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

Wedoany.com Report-Nov 22,   Petroleo Brasileiro SA plans to pay as much as $55 billion in dividends through 2029 as part of its five-year business plan in a pledge to continue returning cash to investors.

Brazil’s state-controlled oil producer could also pay up to $10 billion in extraordinary dividends over the 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.  

Shareholder payments are one of the major attractions for investors in Petrobras and other international oil majors. Petrobras’s dividends have also helped shore up the finances of the government, its biggest shareholder. The company’s policy is to pay dividends as long as it doesn’t compromise financial health, it said. 

Analysts have rewarded the continuation of shareholder payouts 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 it’s strategic plan rose almost 9% to $111 billion. Still, it trimmed estimated capital spending in 2025 to $18.5 billion, down from $21 billion.

Debt Levels

Petrobras increased its debt ceiling to $75 billion from $65 billion at a time it’s increasing investments to expand oil and gas production. It reduced its minimum cash holding to $6 billion from $8 billion. Both measures give the company more flexibility to pay dividends while it continues to invest.

Petrobras became the most indebted oil company in the early 2010s when it embarked on a massive expansion to its refining and offshore production facilities, and a return to higher debt levels would be concern for investors. 

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

Renewable Spending

Investor concerns that Petrobras would ramp up spending on less profitable renewables projects haven’t materialized. The next five-year plan slightly increases planned spending on energy transition projects.

The plan earmarks $11 billion to gas, energy and low-carbon projects, and only 27% of this spending is for projects that are already being implemented, while the rest are still under analysis and may not go forward.

The renewables strategy focuses on biofuels, onshore wind and solar and calls for returning to ethanol production. It also includes projects for biomethane, hydrogen and carbon capture. Another $5.3 billion will go towards reducing emissions from its operations.

Refining and related business lines such as fertilizer and logistics will account for about $20 billion in expenditures.