Petrobras Reports Weaker Earnings, Cuts Dividend amid Low Oil Prices Brazil

Petrobras, Brazil's state-controlled oil producer, reported weaker-than-expected financial results for mid-2025, impacted by lower oil prices despite a 7.8% year-over-year increase in oil and gas production to 2.9 million barrels per day. The company increased investments significantly, by 30.6% year-on-year and 9% from the previous quarter, focusing on developing deep-water oil fields, but this expansion contributed to a sharp rise in debt. Petrobras cut its dividend payout to $1.6 billion for the second quarter, below analyst expectations, as it navigates rising costs and one-off events such as asset impairments and labor agreements. CEO Magda Chambriard has pledged to tighten spending while maintaining production growth amid the challenging market environment. Despite a strong pre-tax profit margin and attractive dividend yield, Petrobras faces operational challenges reflected in a working capital deficit and fluctuating stock prices, with analysts maintaining a Hold rating but an AI analyst suggesting an Outperform. The company is also seeking environmental approval for offshore drilling in new regions to sustain future production levels.