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Petrobras Attempts To Salvage Market Value

A few days after losing $14 billion in market value, Brazil’s state-run oil company, Petrobras, said it may dole out a special dividend after all, CEO Jean-Paul Prates said Monday, which could be the subject of a vote during April’s meeting of shareholders. 

Brazil's shares crashed on Friday, shaving $14 billion off the company’s market value after it disappointed investors by skimping on its dividend, with the ramifications spilling beyond Petrobras and into the wider Brazilian stock market.

Also contributing to the 11% drop in share prices on Friday were reports that Brazilian President Luiz Inacio Lula da Silva had ordered Petrobras board members to vote against the dividend–a development that Petrobras chief executive Jean-Paul Prates denied.

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Lula has summoned Prates to discuss the issue, with the two scheduled to meet later on Monday. Prates said he would not leave his role over the dividend issue.

Investors and analysts had expected an extraordinary dividend between $3 and $4 billion for the quarter, on top of the $2.9 billion regular dividend. But Prates shocked investors when he announced that the year-end payout to shareholders, including the Brazilian government only be for the routine dividend of $2.9 billion.

On Monday, Morgan Stanley downgraded Petrobras from ‘Overweight’ to ‘Equalweight’, reducing its price target to $18, down from $20 over the extraordinary dividend uncertainty. Morgan Stanley said it did still see upside potential and a strong base dividend yield (12%); however, it said investors might shy away from increasing their stakes until the dust settles. 

Petrobras shares were trading at $14.84 at 2:32 p.m. ET on Monday, down 10.12% on the day.


By Julianne Geiger for Oilprice.com

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  • George Doolittle on March 11 2024 said:
    "raging US bull market casualties" absolutely. Happened in the 1990s as well #swiss_franc so not a good time to be investing in commodities remains my stand although oil has held up very well and far better than as happened in the 1990s. Gold hit a low of $400.00 US Dollars per ounce back then silver the ahem "usual" ahem $5.00 US Dollars per ounce although neither of this is true currently obviously of course. Should be a spectacular SpaceX rocket launch attempt from Texas this week as well so if that works more bad news for the somewhat chastened bears. Not sure what to make of Caravana by way of example as thought that was wholly and completely bankrupt just 12 Months ago.

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