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Petrobras (NYSE:PBR) -6.9% post-market Tuesday following news that CEO Jean Paul Prates was fired by Brazil President Luiz Inacio Lula da Silva, to be replaced by Magda Chambriard, the former head of Brazilian oil and gas regulator ANP.
Prates became CEO in January 2023, shortly after Lula assumed the presidency, but the change at the top had been speculated for months because of a dispute over dividend payments.
The CEO’s departure represents a victory for members of Lula’s cabinet that were pushing for lower domestic fuel prices, smaller dividends and more capital spending to create jobs.
Prates’ exit is “a deterioration of Petrobras governance and a downside risk for the investment thesis,” Citi analysts Gabriel Barra and Andres Cardona write. “The new CEO arrives with the pressure to fulfill the investment plan and accelerate the capex expansion, which may negatively impact the company’s dividend payment.”
The Petrobras (PBR) board will meet Wednesday to discuss the proposed departure, the company said.
