
The 12% decrease in Brent in dollars, and 13% in Brazilian Real terms, should negatively impact exploration and production (E&P) players, except for Brava (BRAV3), which increased production following the start of the FPSO Atlanta, Santander said.
Inventory losses from Petrobras’ cuts in 2Q25 are also pressuring fuel distribution players.
Santander, however, also forecasts a partial carbon offset by the consolidation of Comerc into Vibra and Hidrovias (HBSA3) into Ultrapar (UGPA3), and a big working-capital release due to the fall in fuel prices.
“In our view, Brava should be the sector’s highlight in 2Q25, given the positive operational and financial performance since the quarter began,” the lender said.
Braskem (BRKM5), on the other hand, is set to underperform, with weaker-than-expected results disappointing some investors.
As Petrobras prepares to disclose its second-quarter results, expectations are for a relatively consistent performance, aided by increased domestic profits and constant output.
While earnings may reflect macroeconomic headwinds such as declining oil prices and muted foreign exchange gains, solid cash flow and dividends are expected to keep shareholders engaged.
Investors and analysts will be watching closely on August 7 to see if the data match their expectations.
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