In The First Quarter Of 2023, Junior Oil Companies Reported Positive Financial Results, According To Analyses By Banks And Investment Brokerages.

However, a scenario of political and economic uncertainties, such as the possible return of the oil export tax and the suspension of the sale of Petrobras assets, keeps investors on alert. Overall, banks expect a “robust” quarter, especially for Enauta, PRIO, 3R Petroleum, and Petroreconcavo, which reported solid production data.

Decline In Oil Prices Does Not Compromise Cash Generation Of Companies

Highlighting PRIO, which sold all the accumulated stock from the fourth quarter of 2022 to avoid large discounts from the previous quarter, as reported by Genial Investimentos. Itaú BBA expects PRIO to have a record result in the quarter, due to the sale of all the oil accumulated in the U.S. Virgin Islands, following the postponement of sales in the previous quarter.

Even with the decline in oil prices, the current price level is considered healthy for companies’ cash generation, according to analysts from XP. Brent prices fell to US$ 81.20 per barrel (-8.4% in the quarter), while the exchange rate slightly decreased to R$ 5.26 per dollar (-1.3% quarterly).

Although the decline in oil prices may directly impact year-over-year comparisons, junior oil companies may still report reasonable results due to high production levels.

Issues To Be Discussed In Conference Calls: Certification Of Reserves, Export Taxation, Capex, And Petrobras Pricing Policy

The penultimate week of April was busy for junior companies, with the unexpected capital increase from 3R Petroleum and the increase in Capex from Petroreconcavo. However, despite market fluctuations, junior oil companies’ financial results remain positive.

Nonetheless, some issues still need to be discussed in conference calls, such as: the publication of new certification reports for junior oil companies, reactions and effects of the taxation on crude oil exports for PRIO, increased Capex in the new reserve report for Petroreconcavo, capital increase for 3R, and discussions about Petrobras’ pricing policy.

Petrobras Is Expected To Show Decline In Year-Over-Year Comparisons Due To Brent Price Drop

Regarding Petrobras, Genial Investimentos assesses that the result is likely to show a decline in year-over-year comparisons, largely due to the drop in Brent, which reached US$ 120 per barrel at the peak of prices in the first quarter of 2022, versus around US$ 80 per barrel in the first quarter of 2023.

As noted by analysts, the last few months have been particularly eventful for Brazilian oil and gas companies. However, junior oil companies continue to perform positively, with Enauta, PRIO, 3R Petroleum, and Petroreconcavo showing solid results of production and high levels of oil and gas prices.

Overall, the expectation is that junior companies can continue to grow in the oil and gas market, particularly with better utilization of already discovered fields. Junior oil companies are important players in the sector, contributing to market diversification and maintaining a steady growth pace in the country.