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Petroleo Brasileiro SA Petrobras ADR PBR

Morningstar Rating
Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Petrobras Announces Big 2021 Dividend on Back of Strong Q2, Further Debt Reduction

Allen Good, CFA Sector Strategist

Analyst Note

| Allen Good, CFA |

With a strong second quarter marked by higher earnings, stronger free cash and further debt reduction, Petrobras announced a surprisingly high dividend payout. For 2021, it plans to pay out $6 billion, nearly three time the average of the previous three years, in two installments, implying a yield of over 8% for ADRs. The final value to ADR holders will depend on exchange rates at the time of the payment, but at the current level the yield represents one of the highest in the sector. Although it is variable and dependent on future market conditions, it does signal, along with improved profitability and leverage metrics, that Petrobras is making continued progress on its debt reduction, divestment and focused investment plans. Our fair value estimate and moat rating are unchanged.

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Company Profile

Business Description

Petrobras is a Brazil-based integrated energy company controlled by the Brazilian government. The company focuses on exploration and production for oil and gas in Brazilian offshore fields. Production in 2020 was 2.8 million barrels of oil equivalent a day (83% oil production), and reserves stood at 8.8 billion boe (86% oil). Petrobras operates 13 refineries in Brazil with capacity of 2.2 million barrels a day and distributes refined products and natural gas throughout Brazil.

Contact
Avenida Republica do Chile, 65
Rio de Janeiro, RJ, 20031-912, Brazil
T +55 2132244477
Sector Energy
Industry Oil & Gas Integrated
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type —
Employees 49,050

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