Petróleo Brasileiro S.A. - Petrobras
Energy · Integrated Oil & Gas
Structural: world-class pre-salt reserves at ~$30-35/bbl lifting cost - sits in the bottom decile of global cost curves alongside Saudi Aramco and Guyana ($XOM/$CVX/$HES). ~2.7 mbpd production, ~85% from pre-salt; reserve life ~10 years and rising as Buzios + Mero ramp.
- Lifting cost ~$30-35/bbl gives massive FCF cushion at $60+ Brent
- Dividend yield routinely 12-20% - among highest in global energy; statutory minimum + extraordinary payouts
- Buzios field is the largest deep-water discovery globally; multi-decade ramp
- Net debt down from ~$100B (2015) to ~$45B; investment grade restored
- Trades at ~3-4x EV/EBITDA vs $XOM/$CVX 6-7x - political risk discount embedded
- Government as controlling shareholder = capital allocation tail risk (Lula admin pushing capex up, dividends down vs Bolsonaro era)
- Fuel price parity policy can be overridden politically - refining margins compressed when domestic prices held below import parity
- Energy transition + Brazilian pension fund pressure to redirect FCF into renewables/petchem with sub-COE returns
- BRL volatility - USD ADR holders absorb FX swings
- Climate liability + Amazon equatorial margin drilling permits face regulatory friction