Petrobras (PETR4) announces a new dividend policy and will pay 45% of free cash flow to shareholders

The new policy allows for share buybacks, which, when executed, will be carried out through an approved structured program by the Council.

The Board of Directors of Petrobras (PETR3; PETR4) announced on Friday (28th) that it has approved its new dividend policy, which also allows for share buybacks, according to a document sent to the Brazilian Securities and Exchange Commission (CVM). The decision was made after a Board of Directors meeting on this date.

Under the new policy, Petrobras’ quarterly dividend will be set at 45% of its free cash flow, which is lower than the current 60%, but higher than the 40% projected by market analysts. However, this dividend percentage of 45% will be applicable when the company’s gross debt is below US$ 65 billion, as stated in the current strategic plan of the state-owned company.

The new policy eliminates specific references to gross debt values, replacing them with the expression “maximum debt level defined in the current strategic plan,” which is US$ 65 billion. The company also set a minimum annual remuneration of US$ 4 billion for periods in which the average Brent oil price, used as a reference by Petrobras, is above US$ 40 per barrel (bbl). This minimum remuneration may be distributed regardless of the company’s debt level.

Petrobras will distribute remuneration to shareholders on a quarterly basis, and there is a possibility of exceptional distributions of extraordinary remuneration to shareholders in specific cases, as long as financial sustainability is maintained.

The new dividend policy takes effect immediately and will be applied to the results of the second quarter of 2023.

The market had been eagerly awaiting the announcement of Petrobras’ dividend policy, especially after the company paid abundant dividends last year, surpassing even the largest international oil producers.

The new policy comes as the company seeks to balance dividends with investments for the future and attract long-term investors while aligning with international peers in terms of remuneration.

The announcement of dividends and results for the second quarter is scheduled for August 3, after the market closes.