Petrobras General Overview

Transcription

1 Petrobras General Overview December, 2016

2 STRATEGIC PLAN BUSINESS AND MANAGEMENT PLAN

3 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 orevents. Readersarereferredtothedocumentsfiledbythe CompanywiththeSEC, 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 2016 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 thispresentation,such as oil andgasresources,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. 3

4 OUR VISION An integrated energy company focusing on oil and gas that evolves with society, generating high value and with a unique technical ability 4

5 OUR VALUES Respectfor life, people and environment Ethics and transparency Market driven Overcoming and confidence Results 5

6 Main Metrics in Strategic Plan and Business and Management Plan SAFETY FINANCIAL Reduction of 36% In the Total Recordable Injury Frequency Rate (TRIFR*) Reduction in LEVERAGE Net Debt/EBITDA FROM 2.2 in 2015 TO 1.4 in 2018 FROM 5.3 in 2015 TO 2.5 by2018 * TRIFR = number of reportable injuries per million manhours 6

7 Highlights of the Plan Engagement of all leadership 2 main targets drive the strategy Unified instruments (SP and BMP) New management system with targets up to supervisory level Disciplined execution: systematic monitoring of goals and correction of deviations New tools of cost management Meritocracy 7

8 EVOLUTION 8

9 Main variables in the base case scenario Brent Prices (US$/bbl- base year 2016) Nominal exchange rate (R$/US$) , , , , , Range of estimates(ihs, (IHS,PIRA and and IEA) IEA) Petrobras , Market Intervalo forecast Focus Petrobras Source: Petrobras; IHS, PIRA, IEA, Focus report 9

10 Brazilian oil products market resumes growth Brazilian oil products market (Million bpd) % Diesel Gasoline Others 10

11 Cost reduction Manageable operating costs (US$ Billion) % 10% % 53% E&P RGN Refining Other Demais & Natural segments áreas Gas (RNG) BMP Estimates BMP 11

12 Partnerships and divestments Amount in US$ Billion Benefits of the partnerships Risk sharing Reduced investments Increased capacity for investing in the chain Technological exchange Strengthening of corporate governance The partnerships and divestments program of Petrobras leverages additional investments that can surpass US$ 40 Billion* in the next 10 years. * Does not consider investment of suppliers to increase capacity 12

13 Volume of own investments Comparison of total investments (US$ Billion) % 100,00 80,00 2% 17% 1% 17% ,00 40,00 81% 82% 2017 Capex US$ 19.2 Billion 20,00 0, BMP PNG (revisão (Jan 2016 JAN review) 2016) PNG BMP Exploration & Production (E&P) Refining & Natural Gas (RNG) Other segments 13

14 Main themes of the initiatives 21 strategies 72 initiatives Strengthening of the safety culture Stepping up the fight against corruption Merit-based performance management Streamlining decision making Implantation of Zero Based Budgeting Strengthening of internal controls Improvement of risk management 14

15 EXPLORATION & PRODUCTION 15

16 Upstream Capex Breakdown Total E&P US$ 60.6 billion Production Development + Exploration 13% 11% 34% 66% 76% Concession Transfer of Rights Production Sharing (Libra) Exploration Suporte Development Operacional of production Exploração Operational support Pre-Salt Post-Salt 16

17 Efficiency gains: experience in Santos Basin pre-salt Greater productivity of wells in the concessions kbpd/well Fewer wells to achieve maximum capacity of the platform Producing wells Productivity 30% higher % fewer wells 6 Lower capex for the same production Until 2010 Experience acquired in the construction of wells 3 Number of wells built (drilled and completed) 2010 Shorter well construction time in the concessions Days construction per well 310 Until wells drilled Construction about 3 times faster 17

18 Lula field: faster construction and interconnection of wells unit Angra dos Reis 6 units Angra dos Reis Paraty Itaguaí Mangaratiba Maricá Saquarema 60% reduction in construction time and interconnection of wells 18

19 Reduction in operating costs Lifting Cost (US$/boe) * Increased participation of the pre-salt layer in the portfolio, with lower lifting cost Gains from contractual renegotiations Management of drilling rig idleness Optimization of logistics support vessel fleet Reduction in personnel expenses * Averagefor theperiod 19

20 Opportunities in the Campos Basin 2000 Oil Production in Campos Basin (Mbbl/d) We currently have an average decline rate of 6% in Campos Basin* New opportunities may further reduce this effect Campos Basin 1.37 MMbbl/d 62% of our total oil production Operations with emphasis on strategic partnerships, seeking to increase production potential Extension of concessions Revitalization of Marlim project * Average decline rate of last 12 months. Average for the period of of 9% 20

21 Petrobras Production Produção Oil, NGL* Óleo, andgasproduction LGN e Gás (million boed) Oil+ gasabroad Natural gas Brazil Oil+ NGL Brazil * Natural Gas Liquids 21

22 Start-up of new production units TARTARUGA VERDE E MESTIÇA REVIT. DE MARLIM MÓD. 1 REVIT. DE MARLIM MÓD. 2 LEGEND LULA NORTE LULA SUL TLD DE LIBRA BERBIGÃO LULA EXT. SUL BÚZIOS 1 BÚZIOS 2 BÚZIOS 3 BÚZIOS 4 BÚZIOS 5 ATAPU 1 SÉPIA PILOTO LIBRA INTEGRADO PARQUE DAS BALEIAS LIBRA 2 NW ITAPU CONCESSION PSA TRANSFER OF RIGHTS 22

23 REFINING & NATURAL GAS 23

24 Refining and Natural Gas Capex Breakdown Total RNG U$S 12.4 Billion 7% 24% 33% 11% 25% RTC - Operational continuity G&E - Operational continuity Others (Petrobras Distribuidora, PBIO and R&D) RTC - Capital investments G&E - Capital investments RTC: Refining, Transportation and Commercialization; G&E: Gas& Energy; PBIO: Petrobras Biocombustível; R&D: Research& Development. 24

25 Reduction of operating costs Refining Cost (US$ thousand/uedc 1 ) Integration of common and interdependent activities among the refineries Optimization in the use of support resources Optimization of the consumption of energy, catalyzers and chemicals Optimization in maintenance expenditures Unit of equivalent destilation capacity 2. Average for the period 25

26 Main Projects RNEST (Abreu e Lima) 1st Refining set (Train I) 2nd Refining set (Train II) 100 kbpd 130 kbpd SNOX unit (under procurement) Seeking partnership Pre-salt gas flow Route 1 Route 3 Expansion of UTGCA under study Gas pipeline and Gas Processing Unit implementation COMPERJ Gas Processing Unit In final stages Refinery Seeking partnership SNOX: emission reduction unit; UTGCA: Monteiro Lobato Gas Treatment Unit. 26

27 Reduction in personnel expenses Decrease of own employees (Voluntary Severance Incentive Programs ) 9,270 employees already left of which 2470 in the 2016 Program 9,670 employees expected to leave by mid of which 400 in the 2014 Program Decrease of service contractors 114,000 were dismissed since 2014* * Service contractors of worksite and assembly, administrative, operations, schedule stoppages and abroad. 27

28 Measures adopted to strengthen compliance Foreign Corrupt Practices Act DOJ and SEC CORRUPTION PREVENTION Program Code of ETHICS Due diligence counterparty Integrity background check for candidates to key positions UK Bribery Act Brazilian Law /2013 Brazilian Decree-Law 8.420/2015 Brazilian Law /2016 Adherence to the Code of Ethics and the Guide to Ethical Conduct for 100% of employees Board of Directors and Executive Board are selected exclusively by technical criteria Independent whistleblower channel Correction Committee 28

29 Measures adopted to strengthen governance Review of the decision-making process Elimination of individual approvals Creation of statutory technical committees Statutory Audit Committee New Advisories Committees for the Board of Directors Alignment of guidelines for all companies in Petrobras System Definition of succession process Organization chart restructuring 29

30 FINANCE 30

31 Sources and Uses 74 Sources and Uses (US$ billion) Partnerships and divestments are essential to enable all the planned investments No need for net borrowings in Uses Investments Amortizations Financial Expenses Sources Partnerships and Divestments Use of Cash Operating Cash Flow (after dividends) 31

32 Main risks* Important changes in market conditions Divestment and partnership below expectations Risks overseen by accountable professionals and/or mitigating initiatives Litigations Renegotiation of the Transfer of Rights Impact of Local Content on costs and timing of the projects Delays in the construction of platforms Higher than expectedinvestment costs *These risks are not exhaustive 32

33 3Q16 Results 33

34 Production continues in an upward trend Production increases 2.5% in the period Production (MMboe/d) +2.5% Production Records % MMbbl/d +8% +4% Oil production in Brazil 2.87 MMboe/d Oil and gas production 3.17 MMboe/d Operated production 3Q15 4Q15 1Q16 2Q16 3Q16 Oil Brazil Oil International Natural Gas Seven of the eight Pre-Salt platforms in Campos Basin have reached full capacity 34

35 Lifting cost keeps downward trend Lifting Cost* (US$/boe) % 10.4 Lifting Cost* (US$/boe) Q15 2Q16 3Q16 Lifting Cost 3Q15 vs 3Q16 Wereducedby20% the maneagebleoperatingcostsin thesameperiodin which production grew by 2,5% 9M15 9M16 < 8.0 US$ boe Pre-Salt Lifting Cost Below 8 Dollars per barrel * Lifting Costin Brazilandabroad 35

36 Lower sales volume* due to reduced oil product demand in the domestic market Demand impacted by the slowdown in the domestic economy kbbl/day 2,282-6% 2, % 2,088 2,254-8% 2,084 Others Gasoline Diesel Q15 2Q16 3Q16 9M15 9M16 * Includes Downstream and BR Distribuidora sales 36

37 Net balance ofoilandoilproductsexportsof210 kbpdin thequarter kbbl/day Imports Exports Net Balance Oil Products Oil Q15 2Q16 3Q16 3Q15 2Q16 3Q16 3Q15 2Q16 3Q16 37

38 Positive free cash flow for the sixth quarter in a row R$ Billion Adjusted EBITDA 1 +11% Operating Cash Flow +8% Q Q Q M M Adjusted EBITDA Margin (%) Q15 2Q16 3Q16 9M15 9M16 Investments 2-31% Free Cash Flow +256% Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16 1. Adjusted EBITDA is the sum of EBITDA, share of earning in equity-accounted investments and cumulative translation adjustments CTA. 2. Cash basis 38

39 Results affected by non-recurring itens R$ Billion Gross Income -6% Operating Income -81% Q15 2Q16 3Q16 9M15 9M16 3Q15 2Q16 3Q16 9M15 9M16 Net Financial Results Net Income % % Q15 2Q16 3Q16 3Q15 2Q16 3Q16 9M15 9M16 9M15 9M16 39

40 Main projects and reasons for impairment in 3Q16 R$ 15.7 billion in 3Q Country Risk Premium (% p.a.) Increase in discount rate for every segment % jan/15 mar/15 mai/15 jul/15 set/15 nov/15 jan/16 mar/16 mai/16 jul/16 set/ Oil and Gas Production fields in Brazil Some fields, which had already been impacted by impairment in 2015, had their cash flows more pressured by the exchange rate and the discount rate. 2.8 Equipment related to oil and gas production activities Uncertainty in the delivery of the hulls of FPSOs P-71, P-72 and P nd train of Abreu and Lima refinery -RNEST Postponement of 2 nd train of RNEST to 2023 R$ Billion 2.0 Suape Petrochemical Complex Review of business plan s assumptions, such as the reduction in the market for resins and exchange rate 40

41 Individual Actions New York Provision of R$ 1.2 billion in 3Q16 Individual actions (negotiated) Settlement in 3Q16 Provision in 3Q16 Individual actions (under negotiation) Settlement in 3Q16 Provision in 3Q16 Class action + other individual actions Settlement in 3Q16 Provision in 3Q16 In October 2016, Petrobras reached an agreement to settle four individual actions, with the plaintiffs below: Dodge & Cox Int'l Stock Fund; Janus Overseas Fund; PIMCO Total Return Fund; Al Shams Investments.al. In 3Q16, Petrobras provisioned for individual actions under negotiation, for which settlements were not yet reached. In 3Q16, Petrobras did not provision nor closed settlements related to the class action and other individual actions. The ongoing discussions encompass very complex issues and are subject to substantial uncertainties. 41

42 We announced the new diesel and gasoline pricing policy We will practice competitive prices using as a benchmark Import Parity Prices (IPP) plus a margin Competitiveness will be a function of commercial and financial objectives IPP Import price (market alternative) Margin and risks Considers the competitiveness of Petrobras products and the risks associated to imports operations, such as exchange rate and oil and oil products price volatility, delays and changes in quality specification. Taxes CIDE, PIS and COFINS, ICMS Refinery Gate Price 42

43 Partnerships and Divestments already reached 69% of the target of the Plan Transactions already signed amount to US$ 10.5 Bi Partnerships and divestments with signed contracts Partnerships and divestments In final stages of negotiation already announced Strategic Partnerships already announced Ongoing Divestments already announced BaciaAustral assets in Argentina, with PetroquímicaSuape and Citepewith MoU with Statoil focus on Partnership in Petrobras Distribuidora Compañia General de Combustibles Alpek revitalization of Post-Salt fields (BR) S.A. Baúna and Tartaruga Verde fields MoU with GALP focus on Onshore shallow waters fields 49% Gaspetro with Mitsui 66.7% PESA with Pampa Energia Petrobras Chile Distribuiciónwith with Karoon partnerships in regions worldwide in which the companies have a shared interest, besides training and deepwater reservoir research LNG Terminals Thermal power plants Southern Cross Group MoU with TOTAL focus in the E&P, 66% BM-S-8 (Carcará) with Statoil Gas, Energy and Refining segments in 90% of Nova Transportadora do Brazil and aborad Sudeste (NTS) with Brookfield Nansei refinery with Taiyo Liquigás with Ultrapar 43

44 We reduced by 10% the Manageable Operating Costs in 2016 Sales, general and administrative expenses decreased, despite the wage readjustment due to the 2016 Collective Bargaining Agreement Sales, General and Administrative Expenses R$ Billion 6.6-4% 6.5-2% % 19.3 Petrobras Workforce Evolution -10% -7% 3Q15 2Q16 3Q16 9M15 9M16 79,113 76,613 71,152 Manageable Operating Costs R$ Billion % % % Q15 2Q16 3Q16 3Q15 2Q16 3Q16 9M15 9M16 44

45 Lower debt in line with BMP targets Total Debt (R$ billion) Net Debt (R$ billion) 506,6 402,3 493,0 392,1 450,0 369,5 397,8 332,4 398,2 325,6 Total Debt (US$ billion) 127,5 126,3 126,4 123,9 122,7 Net Debt (US$ billion) 101,3 100,4 103,8 103,6 100,3 3Q15 4Q15 1Q16 2Q16 3Q16 3Q15 2Q16 3Q16 Cost of Debt(% a.a.) Maturity(years) Leverage(%)

46 DEBT PROFILE AS OF SEPTEMBER 30, 2016 By Category By Currency 6% 4% 6% 1% 22% 44% 19% 74% 24% Bond Markets Foreign Financial Institutions Brazilian State Banks Foreign Development Banks and ECA Other Brazilian Banks USD BRL EUR Others Note: Brazilian State Banks: BNDES, Banco do Brasil and Caixa Econômica Federal 46

47 MATURITIES AS OF SEPTEMBER 30, 2016 (Including Liability Management LM) % 7% US$ Billion 20% 16.5 Before LM After LM (July 2016) 12% % 2% % 12% 22% 39% 12% 4% 26% 25% Other Brazilian Banks Foreign Development Banks and ECA Brazilian State Banks Foreign Financial Institutions Bond Markets 5% % 25% 1% 38% 45% 16% 40% 22% 32% 32% Note 1: Brazilian State Banks: BNDES, Banco do Brasil and Caixa Econômica Federal 47

48 2016 Cash Flow reflects divestments and debt management US$ Billion Financial Expenses and Amortizations Tender Offer Initial Cash Position Operating Cash Flow Judicial Guarantees Dividends, Interest and Amortizations Investment Divestments Roll-overs Borrowings 2016 Final Balance 48

49 And evolving with a focus on the main metrics of the BMP SAFETY FINANCIAL Total Recordable Injury Frequency Rate* Net Debt / EBITDA** -27% -24% -12% -9% Q16 3Q Q16 3Q16 * TRIFR = Number of reportable injuries per million man-hours ** LTM Adjusted EBITDA 49

50 STRATEGIC PLAN BUSINESS AND MANAGEMENT PLAN