The Brazilian oil and gas company released its highly anticipated, audited financials on Wednesday. It reported a $16.8 billion writedown including more than $2 billion from a massive corruption scandal. In the fourth quarter of 2014, it posted an $8.8 billion loss.
Petrobras shares have risen since then as investors seem appear to be encouraged that the company finally came clean. PBR continued to climb Friday after Chief Financial Officer Ivan Monteiro said the company would take "any opportunity" to raise cash at a competitive cost in debt markets as early as this year.
Still, investors should remain wary about a company with such a troubled history.
"I think we can say that the company is turning in the right direction," said Daniel Marques, head of research at consulting firm Gradual Investimentos, headquartered in Sao Paulo. "But the point is, there is a very, very long way to go until the company recovers, in a complete way, the trust of the markets."
Petrobras CEO Aldemir Bendine has promised to present revised strategic business plan for the company within 30 days.
Some analysts think investors might want to take a chance on Petrobras, an integrated oil and gas company based in Rio de Janeiro, Brazil.
"While the Petrobras story is one of the ugliest in large-cap energy, investors with very high risk tolerances might consider this as a high risk/high reward way to play a rebound in oil prices given that shares today look undervalued," wrote Morningstar analyst Allen Good in a note on Thursday.
Morningstar expects continued steady growth and notes that Petrobras' downstream operations have returned to profitability.
"But then there's the risks," Good wrote. "The company is highly leveraged and has recently had its credit ratings downgraded. In addition, the corruption scandal clouds will loom for some time to come."
Credit Suisse analysts Andre Sobreira and Vinicius Canheu said that while the writedowns are "big enough to instill some credibility," the numbers laid out by Petrobras executives indicate that the company "will continue to be more of the same." They maintained their underperform rating on the stock and $5 price target.
Deutsche Bank kept its hold rating on Petrobras and $10 price target, and analyst Alexander Burgansky acknowledged that, excluding the writedown, underlying fourth-quarter results were ahead of estimates. However, he is unconvinced capital spending cuts to $29 billion in 2015 and $25 billion in 2016 will be enough.
"While lower capex is positive, the savings won't be sufficient to start deleveraging in 2016 particularly in light of reduced growth plans; hence we expect liquidity will tighten even further," he said.
Morgan Stanley analyst Bruno Montanari perceived the move to suspend dividends for the year as positive from a cash preservation perspective. Some investors, however, may still expect payment from preferred shares.
Investors, meanwhile, should pay attention to what happens on two main fronts: divestment and governance.
At the start of April, Petrobras announced the sale of Argentine onshore exploration and production assets to Cia. General de Combustibles for $101 million, putting in motion a $13.7 billion divestment plan approved in February. What else Petrobras will be unloading, however, remains unknown.
Petrobras has recently denied considering putting some of its deepwater pre-salt blocks for sale, but Eurasia Group analysts say such a sale remains a possibility. Pre-salt oil refers to reserves of oil capped by a thick layer of salt. Marques believes it is more likely to lean toward selling inactive pre-salt oil fieldsover active ones. "I think [selling active fields] would not be well received by the market as the company already invested a lot of money and time there," he said.
Petrobras will probably be selling companies, or parts of them, as well. Speculation has been focused on two main entities: Braskem - a petrochemical company of which Petrobras is part owner - and Petrobras Distribuidora - the subsidiary responsible for distributing oil and gas through refineries and gas stations.
On the governance front, Petrobras will also have to take vast measures to recover investor confidence. Company CFO Monteiro discussed this issue with CNBC's Michelle Carruso-Cabrera on Thursday. "It's impossible to have a normal relationship with investors because there's no transparency without the numbers," he said.
A new set of recommendations to improve corporate governance of state-run companies in Brazil put out by BM&F Bovespa, the country's stock exchange operator, have spurred some optimism. News of the new rules gave Petrobras stock a boost in early April, and on Wednesday, more details came to light on exactly what they will entail.
The recommendations -- to which adherence will be voluntary -- may have an impact on Petrobras. But according to Marques, it won't be in the short term.
As the Petrobras story continues to unfold in the weeks and months to come, investors may have more answers. But with so many unknowns, those investing in Petrobras do so at their own risk. "The markets need ... information to decide whether to buy or sell the stock," Marques said.
Petrobras declined to comment.