Santander has raised its recommendation for Petrobras ' common shares from neutral to buy and its target price from R$35 to R$60, given the positive operational outlook and the potential gains that shareholders should see as the bank paves the way for extraordinary dividends.
Analysts Yuri Pereira, Eduardo Muniz, and Nicole Alonso state that the current share price level (the shares closed trading on Wednesday, May 20th, at R$ 49.68) does not reflect the combination of projected growth in oil and gas production, reduced risks in the refining sector, and indications that the company will present good levels of cash return.
"For us, more robust results in the exploration and production area – supported by a faster acceleration of FPSOs, the possibility of positive revisions in production projections and high oil prices – should more than compensate for the expectation of lower gasoline profitability, while government subsidies will help limit losses in refining, mainly in diesel," says an excerpt from the report.
Analysts at Santander see potential upside in Petrobras' exploration and production figures, exceeding the company's projections, considering the strong performance in the first quarter, when 2.6 million barrels per day were recorded, and the 2.7 million barrels per day recorded in April.
According to them, this suggests that 2026 production will likely be closer to the upper limit of the administration's projection of 2.5 million barrels per day, in the range of 2.6 million barrels per day, a 9% increase compared to the previous year.
The increase in production would occur at a time when oil prices are rising due to the war against Iran . Analysts believe that the price of Brent crude should close the year at around US$88 per barrel, above the previously projected US$65. For next year, the price forecast has been raised by 14%, to US$80.
This scenario would lead Petrobras to register revenue of US$ 88.4 billion from exploration and production, a value 48% higher than initially expected.
On the refining side, Santander analysts calculate that the government subsidy of approximately R$ 1.12 per liter for diesel should help offset the weak performance of gasoline and other products, allowing Petrobras to present virtually stable results in the downstream segment in 2026.
"We expect that stronger results in exploration and production and neutral performance compared to the previous year in the refining sector in 2026 will more than offset the risks of potentially higher-than-expected capital expenditures and mergers and acquisitions," says an excerpt from the report.
Regarding the issue of capital expenditures, Santander analysts mention that the company has been signaling greater interest in the ethanol market, a topic included in recent business plans. They also highlighted that the company may end up involved in a possible financial restructuring of Braskem, something that is not yet clear.
The result of this combination of factors is an adjusted free cash flow yield to shareholders of close to 12% and a dividend yield of 9.5% this year, in addition to paving the way for extraordinary dividends.
“In our opinion, discussions about extraordinary dividends may resurface in the next 2027-31 Plan, amid a more favorable outlook for oil prices,” says an excerpt from the report. “We estimate room for up to approximately US$2 billion in extraordinary dividends in 2027.”
At around 4:03 PM, Petrobras' common shares were up 0.72%, at R$ 50.04. Year-to-date, the shares have accumulated a 55% increase, bringing the market value to R$ 613.7 billion.
