Post on 17-Aug-2020
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Petrobras focus on its strengthsRio de Janeiro
October 25, 2017
—
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Disclaimer
FORWARD-LOOKING STATEMENTS:
DISCLAIMER
The presentation may contain forward-looking statements about future events
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that are not
based on historical facts and are not assurances of future results. Such forward-
looking statements merely reflect the Company’s current views and estimates of
future economic circumstances, industry conditions, company performance and
financial results. Such terms as "anticipate", "believe", "expect", "forecast",
"intend", "plan", "project", "seek", "should", along with similar or analogous
expressions, are used to identify such forward-looking statements. Readers are
cautioned that these statements are only projections and may differ materially
from actual future results or events. Readers are referred to the documents
filed by the Company with the SEC, specifically the Company’s most recent
Annual Report on Form 20-F, which identify important risk factors that could
cause actual results to differ from those contained in the forward-looking
statements, including, among other things, risks relating to general economic
and business conditions, including crude oil and other commodity prices, refining
margins and prevailing exchange rates, uncertainties inherent in making
estimates of our oil and gas reserves including recently discovered oil and gas
reserves, international and Brazilian political, economic and social
developments, receipt of governmental approvals and licenses and our ability to
obtain financing.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information or future events or for any
other reason. Figures for 2017 on are estimates or targets.
All forward-looking statements are expressly qualified in their entirety by this
cautionary statement, and you should not place reliance on any forward-looking
statement contained in this presentation.
In addition, this presentation also contains certain financial measures that are
not recognized under Brazilian GAAP or IFRS. These measures do not have
standardized meanings and may not be comparable to similarly-titled measures
provided by other companies. We are providing these measures because we use
them as a measure of company performance; they should not be considered in
isolation or as a substitute for other financial measures that have been disclosed
in accordance with Brazilian GAAP or IFRS.
NON-SEC COMPLIANT OIL AND GAS RESERVES:
CAUTIONARY STATEMENT FOR US INVESTORS
We present certain data in this presentation, such as oil and gas resources, that
we are not permitted to present in documents filed with the United States
Securities and Exchange Commission (SEC) under new Subpart 1200 to Regulation
S-K because such terms do not qualify as proved, probable or possible reserves
under Rule 4-10(a) of Regulation S-X.
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108.8
98.9
52.3
44.1
52.2
2013 2014 2015 2016 2017*
Oil Price - Brent (Annual average – Nominal)
* Average until October 13, 2017 Source: Bloomberg
US$/b
arr
el
1.62.1
1.41.9
1.4
0.5 0.3 0.60.2
-0.7
87
89
91
93
95
97
99
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17
Excess of Supply Oil Supply Oil Demand
Balance between Oil Demand and Supply
Source: International Energy Agency – September/2017 Oil Market Report
Million b
pd
Global Oil & Gas sector has changed.
Oil prices will be lower for longer or lower forever?
—
4
US crude oil production expected to increase through end of 2017,
setting record in 2018
Challenges from the demand side
We learn daily that there are challenges ahead
—
Source: US Energy Information Administration, Short-Term Outlook (Oct 16 2017)
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1997 1998 1999 2006 2008 2013
End of
Petrobras
monopoly
Market opening:
competitive
environment
New companies
entered Brazil
in partnerships
with Petrobras
Beginning of
bid rounds
Pre-salt
discovery
Beginning of
discussions of
new pre-salt
regulatory
framework
Interruption of
bid rounds
Libra
Bid Round
Review of regulatory
frameworks to attract
more investments
Pre-emption rights in pre-salt
bidding rounds
Improvement in local content
policy
Improvement in natural gas
regulatory framework
Predictability of bidding
rounds
Renewal of special tax regime
(REPETRO)
Divestment process
methodology approved by
Federal Accounting Court
(TCU)
16 bid roundswith several companies taking part
Brazil is taking the opportunity to improve its business environment
_
2016/2017
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DistributionRefining & Trading
others27 %
3 %
19 %
20 %
31 %
+100 Other retailers
99 %
1 %
Exploration & Production
79% of
demand
49 %
51 %
21% of
demand
Third
parties
Production
Import
Source: ANP (Brazil), June 2017
Companies with production in Brazil
Source: ANP (Brazil), up to December 2016 Source: Sindcom (Brazil), up to May 2017
51%26%
12%
3%
3% 2% 3%
+40 other E&P
companies
with partners standalone
Other
companies
With opportunities in all Oil & Gas segments
—
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Financial
Operational
Strategic
2015 1H2017
US$ billion (1st half)7.2Free cash flow 1.4
%53Leverage 60
million boe/d
2.7Crude oil, NGL and
Gas production - Brazil 2.6
12Manageable Operating Costs 15
thousand employees63Petrobras workforce 79
X
3.2Net debt/LTM Adjusted
EBITDA ratio
5.1
injuries/MM man-hours
1.1Total Recordable Injury
Frequency Rate 2.2
US$ billion
114Gross debt 126
%
3324Adjusted EBITDA margin
11Lifting cost – Brazil* 13
US$/boe (1st half)
1H2017Main Indicators
US$ billion (1st half)
*excluding government take
At Petrobras, results are being delivered as promised
—
Safety is our top priority
—
Source: Petrobras and subsidiaries
HSE: Health, security and environment
Reduction
36%on the Total Recordable Injury
Frequency Rate (TRIFR*)
TO
1.4in 2018
FROM
2 .2in 2015
1.1in 2Q17
Safety metric
On going assessment of safety
procedures
Stricter rules and enforcement of
HSE procedures in all supplier
contracts
Systemic treatment of HSE
issues
“Commitment to Life” Program
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On going training program on
HSE Golden Rules
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2.13 2.15 2.072.13 2.15 2.17
2015 2016 2017
Petrobras - Oil production in Brazil
Business Plan target Results
2.77
20212021
+ 18 newproduction
units
2021 oil production
target in Brazil
* 1H 2017 average
MM
bbl/
d
*
Production targets were met in 2015 and 2016 and we are ahead of schedule
in 2017
—
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E&P Capex / Total Capex
Onshore and shallow
Deep and Ultradeep
water
Pre-salt
(Ebitda/boe)
1.9x
1.6x
Higher Profitability
30%
40%
50%
60%
70%
80%
90%
100%
2002 2004 2006 2008 2010 2012 2014 2016
Peers Petrobras
Note: Peers considers RDS, ExxonMobil, Chevron and BP
E&P Capex
2017-2021
Investments are focused on more profitable projects
—
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Feb-10 Jan-11 Dec-11 Nov-12 Oct-13 Sep-14 Aug-15 Jul-16 Jun-17
Post-salt + Onshore
49%
Pre-salt
51%
Daily production record
1,423 kbbl/d in
June,19
Loweroperating
costs
Lifting costs below US$7 per barrel
Higher oil quality
Higher margin
More domestic oil in the refineries
Lighter products yield
Higher gas ratio
Higher gas availability
Pre-salt already represents half of our operated production
—
Pre-salt delivers higher revenues
and lower costs to the companyOperated Oil Production in
Brazil
(kbbl/d)
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With a competitive breakeven
_
Middle East
Russia
Algeria
China Brazil
Kazakhstan
NATightOil
Canadaoil sands
WestAfrica
Norwayand UK
USGoM
Venezuela
$0
$20
$40
$60
$80
$100
$120
0 3.000 6.000 9.000 12.000 15.000 18.000 21.000 24.000 27.000
2016 f
ull-c
ycle
Bre
nt
Bre
akeven,
US$/bbl
New crude oil production, thousand b/d
.
* Breakeven price range
for a typical Pre-salt
project
Sources: IHS Markit 2016; *Petrobras
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Competitive portfolio breakevenPoint-forward breakeven reduction of 30%
Petrobras is building a competitive upstream portfolio in a lower price scenario
—
Portfolio 2017 2:
30 US$/bbl
Portfolio 2014 1:
43 US$/bbl
Pre-salt knowledge base
Technology development
Portfolio management & selectiveness
High productivity and low lifting cost
Selectiveness for new exploratory
opportunities
Preemption rights in pre-salt areas
ToR 3 renegotiation
Better regulatory and tax framework
Lower local content requirements
Renewal of special tax regime (Repetro)
1) Business Plan 2014-18
2) Business Plan 2017-21
3) Transfer of Rights
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BRAZIL-BOLIVIA
GAS PIPELINE
MS PR
SP
6 blocks in the Campos Basin
• Partnership with Exxon, with 50% WI
• Petrobras is the operator
• Potential Pre-salt play
• Most competitive sector of the bid
• Eight big companies bid for this sector:
Petrobras, Exxon, BP, Shell, Total, CNOOC,
Repsol and Karoon
1 block in the Paraná Basin
• Gas opportunity
• New exploratory frontier
• Installed infrastructure
Following its portfolio strategy, the company was awarded seven new blocks
in the 14th Brazil bid round
—
Brazil’s 14th Bidding Round (September 27, 2017)
Concession regime
Simplified rules including lower local
content requirements
High liquidity blocks
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Partnerships and Divestments are being made under the same strategy
of portfolio optimization
—
Petrochemicals
Biofuels
Gas Pipelines
Distribution
Assets Abroad
Strategic Partnerships
We reached US$ 13.6 billion in 2015-16 and are committed
to the 2017-18 target
13.6
21.0
2015-2016 2017-2018
Strategic Partnerships:
IPO of Petrobras Distribuidora
71 onshore fields
31 shallow water fields
Distribution & Retail in Paraguay
North/Northeast gas pipelines
Fertilizer units
Announced in 2017
CNPC
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WELLSSUBSEARESERVOIR FACILITIES
WAG (6°)
LWR
WAG (6°)
LWR
JUMPER (6°)
Simplified Project of Intelligent Completion
US$ 82 million
saved by reducing (12 days) the completion process of
injections wells
Single-line WAG
US$300 million
saved by cutting the number of flexible lines
used
Appraisal Strategy Optimization
US$360 million
saved in Libra projects, by decreasing (460 days) the
evaluation phase
CO2 separation and reinjection
4.5 MM tons
separated and reinjected in Lula and Sapinhoá fields
between 2010-2016
The company is constantly developing innovative solutions to reduce costs in
offshore projects
—
Note: Water Alternating Gas (WAG)
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Leading technologies will allow cost reduction, extended oil production
plateau and reservoir management improvements in the Pre-salt
—
Takes advantage of CO2 in liquidstate under certain pressure and
temperature providing a GasOil Ratio Reduction.
Dense Phase CO2
Separation Hi-SepTM
Partners: Aker, FMC, GE, OneSubsea,
and Saipem
High performance membranes for CO2 separation from natural gas allowing smaller processing
plants withhigher capacity
Carbon Molecular Sieve Membranes
Partner: Shell
Compact gas treatment system based on membranes capable of
removing H2S and water, reducing topside
weight and FPSO costs
All Membrane Technology
Partner:Air Liquide
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And the company is also dedicated to reduce its operating costs
—R
$ B
illion
78,47068,829
63,152
2015 2016 1H17
Technical standardization
Contracts renegotiation: reduction in fleet and daily rates
Organizational restructuring (cut of managerial functions)
Process reorganization
Main initiatives
Manageable operating costs Number of employees in Petrobras system
9387
39
2015 2016 1H17
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Law
13.303
Petrobras
By-Laws
Certifications
B3
Strong restrictions for nominations to the Board of Directors
Disclosure rules related to the controller shareholder’s interest
Minimum requirements and impediments for executive nomination
Minority Committee to evaluate relevant transactions with related parties
(federal government, among others)
Certification in the Corporate Governance Program for State-Owned Companies
Annual evaluation of the member of Board of Directors by an external organization
Code of Ethics annual training
Petrobras is creating conditions to maintain a strong governance in the long run
—What has changed?
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Active liability management have resulted in maturities extension—
1,9
6.2
13.011.8
13.1
16.0
9.46.9 7.2
5.3 4.36.3
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Position as of September 30, 2017
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Debt Amortization ScheduleUS$ Billion
Position as of December 31, 2014
6.8
13.4
10.8
15.2
20.4
9.3
2.9
6.4
3.81.9 1.9
0.7 0.9
12.5
1.91.9
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With consistent improvement in our performance
—
Adjusted EBITDAR$ Billion 50
57 60 59 62 53 63 59
77 89
44
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17
Adjusted EBITDA Margin%
Free Cash FlowR$ Billion
29 27
33 28
25 19 21
18 24
31 33
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17
-3.3 -3.5-18.9
-26.9-13.1
-25.7-41.8
-19.6
15.9
41.622.7
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17
BrentUS$/bbl
73 99 63 80 111 112 109 99 52 44 52
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In a nutshell…
Global energy market is challenging and requires greater level of
efficiency from Oil & Gas companies
Petrobras is regaining momentum, but a lot still needs to be done
We are focusing in our strengths and in a partnership-driven business
model
Increasing cooperation with operators, suppliers and academia
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Thank you!