RESULTS ANNOUNCEMENT 3Q17 Clique para editar o título mestre Clique para editar o texto mestre Press Conference November, 13 th 2017 Clique para editar o texto mestre
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 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 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
Agenda Results Highlights 2017-2021 Business and Management Plan Execution Operational Highlights 3
9M-2017 Highlights Safety Decrease of TRI (total recordable injury per million man-hour frequency rate) reaching 1.09 in 3Q17 Net income of R$ 5,031 million in, reversing last year loss of R$ 17,334 million Financial Results Positive Free Cash Flow for 10 quarters in a row, reaching R$ 37,456 million, 26% higher than last year Adjusted EBITDA of R$ 63,571 million, stable relative to the same period of last year, with a 31% margin. Reduction in Net Debt/Adjusted EBITDA to 3.16 from 3.54 and in leverage to 51% from 55% Operating Performance Average oil and gas production of 2,776 thousand boed, stable relative to 2016. In Brazil, production grew 2.7% Oil products sales in Brazil of 1,959 thousand bpd, 6% lower compared to the same period of last year Increase of 39% in oil and oil products exports and 19% decrease in imports, with a net exporting position of 385 thousand bpd 4
Higher Brent prices and apreciation of the BRL Brent (US$/bbl) +24% 46 49 54 50 52 42 52 3Q16 4Q16 1Q17 2Q17 3Q17 FX Rate (R$/US$) -10% 3.25 3.30 3.15 3.22 3.16 3.55 3.18 3Q16 4Q16 1Q17 2Q17 3Q17 3.25 3.26 3.17 3.31 End of period 3.17 3.25 3.17 5
EBITDA of R$ 63.6 billion in, stable relative to last year R$ Billion Exploration and Production Downstream 36.0 +32% 47.4 Higher Brent prices Increase of oil and gas production in Brazil Higher production taxes Lower dry well expenses and equipment idleness 37.6-47% 19.8 Reduction in oil products commercialization margins Lower domestic sales of oil products Higher net exports of crude oil and oil products, at higher prices Gas and Power Distribution 5.5-14% 4.7 Increase in natural gas sales Higher share of domestic natural gas in the sales mix Higher sales expenses (NTS tariff) 0.9 +144% 2.2 Higher distribution margins, especially for diesel and gasoline Lower sales expenses (lower provisions related to receivables in the electricity sector and judicial claims 6
Net financial results R$ Billion Net Financial Results +10% 2.8 2.7 Lower finance expenses due to debt prepayment -18.5 18.1-6.3-21.9-2.0-8.7-24.0 Finance Income Finance Expenses Monetary and FX variation Tax Settlement Programs 7
Significant improvement in Net Income R$ Billion Net Income In addition to the previous factors, net income was also affected by: 5.0 Significant reduction of impairment expenses Gain with the NTS sale Expenses related to Brazilian Federal Regularization Programs (PRD, PRT and PERT) -17.3 8
Positive Free Cash Flow for 10 quarters in row R$ Billion Operating Cash Flow +1% Free Cash Flow 2 66.1 66.9 +26% Investments 1 37.5-19% 29.8 36.3 29.4 1. Cash Basis 2. Free Cash Flow to the Firm 9
Amortizations surpassed borrowings R$ Billion Borrowings 72 Amortizations and pre-payments* 91 29 Global Notes Global Notes 33 Banks 29 59 Banks Others Domestic corporate bonds 6 5 2 Others *Includes R$ 7.46 billion in amortizations of BNDES loans 10
Liability management lengthening maturities Amortization (US$ Billion) 1Q17 2Q17 3Q17 Average interest rate (% p.y.) 6.2 6.1 5.9 Average duration (years) 7.61 7.88 8.36 Leverage (%) 54 53 51 6.8 13.4 10.8 15.2 2.4 12.5 9.3 2.9 6.4 3.8 1.9 1.9 0.7 0.9 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Position as of 12/31/2014 17.2 25.3 5.9 11.3 10.4 13.0 10.4 6.8 7.2 5.2 4.3 6.3 1.3 Cash position as of 09/30/17 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Position as of 11/06/2017 11
Reduction in debt and leverage Debt (US$ billion) Net Debt / Adjusted EBITDA (x) 122.7 118.4 115.1 113.8 113.5 3.93 3.54 3.24 3.23 3.16 100.3 96.4 95.0 89.3 88.1 3Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Total Debt Net Debt 12
2017-2021 BMP Execution SAFETY TRI reached 1.09, quite inferior to the 2018 limit (1.4) PRICES Pricing practice adequate to competitive market CAPEX Revision of the 2017 projection, with no impact on the years production OPEX Reduction of personnel expenses PARTNERSHIPS AND DIVESTMENTS Resumption of divestments, with several ongoing processes, and strategic partnerships in negotiation 13
Revision in capex CAPEX (US$ Billion) Reduction of Capex due to: 17.0-6% 16.0 Postponement of FPSO construction activities and Route 3 gas pipeline, besides adjustments in the schedule of the Tartaruga Verde project; Reduction of support vessel tariffs and greater efficiency in platform revitalization activities; 2017 capex incorporates the payment of the bonuses for the ANP Bid Rounds 2017 Forecast 2Q17* 2017 Forecast 3Q17 *Does not include ANP Bid Rounds bonuses 14
Reduction in operating costs Manageable Operating Costs (R$ Billion) -9% Workforce -12% 64.4 58.4 71,152 62,528 Sales Expenses (R$ Billion) -2% General and Administrative Expenses (R$ Billion) -18% 10.8 10.5 8.5 7.0 15
Divestments, with target maintained for 2017-2018 US$ 13,6 billion closed in 2015-2016, of which US$ 7.8 billion already cashed in US$ 21 billion target for 2017-2018 Ongoing competitive processes Strategic partnerships in negotiation Competitive Processes 71 onshore fields 31 shallow water fields Distribution in Paraguai North/Northeast gas pipelines Fertilizer Units POG BV (Africa) IPO BR Distribuidora Strategic Partnerships 16
OPERATIONAL HIGHLIGHTS 17
Months to reach top capacity Growing production in Brazil offsetting international divestments Oil and Gas Production (kboed) Pre-Salt Operated oil and gas production (kboed) 25 Ramp-Up of Pre-Salt plataforms +0.5% Produção operada 2,763 2,776 trimestral na camada Présal 173 116 Abroad Óleo ou gás? > Ver nota de produção qual o recorde anunciado. +2.7% Caso 2,590 2,660 Brazil haja os dois, colocar apenas óleo Produção operada trimestral na camada Présal +32% Óleo ou gás? > Ver nota de produção qual o 1,582 recorde 309 Gas anunciado. 1,194 Caso haja os 234 dois, colocar apenas óleo 960 1,273 Oil Ilhabela Produção operada 20 trimestral São na Paulocamada Présal Angra dos Reis Óleo 15 ou gás? Paraty > Ver nota de produção qual Mangaratiba o recorde Itaguaí anunciado. Caso Saquarema haja os 10 Maricá dois, colocar apenas óleo 5 2010 2011 2012 2013 2014 2015 2016 2017 First oil 18
Growth of natural gas production in Brazil with gains in operational efficiency Operated Natural Gas Production in Brazil (kboed) Records in the quarter (September) +9% 575 626 Produção operada trimestral na camada Pré-sal Óleo ou gás? > Ver nota de produção qual o recorde anunciado. Caso haja os dois, colocar apenas óleo Operated Gas Production in Associated Gas Utilization ratio Produção Brazil operada trimestral na camada Pré-sal Óleo ou gás? > Ver nota de produção qual o recorde anunciado. Caso haja os dois, colocar apenas óleo Monthly Record 107 MMm³/d Monthly Record 97% Pré-sal Pre-Salt Outros Post-Salt Plays + Onshore 19
Reduction of Operating Expenses E&P Operating Expenses R$ billion 35-17% Produção operada trimestral na 29 camada Pré-sal Óleo ou gás? > Ver nota de produção qual o recorde anunciado. Caso haja os dois, colocar apenas óleo Lifting Cost US$/boe (Brazil e Abroad) +5% 11 Produção 10.4 operada trimestral na 0.7 Exchange rate effect camada Pré-sal Óleo ou gás? > Ver nota de produção qual o recorde anunciado. Caso haja Lifting Cost 10.4 os dois, colocar 10.3 apenas including Exchange óleo rate effect Pre-Salt Lifting Cost <7,0 US$/boe 20
Rebuilding of the exploratory portfolio following a strategy of leveraging value through partnerships Espírito Santo PAR-T-175 Mato Grosso do Sul 14 th CONCESSION BID ROUND 2 nd AND 3 rd PSC BID ROUNDS Minas Gerais Rio de Janeiro 10 new exploratory blocks São Paulo Setor SC-AP3 11.4 thousand km 2 of exploratory areas (Increase of 17% in the current portfolio) R$ 2.9 billion invested in signing bonuses Santa Catarina Entorno de Sapinhoá Peroba Alto de Cabo Frio Central Production Sharing Contracts Concession 21
Excellent exploratory result in the Pre-salt of the Campos Basin RJ MARLIM Excellent result in exploratory well in Marlim field Good quality oil in carbonate reservoirs with a total thickness of 196 meters Pre-salt discoveries in the Campos Basin have their value increased by the existing infrastructure, such as Albacora, Marlim Leste, Marlim Sul and Caratinga 22
Exports of 708 kbpd of crude oil and oil products in, a net balance of 385 kbpd Imports kbpd -76 399 Produção operada trimestral 323 na camada Pré-sal Óleo ou gás? > Ver nota 241 de produção qual o recorde anunciado. Caso 200 haja os dois, colocar apenas óleo Oil Products 158 123 Crude Oil Net Balance +274 385 kbpd Exports +198 kbpd 708 Produção operada trimestral na camada Pré-sal 510 158 Óleo ou gás? > Ver nota de produção qual o recorde anunciado. Caso haja 154 os dois, colocar apenas óleo 550 Oil Products 356 Crude Oil Produção operada trimestral na camada Pré-sal Óleo ou gás? > Ver nota de produção qual o recorde anunciado. 111 Caso haja os dois, 427 colocar apenas óleo 198 Oil Products Crude Oil -42-87 23
Higher sales volumes in the quarter and lower in Sales Volume (kbpd)* +3% -7% 1,836 1,886 2,010 Produção operada trimestral na camada 1,861Pré-sal Óleo 711 ou gás? > Ver 764 nota de produção 764 qual o recorde 740 anunciado. Caso haja os dois, colocar apenas óleo 462 450 486 460 Others Gasoline 663 672 760 661 Diesel 2Q17 3Q17 Participation of domestic oil in the processed feedstock (%) Produção operada 93 trimestral 93 na camada Pré-sal Óleo ou gás? > Ver nota de produção qual o recorde anunciado. Caso haja os dois, colocar apenas óleo 2Q17 3Q17 Distillation Utilization Factor (%) Cracking Utilization Factor (%) Produção operada trimestral na camada Pré-sal Óleo ou gás? 78 > Ver nota de 78 produção qual o recorde 80 anunciado. 84 Caso haja os dois, colocar apenas óleo Refining Plants Operational Availability (%) Produção operada trimestral na camada Pré-sal 96 96 Óleo ou gás? > Ver nota de produção qual o recorde anunciado. Caso haja os dois, colocar apenas óleo 2Q17 3Q17 2Q17 3Q17 2Q17 3Q17 *Does not include BR Distribuidora sales 24
Natural Gas Supply and Demand Higher domestic supply and higher demand Natural Gas Supply MMm³/ day Natural Gas Demand MMm³/ day 76 5 +7% 81 4 Produção operada trimestral 23 na camada Pré-sal Óleo ou gás? 29 > Ver nota de produção qual o recorde anunciado. Caso haja os dois, colocar apenas óleo +7% 81 76 Produção operada trimestral na camada Pré-sal 37 Óleo ou gás? 35 > Ver nota de produção qual o recorde anunciado. Caso haja os dois, colocar apenas óleo 42 53 LNG Bolivia Domestic 24 28 16 15 Non Thermoeletric Thermoeletric Downstream/Fertilizers System Gas 25
RESULTS ANNOUNCEMENT 3Q17 Information: Investor Relations +55 21 3224-1510 investors@petrobras.com 26