PETROBRAS TURNS AROUND

Transcription

1 PETROBRAS TURNS AROUND Pedro Parente President & CEO of Petrobras

2 Disclaimer FORWARD-LOOKING STATEMENTS: 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 forwardlooking 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 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 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. 2

3 Investors are seeing the recovery of the company Petrobras Market Value x Brent (01/01/2015=100) Petrobras Despite the lower oil prices, investors believe in the recovery of Petrobras Brent 3

4 In 2016, higher total shareholder return and lower cost of debt 1 Year Liability Management 3 sucessful liability management offers between May 2016 and January 2017 US$ 14 bn in issuances and US$ 15 bn in repurchases helped reduce cost of funding and extended maturities Awarded Corporate Liability Management of the Year by LatinFinance Magazine Estimated Debt Cost Term Jan month ago 1 year ago Maximum 5 years 5,4 % p.a. 6,6% p.a. 12,3% p.a. 10 years 7,0% p.a. 7,8% p.a. 11,8% p.a. 30 years 7,9% p.a. 8,6% p.a. 10,8% p.a. 15,9% p.a. (09/29/15) 14,4% p.a. (01/20/16) 13,2% p.a. (02/11/16) Annual TSR (Dec 15-Dec '16) 1 TSR: Earnings growth, Change in valuation multiple and Free Cash Flow yield Source: Capital IQ; BCG analysis, BCG Source: Bloomberg 4

5 Making safety our top priority Our safety daily challenge SAFETY Safety activities on a typical day Headcount at shipyards Safety Dialogues Work Permits Confined Space Entry Permits 400 Reduction of 36% In the Total Recordable Injury Frequency Rate (TRIFR*) Interventions Work Permits Audits Job Safety Analysis Distance travelled by trucks (million km/day) 1,7 Source: Petrobras and subsidiaries FROM 2.2 in 2015 TO 1.4 by

6 Deleveraging the company FINANCIAL DRIVERS Reduction in LEVERAGE Net Debt/EBITDA Competitive prices Partnerships and Divestments FROM 5.3 in 2015 TO 2.5 by 2018 Opex Efficiency Capex Efficiency 6

7 New pricing policy in place since October 2016 % 8 How was it? Price changes 9,5 8,1 Import 6,1 Guidelines of the new pricing policy 3 0 Need for more frequent changes -2-2,7-3,2-3,1-7 How it is now? -5,1-1,4 Shorter-term adherence to price changes in international markets ,4 Oct 16 Nov 16 Dec 16 6 Jan Jan 17 Decisive element for downstream partnerships Diesel Gasoline 7

8 Lower investment is an industry trend Selected Companies Capex (US$ Billion) % -16% -19% % -16% 0 Petrobras BP Chevron ExxonMobil Total Estimate Sources: Evaluate Energy, Energy Intelligence, Company Report 8

9 Investment is focused on core business CAPEX E&P / CAPEX Total % Jan-Set Petrobras Shell Exxon Chevron BP 9

10 Cuts in Capex and Opex did not lower production Manageable operating costs* (US$ Billion) 2,54 2,69 2,79 2,79 Oil and Gas Production (Million boed) ESTIMATE * Manageable operating costs: lifting, refining, logistics and distribution costs, overhead and others 10

11 Partnership and divestment program took off Petrochemical Suape and Citepe to Alpek Partnership with Total Partnerships and divestments 21 45,97% Guarani to Tereos 49% Nova Fronteira to Sao Martinho Liquigas to Ultragaz 13,6 Nansei Seikyu to Taiyo OC 90% of Nova Transportadora do Sudeste to Brookfield 66% BM-S-8 (Carcara) to Statoil Petrobras Chile Distribuición to SCC 66,7% PESA to Pampa Energia Bacia Austral assets to CGG 49% Gaspetro to Mitsui Strategic Partnership with Statoil USD 2.5 billion Strategic Partnership with Total USD 2.2 billion Strategic Partnership with Galp 11

12 Indicators are showing a turnaround Free cash flow (R$ million) Net debt/ebitda 2012 a a 2016¹ -R$ R$ ,5 5, ,5 4 4,1 3, ¹ 2,5 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Cash flow from operating activities Investments (1) Data for 2016 until 3Q 12

13 MM TOEs Oil and gas will remain the dominant energy sources in Brazil Brazilian Energy Mix Oil Natural gas Coal Hydro Nuclear Renewables Other Source: IHS Markit (Scenario) Other: Includes biofuels, solid waste, biomass, and net trade of electricity and heat 13

14 Challenges ahead

15 2017 Top Risks Geopolitical risks, especially in the Middle East Uncertainties about Trump s monetary, trade and foreign policies Economic slowdown of Europe and China Slow economic recovery in Brazil 15

16 In the oil sector, regulation is likely to move towards a more competitive business environment New calendar for bid rounds Streamline environmental licensing Better regulatory framework Changes in the pre-salt law Improvement in local content policy New regulation for the Gas industry 16

17 Key messages Regulatory framework for the Oil&Gas industry tends to improve Deleveraging and safety are top priorities for Petrobras 17

18 THANK YOU Pedro Parente President & CEO of Petrobras