Petrobras has reaffirmed its investment strategy, facing a drop in share prices due to increased spending forecasts for 2024. CEO Magda Chambriard revealed plans to accelerate investments for higher oil production, addressing concerns over lower dividends stemming from elevated expenditures. The company’s capital spending reached $16.6 billion in 2023, exceeding guidance, while maintaining long-term spending plans unchanged for 2025-2029.
Petrobras, the Brazilian state-run oil company, has reaffirmed its investment strategy following a decrease in its share prices due to higher-than-expected investment announcements for 2024. CEO Magda Chambriard indicated that the company might accelerate future investments to enhance oil production sooner. This announcement led to a decline in non-voting shares by over 3% and a more than 5% dip in voting shares on the São Paulo B3 exchange, as traders reacted to the surprising financial outcomes reported Wednesday.
The firm disclosed that its capital spending last year reached $16.6 billion, which was approximately $2.1 billion over its prior guidance, initially set at $18.5 billion but reduced earlier in the year. Chambers addressed analysts’ concerns regarding lower dividends resulting from increased expenditures, acknowledging their “frustration.” Historically, Petrobras had tended to spend less than planned but revised its investment strategy this year, signifying a shift toward increased capital deployment under Brazilian President Luiz Inacio Lula da Silva’s government.
Despite the higher investments anticipated, analysts expected larger ordinary dividends than the proposed 9.1 billion reais ($1.57 billion) scheduled for disbursement. Petrobras is maintaining its guidance for 2025 capital expenditures, projecting an annual variation of 10% in anticipated spending. Looking ahead, Chambriard noted that investments in the first quarter would likely trend toward the lower end of this variation. However, Petrobras has yet to update its long-term spending plan, which amounts to $111 billion for 2025-2029.
In summary, Petrobras is reiterating its commitment to boost investments despite recent share price declines. The firm recognizes the necessity to enhance oil production and is addressing shareholder frustrations over lower dividends while maintaining a structured investment approach. The company’s ability to adapt its capital spending strategy reflects the dynamic nature of the oil market and governmental pressures for economic development.
Original Source: www.tradingview.com
