petrobras update november2014 - jefferies.com cid de saquarema lula central 2016 concession transfer...
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PETROBRAS
Update
November2014
__
22
FORWARD-LOOKING STATEMENTS:
DISCLAIMER
The presentation may contain forward-looking statements about future events within themeaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E ofthe Securities Exchange Act of 1934, as amended, that are not based on historical factsand are not assurances of future results. Such forward-looking statements merely reflectthe Company’s current views and estimates of future economic circumstances, industryconditions, company performance and financial results. Such terms as "anticipate","believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along withsimilar or analogous expressions, are used to identify such forward-looking statements.Readers are cautioned that these statements are only projections and may differmaterially from actual future results or events. Readers are referred to the documentsfiled by the Company with the SEC, specifically the Company’s most recent AnnualReport on Form 20-F, which identify important risk factors that could cause actual resultsto differ from those contained in the forward-looking statements, including, among otherthings, risks relating to general economic and business conditions, including crude oil andother commodity prices, refining margins and prevailing exchange rates, uncertaintiesinherent in making estimates of our oil and gas reserves including recently discovered oiland gas reserves, international and Brazilian political, economic and socialdevelopments, receipt of governmental approvals and licenses and our ability to obtainfinancing.
We undertake no obligation to publicly update or revise any forward-lookingstatements, whether as a result of new information or future events or for anyother reason. Figures for 2014 on are estimates or targets.
All forward-looking statements are expressly qualified in their entirety by thiscautionary statement, and you should not place reliance on any forward-lookingstatement contained in this presentation.
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 StatesSecurities and Exchange Commission (SEC) under new Subpart 1200 toRegulation S-K because such terms do not qualify as proved, probable orpossible reserves under Rule 4-10(a) of Regulation S-X.
DISCLAIMER
33
PETROBRAS TODAYFully integrated across the hydrocarbon chain
• 2.6 mm boed production
• 293 production fields
• 92% of Brazilian production
• 34% of global DW and UDW
production
Exploration and Production
• 12 refineries (Brazil)
• 2.2 mm bpd refining capacity
• Oil products sales in Brazil:
2,443 Kbpd
• Oil products output in Brazil: ,2,180 Kbpd
Downstream
• 7,710 service stations
• 37,7% of market share
• 21% share of service stations
Distribution
• 9,190 km of gas pipelines in
Brazil
• NG Supply: 96.3 million m³/d
• 3 LNG Regasification terminals
with 41 MMm³/d capacity
• 6,885 MW of generation
capacity
Gas and Power
• 17 countries
• 0.7 Bn boe of 1P (SPE)
• 217 th. boed production
• 231 th. bpd refining capacity
International
• 3 Biodiesel Plants and interest
in 2 addiotional plants: 14,1 kbbld
• Ethanol: opening new markets
• Largest domestic producer of
biodiesel: 20% of internal market
• 3rd producer of ethanol in Brazil
Biofuels
(1) Adjusted according average exchange rate. Excludes Corporate and Elimination.
2013 Proven Reserves (SPE Criteria) - BrazilAdjusted EBITDA per Segment (US$ bn) (1)
OnShore8%
Shallow Water (0-300m)
6%
Deep Water (300-1,500m)
45%
Ultra-Deep Water
(> 1,500m)41%
15.97 Billion boe
30,643,4 42,0 37,4
4,1
-6,9-15,6 -9,8
1,4
3,6 2,01,61,3
1,3 1,61,52,1
3,0 3,23,5
E&P RTM G&P Distribution International
2010 2011 2012 2013
44
COMPETITIVE ADVANTAGESUniquely positioned to integrate upstream and downstream operations
• Leader in deep-water production, with access to abundant oil reserves
• New exploratory frontier, adjacent to existing operations
• Dominant position in growing market, far from other refining centers
• Balance and integration between production, refining and demand
• Fully developed infrastructure for processing and transfporting gas
• Integration accross full energy and hydrocarbon chain in Brazil
Exploration & Production
Downstream
Gas & Power/ Biofuels/Petrochemicals
Abundant reserves 300 km away from
the market
55
2006-2010
• Petrobras installed, on average, 5 platforms per year from 2006 to 2010,with capacity of 400-500KBPD.
• Ramp up of these units was delayed due to limited availability of drillingrigs: Since 2006, fleet increased from less than 30 to more than 70
2011-2015
• 2011/12: Inadequate installation of new capacity to overcome naturaldecline.
• 2014/15: Gradual well connection will lead to production growth within theperiod
HISTORICAL FPSO INSTALLATIONProduction grows when capacity of new production units exceeds decline of approximately 10% p.a.
SEILLEANGOLFINHO
30 kbpd
PPER-Phase 12.7MMm³/d
P-34 JUBARTE60 kbpd
P-50180 kbpd
FPSO-CAPIXABA100 kbpd
FPSO-PIRANEMA
30 kbpd
P-52180 kbpd
P-54180 kbpd
Manati8MMm³/d
FSO Cid. DeMacaé
FPSO-Cid. RJ100 kbpd
FPSO-CIDADE DE VITÓRIA
100 kbpd
2008 2009 2010 2011
PRA-1
FPSO Cid. Rio Das Ostras
30 kbpd
P-53 – MLL180 kbpd
PPER-Phase 2∆5.3MMm³/d
FPSO Cid. Niteroi MLL
100 kbpd
FPSO Cid São Mateus
Camarupim10MMm³/d
Frade100 kbpd
FPSO E.S. PQ DAS CONCHAS
100 kbpd
P-51 – MLSMód. 2
180 kbpd
2012 2013
FPSO Cidade deAngra dos Reis
100 kbpd
FPSO Cidade deSantos
10MMm³/d
P-57180 kbpd
SS-11TIRO/SIDON
20 kbpd
FPSO Capixaba(reallocation)
100 kbpd
Mexilhao15MMm³/d
P-56100 kbpd
Cid. Anchieta100 kbpd
Cid. Itajaí80 kbpd
Cid. São Paulo120 kbpd
P-55180 kbpd
TAD + P-61 + P-63140 kbpd
Cid. Paraty120 kbpd
2006 2007
P-58180 kbpd
(1) Petrobras’ Total Interest in capacity added to produce oil
9 units1,000 kbpd
Units and Oil Capacity (1) added per year
1 unit100 kbpd
2 units100 kbpd
5 units400 kbpd
5 units480 kbpd
4 units210 kbpd
7 units590 kbpd
5 units370 kbpd
P-62180 kbpd
2014
Cid. Mangaratiba150 kbpd
Cid. Ilhabela150 kbpd
P-61 + TAD140 kbpd
P-58180 kbpd
P-62180 kbpd
66
NEW SYSTEMS ENSURE FUTURE GROWTH
1,9
3,2
4,2
2013 2014 2015 2016 2017 2018 2019 2020
Growth in 2014:7.5% ± 1p.p.
Piloto Sapinhoá (Cid. São Paulo)
Baúna(Cid. Itajaí)
Piloto Lula NE(Cid. Paraty)
Papa-Terra(P-63)
Roncador III(P-55)
Norte Pq. Baleias (P-58)
Iracema Sul(C. Mangaratiba)
Roncador IV (P-62)
Sapinhoá Norte (Cid. Ilhabela)
Papa-Terra (P-61+TAD)
Itapu
Lula Alto
Lula CentralJúpiterLula Sul
(P-66)
Búzios I(P-74)
Lapa
Lula Norte (P-67)
Búzios II(P-75)
Lula Ext. Sul e CO Sul de Lula
(P-68)
Lula Oeste(P-69)
Búzios III(P-76)
Tartaruga Verde e Mestiça
Maromba I
Iara Horst(P-70)
Búzios IV(P-77)
Entorno de Iara(P-73)
NE de Tupi (P-72)
Iara NW (P-71)
Sul Pq. Baleias
ES ÁguasProfundas
Carcará
Espadarte III
SE ÁguasProfundas I
Búzios V
RevitalizaçãoMarlim I
SE ÁguasProfundas II
Libra
RevitalizaçãoMarlim II
Iracema Norte (Cid. Itaguaí)
On Stream
On Location
Ordered
Under Bidding
+640kbpd +660kbpd +150kbpd +1000kbpd +900kbpd +1050kbpd Capacity added per year
3 MM bbl
77
OIL AND NGL PRODUCTION IN BRAZIL – 2014 PROJECTION Production target of 7.5 (± 1 p.p.) maintained, as year end production offsets lower first half production
Factors that support production growth:� New systems: P-61/TAD (4Q14), FPSO Cidade de Ilhabela (4Q14) and FPSO Cidade de Mangaratiba (4Q14).� Planned connection of 33 production wells in 2H14. 30 were connected in 1H14.
- PLSV FLEET INCREASE: 11 vessels in 1Q14, 13 in 2Q14, 16 in 3Q14 and 19 in 4Q14.- PRODUCTIVITY INCREASE: from 84 km / PLSV / year in 2Q13 to 114 km / PLSV / year in 2Q14 (+36%).- READINESS: Reduction in PLSV downtime: from 33% in 2Q13 to 31% in 2Q14 (-2 p.p.).
1Q13: 1,910 2Q13: 1,931 3Q13: 1,924 4Q13: 1,960 1Q14: 1,922 2Q14: 1,972
2013 average: 1,931 kbpd 2014 average: 2,075 kbpd ± 1%
P-61
TAD
Cid. Mangaratiba
Cid. Ilhabela
Cid. São PauloJan 6
Cid. ParatyJun 6
P-63Nov 12
Cid. ItajaíFeb 16
P-55Dec 31
P-58Mar 17
P-62May 12
1965
1920
1846
19241892
1979
18881908
19791960 1957 1964
1917 1923 1926 1933
19752008
2049
2105 2118
1700
1800
1900
2000
2100
2200
2300
2400
2500
2600
3Q14: 2,090
Cid. MangaratibaOct 14
88
PRODUCTION WELLS EXPECTED TO BE CONNECTED IN 2014
29 29 30
11
62 62
42
56
New Production Wells in 2014 New Injection Wells in 2014
Connected Completed Drilled Total Connected Completed Drilled Total
* Wells drilled, completed, connected as of September 30, 2014
99
PLSV’s New units, greater productivity
1010
PROGRAM TO INCREASE OPERATIONAL EFFICIENCY (PROEF) SHOWING RESULTS
488
455 452 442 418
389 390 389
355 376
428 413 408 405
374 357
370
312 315
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
With PROEF
Without PROEF
920
871 887
871 881
839
804
910
851 840 841
811 824
731
4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
With PROEF
Without PROEF
Oil + NGL Production (kbpd)
Oil + NGL Production (kbpd)
73 68 71
76 76 74 75 77 77 80
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
92 91 89 94 91 93 92 94 95 96
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Operational Efficiency(%)
Operational Efficiency(%)
* By February 2014
UO-BCRecovering wells and subsea systems.
Total Expenditure*US$ 1,897 mm
NPV*US$ 1,080 mm
Production gain:+61 kbpd in the 2Q14.
UO-RIOIntegrity improvement and optimization in the usage of resources.
Total Expenditure*US$ 3.2 mm
NPV*US$ 1,340 mm
Production gain+73 kbpd in the 2Q14.
1111
SUBSEA FACILITIES IN BRAZIL Main suppliers of subsea equipment concentrated in the same geographic region, facilitating the logistics supply and local content
Source: MSS/ IHS 2014
Niterói-RJ
Vitória e Porto do Açu-RJ
Vila Velha-ES
Porto do Açu-RJ
Rio de Janeiro
Curitiba-PR
Taubaté-SP
Jandira - SP
Industrial Region Subsea Umbilicals
Vila Velha-ESSalvador-BA Niterói-RJ
Industrial Region Subsea Equipments
Industrial Region Flexible Pipe
11
1212
PETROBRAS VESSELS;CURRENT AND PROJECTED FLEETAdditional vessels still needed, but largely contracted
(1) Future Demand includes hired demand, demands in hiring phase and yet to be hired demand.
Source: Transpetro; BMP 2014-18; Petrobras (E&P-SERV/US-CONT and AB-LO/TM)
+ 154 Large Supply Boats+ 154 Large
Supply Boats
Business and Management Plan 2014-2018
Significant equipment demand mapping:
� Historically imported equipment with potential to attract foreign suppliers
� Equipment produced nationally but with potential bottlenecks in production capacity
+ 32 Production Units by 2020 and+11 from 2021 to
2030 (Libra)
+ 32 Production Units by 2020 and+11 from 2021 to
2030 (Libra) + 28 Drilling Rigs+ 28 Drilling Rigs
* AHTS, ORSV, PSV
+ 89 Tanker Vessels
+ 89 Tanker Vessels
Future Demand (2014-2020)
CriticalResources
Dec/2013Situation
Future Situation:Incremental values considering
acquisitions(1) and disposals2020
Situation2014-15 2016-17 2018-20
Tanker Vessels 55 13 23 38 127
Supply Vessels 414 44 44 66 568
Production Units(SS and FPSO) 54 3 13 16 86
Drilling Rigs(SWD > 2.000 m) 40 -1 8 7 54
1313
PRE-SALT PROVINCE – ON STREAM Daily Production Record: 618kbpd on 18th September
Rio de Janeiro
MGMG
RJ
São Paulo
Curitiba
FPSOCapixaba2 p. well
P-482 p. well
P-533 p. wells
FPSO Cid.Angra dos Reis4 p. wells
FPSO Cid.Paraty
4 p. wells
FPSO DynamicProducer
1 p. well
FPSO Cid. Niterói1 p. well
P-584 p. well
FPSO Cid.Anchieta4 p. wells
FPSO Cid.São Paulo
4 p. wells
� 9 production units+ 1 EWT
� 29 productionwells (13 PPSBS,6 BC/RJ e 10 BC/ES)
ConcessionTransfer of RightsProduction SharingSurplus Volumes of the Transfer of Rights
1414
PRE-SALT PROVINCE Production Highlights
Production RecordProduction Record
-May 11th 2014 –21 production wells-May 11th 2014 –21 production wells
8 YEARS PRESALT
9 YEARS North sea
16 YEARS Campos Basin
19 YEARS Gulf of Mexico
In eight years,the Presalt production exceeded 400.000 bpd .
Success in exploratory wells 2013: 100%-Presalt
Daily Production Record
618.000bpd September 18, 2014
14
1515
PRE-SALT DRILLING ACTIVITY Santos Basin Pre-Salt cluster
2 23
7
11
14
2123
Active Rigs
2 3 4 4 69 10 12
6
15
21
2 3 4 57
15
25
33
2006 2007 2008 2009 2010 2011 2012 2013
DevelopmentExploration
29 injection wells27 production wells
54 exploratory wells
2014 (Jan-Jul)
4
21
14
18
1616
WELLS CONSTRUCTION IN SANTOS PRE-SALT Total Duration
168
125
98 98
78
2010 2011 2012 2013 2014
Duration (days/well)
158
102
89 86
64
2010 2011 2012 2013 2014
Duration (days/well)
Drilling Completion (including WCT)
-11% p.a. -15% p.a.
16
1717
THE WAY FORWARD UP TO 2020 Additional 24 platforms (PNG 2014-18)
FPSO Cid de IlhabelaSapinhoá Norte4T2014
FPSO Cid de SaquaremaLula Central2016
ConcessionTransfer of RightsProduction SharingSurplus Volume of the Transfer of Rights
Carcará2018
FPSO Cid de CaraguatatubaLapa2016
FPSO Cid de MaricáLula Alto2016
P-66, P-67, P-68, P-69, P-70, P-71, P-72, P-73 1º: Lula Sul2016
FPSO Cid de ItaguaíIracema Norte2015
FPSO Cid de MangaratibaIracema Sul4T2014
Júpiter2019
Itapu2020
Sul Parque dasBaleias 2018
P-74, P-75, P-76, P-77 1º: Búzios I2016
Búzios V2019
Libra2020
1818
PRE-SALT RESULTS ARE COMPETITIVE TO DEEPWATER PEERS
150
120
90
60
30
0
Other
Heavy oil/oil sands/shale oil/tight liquids
Deep/ultradeep (>450 m)
Conventional
1. Range of predicted global oil demand according to the New Policies Scenario (91.7 Mboed) and the Current Policy Scenario (93.5 Mboed) in 2020, already subtracting 2.5 MBoed of processing gains – IEA Source: Rystad Energy UCUBE, IEA WEO 2012 (Nov-2012)
60
60
120
150
0
1008040200
30
90
Break-even commercial ($/bbl)
(Mbpd)
OPEC conventional
Other conventional
Global forecasted production and break-even prices by types of oil and projects (*)
Deep and Ultradeep
Brownfield Canada oil sands and heavy oil
Greenfield Canada oil sands and heavy oil
Other oil sands and heavy oil
Tight liquids
Arctic
Oil shale
Shale oil
Break-even price rangefor Brazil Pre-Salt
sanctioned projects
Next wave of new technologies can
further decrease break-even pre-salt price
(*) Concession Model
18
1919
FPSO CIDADE DE MANGARATIBA – IRACEMA SUL (START-UP: OCT/14) Santos Pre-Salt cluster unit also being completed in Brazil and on schedule for production
• First oil on October 14, 2014• Pull-in of the first production well completed• Operation License released on Oct 6th• 150 kppd oil• 8 MM m³/d gas• 8p + 8i wells
19
2020
FPSO CIDADE DE ILHABELA – SAPINHOÁ NORTE (START-UP: NOV/14)Santos Pre-Salt cluster unit on schedule with topsides built and integrated in Brazil
• Sail away on September 2014• Mooring in progress• 150 kbpd oil• 6 MM m³/d gas• 9p + 7i wells
20
2121
LIBRA: FIRST PRODUCTION SHARING BID ROUNDSTVoR with equivalent economics and volumes, but with a 100% participation for Petrobras
Unique Characteristics
• Very thick Pre-salt reservoirs
• Good reservoir quality (porosity / permeability)
• Light Oil (~ 27° API)
The Libra partnership offers a vast array of opportunities
• Very strong oil companies
• Integrated Project Team
• Openness to new ideas
40% 20% 20% 10% 10%
LibraLibra
L1L1
L3L3
L2L2
L4L4
L5L5
L6L6 L7L7
L8L8
L9L9
L10L10
L11L11
L12L12
L1
L3
L2
L4
L5
L6 L7
L8
L9
L10
L11
L12
ConcessionTransfer of RightsProduction SharingSurplus Volumes of Transfer of Rights
BúziosItapuEntorno de IaraSépia
BúziosItapuEntorno de IaraSépia
2222
SVToR IMPACT ON FUTURE PETROBRAS INVESTMENT SPENDING Reducing investments in the other segments while increasing investments in E&P in Brazil
Oil Products Output Record in Brazil: 12 RefineriesNew HDT´s and conversion units, logistics and process optimization lead to higher output
2,100
2,150
2,200
1,850
2,050
2,000
1,950
1,900
1,800
1,750
1,700
1,650
1,600
1,5502013
2,074
2012
1,944
2011
1,862
2010
1,798
2009
1,799
2008
1,765
2007
1,779
2014
1,746
2005
1,727
2004 20062003
1,588
2,172
+228 th. Bpd+12%
1,704
Note: 2014 value refers to the monthly record achieved in June/14.
Th. bpd
New production records in the refining segment
• Excellent efficiency levels: utilization factor of 98% in 2Q14.
• New monthly record of 2,172 th. bpd in June, 21 th. bpd above the previous record achieved in March 2014
Paulínia Refinery – REPLANCapacity: 415 th. bpd
23
2424
CAPEX EVOLUTION IN BUSINESS AND MANAGEMENT PLANSTotal planned investments declining, E&P share increasing in each of last five Plans
* Gas and Energy, International, BR Distribuidora, PBio , Engineering Technology and Materials (ETM) and Corporate and Services Area
2014-2018 BMPTotal Capex
2012-2016 BMPTotal Capex
2013-2017 BMPTotal Capex
2010-2014 BMP 2011-2015
BMP
E&P
Downstream
Other Areas*Po
rtfol
io o
f Pro
ject
s fo
rFi
nanc
iabi
lity
Eval
uatio
n
US$ 224.0 BillionInvestment US$ 224.7 Billion US$ 236.5 Billion US$ 236.7 Billion US$ 220.6 Billion
48%
35%
17%
52%
33%
11%15%
18%
27%
62%
14%
30%
56%
70%
12%
2525
BUSINESS AND MANAGEMENT PLAN 2014-2018Breakdown of total spending by projects under implementation, bidding process, and evaluation
Downstream 38.7 (17.5%)
Gas & Energy 10.1 (4.6%)
International 9.7 (4.4%)
Distribution 2.7 (1.2%)
Biofuels 2.3 (1.0%)
Engineering, Technology& Materials 2.2 (1.0%)
Other Areas 1.0 (0.5%)
Exploration & Production 153.9 (69.8%)
Under Implementation(US$ 175.9 billion)• Projects being executed
(construction)• Projects already bid• Resources required for studies
of Projects Under Evaluation
Under Bidding Process¹(US$ 30.9 billion)
• E&P projects in Brazil- Represent around 200 th. bpdof production in 2018 and 900 th. bpd in 2020.
• Refineries Premium I and II - Capex considers a relevantparticipation of partners- Capex aligned to internationalparameters2
(US$ 13,000 38,000/barrel).
Projects under Studies in Phase I, II or III
(except E&P in Brazil)
Portfolio of Projects Under Implementation + Under Bidding Process
US$ 206.8 Billion Portfolio of Projects Under Evaluation
US$ 13.8 Billion
¹ Includes E&P projects in Brazil which will stil go through bidding process of their units, as well as Premium I and Premium II refineries, which will have the bidding process carried out throughout 2014 ² Source: IHS CERA Regional Downstream Capital Costs Indexes - 2011
Oil Production 2020: 4.2 million bpd
No impact in Oil Production 2020
2014-18 BMPTotal Investment
US$ 220.6billion
ProductionDevelopment
112.5 (73%)
Infrastructure:18.0 (12%)
Exploration:23.4 (15%)
2626
2014-2018 BMP: FINANCIAL PLANNING ASSUMPTIONSFinancing analysis only incorporates projects under Implementation + Bidding = US$ 206.8 Billion
Main Assumptions for Cash Flow Generation and Investment Levels
2014-2018 BMP is based on constant currencies from 2014.
Brent Prices (US$/bbl) US$ 105 in 2014, declining to US$ 100 by 2017 and to US$ 95 in the long term
Average Exchange Rate (R$/US$) R$ 2.23 in 2014, strengthening to R$ 1.92 in the long term
Leverage Limit: < 35% │ Declining leverage (although limit surpassed in 2014)
Net Debt/ EBITDA Limit: < 2.5x │ Limit will be surpassed in 2014 and will fall below 2.5x from 2015 and below 2.0x in the end of period
Oil Product Prices in Brazil Convergence of prices in Brazil to international benchmarks, according to diesel and gasoline price policy appreciated by the Board of Directors on November 29th, 2013.
No equity issuance Investment grade maintenance
2727
2014-2018 BMP: OPERATING CASH FLOW AND FUNDING NEEDS
Annual borrowing needs 2014-2018
Gross – US$ 12.1 billion │Net – US$ 1.1 billion
� Additional funding needs will be funded exclusively through new debt. No equity issuance is envisaged
� Free cash flow, before dividends, from 2015 on.
� Net borrowing needs below previous BMP due to:
• Higher oil production.
• Expansion of refining capacity, reducing oil products imports.
• Business model restructuring, which decreases cash needs throughout the BMP.
182,2
9,1
9,9
60,5
206,8
54,9
Sources Uses
Amortization
Investments
Third-Party Resources (Debt)
Business Model Restructuring
Cash Utilization
Operating Cash Flow (After Dividends) and Divestments
US
$ B
illio
n
261.7 261.7
2828
PETROBRAS RATINGSConsolidated investment grade position, supported by the sovereign rating
“We see Petrobras’s leverage to be nearing peak levels in 2013 and 2014, significantly higher than those of its industry peers and only likely to decline in 2015 and beyond”
“Petrobras’s Baa1 ratings are supported by its large-scale reserve base and dominance in the Brazilian oil industry with a leading position and reflects government support and the impact of joint-default analysis.”
“Increased government linkages could also result in the convergence of the ratings with the sovereign rating.”
Petrobras Rating: Baa1 / Brazil: Baa1
Petrobras Rating: BBB- / Brazil: BBB-
“Although credit metrics deteriorated, they remain consistent with Fitch expectations and consistent was current ratings”
“Credit metrics are expected to recover once the company increasingly monetizes its large oil reserve base and as domestic products refined products are aligned with international prices.”
“A negative rating action could result from the downgrade of the sovereign or the perception of a lower level of credit support for Petrobras by the Brazilian government and/or a significant weakening in credit fundamentals beyond current expectations and without the government's expressed support for the company. “
“The ratings on Petrobras reflect our view of the company's "bbb-" stand-alone credit profile (SACP) and the "very high" likelihood that the government of Brazil would provide timely and sufficient extraordinary support to Petrobras in the event of financial distress.”
“The negative outlook mirrors that of the sovereign and indicates that we would lower the ratings on Petrobras if we take a similar rating action on the sovereign. Absent any sovereign rating action, and maintaining our current assessment about likelihood of extraordinary government support, a downgrade would occur only if the company's SACP were to fall to 'b+', which we consider highly unlikely.”
Petrobras Rating: BBB / Brazil: BBB
2929
Dividend Policy Petrobras policy is to pay a minimum of 25% of adjusted net income to each class of shares
� The application of Petrobras policy and by-laws resulted in the following declarations of dividends based on 2013
Adjusted Net Income:
Note: 1 ADR = 2 shares
� PN/PBR.A received a higher dividend for 2013 results because of the requirement of a minimum distribution, based on
corporate by-laws, of 3% of the book value of shareholder equity
SHARE ADR
PN – PBR.A R$ 0.9672 R$ 1.9344
ON – PBR R$ 0.5217 R$ 1.0434
� According to Brazilian Corporate Law, companies with two classes of shares must pay a minimum amount equal to 25%
of net income
� Regarding Petrobras By-Laws, minimum payable to non-voting shares (PN/PBR.A) is the higher of:
� 25% of Adjusted Net Income
� 3% of the PN’s proportional book value of shareholder’s equity
� 5% of the PN’s proportional paid-in capital
� Non-voting shares have priority rights to distribution of dividends
Petrobras By-Laws Consistent with Brazilian Corporate Law
