Petróleo Brasileiro SA Q3 FY2026 earnings call

• Record Production Growth: Oil production reached a record 2.9 million barrels per day in September 2026, up 12% year-over-year. Since May 2024, production has increased by 37%, driven by improved reservoir management that reduced decline rates from 10% to 3% annually.
• Capacity Expansion Without CapEx: Eleven platforms are operating above their nominal design capacity, adding approximately 280,000 barrels per day without new capital expenditure. Key examples include P78 and P79, which are producing well beyond rated limits through subsea tie-ins and efficiency gains.
• Refining Efficiency: Refinery utilization reached 99% in Q3 2026, with some units exceeding 100%. Diesel production hit a record 769,000 barrels per day. Domestic sales of refined products reached 1.85 million barrels per day, while exports hit a record 1.25 million barrels per day.
• Exploration Success: The Morpho Well in the Equatorial Margin yielded three distinct oil discoveries in a single location, validating the area's potential. Petrobras also acquired 21 new exploration blocks in recent ANP auctions.
• Financial Performance: Operating cash flow for Q3 2026 was $12 billion, a 20% increase year-over-year. Adjusted EBITDA reached $18.4 billion. Net income (excluding one-offs) was $9.3 billion. Gross debt was reduced to $70 billion, with net debt at $57.8 billion.
• Strategic Integration: Management emphasized vertical integration, particularly in diesel self-sufficiency and petrochemical synergies with Braskem, aiming for diesel self-sufficiency by 2030.

The provided transcript does not contain specific financial breakdowns for individual product segments (e.g., Upstream vs. Downstream revenue contributions or absolute segment profits). The report focuses on consolidated operational metrics and financial results.

• Production: Revised 2026 average oil production guidance upward to between 2.7 and 2.8 million barrels per day, up from an initial forecast of 2.5 million barrels per day.
• Capital Expenditure (CapEx): Revised 2026 CapEx guidance upward to a range of $21–22 billion, compared to the previous estimate of $16–17.4 billion. This increase is attributed to foreign exchange effects, accelerated FPSO construction, and higher well-tie-in activity.
• Operating Cash Flow: Revised 2026 operating cash flow guidance upward to a range of $45–50 billion, reflecting higher production volumes and favorable Brent price averages.
• Manageable Operating Expenses (GOG): Revised 2026 GOG guidance to $24.2 billion, representing a 2% reduction relative to 2025 actuals despite higher absolute costs due to FX and logistics.
• Lease Liabilities: Guidance for lease liabilities was increased significantly, primarily due to higher rig and vessel chartering costs required to support accelerated drilling and maintenance activities.

• Geopolitical Volatility: Unprecedented geopolitical tensions, including conflicts in the Middle East, have caused sharp fluctuations in oil prices and freight rates, impacting logistics costs and market stability.
• Regulatory and Policy Uncertainty: Ongoing internal discussions regarding the fuel price policy (CAC/VM bands) create uncertainty, particularly for gasoline pricing amidst competition from ethanol.
• Operational Maintenance Risks: The harsh marine environment requires aggressive maintenance; failure to maintain equipment integrity could lead to significantly higher costs and safety risks.
• Subsidy Dependencies: Reliance on federal subsidies to stabilize domestic fuel prices poses a risk if government support changes or is delayed.

Q: Gabriel Barra (Citibank) asked how Petrobras assesses its current fuel price policy given geopolitical volatility and whether adjustments to diesel/gasoline prices are needed in early 2027.

A: Director Angelica Laureano stated that Petrobras remains committed to its commercial strategy, which aims to reconcile competitiveness with value generation. She noted that while there are no immediate structural changes planned, the company is conducting internal discussions to evaluate situational adjustments to better address current market shifts and ensure adherence to the CAC/VM bands throughout the fiscal year.

Q: Bruno Amorim (Goldman Sachs) inquired about investment flexibility for 2027, asking if projects could be moved forward given the successful execution of higher-than-planned CapEx in 2026.

A: Director Renata Baruzzi explained that the company’s risk analysis confirmed high confidence in deployment, allowing them to mitigate execution risks and deliver more oil. They plan to maintain this pace in 2027, focusing on accelerating well connections and platform deliveries (like P80/P82) to maximize production and offset reservoir decline, ensuring efficient use of capital.

Q: Liliane Young (HSBC) asked about the importance of downstream verticalization, specifically regarding petrochemical integration and diesel self-sufficiency.

A: Director William França confirmed that integrating refining with petrochemicals is a core strategic priority. Petrobras aims for diesel self-sufficiency by 2030, with projects in six refineries adding 13,000 barrels/day of diesel capacity. Additionally, the company is actively seeking synergies with Braskem, having increased its stake, to leverage ethane resources and optimize resin production.

Q: Monique Natal (Itaú BBA) questioned the drivers behind the significant revision in leasing guidance, noting a large implicit deployment in Q4.

A: CFO Fernando Melgarejo attributed the increase to higher investment execution, including extended maturities on existing contracts and additional drilling needs. President Magda Chambriard added that maintaining platform integrity in Brazil’s aggressive marine environment requires frequent maintenance, necessitating more vessels and rigs than originally planned to prevent costly shutdowns.

Q: Jorge Grebridi (Scotiabank) asked for a comparison of progress in the Equatorial Margin versus the Pre-Salt area and its impact on future CapEx.

A: Director Sylvia Anjos highlighted that the Morpho Well discovery revealed three distinct deposits, offering high potential. While the Pre-Salt basin required many wells to define, the Equatorial Margin showed rich results early on. Petrobras will focus on drilling three licensed wells at Morpho next, potentially opening new frontiers in Amapá and Rio Grande do Norte without drastically altering the overall CapEx plan.