Petrobras Q4 Profit Surpasses Expectations as Increased Production Balances Oil Price Decline

Petrobras Surpasses Earnings Expectations in Q4

Petroleo Brasileiro S.A. (Petrobras) reported fourth-quarter earnings per American Depositary Share (ADS) of $0.72, outperforming the Zacks Consensus Estimate of $0.57 and improving on last year’s $0.49 per ADS. This strong performance was driven by increased production in its upstream operations and improved results in its downstream segment.

The company’s adjusted net income, which excludes non-recurring items, reached $4.75 billion, up from $3.08 billion in the same quarter last year. Adjusted EBITDA rose to $11.11 billion, compared to $7.17 billion a year earlier.

Total revenue for the quarter was $23.61 billion, marking a 13.4% increase from $20.82 billion in the previous year and exceeding analyst expectations. Alongside these results, Petrobras announced plans to distribute RMB 8.1 billion in dividends and equity interests.

Petrobras: Price, Consensus, and EPS Surprises

Performance by Segment

• Upstream (Exploration & Production):

  During the fourth quarter, Petrobras averaged 3,109 thousand barrels of oil equivalent per day (MBOE/d), with 81% being liquid hydrocarbons. This represents a significant increase from 2,628 MBOE/d in the same period of 2024. Nearly all of this output—about 99%—came from Brazilian oil and gas fields, which saw an 18.6% year-over-year boost to 3,081 MBOE/d.

  Despite a 15% year-over-year drop in the average Brent crude price to $63.69 per barrel, higher production volumes more than compensated for the price decline, resulting in upstream revenue rising to $14.33 billion from $13.39 billion a year ago. However, increased pre-salt lifting costs (up 3.2% to $6.86 per barrel) slightly impacted profitability. Even so, net income for the upstream segment climbed 48% to $3.10 billion, compared to $2.09 billion in the fourth quarter of 2024.

• Downstream (Refining, Transportation & Marketing):

  Revenue from downstream activities reached $22.30 billion, a 15.6% increase over the previous year’s $19.29 billion, thanks to higher domestic sales volumes. The downstream segment posted a profit of $576 million, a sharp rise from just $15 million in the same quarter of 2024. This improvement was supported by both increased revenues and higher product prices.

Cost Analysis

Petrobras’ sales, general, and administrative expenses totaled $1.99 billion for the quarter, up 31% from the prior year. Selling expenses also increased, rising from $1.08 billion to $1.46 billion. However, a notable reduction in other expenses led to a 25.9% decrease in total operating costs. The cost of sales grew by 17.9%, resulting in operating income of $5.51 billion, compared to $2.79 billion in the same period last year.

Financial Overview

In the final quarter of 2025, Petrobras invested $6.31 billion in capital expenditures, up from $5.73 billion (including signature bonuses) in the previous year. The company generated positive free cash flow for the 43rd consecutive quarter, amounting to $3.58 billion, though this was slightly lower than the $3.77 billion recorded a year earlier.

By the end of 2025, Petrobras’ net debt had risen to $60.59 billion, compared to $52.24 billion a year prior and $59.05 billion at the end of September 2025. The company closed the quarter with $6.47 billion in cash and cash equivalents. Its net debt to trailing 12-month EBITDA ratio worsened to 1.42, up from 1.29 the previous year and 1.53 at the end of the prior quarter.

See the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Notable Energy Earnings

• Shell plc (SHEL):

  Shell, Europe’s largest oil company, reported fourth-quarter 2025 earnings per ADS of $1.14 (excluding certain items), missing the Zacks Consensus Estimate of $1.21. The decline was attributed to lower oil prices and unfavorable tax adjustments, partially offset by increased hydrocarbon production. Earnings also fell from the previous year’s $1.20 per ADS. Revenue was $66.7 billion, slightly below last year’s $66.8 billion and missing expectations by 2%. Shell repurchased $3.4 billion in shares during the quarter and plans another $3.5 billion in buybacks for the first quarter.

• Murphy USA (MUSA):

  The fuel retailer posted adjusted earnings per share of $7.53 for the fourth quarter of 2025, surpassing the Zacks Consensus Estimate of $6.67 and last year’s $6.96. The strong results were driven by higher merchandise sales. Operating revenue rose 0.7% year-over-year to $4.7 billion but fell short of expectations due to weaker petroleum product sales. Murphy USA opened 29 new stores and closed one, bringing its total to 1,800 locations. The company ended the quarter with $28.9 million in cash and $2.2 billion in long-term debt, with a debt-to-capitalization ratio of 77.6%. Share repurchases totaled $67.5 million during the quarter.

• APA Corporation (APA):

  APA reported adjusted earnings of $0.91 per share for the fourth quarter of 2025, beating the consensus estimate of $0.62 and improving on last year’s $0.79. The company’s outperformance was due to higher production and lower costs, partially offset by lower commodity prices. Revenue was $2 billion, down 20.9% year-over-year but 3% above expectations. APA generated $808 million in operating cash flow and spent $434 million on upstream capital expenditures. Adjusted operating cash flow reached $1 billion, and free cash flow was $425 million, slightly up from $420 million a year ago. At quarter’s end, APA held $516 million in cash and $4.3 billion in long-term debt, with a debt-to-capitalization ratio of 41.3%.

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