(Bloomberg) — Brazil’s state-controlled oil producer Petrobras reported weaker-than-expected results and cut its dividend after lower oil prices offset stronger production figures.
Petroleo Brasileiro SA, as it is formally known, increased investments 30.6% on year and 9% from the previous quarter to $4.4 billion as it develops massive deep-water oil fields. Investors have been hoping to see Petrobras contain capital expenditures to help preserve shareholder payouts.
Chief Executive Officer Magda Chambriard has vowed to tighten spending to navigate the challenging scenario of lower oil prices, while sticking to a production expansion.
Petrobras also cited one-off events that include asset impairments and labor agreements.
Adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, was 52.3 billion reais ($9.6 billion), trailing the 56.9 billion-reais estimate. Petrobras will pay $1.6 billion in second-quarter dividends and interest on capital, it said in a filing. Expectations were for a $2.2 billion payout, according to an average of five analyst forecasts reviewed by Bloomberg.
The lower dividends came despite a significant boost in second-quarter output, driven by the rapid ramp-up of its offshore Buzios field and the nearby Mero field. The company’s oil and natural gas output climbed 7.8% year-over-year to 2.9 million barrels per day.
The company reported a sharp increase in debt that it attributed to growth in oil platform leasing with new units coming on line. Brazil needs to open up new offshore regions to oil exploration to prevent production from going into decline in the 2030s.
The Rio de Janeiro-based company hopes to get the green light for an oil-spill-simulation test at a key offshore region off the coast of the Amazon forest. The company will meet Brazil environmental officials next week for planning. The test is considered the last step to obtain a permit to drill a block in the Foz do Amazonas basin, following a years-long battle with environmental authorities.
Oil prices have fluctuated sharply, fueled by U.S. President Donald Trump’s trade war and rising output from OPEC+, which clouded the supply-demand outlook. International crude prices were nearly $20 per barrel lower year-over-year during the period.
Net income beat estimates at 26.65 billion reais, it said in the earnings release. Analysts tracked by Bloomberg expected 21.8 billion reais.
