Petrobras to Pay Up to $55 Billion in Dividends by 2029

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(Bloomberg) – Petroleo Brasileiro SA plans to pay up to $55 billion in dividends through 2029 as part of its five-year corporate plan as a pledge to continue returning money to investors.

Brazil’s state-controlled oil producer could also pay up to $10 billion in extraordinary dividends during this period, it said in a filing on Thursday. Petrobras also approved the payment of 20 billion reais ($3.4 billion) in extraordinary dividends, it said in a separate statement.

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Shareholder payouts are one of the main attractions for investors in Petrobras and other international oil majors. Shares in Petrobras have also helped bolster the finances of the government, its largest shareholder. The company’s goal is to pay dividends as long as it does not jeopardize its financial health, he said.

Analysts have rewarded the continuation of shareholder payments with favorable recommendations. Eighty-three percent of analysts have a buy rating on the stock, according to data compiled by Bloomberg.

Rio de Janeiro-based Petrobras confirmed that its strategic plan increased by nearly 9% to $111 billion. However, it reduced estimated spending by 2025 to $18.5 billion, down from $21 billion.

Most of the proceeds – $77.3 billion – will go to exploration and production projects in Brazil and other countries. The business plan includes ten new offshore production units, and five more vessels to be added after 2029. Petrobras also has six additional production vessels under study, including the twelfth stage of its large Buzios field in the deepwater pre-salt region. the Atlantic.

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Credit Ratings

Petrobras has increased its debt to $75 billion from $65 billion as it ramps up investments to expand oil and gas production. It lowered its net worth to $6 billion from $8 billion. Both of these moves give the company more flexibility to pay dividends while continuing to invest.

Petrobras became the most indebted oil company in the early 2010s when it embarked on a major expansion of its refining and offshore production facilities, and a return to high debt levels will worry investors.

Chief Financial Officer Fernando Melgarejo said during an interview in September that the increase in debt will not mean more debt, but will give the company flexibility in debt management. Petrobras is under pressure to continue rewarding shareholders with dividends while also using enough cash to help the government meet its economic growth targets.

Renewable Energy Consumption

Investors’ worries that Petrobras would raise money for low-profit renewable projects have not materialized. The plan for the next five years gradually increases the planned spending on energy conversion projects.

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The plan has earmarked $11 billion for gas, power and low-carbon projects, and only 27% of this spending is for projects that have already been implemented, while others are still under consideration and may not proceed.

The renewables strategy focuses on biofuels, offshore wind and solar and seeks to return to ethanol production. It also includes biomethane, hydrogen and carbon capture projects. Another $5.3 billion will go toward reducing emissions from its operations.

Refining and related business lines such as fertilizers and commodities will account for $20 billion in costs.

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