Petrobras Q2 Earnings Miss on Oil Price Drop, Production Grows

Petroleo Brasileiro S.A., or Petrobras PBR, announced second-quarter earnings per ADS of 64 cents, missing the Zacks Consensus Estimate of 70 cents. The underperformance can be attributed to lower downstream production and a decline in realized oil prices. 

However, the bottom line improved from the year-ago profit of 47 cents due to production growth.

Consolidated net income, which strips out one-time items, came in at $4,101 million compared with $5,394 million a year earlier. Petrobras’ adjusted EBITDA fell to $9,242 million from $9,627 million a year ago.

Brazil's state-run energy giant reported revenues of $21,037 million, which fell 10.4% from the year-earlier sales of $23,467 million and marginally missed the Zacks Consensus Estimate of $21,040 million. 

Along with the second-quarter earnings announcement, PBR added that it plans to shell out RMB 8.7 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 2,909 thousand barrels of oil equivalent per day (MBOE/d) — 80% liquids — compared to 2,699 MBOE/d in the same period of 2024.

Brazilian oil and natural gas production — constituting approximately 99% of the total output — improved 8.1% to 2,879 MBOE/d. The growth reflects ramp-up of existing fields as well as the production start-up of FPSO Alexandre de Gusmao.

In the April to June period, the average sales price of oil (or the average Brent crude price) fell more than 20% year over year to $67.82 per barrel. The decrease in crude prices more than offset the rise in production, thereby having a negative effect on upstream unit sales. Overall, the segment’s revenues declined to $14,404 million in the quarter under review from $15,668 million in the year-ago period. 

As far as the bottom line is concerned, it was further dented by an uptick in pre-salt lifting costs (which rose 6.1% from the year-ago period to $6.64 per barrel). Consequently, the upstream unit recorded a net income of $3,974 million, down 24.1% from second-quarter 2024 earnings of $5,237 million.

Downstream (or Refining, Transportation and Marketing): Revenues from the segment totaled $19,795 million, 10.3% lower than the year-ago figure of $22,061 million, due to lower production volumes. Petrobras' downstream unit recorded a profit of $217 million, which fell sharply from earnings of $279 million in the second quarter of 2024. Apart from a decline in production volume, the unit’s income was affected by higher operating costs.

Costs

During the period, Petrobras’ sales, general and administrative expenses were $1,750 million, 3.7% lower than the year-ago quarter. But selling expenses rose from $1,268 million a year ago to $1,286 million. Overall, a significant reduction in “other taxes” led to a 7.2% decrease in total operating expenses.

The decline in costs was more than offset by lower revenues, leading to a drop in PBR’s operating income to $5,349 million in the second quarter of 2025 compared with $6,705 million a year ago.

Financial Position

During the three months ended June 30, 2025, Petrobras’ capital investments and expenditures totaled $4,431 million compared with $3,393 million in the prior-year quarter.

Importantly, the company generated a positive free cash flow for the 41st consecutive quarter, with the metric coming in at $3,445 million. However, it fell from $6,148 million recorded in last year’s corresponding period.

At the end of the second quarter, Petrobras had a net debt of $58,563 million, up from $46,160 million a year ago and $56,034 million as of March 31, 2025. The company ended the quarter with cash and cash equivalents of $6,996 million.

Petrobras’ net debt to trailing 12-month EBITDA ratio deteriorated to 1.53 from 0.95 in the previous year. It was 1.45 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 reported adjusted EPS of $1.77, beating the Zacks Consensus Estimate of $1.70. The outperformance stemmed from higher-than-expected production in the company’s key upstream segment. The company’s output of 3,396 MBOE/d — a record — came in above the consensus mark of 3,326 MBOE/d. Healthy gain in natural gas realizations and stronger refined product sales margins also played their part.  

Chevron recorded $8.6 billion in cash flow from operations compared to $6.3 billion in the year-ago period due to the absence of prior-year working capital outflows and higher cash distributions from Kazakhstan. Chevron’s free cash flow for the quarter was $4.9 billion.

Motor fuel retailer Murphy USA MUSA announced second-quarter 2025 earnings per share of $7.36, which beat the Zacks Consensus Estimate of $6.82 and compared favorably with the year-ago profit of $6.92. The outperformance was primarily on the back of higher fuel margins. Murphy USA’s operating revenues of $5 billion fell 8.2% year over year and missed the consensus mark by $468 million due to lower-than-expected petroleum product sales.

As of June 30, Murphy USA — which opened six new retail locations in the quarter and closed one outlet to take its store count to 1,766 — had cash and cash equivalents of $54.1 million and long-term debt (including lease obligations) of $2.1 billion, with a debt-to-capitalization of 76.2%. During the quarter, MUSA bought back shares worth $211.9 million.

U.S. energy operator APA Corporation APA reported adjusted earnings of 87 cents per share, beating the Zacks Consensus Estimate of 45 cents. The outperformance primarily reflects higher-than-expected production and lower costs. However, APA’s bottom line fell from the year-ago adjusted profit of $1.17 due to lower oil realizations.

APA’s second-quarter lease operating expenses totaled $367 million, down 20.2% from $460 million in the year-ago period. Moreover, a 10.1% drop in the cost of oil/gas equipment and lower depreciation outgo meant that total operating expenses decreased 15% from the corresponding period of 2024 to $1.6 billion.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research