Petrobras PN & ON Buy: Strong 2Q26; resilient 2H26 outlook

Research evidence excerpt

Petrobras PN & ON Buy: Strong 2Q26; resilient 2H26 outlook

2 July 2026

Petrobras PN & ON EquitiesOil & Gas

Buy: Strong 2Q26; resilient 2H26 outlook Brazil

◆ 2Q26 looks stronger QoQ; we cut 2026e EBITDA on weaker

Lilyanna Yang, CFA

oil prices, but think it’s too early to lower 2027-28 estimates Analyst, LatAm Oil & Gas, Utilities, Petrochems

HSBC Securities (USA) Inc.

lilyanna.yang@us.hsbc.com

◆ Crack spreads are higher than we had anticipated, even after +1 212 525 0990

this week’s diesel price cut Arthur Gennari*

Analyst, LatAm Oil & Gas, Utilities, Petrochems

◆ Retain Buy with unchanged TPs of BRL60.00, USD24.00/ADR Bancoarthur.gennari@hsbc.comHSBC S.A.

for ON and PN shares; new estimates but same 2027 Brent +55 11 2801 2616

* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

Trading at our bear case: Petrobras underperformed in June (-11% vs -3% for IBOV) not registered/ qualified pursuant to FINRA regulations

and in 2Q26 (-20% vs -8% for IBOV), reflecting: 1) softer crude prices; 2) a complex,

if not confusing, set of subsidy schemes for fuels (namely diesel) that may soon fully

unwind; and 3) Brazil’s fiscal challenges with high interest rates for longer (see Brazil

Economics, 15 June 2026). After the pull-back, we see the stocks as attractive,

trading at <3x EV/EBITDA, and reflecting a bear case scenario of USD65/b oil,

USD10/b crack spread, and higher capex at poor returns. We mark-to-market our

2Q26 assumptions, and expect 2Q26 earnings (out in early August 2026) to

underscore robust FCF and capex discipline, supporting near-term outperformance.

Cutting 2026e OCF on softer Brent: We cut our 2026e EBITDA by 10% to reflect

1) lower Brent amid peace hopes and Strait of Hormuz oil flows (see Oil markets: Gulf