Petrobras Model Update

Research evidence excerpt

Petrobras Model Update

Milene Clifford Carvalho AC Latin America Equity Research

(55-11) 4950-3475 28 July 2026 J P M O R G A N

milene.carvalho@jpmorgan.com

Investment Thesis, Valuation and Risks

Petrobras ON (Overweight; Price Target: R$60.00)

Investment Thesis

Petrobras remains the largest O&G company in our coverage, producing ~3.5Mboed and

operating roughly 90% of Brazilian output. We see the company well positioned to capture

a stronger oil environment, with updated Brent assumptions ($85/bbl in 2026 and $75/bbl

in 2027) supporting upstream EBITDA expansion toward ~$50B, which should more than

offset potential headwinds from export taxes and softer downstream margins. We view

governance as solid, with clearer rules around pricing policy and compensation

mechanisms. While we still acknowledge potential strategic shifts (e.g., higher capex or

M&A), we no longer see cash flow as a concern given prices well above breakeven.

Valuation

We rate Petrobras Overweight, with December 2026 price targets of R$60.0/sh ($23.0/

ADR) for ON shares and R$56.0/sh ($21.5/ADR) for PN shares. Our fair value is derived

using an average discount rate of 10.4% for all segments (50%) and a fair multiple of 4.3x

(50%) for Upstream and Downstream. For the 2026-30 Strategic Plan, we assume the five-

year capex according to the under implementation target portfoio of $91B, while our

production curve is still ~100kboed above Petrobras’s, despite the company’s upward

revision (reflecting our bullish stance on the pre-salt, here).

Risks to Rating and Price Target

Downside risks include local selling of fuel at a discount to international parity, subsidizing

domestic fuel market, higher-than-expected capex, lower-than-expected long-term Brent