Petrobras shares swing “wildly” amidst reports that CEO Jean Paul Prates departure is near
(Bloomberg) – Petroleo Brasileiro’s shares swung wildly on Thursday as traders digested local media reports on the impending departure of Chief Executive Officer Jean Paul Prates and the prospect of future dividend payments.
Petrobras, as the state-controlled oil giant is known, climbed as much as 3.4% in Sao Paulo in a volatile session. The stock fell sharply after CNN Brasil reported, citing anonymous sources, that Prates’ departure was imminent.
Shares then reversed losses after O Globo reported that President Luiz Inacio Lula da Silva’s ministers had struck a deal to pay special dividends that weren’t initially distributed to shareholders.
Prates’ potential departure after more than a year in the role underscores how Petrobras struggles to meet conflicting expectations from the government and minority shareholders. The Lula administration would like to see Petrobras act more as a motor for economic and job growth while shareholders had gotten accustomed to industry leading dividend payments that have gone into decline.
“We consider Prates’ departure, especially for political reasons, as negative news for the company,” said Ilan Arbetman, analyst at Ativa Investimentos. “What concerns us, at the moment” is that the conflict between the company and the government “could take away the company’s maneuvering power to continue executing its current pricing policy.”
Petrobras subsidized motor fuels the last time Lula’s Workers’ Party was in power, and there is concern it will start doing that again.
The head of Brazil’s Development Bank, Aloizio Mercadante, is one of the candidates being considered to lead Petrobras, according to CNN. In response to the report, Mercadante’s media representative denied any invitation to lead Petrobras and said he was working normally at the BNDES as normal, according to CNN.
Lula is set to meet with Prates on Friday in an encounter that markets speculate will determine his fate at the company.
“There’s probably not a more thankless job in Brazil than being the president of Petrobras,” said Schreiner Parker, managing director for Latin America at Rystad Energy AS. “You’re torn between the government and market.”
Lead image source: Buda Mendes/Getty Images
