Petroleo Brasileiro (NYSE:PBR) will release its quarterly report on Friday, and longtime shareholders have seen their investment absolutely crushed over the years as prospects for the Brazilian energy giant have continued to wane. Yet this quarter, Petrobras earnings look poised to perk up, raising the question of whether beaten-down shares are a good value at current levels.

Petrobras is poised to benefit greatly from its position within what's become known as the Deepwater Golden Triangle, with offshore reserves estimated at 10 billion to 15 billion barrels of oil and 5 trillion to 8 trillion cubic feet of natural gas. But the challenges of getting to that oil pose a real obstacle to the company's growth. Let's take an early look at what's been happening with Petroleo Brasileiro over the past quarter and what we're likely to see in its quarterly report.

Stats on Petroleo Brasileiro

Analyst EPS Estimate

$0.44

Year-Ago EPS

($0.10)

Revenue Estimate

$35.61 billion

Change From Year-Ago Revenue

2.8%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Is a bounce in Petrobras earnings really coming?
Analysts have gotten less optimistic in recent months about the prospects for Petrobras earnings, cutting back their June-quarter estimates by almost 25% and their full-year 2013 and 2014 estimates by a slightly more modest 12% to 16%. The stock has continued to struggle, falling almost 30% since early May.

Petrobras is Brazil's national oil company, and with estimates of 12 billion barrels of recoverable oil in its pre-salt fields off its coast, the company has a big stake in the nation's energy future. Through a government requirement, Petrobras gets a 30% working interest in wells in the Brazilian pre-salt fields, which could give it immense shares of profits as producers realize the full potential of the nation's offshore resources. A recent auction of offshore blocks showed Petrobras' dominance, as the company bought rights on 35 blocks and was also part of a group that won the lucrative block at the mouth of the Amazon.

But the problem Petrobras faces is the huge capital investment necessary to make the most of those opportunities. The company has made big partnerships to facilitate its drilling, with one of the latest being its $2.7 billion joint venture with Seadrill (NYSE:SDRL) to provide deepwater infrastructure. Petrobras also has an important relationship with Transocean (NYSE:RIG) to provide rigs for its drilling activity. But with plans to spend a massive $237 billion in the next four to five years, Petrobras will be massively exposed to the future of Brazil's offshore assets, and if the company can't deliver on its highly optimistic production goals without overspending or delays, then shareholders could continue to suffer.

During the quarter, Petrobras got good news on the tax front, as a court found that the company isn't liable for $3.45 billion in taxes. Yet in comparison to its capital needs, $3.45 billion is just a drop in the bucket for the company. Similarly, it has sold off some noncore assets, including a May sale of its stake in a drilling block off the coast of Tanzania to Statoil (NYSE:STO), but the proceeds won't make a dent in Petrobras' capital requirements.

In the Petrobras earnings report, watch closely to see how the company is handling its balance sheet. Given ballooning debt in recent years, investors have to be getting nervous about the future ability of Petrobras to get access to even more capital to finance its future operations. Hopefully, Petrobras will be able to reassure investors that even as the Brazilian economy has weakened, its future is still bright.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Petroleo Brasileiro, Seadrill, and Statoil. It owns shares of Seadrill and Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.