2Q26 preview: Higher prod. and oil prices drive stronger quarter; PBR the highlight

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LatAm Oil & Gas

2Q26 preview: Higher prod. and oil prices

drive stronger quarter; PBR the highlight

Estimate Change

A strong quarter as oil prices rose 25% QoQ

We expect sequentially stronger results across the LatAm E&P names, driven by a

roughly 25% increase in oil prices and higher production volumes. Offsetting part of this

upside, however, is Brazil's recently implemented export tax, which should temper the

benefit of stronger realized prices. Petrobras stands out as the quarter’s key highlight,

supported by robust free cash flow generation and an attractive dividend. At PRIO, the

production uplift from Wahoo’s start-up should support earnings, although the export

duty is likely to partially dilute the gains. Meanwhile, Brava and PetroRecôncavo are likely

to report hedge-related losses, as a portion of their production was hedged before the

sharp increase in oil prices following the escalation of the conflict in the Middle East.

Finally, at Ecopetrol, while production is likely to decline sequentially, higher oil prices

and resilient refining crack spreads should provide meaningful support to earnings.

PBR: appealing FCFE and dividend yield expected

We estimate Petrobras to deliver a very strong EBITDA of US$18.4bn (+62% QoQ;

+100% YoY). Cash generation should come in at US$4.6bn (4.5% yield), although this

should be partially offset by a working capital outflow related to the fuel subsidy

program. We expect dividends of US$3.3bn (3.3% yield).

PRIO: production rises; export duty impacts result

We forecast EBITDA at US$874mn (flat QoQ; +205% YoY). Quarterly production came in

at 172kboed (+11% QoQ; +72% YoY), with sequential growth primarily driven by the

ramp-up of new wells at Wahoo. Notably, despite the stronger production and oil prices,

PRIO’s result should be impacted by the export duty.

Brava: hedges to impact cash generation

Production in the quarter reached 81kboed (+7% QoQ, -5% YoY). We forecast EBITDA at

R$1.9bn (+11% QoQ, +31% YoY). Part of the EBITDA growth is capped by the crude oil

export tax, which affects Atlanta and Parque das Conchas. Cash generation should be

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