Petroleo Brasileiro S.A., or Petrobras PBR, announced fourth-quarter earnings per ADS of 49 cents, ahead of the Zacks Consensus Estimate of 37 cents. The better-than-expected performance can be attributed to higher downstream volumes and lower refining costs. 

However, the company’s bottom line fell from the year-ago profit of $1.27 due to lower production and weak commodity price realizations. 

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Consolidated net income, which strips out one-time items, came in at $3,083 million compared with $7,642 million a year earlier. Petrobras’ adjusted EBITDA fell to $7,165 million from $13,470 million a year ago.

Brazil's state-run energy giant reported revenues of $20,815 million, which fell 23.2% from the year-earlier sales of $27,107 million and missed the Zacks Consensus Estimate of $21,135 million. 

Along with the fourth-quarter earnings announcement, PBR added that it plans to shell out RMB 9.1 billion in dividends and equity interests.

Coming back to earnings, let's take a deeper look at the recent performances of PBR’s two main segments: Upstream (Exploration & Production) and Downstream (or Refining, Transportation and Marketing).

Segmental Performance

Upstream: The Rio de Janeiro-headquartered company’s average oil and gas production during the fourth quarter reached 2,628 thousand barrels of oil equivalent per day (MBOE/d) — 80% liquids — down from 2,935 MBOE/d in the same period of 2023.

Compared with the year-ago quarter, Brazilian oil and natural gas production — constituting approximately 99% of the total output — decreased 10.5% to 2,597 MBOE/d. The downside primarily reflected maintenance-related interruptions in the Búzios field.

In the October to December period, the average sales price of oil (or the average Brent crude price) fell 11% year over year to $74.69 per barrel. The decrease in crude prices, together with lower production, had a negative effect on upstream unit sales. Overall, the segment’s revenues declined to $13,388 million in the quarter under review from $18,506 million in the year-ago period. 

As far as the bottom line is concerned, it was further dented by an uptick in pre-salt lifting costs (which rose 8.5% from the year-ago period to $6.65 per barrel). Consequently, the upstream unit recorded a net income of $2,094 million, down 55.8% from fourth-quarter 2023 earnings of $4,734 million.

Downstream (or Refining, Transportation and Marketing): Revenues from the segment totaled $19,291 million, 23.7% lower than the year-ago figure of $25,278 million, due to lower diesel volumes. Petrobras' downstream unit recorded a profit of $15 million, which fell sharply from earnings of $711 million in the fourth quarter of 2023. Apart from a decline in sales volume, the unit’s income was affected by lower oil product realizations.

Costs

During the period, Petrobras’ sales, general and administrative expenses were $1,520 million, 14.8% lower than the year-ago quarter. Selling expenses also fell from $1,329 million a year ago to $1,080 million. However, a 76% jump in “other expenses” led to a $564 million increase in total operating expenses.

The rise in costs, coupled with the decrease in revenues, led to a drop in PBR’s operating income to $2,787 million in the fourth quarter of 2024 compared with $8,022 million a year ago.

Financial Position

During the three months ended Dec. 31, 2024, Petrobras’ capital investments and expenditures totaled $5,729 million compared with $3,558 million (excluding signature bonus) in the prior-year quarter.

Importantly, the Zacks Rank #3 (Hold) company generated a positive free cash flow for the 39th consecutive quarter, with the metric coming in at $3,766 million. However, it fell from $8,073 million recorded in last year’s corresponding period.

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At the end of 2024, Petrobras had a net debt of $52,240 million, up from $44,698 million a year ago and $44,251 million as of Sept. 30, 2024. The company ended the year with cash and cash equivalents of $3,271 million.

Petrobras’ net debt to trailing 12-month EBITDA ratio deteriorated to 1.29 from 0.85 in the previous year. It was 0.95 at the end of the previous quarter.

Some Key Energy Earnings

While we have discussed PBR’s fourth-quarter results in detail, let’s see how some other energy companies have fared this earnings season.

Oil supermajor Chevron CVX reported adjusted fourth-quarter earnings per share of $2.06, missing the Zacks Consensus Estimate of $2.19 and well below the year-ago adjusted profit of $3.45. The underperformance stemmed from weaker oil price realizations and a dip in refined product sales margins. Chevron’s production of crude oil and natural gas — at 3,350 MBOE/d (59% liquids) — fell 1.2% year over year.

Importantly, CVX hiked its quarterly cash dividend by 5% to $1.71 per share. The dividend will be paid out on March 19, 2025, to its shareholders of record as of Feb. 14. The company recorded $8.7 billion in cash flow from operations compared to $12.4 billion in the year-ago period due to a drop in earnings and asset retirement obligations. Chevron’s free cash flow for the quarter was $4.4 billion.

ConocoPhillips COP, one of the world’s largest independent oil and gas producers, reported fourth-quarter 2024 adjusted earnings per share of $1.98, which beat the Zacks Consensus Estimate of $1.89. The outperformance can be attributed to higher oil equivalent production volumes, partly offset by decreased realized oil prices.

As of Dec. 31, 2024, ConocoPhillips had $5.6 billion in cash and cash equivalents. The company had a total long-term debt of $23.3 billion and a short-term debt of $1.04 billion as of the same date. Capital expenditure and investments totaled $3.3 billion. Net cash provided by operating activities was $4.5 billion.

Finally, we have refiner Marathon Petroleum’s MPC fourth-quarter adjusted earnings per share of 77 cents, which comfortably beat the Zacks Consensus Estimate of 6 cents. The outperformance primarily reflects the stronger-than-expected performance of its Refining & Marketing segment. The adjusted EBITDA of the segment totaled $559 million, surpassing the consensus mark, calling for a profit of $188 million on the back of lower costs and higher throughput.

Marathon Petroleum’s total refined product sales volumes were 3,747 thousand barrels per day (mbpd), up from 3,583 mbpd in the year-ago quarter. Throughput rose from 2,922 mbpd in the year-ago quarter to 2,997 mbpd and outperformed the Zacks Consensus Estimate of 2,915 mbpd. MPC’s operating costs per barrel decreased from $5.55 in the year-ago quarter to $5.26.

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