How Will Petrobras’ Revenue Move If Crude Oil Prices Rebound Over The Next Two Years?

-46.35%
Downside
15.21
Market
8.16
Trefis
PBR: Petroleo Brasileiro logo
PBR
Petroleo Brasileiro

The ongoing commodity slump has severely impacted most of the oil and gas companies across the globe, including the Brazilian energy company, Petroleo Brasileiro SA Petrobras (NYSE:PBR), commonly known as Petrobras. The oil and gas giant’s revenue dropped close to 40% in 2015, due to the weak commodity prices throughout the year. As a result, the company’s stock dropped more than 50% over the last two years and is currently trading at less than $10 per share.

Based on the current commodity prices, and the market trends, we forecast a gradual recovery in crude oil prices over the next couple of years. We estimate crude oil to rebound to around $70 per barrel by 2018 in our base case. However, in case the market conditions improve over the next few quarters, due to the Organization of the Petroleum Exporting Countries (OPEC) or the US oil producers cutting down their high level of production, or stronger-than-expected global demand for oil, crude oil prices could surge back to almost $100 per barrel by 2018. In such a case, we expect Petrobras’ 2018 revenue to be roughly 50% higher than our base case estimates. Below, we show how each division would perform in the aforementioned base case and upside case.

PBR-Q&A-2

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