Brazil’s state-owned oil company Petrobras reported combined oil, gas and NGL production of 2.653 MMboe/d in the second quarter 2022, down 5.1% from the prior quarter and second quarter 2021. Despite the hiccup, the company still expects production to average around 2.6 MMboe/d in 2022.

Petrobras’ results provided “a positive read-through for the upcoming 2Q:22 results,” Credit Suisse research analysts Regis Cardoso and Marcelo Gumiero wrote July 21 in an research note to clients. They said the main positive highlight includes a drawdown of inventories “which might be an indication of good results ahead.”

Petrobras’ overall long-term business strategy remains focused on growing reserves and production in the pre-salt – which accounted for 73% of total production in the second quarter – while divesting non-core assets and maintaining its long-term debt in the $60 billion-$65 billion range or lower in order to provide higher returns to its shareholders.

Production declines

Total production during the second quarter was negatively impacted by the start of production agreements and increased shutdowns at some units and slightly offset by gains from the startup of one floating production storage and offloading (FPSO) unit and ramp-ups at others, Petrobras announced July 21 in its quarterly production and sales report.

Activities putting downward pressure on volumes during the quarter included the start of Transfer of Rights (TOR) production share agreement for surplus volumes at the Atapu and Sepia fields, which resulted in the loss of 90 Mboe/d, as well as a higher number of shutdowns at production units P-70 (Atapu field), Cidade de Anchieta (Jubarte), Cidade de Maricá (Tupi), P-76 and P-74 (Búzios), P-51 (Marlim Sul), P-61 (Papa-terra), P-25 and P-31 (Albacora), the company said.

The negative impacts were partially offset by the start of production at the Guanabara FPSO in Mero field and the ramp-up of production at the Carioca FPSO in Sépia field, as well as the P-68 unit in Berbigão and Sururu fields.

Net exports reached 432 Mbbl/d in the second quarter, up 5.1% sequentially compared to the prior quarter due to higher exports of oil products, mainly naphtha, gasoline, fuel oil and lower oil imports. Compared to the same year ago quarter, net exports were down 33.7%.

Dividend watch

Rio de Janeiro-based Petrobras “might announce dividends ranging from $10 billion-$14 billion relative to the 2Q22 results, which represents a 14%-20% dividend yield in a single quarter, at the current share price,” the Credit Suisse analysts wrote.

Petrobras “could eventually announce deferred dividends payments (e.g. payments in 3Q:22 and 4Q:22), allowing for higher dividends without compromising the balance sheet in the short-term,” the analysts added.