petrobras day 2018 · disclaimer — forward-looking statements: disclaimer the presentation may...

PETROBRAS DAY 2018—Rafael GrisoliaChief Financial and

Investor Relations Officer

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.

2

Summary—

• Petrobras became stronger

• Business and Management Plan deliveries

• Highlights in Exploration and Production

• Setting the company for the future

3

SAFETY

2.21.6

1.1 1.06

2015 2016 2017 2T18

TOTAL RECORDABLE INJURIES(TRI) Performed

2.24Q15

PNG 18-22

1.0in 2018

Safety remains our greatest value—

4

We continue reducing our net debt and increasing our free cash flow —

37

55

72

95

106100 96

85

69

-15.2

-7.6-12.8

-18.9-8.1

4.512.4 13.9 15.0

2010 2011 2012 2013 2014 2015 2016 2017 2018E

US$ billion

Net debt

Free cash flow

5

—

59 6253

63 5977

8977

56

80

111 112 10999

52 4454

71

2010 2011 2012 2013 2014 2015 2016 2017 1H 2018

28% 25% 19% 21% 18%24%

31% 27%35%

Brent

Adjusted EBITDA R$ billion

While delivering sustainable results

6

US$/bbl

Adjusted EBITDA

margin

Note: In 2017, excluding the Class Action settlement, the adjusted EBITDA would be R$ 88 billion

Towards our leverage target and with growing profit

-8.6

-4.3

0.2

4.9

2015 2016 2017 1H 2018

Net Profit(US$ billion)

PNG 18-22

2.5in 2018

Performed

5.14Q15

Net Debt /

Adjusted EBITDA

—

7

5.11

3.54 3.673.23

2015 2016 2017 1H 2018

3.20* 2.86*

* Excluding Class Action setttlement

—

as

Confidence RecoveryNew management system

Efficient governance mechanisms

We overcame “car wash”More than R$ 2.5 billion recovered

Class Action settlement agreement

Value creationDividends distribution

Focus on return on capital

The crisis is overSolid Liquidity

Robust cash generation✓

Active portfolio managementAcquisitions and divestments as opportunities

Greater competition in the Brazilian market

Debt reductionAfter Net Debt / EBITDA of 2.5x in 2018, we

will continue to reduce to the peers level

✓

✓

8

but the challenges

continue...

The company became

stronger...

Deliveries of our Business

and Management Plan

—

9

Traded at B3’ Level 2

New governance and compliance measures took the company to

a higher level

—

Related Party Transactions PolicyR

Employee Minority ShareholdersCEO

B3’ State-owned Companies Certification

R

R81% of independent members (minimum of 40%)

• Banning of political indications

• Independent members nominated by the Union: selected from a triple list

• Assessment of individual members

Board of Directors

10

Board of Directors Committees

Executive Bodies

R Elimination of all material weaknesses

—

US$ billion

International Capital Markets2016-2018

Banking Market*2016-2018

* Includes commercial banks and BNDES

22

28

7

Issuances Repurchases Exchange*

* Exchange of securities with maturities in 2019, 2020

and 2021 for securities with maturities in 2025 and 2028

A large liability management program was implemented

Note: Considers the position of transactions up to 8/31/2018.

US$ billion

11

Exchange*

24

36

6

Fundraising Pre-payments MaturitiesExtension

—

12

AMORTIZATION SCHEDULE

2015 vs 2018

Which improved our debt profile

5.5

Cash available

in 08/31/2018

Revolving credit

lines

US$ Billion

CASH

16.1

22.6

15.3

10.6

4.2

8.0

5.7

2.71.8

0.8 0.9 1.11.62.5

5.4

7.7

11.712.8

9.9

7.86.0

5.06.0

2.8

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Dec/15 Aug/18

14.1

—

Prices aligned to the international market

13

14

Reduction in break-even (point forward)

BMP 2014-2018

43

BMP 2018-2022

29

• Pre-salt learning curve

• Focus on the most

profitable projects

• Rig fleet optimization

• Low oil price resilience

• Competitive costs

• Technology development

US$/bbl

BMP 2017-2021

30

Capex efficiency focusing on deep water —

Pre-salt stands out by its global competitiveness—

Source: Bain, Rystad, EIA, IEA 15

25 50 75 100

OPECNorth America

Tight Oil Tier 1

pre-salt

Oil Sands

North America Conv.

North America

Tight Oil Tier 2

North America

Deep Water

Russia

Rest of the World

Shallow Water

Rest of the World

Deep Water

North America Tight Oil

Tier 4

North America Tight Oil

Tier 4

North America Shale

Tier 4

125

100

75

50

25

0

Breakeven Cost (US$/bbl)

Cumulative Production (MMBD)

Operating costs under control—

Lifting costUS$/boe

Refining cost

11.710.3

11.310.5

2015 2016 2017 1S18

US$/bbl

• Upstream logistic cost

optimization

• Rig fleet efficiency and

optimization

• Renegotiation of contracts 16

• Maintenance Optimization

• Reduction in personnel

expenses

G&A US$ billion

• Reduction in staff

• Cut in managerial positions

• Zero based budget

2.5 2.6 2.92.6

2015 2016 2017 1S18

3.4 3.32.9

1.3

2015 2016 2017 1S18

US$ 11.5 bi cashed-in from partnerships and divestments since 2017—

• Guarani

• Distribution

Chile

• BR IPO

• Roncador

(1st stage)

0.6

4.2

1.7 2.5 2.5 2.0

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

13.5

• Iara and Lapa

• São Martinho

• Liquigás (fine)

• Carcará

(2nd stage)

• NTS • Suape/Citepe

• Azulão

• Roncador

(2nd stage)

Projected

Strategic Partnerships

Note: Cash inflow amounts

Maintaining the goal of US$ 21 billion in signing

US$ billion

17

18

Financial discipline —

• Towards an optimal capital structure

• With continuous cost control

• Efficient capex allocation

• Active portfolio management

• Adequate remuneration to our shareholders

Exploration &

Production

Highlights

—

Hugo RepsoldChief Production Development and

Technology Officer

19

20

31% expansion in exploratory area

• 20 new blocks of high potential

• 90% of the assets in partnership

Sector SC-AP3

Dois Irmãos

Alto de Cabo Frio

Central

Três Marias

Peroba

Uirapuru

Sector SC-AP5

Entorno

de Sapinhoá

Sudoeste de

Tartaruga

Verde

4th Round (operator)

5th PSA Round: pre-emption right

Santos

Basin

Campos

Basin

Non-operator

Operator

Improvement in the regulatory framework

Peroba exploratory effort

• Record: 9 months between signing and drilling

20

—

—

10 years of pre-salt production—

Petrobras Parceiros2008 Jun/2018

1.5 million

bpd

Record 04/27/18

2.0 billion boe

Cumulative Production

Average production 1H2018

1.38 million bpd

• 21 FPSOs

• 150 wells

• lifting cost down by 40%

• new technologies and

project conception

• high productivity

21

Partners

dCampos Basin: cumulative production exceeds 11 billion barrels

—

Management of production decline and

systems operating at full capacity

Marlim, Marlim Sul, Roncador and

Albacora fields have already produced

more than 1 billion barrels each

Production fields

Exploratory blocks

22

2017

2.1 2.1 2.2 2.1

0.5 0.5 0.5 0.5

0.2 0.2 0.10.1

2.8 2.8 2.8 2.7

2015 2016 2017 2018E

Brazil Oil Brazil Gas Abroad

Target delivered for 3 consecutive years

Production Records

BRAZIL

OIL

2.6MMBBL/D

GAS

110MMm3/D

Millions

boed

23

May

2018

Delivering production targets in recent years—

WELLS

35%

FPSO

35%

SUBSEA

30%

INCREASED EFFICIENCY

5

10

15

20

25

2010 2011 2012 2013 2014 2015 2016 2017

months

Ramp-up time

Typical pre-salt project

—

CAPEX

150,000 bpd

8 production wells

7 injection wells

11 months ramp-up

25-30 years of production

0

100

200

300

2010 2011 2012 2013 2014 2015 2016 2017

days

Well construction time

Completação

PerfuraçãoDrilling

25% average capex reduction

24

Completion

Búzios 1 - FPSO P-74

• Start of operation: April/2018

• 7 completed wells

(88% expected for 2018)

• Current production: 30 kbpd (1 well)

Tartaruga Verde e Mestiça

FPSO Cid. de Campos

• Start of operation: June/2018



• Current production: 25 kbpd (2wells)

Lula Norte - FPSO P-67

• Baia de Guanabara (RJ)

• Start of operation: 4Q18



Lula Extremo Sul - FPSO P-69

• At location





• At location




)


• Techint Shipyard (Pontal do Paraná)




Startup of six systems in 2018—

25

Mero 1

Sépia

Under procurement

Mero 2

Integrated Parque das Baleias

Búzios 5

Marlim 1 Revitalization

Marlim 2 Revitalization

And ten new systems in the next years—

26

Búzios 4 FPSO P-77

Lula Extremo SulBerbigão FPSO P-68

Atapu

2021+FPSO Carioca

150,000 bpd

180,000 bpd150,000 bpd

FPSO Guanabara 180,000 bpdFPSO P-70 150,000 bpd

15

Preparing the company for the future—

Nelson Silva Chief Strategy and Performance Officer

27

\\\\\\\\\\\\\\\\

Moving towards a low carbon economy—

• Technology driving 30% reduction of NOx emissions

• Investments in CCUS

• 15% reduction in GHG since 2015

28

28

—

Developing high performance products—

• Gasoline: components for high performance

• Lubricant oil: reduction of frictional power losses and engine wear

• Transmission fluid: increase durability and performance

Partnership with McLaren and Renault

29

• Improved safety and governance

• Substantial debt reduction

• Solid cash generation

• Creating value for society and shareholders

• Active portfolio management, with great

exploratory opportunities and strengthening

partnerships

• Preparing the company for a low carbon future

and digital transformation

Setting the company for the future

—

30

PETROBRAS

DAY 2018—www.petrobras.com.br/ir

[email protected]

31

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