What Goldman Sachs says about Petrobras (PETR4) strategy and prices


O Goldman Sachs reiterated the purchase recommendation for the Petrobras (PETR3; PETR4) when highlighting that he continues to see room for extraordinary dividends on March 7, when the company will report results for the fourth quarter of 2023 and fiscal year 2023. The bank’s report was made after the state-owned company held the “Deep Dive” event in New York on January 30th and 31st, providing more details on its Strategic Plan from 2024 to 2028.

At the event, Petrobras management reiterated the dividend policy applied quarterly and mentioned that the extraordinary dividend should only be paid once a year. “We see space for an announcement of up to US$7 billion, but we recognize that the amount to be paid may be lower depending on how the conservative administration will manage cash”, say analysts Bruno Amorim, Joao Frizo and Guilherme Costa Martins, in a report sent to clients.

Petrobras also clarified that it manages financial risk based on factors such as the price of oil and the level of production to determine how much money the company needs to retain. Finally, management reiterated that the creation of the dividend reserve was a way to better match payments to cash flows, as opposed to a distribution based solely on net income, according to Goldman.

In relation to the renewables segment, Petrobras highlighted that it intends to meet the US$11 billion budget announced in its strategic plan. The value includes possible mergers and acquisitions that are expected to be focused primarily on onshore wind and solar energy, as opposed to offshore wind energy, where investment is likely to be relatively low, given the early phase of preliminary studies of these. projects.

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The company also noted that it will target minority stakes in wind and solar projects, trying to leverage the experience and capabilities of strong partners in these segments.

Petrobras pricing policy

Regarding refining and fuel pricing policy, management said the recent level of capacity utilization (around 93%) is sustainable and should be a good benchmark for the future. Furthermore, the company reiterates that it does not see import price parity as the best approach in relation to fuel prices.

Petrobras management also presented the managers responsible for mergers and acquisitions (M&A) and governance, highlighting that they have created several procedures in recent years and that they are monitored by external entities, such as the Federal Audit Court (TCU ). “They mentioned that the TCU does not have veto power, but may eventually decide and apply penalties to the company and management if they find evidence of irregularities in such processes,” says Goldman.

Regarding production growth, the state-owned company reiterated its goal of keeping production stable at around 2.2 million barrels per day in the coming years, which Goldman considers very conservative (the bank’s expectation is around 2.2 million barrels per day). 3 million barrels per day in 2024). Petrobras also provided more details about the revitalization of the Campos Basin, where two new production units will be installed and highlighted that they see opportunities for growth in the pre-salt region.

Goldman Sachs target price for Petrobras

Goldman Sachs’ target price for Petrobras’ common shares is R$45.10, a potential appreciation of 6.9% over Wednesday’s closing (31). For the preferred share, the target price of R$41.00 represents a potential upside of 1.7%.

The article is in Portuguese

Tags: Goldman Sachs Petrobras PETR4 strategy prices



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