Petróleo Brasileiro S.A. (NYSE: PBR), or Petrobras, has now rallied almost 40% from its lows. The problem is that its low is $4.90, and the American depositary shares (ADSs) are still trading at only $6.80. Make no mistake here, the Brazilian state-run oil giant remains in a very difficult position. Investors in the common equity ADSs and in the Petróleo Brasileiro S.A. – Petrobras (NYSE: PBR-A) preferred shares have to be wondering about the fate of the Petrobras dividends.

24/7 Wall St. recently featured Petrobras among four dividends that were at risk of being cut. In the case of Petrobras, it could be worse than a cut. It seems as though the term “delayed” may be different down in Brazil from what Americans might consider a delay.

It is without argument that any analysts or investors who stuck their necks out trying to defend Petrobras up until two or three weeks ago has had their pride handed to them. Petrobras has a very complicated capital structure, which should have already scared off most sensible investors, if they consider that Brazil is now under an elected socialist regime. The other issue is that Petrobras has an operating structure that puts the company itself in a position where it could be forced to operate at losses.

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So, is its dividend at risk? The answer is difficult, but at the end of the day it sure seems as though many investors have braced for bad dividend news. A rally of nearly 40% off the bottom for its ADSs may imply that the dividend is safe, but this situation is very complicated — and being under new management and having financial delays that could be very long in the tooth does not help matters at all.

The long and short of the matter is that Petrobras investors already should have known about the dividend. The scandal, financial reporting delays and new management are all ongoing efforts here. What investors have to accept is that this is not a normal year at all at Petrobras.

Investors need to consider that the state-run oil giant, partially under the old team, has already warned that a dividend might be delayed as it deals with its finances and a credit crunch. Petrobras lost its investment grade rating at Moody’s already, and Standard & Poor’s warned about its dividend prospects. Also, Fitch has previously warned that asset write-downs could result in dividend delays here. Another dividend delay warning came from J.P. Morgan.

With 2015 being such an abnormal year, thinking of a delay might not be the right view. It seems on the surface that investors should be more concerned that, at the end of the day, the term “delayed” might mean “skipped.” It just seems unlikely that a company in this much trouble would accrue the capital and then lump-sum a larger catch-up payout down the road.

24/7 Wall St. does admit that Petrobras may deny this, and they may point to their dividend policy as being set in stone. Again, these are not normal times in Brazil and this is no normal year for Petrobras. Another concern is that it is not unusual for governments and companies in South America to “change the deal” when it comes down to corporate law and investors. It seems that the ongoing reviews of financial problems could last through the end of 2016.

It now seems as though anything is possible regarding the Petrobras dividend. What investors should keep under consideration is that the Petrobras woes likely will continue. Bad news flow like this almost never seems to end suddenly. Even with close to a 40% ADS rally, Petrobras is down 67% from its 52-week high.

Several issues have come up in the past few days. Will a cooperation with the China Development Bank help with an added $3.5 billion coming to the company? Or what about the recently announced asset sales in Argentina?

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Petrobras has its Ordinary and Extraordinary General Meetings currently set for April 29th, 2015. That is one day short of the mandated date under its corporate governance. If a “delay” in the dividend is coming, that is when investors should find out the fate of the Petrobras dividend.

Again, the door is still open here. It is not set in stone that Petrobras will delay or skip a dividend. Still, there is also no assurance that the dividend will amount to much if a dividend is paid out. A fresh reminder came from the Wall Street Journal as well: Petrobras has about $56 billion in bonds outstanding, and it has been frozen out of the capital markets and has slashed production and slowed expansion as it struggles to generate cash.

When it comes to dividends, the preferred shares have a priority over the common equity. Petrobras lists its dividend policy on its investor relations site. That policy is here in part:

Shareholders shall be entitled in each fiscal year to dividends and/or additional payment on shareholders’ equity, which must not be less than 25% (twenty-five percent) of the net profit adjusted according to the Corporate Law, and divided pro-rata by the shares into which the capital of the Corporation is divided. (Article 8 of the Bylaws)

Preferred shares shall have priority in case of capital reimbursement and in the distribution of the 5% minimum dividend, calculated on the part of the capital represented by such kind of shares, or 3% of the net value of the share, always with the greater prevailing, with a participation equal to the common shares in corporate capital increases deriving from the incorporation of reserves and profits.

Preferred shares shall participate non-cumulatively on equal conditions with the common shares in the distribution of dividends whenever the latter are greater than the minimum percentage as guaranteed to them in the preceding paragraph. (Article 5- Paragraph 3 of the Bylaws)

The Company may pay interim dividends and/or interest on shareholder equity through the appropriate provisioning and subsequent approval by the Board of Directors… (Rest of policy here)

24/7 Wall St. will leave the final verdict up to the calendar here on Petrobras’ dividend. Anything seems possible in 2015 when it comes to Petrobras, and that includes government intervention.

Stay tuned.

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