Petrobras Misses Profit Forecasts, Boosts Investment Plans

(Credit: Petrobras)

Brazil's state-run oil firm Petrobras has frustrated market expectations as it increased investment projections for the year while reporting lower-than-expected financial results in the third quarter on Tuesday.

The firm's net profit of 39.7 billion reais ($7.10 billion), while a 21.5% increase from a year earlier, stood below the 47.0 billion reais expected by analysts in a LSEG poll.

The firm's financial results were impacted to the tune of 4.5 billion reais paid in taxes on oil exports, a levy created by Brazil's government after the start of the US-Israel war with Iran earlier in the year.

Adjusted earnings before interest, taxes, depreciation and amortization for the July-September quarter stood at 85.8 billion reais, a 34.3% rise, also below the 94.0 billion reais LSEG consensus.

The company announced 15.3 billion reais ($2.74 billion) in shareholder remuneration.

While financial results were below market expectations, Petrobras has for three quarters in a row beat its oil production record, said the firm, raising its 2026 oil output estimates.

"We have once again reached record oil and gas production levels, raising our production curve to a historic high for the company," said CEO Magda Chambriard in a statement.

Investments on the Rise

The firm increased its yearly capital expenditure forecast, a measure of investments, by more than $4 billion, after the figure rose nearly 17% in the quarter to $6.4 billion.

The increase does not represent a rise in total project costs, but mainly reflects exchange rate effects and improved performance in project execution, said the firm.

Under Chambriard, Petrobras has regularly elected to speed up investments when possible, in order to boost oil output. The firm said progress for the construction of production vessels destined for the Buzios, Atapu, and Sepia fields exceeded forecasts.

In the first nine months of the year, investments totaled $16.8 billion, representing a 20.2% increase compared to the same period the previous year.

"We are accelerating profitable investments that make up the company’s unique portfolio, and we will continue to generate value through growth and operating cash flow," said CFO Fernando Melgarejo in a statement.

($1 = 5.5926 reais)

(Reuters - Reporting by Fabio Teixeira and Marta Nogueira in Rio de Janeiro and Andre Romani in Sao Paulo; Editing by Chris Reese, Natalia Siniawski and Christopher Cushing)