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Petrobras (PBR) Q2 Earnings in Line on Production Growth
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Petroleo Brasileiro S.A., or Petrobras (PBR - Free Report) , announced second-quarter earnings per ADS of 47 cents, same as the Zacks Consensus Estimate. The strong performance can be attributed to production gains.
However, the company’s bottom line fell from the year-ago adjusted profit of 90 cents due to rising pre-salt lifting costs and lower downstream margins.
Recurring net income, which strips one-time items, came in at $3,060 million compared with $5,958 million a year earlier. Petrobras’ adjusted EBITDA fell to $9,627 million from $11,436 million a year ago.
Brazil's state-run energy giant reported revenues of $23,467 million, which rose 2.1% from the year-earlier sales of $22,979 million but missed the Zacks Consensus Estimate of $24,223 million.
Along with the second-quarter earnings announcement, PBR added that it plans to shell out RMB 13.57 billion in dividends and equity interests.
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 second quarter reached 2,699 thousand barrels of oil equivalent per day (MBOE/d) — 80% liquids — up from 2,637 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 2.3% to 2,664 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 April to June period, the average sales price of oil (or the average Brent crude price) rose 8.4% year over year to $84.94 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 $15,668 million in the quarter under review from $14,722 million in the year-ago period.
But as far as the bottom line is concerned, an uptick in pre-salt lifting costs (which rose 9.6% from the year-ago period to $6.26 per barrel) meant that the upstream unit recorded a net income of $5,237 million, down 1.8% from the second-quarter 2023 earnings of $5,335 million.
Downstream (or Refining, Transportation and Marketing): Revenues from the segment totaled $22,061 million, 4.8% higher than the year-ago figure of $21,057 million, due to strong diesel and LPG sales. Petrobras' downstream unit recorded a profit of $279 million, which compared unfavorably with earnings of $312 million in the second quarter of 2023. The dip was due to lower oil products margins.
Costs
During the period, Petrobras’ sales, general and administrative expenses were $1,817 million, 14.4% higher than the year-ago quarter. Selling expenses also rose from $1,200 million a year ago to $1,268 million. Moreover, surging “other expenses” led to a $1,863 million increase in total operating expenses.
The jump in costs more than offset the increase in revenues, which meant that PBR reported an operating income of $6,705 million in the second quarter of 2024 compared with $8,478 million a year ago.
Financial Position
During the three months ended Jun 30, 2024, Petrobras’ capital investments and expenditures totaled $3,393 million compared with $3,100 million (excluding signature bonus) in the prior-year quarter.
Importantly, the Zacks Rank #3 (Hold) company generated a positive free cash flow for the 37th consecutive quarter, with the metric coming in at $6,148 million. However, it fell from $6,721 million recorded in last year’s corresponding period.
At the end of the second quarter of 2024, Petrobras had a net debt of $46,160 million, up from $42,177 million a year ago and $43,646 million as of Mar 31, 2024. The company ended the quarter with cash and cash equivalents of $7,884 million.
Petrobras’ net debt to trailing 12-month EBITDA ratio deteriorated to 0.95 from 0.74 in the previous year. It was 0.86 at the end of the previous quarter.
Some Key Energy Earnings
While we have discussed PBR’s second-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 second-quarter earnings per share of $2.55, lagging the Zacks Consensus Estimate of $2.88 and also below the year-ago adjusted profit of $3.08. product sales margins. This was partly offset by higher-than-expected U.S. production in the company’s key upstream segment. The unit’s domestic output of 1,572 thousand oil-equivalent barrels per day (MBOE/d) came in above the consensus mark of 1,535 MBOE/d.
CVX recorded $6.3 billion in cash flow from operations, same as the year-ago period as a drop in as lower earnings was somewhat offset by higher dividends from equity affiliates and lower working capital. Chevron’s free cash flow for the quarter was $2.3 billion. Further, Chevron paid $3 billion in dividends and bought back $3 billion worth of its shares.
ConocoPhillips (COP - Free Report) , one of the world’s largest independent oil and gas producers, reported second-quarter 2024 adjusted earnings per share of $1.98, missing the Zacks Consensus Estimate of $2.06. The bottom line, however, improved from the prior-year quarter’s $1.84 per share. ConocoPhillips’ higher costs and expenses led to a weaker-than-expected bottom line. The negatives were partially offset by strong oil equivalent production volumes — up 7.8% year over year.
As of Jun 30, 2024, ConocoPhillips had $4.3 billion in cash and cash equivalents. COP’s total long-term debt was $17 billion, while it had a short-term debt of $1.3 billion. Capital expenditure and investments totaled $3 billion. Net cash provided by operating activities was $4.9 billion.
Finally, we have refiner Marathon Petroleum’s (MPC - Free Report) second-quarter adjusted earnings per share of $4.12, which comfortably beat the Zacks Consensus Estimate of $3.04. The outperformance primarily reflects the stronger-than-expected performance of its Refining & Marketing segment. Operating income of the segment totaled $1.3 billion, surpassing the consensus mark of $1 billion.
Marathon Petroleum’s total refined product sales volumes were 3,742 thousand barrels per day (mbpd), down from 3,581 mbpd in the year-ago quarter. But throughput rose from 2,925 mbpd in the year-ago quarter to 3,065 mbpd and outperformed the Zacks Consensus Estimate of 2,968 mbpd. MPC’s operating costs per barrel decreased from $5.15 in the year-ago quarter to $4.97.
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Petrobras (PBR) Q2 Earnings in Line on Production Growth
Petroleo Brasileiro S.A., or Petrobras (PBR - Free Report) , announced second-quarter earnings per ADS of 47 cents, same as the Zacks Consensus Estimate. The strong performance can be attributed to production gains.
However, the company’s bottom line fell from the year-ago adjusted profit of 90 cents due to rising pre-salt lifting costs and lower downstream margins.
Recurring net income, which strips one-time items, came in at $3,060 million compared with $5,958 million a year earlier. Petrobras’ adjusted EBITDA fell to $9,627 million from $11,436 million a year ago.
Brazil's state-run energy giant reported revenues of $23,467 million, which rose 2.1% from the year-earlier sales of $22,979 million but missed the Zacks Consensus Estimate of $24,223 million.
Along with the second-quarter earnings announcement, PBR added that it plans to shell out RMB 13.57 billion in dividends and equity interests.
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 second quarter reached 2,699 thousand barrels of oil equivalent per day (MBOE/d) — 80% liquids — up from 2,637 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 2.3% to 2,664 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 April to June period, the average sales price of oil (or the average Brent crude price) rose 8.4% year over year to $84.94 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 $15,668 million in the quarter under review from $14,722 million in the year-ago period.
But as far as the bottom line is concerned, an uptick in pre-salt lifting costs (which rose 9.6% from the year-ago period to $6.26 per barrel) meant that the upstream unit recorded a net income of $5,237 million, down 1.8% from the second-quarter 2023 earnings of $5,335 million.
Downstream (or Refining, Transportation and Marketing): Revenues from the segment totaled $22,061 million, 4.8% higher than the year-ago figure of $21,057 million, due to strong diesel and LPG sales. Petrobras' downstream unit recorded a profit of $279 million, which compared unfavorably with earnings of $312 million in the second quarter of 2023. The dip was due to lower oil products margins.
Costs
During the period, Petrobras’ sales, general and administrative expenses were $1,817 million, 14.4% higher than the year-ago quarter. Selling expenses also rose from $1,200 million a year ago to $1,268 million. Moreover, surging “other expenses” led to a $1,863 million increase in total operating expenses.
The jump in costs more than offset the increase in revenues, which meant that PBR reported an operating income of $6,705 million in the second quarter of 2024 compared with $8,478 million a year ago.
Financial Position
During the three months ended Jun 30, 2024, Petrobras’ capital investments and expenditures totaled $3,393 million compared with $3,100 million (excluding signature bonus) in the prior-year quarter.
Importantly, the Zacks Rank #3 (Hold) company generated a positive free cash flow for the 37th consecutive quarter, with the metric coming in at $6,148 million. However, it fell from $6,721 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 second quarter of 2024, Petrobras had a net debt of $46,160 million, up from $42,177 million a year ago and $43,646 million as of Mar 31, 2024. The company ended the quarter with cash and cash equivalents of $7,884 million.
Petrobras’ net debt to trailing 12-month EBITDA ratio deteriorated to 0.95 from 0.74 in the previous year. It was 0.86 at the end of the previous quarter.
Some Key Energy Earnings
While we have discussed PBR’s second-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 second-quarter earnings per share of $2.55, lagging the Zacks Consensus Estimate of $2.88 and also below the year-ago adjusted profit of $3.08. product sales margins. This was partly offset by higher-than-expected U.S. production in the company’s key upstream segment. The unit’s domestic output of 1,572 thousand oil-equivalent barrels per day (MBOE/d) came in above the consensus mark of 1,535 MBOE/d.
CVX recorded $6.3 billion in cash flow from operations, same as the year-ago period as a drop in as lower earnings was somewhat offset by higher dividends from equity affiliates and lower working capital. Chevron’s free cash flow for the quarter was $2.3 billion. Further, Chevron paid $3 billion in dividends and bought back $3 billion worth of its shares.
ConocoPhillips (COP - Free Report) , one of the world’s largest independent oil and gas producers, reported second-quarter 2024 adjusted earnings per share of $1.98, missing the Zacks Consensus Estimate of $2.06. The bottom line, however, improved from the prior-year quarter’s $1.84 per share. ConocoPhillips’ higher costs and expenses led to a weaker-than-expected bottom line. The negatives were partially offset by strong oil equivalent production volumes — up 7.8% year over year.
As of Jun 30, 2024, ConocoPhillips had $4.3 billion in cash and cash equivalents. COP’s total long-term debt was $17 billion, while it had a short-term debt of $1.3 billion. Capital expenditure and investments totaled $3 billion. Net cash provided by operating activities was $4.9 billion.
Finally, we have refiner Marathon Petroleum’s (MPC - Free Report) second-quarter adjusted earnings per share of $4.12, which comfortably beat the Zacks Consensus Estimate of $3.04. The outperformance primarily reflects the stronger-than-expected performance of its Refining & Marketing segment. Operating income of the segment totaled $1.3 billion, surpassing the consensus mark of $1 billion.
Marathon Petroleum’s total refined product sales volumes were 3,742 thousand barrels per day (mbpd), down from 3,581 mbpd in the year-ago quarter. But throughput rose from 2,925 mbpd in the year-ago quarter to 3,065 mbpd and outperformed the Zacks Consensus Estimate of 2,968 mbpd. MPC’s operating costs per barrel decreased from $5.15 in the year-ago quarter to $4.97.