Petrobras Board Approves 50% Payout of 2023 Extraordinary Dividends

The board of Petrobras, the state-controlled Brazilian oil company, has approved a 50% payout of potential 2023 extraordinary dividends, settling a dispute over President Luiz Inácio Lula da Silva's influence on the company. The decision was made after concluding that the payment would not compromise Petrobras' investment capacity, according to the company.

The remaining 50% of the dividends, amounting to R$21.5 billion, will be reserved, but Petrobras may pay the rest at another time. In total, Petrobras has R$43.9 billion in dividend reserves, with R$6 billion going to the government from the approved 50% payout.

The general assembly of Petrobras will meet on April 26th to finalize the fate of the R$43.9 billion in retained additional dividends. The market had previously expected Petrobras to pay 100% of the dividends, which boosted the company's stock price.

The decision to approve the 50% payout comes amid ongoing speculation about the potential replacement of Petrobras CEO Jean Paul Prates. President Lula recently canceled a meeting with cabinet ministers that could have decided on whether to replace Prates.

Additionally, a Brazilian judge suspended the chair of Petrobras' board, Pietro Sampaio Mendes, over a conflict of interest regarding his role in the Ministry of Energy. The dispute highlights the tension between President Lula's influence and the autonomy of the state-controlled oil company.

Why this matters: The decision by Petrobras to pay out 50% of the extraordinary dividends settles a high-profile dispute over the Brazilian government's influence on the state-controlled oil company. The outcome has significant implications for Petrobras' financial strategy and its ability to balance shareholder returns with strategic investments in assets and decarbonization efforts.

Petrobras has also been streamlining its operations and focusing on its core business. As part of this effort, the company recently sold the Cherne and Bagre fields to Perenco for $10 million. The strong financial performance in the first quarter of the year was a contributing factor in the decision to make the 50% dividend payout, with Petrobras shares rising around 2.4% following the news.

Key Takeaways

• Petrobras approves 50% payout of 2023 extraordinary dividends, settling dispute.
• Remaining 50% of R$43.9B dividends reserved, may be paid later.
• General assembly to finalize fate of retained dividends on April 26.
• Dispute highlights tension between Lula's influence and Petrobras' autonomy.
• Petrobras streamlining operations, selling assets to focus on core business.