Petróleo Brasileiro S.A. – Petrobras (PBR): A Bull Case Theory 

We came across a bullish thesis on Petróleo Brasileiro S.A. – Petrobras on Quiet Wealth Compounding’s Substack. In this article, we will summarize the bulls’ thesis on PBR. Petróleo Brasileiro S.A. – Petrobras’s share was trading at $15.52 as of January 29th. PBR’s trailing and forward P/E were 7.13 and 5.92 respectively according to Yahoo Finance.

Petróleo Brasileiro S.A. – Petrobras explores, produces, and sells oil and gas in Brazil and internationally. PBR presents a unique investment opportunity, offering both steady income and significant upside potential. At current depressed oil prices, the company trades at levels that provide investors with a roughly 10% covered dividend yield, reflecting a low-risk base return with strong downside protection.

This yield is underpinned by Petrobras’s disciplined dividend policy, which allocates 45% of operating income to shareholders, and a business plan projecting $45 billion in dividends through 2030, despite conservative oil price assumptions.

Beyond this stable yield, Petrobras offers substantial optionality as oil prices recover. Historical underinvestment in upstream projects, coupled with fiscal constraints across OPEC+ producers, suggests supply could lag demand in the coming years, creating the potential for sharp oil price appreciation.

Even in a stress scenario where oil prices remain $10 per barrel below estimates, the dividend yield remains an attractive 7% per annum, while moderate price increases could push yields to 12% annually. In a bull scenario, oil prices could rise sharply due to global supply constraints, potentially delivering returns above 20% per year, with an ultimate upside case of over 30% annually if extreme price spikes occur.

This combination of a bond-like steady income and equity-like upside classifies Petrobras as the “ultimate Equity Bond,” providing downside protection while capturing the potential for exceptional gains. With oil demand remaining robust, energy transition timelines extending, and the market underweight energy stocks, Petrobras offers investors a rare mix of resilience, high cash flow, and asymmetric upside, making the current entry point particularly compelling for long-term value-focused portfolios.

Previously we covered a bullish thesis on Occidental Petroleum Corporation (OXY) by Oliver | MMMT Wealth in April 2025, which highlighted OXY’s attractive valuation, favorable U.S. oil supply, and potential for market re-rating. The company’s stock price has appreciated approximately by 14.03% since our coverage. This is because the thesis played out. Quiet Wealth Compounding shares a similar perspective but emphasizes Petrobras’s high dividend yield and upside potential from oil price recovery.

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Disclosure: None.