Petróleo Brasileiro S.A. - Petrobras

Petrobras holds 12.1B boe of proved reserves with a 12.5-year reserves-to-production ratio, providing firm long-run production volume visibility. However, all oil is sold at spot Brent-linked prices with no contracted pricing mechanism, so revenue declined roughly 12-14% in the twelve months through FY2025 as average Brent fell 14%.

E&P is the dominant profit contributor, with refining and marketing (RT&M) and gas operations as secondary streams, all directly tied to hydrocarbon prices. The 2026-2030 business plan allocates only $13B of $109B total capex to low-carbon and energy transition, insufficient to materially shift segment mix over the plan horizon.

Petrobras generates over 90% of its crude output from Brazilian assets, primarily the pre-salt Santos Basin, with international operations in the Americas, Africa, and Europe immaterial to consolidated production. Revenue, regulatory exposure, and operating risk are all substantially single-country, making the company highly sensitive to Brazil's political and economic environment.

Pre-salt wells deliver low per-barrel lifting costs (deepwater lifting cost around $8.7/boe following operational optimization), and once FPSO infrastructure is deployed, incremental barrels carry minimal marginal cost. Sustaining and growing production requires capex of over $20B per year, however, limiting structural operating leverage and constraining free cash generation as a share of EBITDA.

Crude oil and refined products are sold at spot or near-spot commodity prices with no subscription or long-term contractual pricing. Domestic fuel sales in Brazil carry some repeat-purchase stickiness given Petrobras' refinery and distribution infrastructure, but all revenue is effectively transactional and commodity-linked.