Despite profit drop, Petrobras records 10th highest quarterly earnings on eve of 70th anniversary

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Petrobras, the Brazilian state-controlled oil giant, announced a significant drop in quarterly profits, with results adversely affected by the depreciation of Brent crude prices and rising operating expenses. The company reported a net profit of 28.8 billion reais (US$5.8 billion) in the second quarter of 2023, marking a sharp decline of 47% from the 54.3 billion reais recorded in the same period a year ago. Net revenues also saw a substantial decline, falling 33% from 171 billion reais to 113.8 billion reais year on year.

Despite the downturn, the quarterly earnings for the period from April to June stood as the 10th highest in Petrobras’ history. The company is set to celebrate its 70th anniversary in October, demonstrating its enduring presence in the Brazilian energy sector.

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During the second quarter of 2023, oil production experienced a slight decline of 1.8% compared to the previous three months, amounting to 2.102 million barrels per day (bpd). However, output from the pre-salt province reached a record high of 1.708 million bpd, accounting for a substantial 81% of the total production. This increase was attributed to the successful ramp-up of the P-71 floating production, storage, and offloading vessel (FPSO) at the Itapu field and the commencement of operations of the Almirante Barroso FPSO on the Buzios field.

Conversely, hydrocarbon production saw a 1.5% dip during the period, resulting in a total of 2.637 million barrels of oil equivalent per day (boepd). Production from the post-salt section faced a more significant setback, plummeting by 9.7%. This decline was primarily due to operational shutdowns and maintenance activities, as well as the divestment of the Albacora Leste field to Brazilian independent oil company, Prio.

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Petrobras demonstrated its commitment to investments in the energy sector, with US$3.2 billion invested in the second quarter of 2023, reflecting a notable increase of 31% from the first three months of the year. Most of the investment, totaling US$2.6 billion, was allocated to the upstream sector.

Additionally, Petrobras made a significant change to its dividend payment policy, approving the payment of 15 billion reais in dividends to shareholders. This amount marked a substantial reduction from the 24.7 billion reais approved in the previous quarter. The alteration in the dividend payment formula was implemented to better align with planned investments outlined in the five-year business plan from 2024 to 2028, currently under discussion by the board of directors.

Despite the challenges posed by fluctuations in oil prices and higher operational expenses, Petrobras remains determined to uphold its position as a key player in the global oil and gas industry. 

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