Petrobras at Glance - 2014
 

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Petrobras at Glance - 2014 Presentation Transcript

  • 1. PETROBRAS At a Glance June 2014 __
  • 2. 22 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 2014 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. 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. DISCLAIMER
  • 3. 33 PETROBRAS TODAY Fully integrated across the hydrocarbon chain • 2.4 mm boed production • 293 production fields • 96% of Brazilian production • 34% of global DW and UDW production Exploration and Production • 12 refineries (Brazil) • 2.0 mm bpd refining capacity • Oil products sales in Brazil: 2,285 Kbpd • Oil products output in Brazil: 1,997 Kbpd Downstream • 7,641 service stations • 38,1% of market share • 20% share of service stations Distribution • 9,190 km of gas pipelines in Brazil • NG Supply: 74.9 million m³/d • 3 LNG Regasification terminals with 41 MMm³/d capacity • 7,028 MW of generation capacity Gas and Power • 24 countries • 0.7 Bn boe of 1P (SPE) • 243 th. boed production • 231 th. bpd refining capacity International • 3 Biodiesel Plants • Ethanol: opening new markets • Largest domestic producer of biodiesel • 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) OnShore 8% Shallow Water (0-300m) 6% Deep Water (300-1,500m) 45% Ultra-Deep Water (> 1,500m) 41% 15.97 Billion boe 30,6 43,4 42,0 37,4 4,1 -6,9 -15,6 -9,8 1,4 3,6 2,0 1,61,3 1,3 1,6 1,52,1 3,0 3,2 3,5 E&P RTM G&P Distribution International 2010 2011 2012 2013
  • 4. 44 COMPETITIVE ADVANTAGES Uniquely 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 13 Abundant reserves 300 km away from the market 4
  • 5. 55 FPSO Cid. São Paulo (Sapinhoá) 1,950 1,900 1,850 2,050 2,000 2,200 2,150 2,100 1,917 Dec-13 2,027 1,964 Nov-13 2,009 1,957 Oct-13 1,994 Mar-14 2,014 1,926 Mar-13 2,009 1,923 1,960 Sep-13 2,022 1,979 Aug-13 1,951 1,908 Jul-13 1,929 1,888 Jun-13 2,021 1,979 May-13 1,925 1,892 Apr-13 1,974 1,924 1,890 1,846 Feb-14Jan-14 1,988 Fev-13 1,955 1,920 Jan-13 1,994 1,965 Th. bpd Petrobras: Oil and NGL Production in Brazil Petrobras Production in the 1Q14 was 1,922 thousand bpd, in line with projections 1Q13 Average 1,910 2Q13 Average 1,931 4Q13 Average 1,960 1Q14 Average 1,922 3Q13 Average 1,924 P-58 (Parque das Baleias) P-55 (Roncador) P-63 (Papa-Terra) Nov 12thFPSO Cid. Paraty (Lula NE Pilot) FPSO Cidade de Itajaí (Baúna) Feb 16th Jan 5th Mar 17th Dec 31st Capacity: 120 th. bpd (45% Petrobras) 2013 – 10 th. bpd 1Q14 – 20 th. bpd Capacity: 80 th. bpd (100% Petrobras) 2013 – 36 th. bpd 1Q14 – 72 th. bpd Capacity: 120 th. bpd (65% Petrobras) 2013 – 10 th. bpd 1Q14 – 30 th. bpd Capacity: 140 th. bpd (62.5% Petrobras) 2013 – 1 th. bpd 1Q14 – 9 th. bpd Capacity: 180 th. bpd (100% Petrobras) 1Q14 – 8 th. bpd Capacity: 180 th. bpd (100% Petrobras) 1Q14 – 2 th. bpd Petrobras Production Production Operated by Petrobras Jun 6th Main factors that impacted production in the 1Q14: • Demobilization of FPSO Brasil and complete stoppage of Marlim P-20 for 103 days (fire). • Limited availability of PLSVs, due to the delayed decision of contracting abroad (2010 → 2012), impacting the pace of interconnection of wells. • Delays in the delivery of the platforms by the shipyards. • Longer time for the execution of innovative projects, such as the BSRs (monobuoys) and systems P-63/P-61/TAD. 2013: 1,931 th. bpd
  • 6. 66 • Norte Pq. Baleias (P-58) 1st Quarter  Sapinhoá Pilot (Cid. São Paulo)  Baúna (Cid. Itajaí) • Iracema Sul (Cid. Mangaratiba) • Roncador IV (P-62) 2º Quarter • Sapinhoá Norte (Cid. Ilhabela) • Papa-Terra (P-61 + TAD ) 2nd Quarter • Florim • Júpiter• Lula Alto • Lula Central • Lula Sul (P-66) • Búzios I (P-74) • Lapa • Lula Norte (P-67) • Búzios II (P-75) • Lula Ext. Sul e ToR Sul de Lula (P-68) • Lula Oeste (P-69) • Búzios III (P-76) •Tartaruga Verde and 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 • Deep Water ES • Carcará • Búzios V • Espadarte III  Production Units in operation • Deep Water I SE • Marlim I •Revitalization • Deep Water II SE • Libra • Marlim II Revitalization Lula NE Pilot (Cid. Paraty)  Papa-Terra (P-63)  Roncador III (P-55) --- Production Units not bid as of Feb/2014 1st Oil Forecast 3rd Quarter 4th Quarter • Iracema Norte (Cid. Itaguaí) 3rd Quarter 1st Oil Forecast9 Production Units Concluded • Norte Pq. Baleias (P-58) • Roncador IV (P-62) • Papa-Terra (P-61) • Papa-Terra (TAD) • Production Units Delivered in 2013 2014 Growth: 7.5% ± 1p.a. 2014-2018 BMP: PETROBRAS OIL AND NGL PRODUCTION CURVE IN BRAZIL New systems recently installed and under construction ensure future growth 2014 - 2015 2016 - 2020
  • 7. 77 ProductionUnitsDelivered,underConstructionandunderBidding 2014 2015 2016 2017 20182013 1,000 kbpd 300 kbpd Additional Capacity Operated by Petrobras 150 kbpd 1,000 kbpd 900 kbpd 1,050 kbpd Cid. Ilhabela Cid. Mangaratiba P-75 P-67 P-74 P-66 P-68 P-69 P-76 P-77 P-72 P-71 P-73 P-67 Cid. Itaguaí Cid. Maricá Cid. Saquarema Cid. Caraguatatuba Cid. São Paulo Cid. Itajaí Cid. Paraty P-63 P-55 P-61 P-58 P-62 TAD PU to be bid: • Deep Water ES • Marlim I Revitalization • Deep Water I SE • Maromba I • Sul do Pq. das Baleias • Carcará + 600 kbpd PU under bidding: •Tartaruga Verde and Mestiça + 150 kbpd P-70 Under Bidding Process: • Tartaruga Verde and Mestiça • Deep Water ES • Marlim I Revitalization • Deep Water I SE • Maromba I • Sul do Pq. das Baleias • Carcará
  • 8. 88 2006-2010 • Petrobras installed, on average, 5 platforms per year from 2006 to 2010. • Ramp up of these units was delayed due to limited availability of drilling rigs1: (2006: 2, 2011: 26) (1) Does not include installation of Extended Well Tests / (2) Over 2,000 meters water depth 2011-2015 •2011/12: Inadequate installation of new capacity to overcome natural decline. •2014/15: Gradual well connection will lead to production growth within the period HISTORICAL FPSO INSTALLATION Production growth correlated with installation of new capacity SEILLEAN GOLFINHO 30 kbpd PPER-Phase 1 2.7MMm³/d P-34 JUBARTE 60 kbpd P-50 180 kbpd FPSO- CAPIXABA 100 kbpd FPSO- PIRANEMA 30 kbpd P-52 180 kbpd P-54 180 kbpd Manati 8MMm³/d FSO Cid. De Macaé FPSO-Cid. RJ 100 kbpd FPSO-CIDADE DE VITÓRIA 100 kbpd 2008 2009 2010 2011 PRA-1 FPSO Cid. Rio Das Ostras 30 kbpd P-53 – MLL 180 kbpd PPER-Phase 2 Δ5.3MMm³/d FPSO Cid. Niteroi MLL 100 kbpd FPSO Cid São Mateus Camarupim 10MMm³/d Frade 100 kbpd FPSO E.S. PQ DAS CONCHAS 100 kbpd P-51 – MLS Mód. 2 180 kbpd 2012 2013 FPSO Cidade de Angra dos Reis 100 kbpd FPSO Cidade de Santos 10MMm³/d P-57 180 kbpd SS-11 TIRO/SIDON 20 kbpd FPSO Capixaba (reallocation) 100 kbpd Mexilhao 15MMm³/d P-56 100 kbpd Cid. Anchieta 100 kbpd Cid. Itajaí 80 kbpd Cid. São Paulo 120 kbpd P-55 180 kbpd TAD + P-61 + P-63 140 kbpd Cid. Paraty 120 kbpd 2006 2007 P-58 180 kbpd (3) Petrobras’ Total Interest in capacity added to produce oil 9 units 840 kbpd Units and Oil Capacity3 added per year 1 unit 100 kbpd 2 units 100 kbpd 5 units 400 kbpd 5 units 480 kbpd 4 units 210 kbpd 7 units 590 kbpd 5 units 370 kbpd P-62 180 kbpd 2014 Cid. Mangaratiba 150 kbpd Cid. Ilhabela 150 kbpd P-61 + TAD 140 kbpd P-58 180 kbpd P-62 180 kbpd
  • 9. 99 Drilling rigs in operation (Nº) (Greater than 2000 meters) 7 8 16 26 40 40 2008 2009 2010 2011 2012 2013 PLSV Fleet Production Wells Expected to be Connected in 2014  34 wells connected in the 2013, higher than 2012. Current Fleet 11 New Units Throughout 2014 + 8 2016 + 9 2017 + 2 30 34 65 2012 2013 2014 DRILLING RIGS Needs now largely met, with increasing utilization for production development
  • 10. 1010 Oil Production – Existing Systems Program to Increase Operational Efficiency (PROEF) – 58 th. Bpd Gain in the 1Q14 UO-BC Oil + NGL Production (th. bpd)Operational Efficiency(%) 73 68 71 76 76 74 75 77 77 81 50 60 70 80 90 100 2Q131Q134Q123Q122Q121Q12 +9 p.p. Apr/141Q14*4Q133Q13 382 355 389390389 418 442452455 488 335312 370357374 405408413428 100 200 300 400 500 600 2Q121Q12 2Q131Q134Q123Q12 Apr/141Q14*4Q133Q13 Production without PROEFProduction with PROEF Total Expenditure of US$ 1,897 million by Feb/14. NPV of US$ 1,080 million by Feb/14 Focus on recovering wells and subsea systems. Production gain: +43 th. bpd in the 1Q14. *Excluding the impact of new systems: P-63 and P-61. 1Q14: Gain of 43 th. bpd UO-RIO Oil + NGL Production (th. bpd)Operational Efficiency(%) 92 91 89 94 91 93 92 94 95 96 50 60 70 80 90 100 +6 p.p. Apr/141Q14*4Q133Q132Q131Q134Q123Q122Q121Q12 807 839 881871887871 920 775 824811 841840851 910 500 600 700 800 900 1.000 Apr/141Q14*4Q133Q132Q131Q134Q12 Production without PROEFProduction with PROEF Total Expenditure of US$ 3.2 million by Feb/14. NPV of US$ 1,340 million by Feb/14. Focus on management, integrity improvement and optimization in the usage of resources. Production gain: +15 th. bpd in the 1Q14. *Excluding the impact of new systems: P-55 and P-62 1Q14: Gain of 15 th. bpd 2014 Target: 93% 2014 Target: 81% Highest Amount of the last 46 months Highest Amount of the last 40 months
  • 11. 1111 NET INCOME / TOTAL BOE OF E&P BRAZIL AND ABROAD Further improvement expected with pre-salt production growth 18,79 7,89 13,97 17,92 15,19 13,04 26,94 11,91 20,71 29,68 28,21 25,23 0,00 5,00 10,00 15,00 20,00 25,00 30,00 35,00 2008 2009 2010 2011 2012 2013 Peers*Petrobras US$ Peers Average * Peers: Total, Chevron, Conoco, Exxon and Shell
  • 12. 1212 E&P COMPARATIVE ADVANTAGE High cash flow relative to E&P capex, even with higher exploratory spending 15.566 13.426 14.905 14.963 17.859 18.889 17.837 22.455 5.370 2.448 6.461 2.907 6.640 3.756 7.410 3.909 1.353 11.542 609 4.272 617 2.799 990 3.124 2.777 - 5.000 10.000 15.000 20.000 25.000 30.000 35.000 PBR Peers Average PBR Peers Average PBR Peers Average PBR Peers Average US$Million Development Cost Exploration Cost Acquisition Cost Libra Net Income + DD&A PBR Net Income + DD&A Peers 2012 20132010 2011 Libra  E&P development capex for Petrobras half of after tax cash flow in 2012. For peers, 93% in 2012.  Petrobras invests twice as much relative to total E&P capex on exploration as do the peer group. * Transfer of Rights not includedPeer Group: XOM, CVX, TOT, RDS, COP Source: Evaluate Energy – March 2014
  • 13. 1313 PRE-SALT – Size Rio de Janeiro Curitiba Florianopolis ES MG PR SC São Paulo SP RJ 100 km Pre-Salt - Size Campos Basin 7,000 km2 (1.7 million acres) SP 650 US GoM Blocks Santos Basin Pre-Salt 15,000 km2 (3.7 million acres)
  • 14. 1414 PRE-SALT – WHAT IS NEXT
  • 15. 1515 PRE-SALT PRODUCTION IS A REALITY Exploration success, production, available resources all growing rapidly Pre-Salt Average Production 1 1 6 15 21 4 4 6 9 10 12 2 3 4 5 7 15 25 0 5 10 15 20 25 30 2006 2007 2008 2009 2010 2011 2012 2013 Exploration Production Drilled Wells Santos Basin Pre-Salt Cluster 2 2 3 7 10 10 21 22 0 5 10 15 20 2006 2007 2008 2009 2010 2011 2012 2013 Drilling Rigs Operating Drilling Rigs Average Wells Productivity (kbpd) 8 18 47 86 136 214 3 8 24 72 83 165 181 16 42 119 169 301 0 50 100 150 200 250 300 350 2008 2009 2010 2011 2012 2013 2014 (MARCH) Campos Basin (kbpd) Santos Basin (kbpd) Pre-Salt (Santos and Campos Basin) 33 13 13 13 17 15 16 21 23 25 0 5 10 15 20 25 30 2012 2013 2014 Campos Basin - RJ Campos Basin - ES Santos Basin* 5 8 4 6 9 6 5 12 9 Number of contributors wells *Excluding EWTs, because their production are limited to gas burn restrictions.
  • 16. 1616 TRADE BALANCE Rapid demand growth in the last 5 years has led to a shift in the trade balance 2,000 2,300 2,600 2,900 3,200 3,500 3,800 4,100 4,400 4,700 5,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Thousandm³ +24% +24% Diesel Sales 364 346 18 184 433 -249 478 397 81 227 152 75 Balance -231 Balance 156 207 404 -197 186 389 -203 Oil Oil Products ImportsExports -400 Balance ImportsExports ImportsExports 2009 2012 2013 (thous.bpd) 705 549 548 779 393 793 1,000 1,300 1,600 1,900 2,200 2,500 2,800 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Thousandm³ +3% +65%Gasoline Sales
  • 17. 1717 OPERATION PERFORMANCE IN BRAZIL – DOWNSTREAM Refining throughput, product output and sales, and costs  Better performance due to the start-up of new quality and conversion units since 2012, optimization of refining processes and elimination of logistical bottlenecks. 782 850 438 491 777 783 +6% 2,124 2012 1,997 Diesel Gasoline Others Oil Products Output in Brazil (kbpd) Oil Products Sale in Brazil (kbpd) 937 984 570 590 778 809 +4% 2,4222,350 Diesel Gasoline Others  Gasoline (+3.5%): increase in automotive fleet, competitive price relative to ethanol and increase of the anhydrous ethanol content in Type C gasoline .  Diesel (+5.0%): increase in retail activities, higher thermal consumption, higher grain harvest and an increase in diesel light vehicle fleet 1.594 1.701 350 373 94% 97% 0 1 1 2013 2,074 2012 1,944 Domestic Oil + NGL Imported Oil Utilization  Increasing production and higher utilization factor due to prior investments in modernization  Participation of domestic heavy crude oil increasing (maintaining share of throughput) 1 7 2013 2012 2013 Throughput (kbpd) and Utilization (%)
  • 18. 1818 COMPARISON OF GASOLINE AND DIESEL CONSUMER PRICES Brazilian prices above USA; taxes account for significant share of consumer price Brazil Chile China Japan Germany Brazil Chile China Japan Germany Disttribution MarginTaxationRefinery Gate Price Anhydrous Alcohol USAUSA The refinery gate price for gasoline is currently 35% of the retail price while for diesel it is 60% Gasoline Retail Prices 2013 Average Diesel Retail Prices 2013 Average
  • 19. 1919 RNEST AND COMPERJ REFINERIES Rnest nearing physical and financial completion, Comperj more than 60% complete PNG 13-17 2016 Projetado 2016 0 10 20 30 40 50 60 70 80 90 100 110 mai-04 nov-04 mai-05 nov-05 mai-06 nov-06 mai-07 nov-07 mai-08 nov-08 mai-09 nov-09 mai-10 nov-10 mai-11 nov-11 mai-12 nov-12 mai-13 nov-13 mai-14 nov-14 mai-15 nov-15 mai-16 nov-16 mai-17 nov-17 mai-18 nov-18 mai-19 nov-19 mai-20 nov-20 mai-21 nov-21 PNG 12-16 PNG 13-17 Physical Monitoring – S-Curve (%) RNEST Start-up: 4th Quarter PNG 13-17 2014 Projetado 2014 0 10 20 30 40 50 60 70 80 90 100 110 abr-05 out-05 abr-06 out-06 abr-07 out-07 abr-08 out-08 abr-09 out-09 abr-10 out-10 abr-11 out-11 abr-12 out-12 abr-13 out-13 abr-14 out-14 abr-15 out-15 abr-16 out-16 abr-17 out-17 abr-18 out-18 abr-19 out-19 abr-20 out-20 PNG 12-16 PNG 13-17 Realizado Projetado Physical Monitoring – S-Curve BMP 13-17: 87% Accomplished: 84% PNG 13-17: US$ 13.457 MM Projetado: US$ 13.596 MM 0 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000 jan-10 jul-10 jan-11 jul-11 jan-12 jul-12 jan-13 jul-13 jan-14 jul-14 jan-15 jul-15 jan-16 jul-16 jan-17 jul-17 jan-18 jul-18 jan-19 jul-19 jan-20 jul-20 jan-21 jul-21 US$MM PNG 13-17 Realizado Projetado (%) Financial Monitoring – S-Curve Financial Monitoring – S-Curve BMP 13-17: 7,882 Million Accomplished: 7,573 Million PNG 13-17: US$ 18.515 MM Projetado: US$ 18.579 MM 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 abr-05 out-05 abr-06 out-06 abr-07 out-07 abr-08 out-08 abr-09 out-09 abr-10 out-10 abr-11 out-11 abr-12 out-12 abr-13 out-13 abr-14 out-14 abr-15 out-15 abr-16 out-16 abr-17 out-17 abr-18 out-18 abr-19 out-19 abr-20 out-20 US$MM PNG 13-17 Realizado Projetado IMPLEMENTION MILESTONES 1 - Start-up - ETA (Mar/2014) 2 - Start-up - ETDI (Sep/2014) 3 - Start-up UDA 11 (Oct/2014) 4 - Start-up UCR 21 (Nov/2014) 5 - Start-up HDT Diesel 31 (Nov/2014) IMPLEMENTATION MILESTONES 1 - Start-up – ETA (Jun/2015) 2 - Start-up - ETDI (Jun/2015) 3 - Start-up - UDAV (Ago/2016) 4 - Start-up - UCR (Ago/2016) 5 - Start-up - HCC (Ago/2016) BMP 13-17: 15,246 Million Accomplished: 14,841 Million BMP 13-17: 67% Accomplished: 66% feb/14 COMPERJ Start-up: 2016 feb/14 BMP 12-16 BMP 13-17 Accomplishe d Planned BMP 13-17 Accomplishe d Planned BMP 12-16 BMP 13-17 Accomplishe d Planned BMP 13-17 Accomplishe d Planned BMP 13-17 2016 Planned 2016 Planned 2014 BMP 13-17 2014 BMP 13-17 US$ 18.515 MM Planned US$ 13.596 MM BMP 13-17 US$ 13.457 MM Planned US$ 18.579 MM
  • 20. 2020 BRAZIL OIL PRODUCTION, REFINING, AND PRODUCTS DEMAND Over time, Brazil will be a net exporter of oil and self sufficient in refined products RNEST 1st Phase 4th Quarter RNEST 2nd Phase 2nd Quarter Comperj 1st Phase Premium I 1st Phase Premium II PROMEGA additional refining capacity (by Dec/2016): +165 kbpd (current refineries) + 30 kbpd (RNEST). PROMEGA targets are to increase diesel, jet fuel and gasoline production of our refineries, based on capacity and efficiency increase of processing units. Millionbpd PROMEGA Capacity Expansion of 195 kbpd
  • 21. 2121 Natural Gas Supply and Demand Increase in the thermoelectric market demand in 1Q14 relative to 4Q13 Despite the increase in domestic natural gas supply in 1Q14, there was a higher need to import natural gas and LNG to meet higher thermoelectric demand during the period. 1Q14 x 4Q13 » Higher thermoelectric demand due to the weak hydrological condition and low level of reservoirs. » Higher imports of Natural Gas from Bolivia, with the additional contract signed on February/14 to supply Cuiabá thermopower plant. » Increase in the volume of LNG regasification to meet higher thermoelectric demand. million m³/day SUPPLYDEMAND 40,2 37,0 11,7 39,3 +1% +1% +10% 1Q14 88.5 13.0 37.9 37.6 4Q13 80.8 12.7 29.6 38.5 1Q13 87.8 10.9 39.9 37.0 30.7 88.1 1Q14 81.3 +9% 37.8 31.7 14.1 12.8 38.3 18.8 1Q13 4Q13 43.3 30.7 88.8 +28% +2% +3% +47% +1% 39,9 Non-thermoelectric Thermoelectric Downstream E&P/Fertilizers Domestic Bolivia LNG
  • 22. 2222 • Management focused on reaching physical and financial targets of each project PERFORMANCE • Guarantee the expansion of the business with solid financial indicators CAPITAL DISCIPLINE • Priority for oil and natural gas exploration & production projects in Brazil PRIORITY 2014 2018 Financiability Assumptions • Investment Grade rating maintenance • No new equity issuance • Convergence with International Prices (Oil Products) • Partnerships and Business Models Restructuring 2014-18 Business and Management Plan Fundamentals
  • 23. 2323 E&P and Dowstream Share Evolution in the Business and Management Plan Portfolio of Projects for Financiability Evaluation * Gas and Energy, International, BR Distribuidora, PBio , Engineering Technology and Materials (ETM) and Corporate and Services Area 2014-2018 BMP Total Capex 2012-2016 BMP Total Capex 2013-2017 BMP Total Capex 2010-2014 BMP 2011-2015 BMP E&P Downstream Other Areas* PortfolioofProjectsfor FinanciabilityEvaluation US$ 224.0 BillionInvestment US$ 224.7 Billion US$ 236.5 Billion US$ 236.7 Billion US$ 220.6 Billion E&P share in Petrobras investments has been increasing in the last five Business and Management Plan 48% 35% 17% 52% 33% 11% 15% 18% 27% 62% 14% 30% 56% 70% 12%
  • 24. 2424 0 5.000 10.000 15.000 20.000 25.000 30.000 2010 2011 2012 2013 2014 Exploration & Production US$ Million Realized 2014 Budget 0 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000 18.000 2010 2011 2012 2013 2014 Downstream US$ Million Realized 2014 Budget CAPEX Exploration & Production and Downstream
  • 25. 2525 2014-2018 BMP Investments: US$ 220.6 Billion Projects Under Implementation, Bidding Process and Evaluation Under Implementation (US$ 175.9 billion) • Projects being executed (construction) • Projects already bid • Resources required for studies of Projects Under Evaluation = 38.7 (18%) 153.9 (70%) 2,2 (1%) 1,0 (0,4%) 2,7 (1,2%) 2,3 (1,0%) 9,7 (4%) 10,1 (5%) Total Investments US$ 220.6 Billion Portfolio of Projects Under Evaluation US$ 13.8 Billion Under Bidding Process¹ (US$ 30.9 billion) • E&P projects in Brazil • Represent around 200 th. bpd of production in 2018 and 900 th. bpd in 2020. • Refineries Premium I and II • Capex considers a relevant participation of partners • Capex aligned to international parameters² (US$ 13,000 – 38,000/barrel) • Projects under Studies in Phase I, II or III (except E&P in Brazil) Oil Production 2020: 4.2 million bpd No impact in Oil Production 2020 + Portfolio of Projects Under Implementation + Under Bidding Process US$ 206.8 Billion * Financial Area, Strategy and Corporate-Services Distribution Biofuels Downstream Other Areas*International Gas and Energy Engineering, Technology and Materials E&P 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
  • 26. 2626 112,5 (73%) 18,0 (12%) 23,4 (15%) Petrobras Investments in Exploration and Production: US$ 153.9 billion Total E&P US$ 153.9 bilhões Production DevelopmentExploration Infrastructure and Support E&P Petrobras US$ 153.9 Billion (77%) =+ E&P Partners US$ 44.8 Billion (23%) Total with Partners US$ 198.7 Billion (100%) Pre-SaltPost-Salt Production Development + Exploration US$ 135.9 billion Pre-Salt (Concession) Transfer of Rights PSA (Libra) 53,9 (40%) 82,0 (60%)
  • 27. 2727 9,0 92% 0,05 0,5% 0,6 6% 0,01 0,1% 0,05 0,5% 0,1 0,7% Projects Under Implementation  RNEST (Pernambuco)  COMPERJ 1st phase (Rio de Janeiro)  PROMEF – 45 Vessels to transport Oil and Oil Products Projects Under Bidding Process Premium I – 1st phase (Maranhão) Premium II (Ceará) Projects Under Implementation  UNF III (Mato Grosso do Sul)  UNF V (Minas Gerais)  Rote 2: Gas pipeline and NGPU  Rote 3: Gas pipeline and NGPU Downstream Gas, Energy and Gas-Chemical International Projects Under Implementation  E&P USA – Saint Malo  E&P USA – Cascade and Chinook  E&P USA – Lucius  E&P Argentina – Medanito and Entre Lomas  E&P Bolivia – San Alberto and San Antonio  E&P Nigeria – Egina US$ 38.7 billion US$ 10.1 billion US$ 9.7 billion Petrobras Investments: US$ 58.5 billion Downstream – Gas, Energy and Gas-Chemical – International Logistics for Ethanol Corporate Petrochemical Fleet Expansion Logistics for Oil Quality and Conversion Operational Improvement Refining Capacity Expansion Distribution Gas-Chemical Operational Units (Nitrogenous) Regas - LNG Network Energy Distribution Corporate Gas & Energy Refining & Marketing Exploration & Production Petrochemical 1,3 13% 2,6 25% 6,1 61% 0,1 1% 16,8 43% 9,4 24% 5,5 14% 1,4 3% 3,3 9% 1,4 4% 0,4 1% 0,3 1% 0,3 1% Projects under implementation, under evaluation and under bidding were included. .
  • 28. 2828 2014-2018 BMP: FINANCIAL PLANNING ASSUMPTIONS Financing 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
  • 29. 2929 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$Billion 261.7 261.7
  • 30. 3030 2014-2018 BMP: Leverage and Net Debt/EBITDA – Base Case USD $206.8 investment, FX R$ 2.23 in 2014, R$ 1.92 in the long term  Net Debt/EBITDA within limit as of 2015 Leverage Net Debt/EBITDA  Declining leverage, within maximum limit of 35% as of 2015 0 20 40 60 80 100 120 140 2008 2009 2010 2011 2012 2018 2013 2014 2015 2016 2017 2007 Net DebtGross Debt US$ billion Petrobras – Gross and Net Debt 0% 10% 20% 30% 40% 50% 2014 2015 2016 2017 2018 0,0 1,0 2,0 3,0 4,0 2014 2015 2016 2017 2018
  • 31. 31 Investment and FX Rate Sensitivity: USD $175.9 investment, FX R$ 2.44 in 2014, R$ 2.56 in 2015, R$ 2.59 long term* Leverage Net Debt/EBITDA 0 20 40 60 80 100 120 140 2018 2009 2008 2007 2016 2017 2015 2014 2013 2012 2011 2010 Gross Debt Net Debt US$ billion Petrobras – Gross and Net Debt  Declining Leverage, returning to limit of 35% in 2017  Net Debt/EBITDA below limit as of 2016 0% 10% 20% 30% 40% 50% 2014 2015 2016 2017 2018 0,0 1,0 2,0 3,0 4,0 5,0 2014 2015 2016 2017 2018 Reference FX rate Reference FX rate *Convergence to international price only in 2016
  • 32. 3232 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
  • 33. 3,52 4,00 39% 39% -10% 0% 10% 20% 30% 40% 50% 1,5 2,5 3,5 4,5 4Q13 1Q14 Net Debt / EBITDA ¹ Net Debt / Net Capitalization ² LEVERAGE ND/EBITDA Financial Ratios 1Q14 issuances increased our cash position to R$ 78.5 billion • In 1Q14 there were two bonds issuances: - January/14 € 3.05 billion + £ 600 million = US$ 5.14 billion (demand of US$ 15 billion) - March/14 US$ 8.5 billion (demand of US$ 23 billion) • Leverage remains at 39% • ND/EBITDA at 4.00x due to PIDV provision; Without the PIDV effect ND/EBITDA would have been 3.43x in the 1Q14. Market Access Debt Ratios R$ Billion 12/31/13 03/31/14 Short-term Debt 18.8 21.8 Long-term Debt 249.0 286.3 Total Debt 267.8 308.1 (-) Cash and Cash Equivalent3 46.3 78.5 = Net Debt 221.6 229.7 US$ Billion Net Debt 94.6 101.5 1) Net Debt / (adjusted EBITDA 1Q14 x 4). Adjusted EBITDA= EBITDA excluding earnings of equity-accounted investments and impairments 2) Net debt / (Net Debt + Shareholders Equity) 3) Includes tradable securities maturing in more than 90 days
  • 34. 3434 33,7 37,3 27,6 29,4 2010 2011 2012 2013 EBITDA Price increases contributed to higher cash flow, but additional adjustments still needed 30,6 43,4 42,0 37,4 4,1 -6,9 -15,6 -9,8 1,4 3,6 2,0 1,61,3 1,3 1,6 1,5 2,1 3,0 3,2 3,5 E&P RTM G&P Distribution International 2010 2011 2012 2013 (*) IFRS (**) Adjusted according average exchange rate. Excludes Corporate and Elimination Adjusted EBITDA (US$ bn)* Adjusted EBITDA Breakdown per Segment (US$ bn)**
  • 35. 3535 0 10.000 20.000 30.000 40.000 50.000 2013 OCF Capex 2012 Capex 2013 Capex 2014 Capex 2018 E&P Downstream Gas & Energy Others US$ MM 42,949 26,289 CAPEX AND CASH FLOW Free cash flow turns positive with completion of downstream projects 48,097 Capex vs. Operating Cash Flow 42,421 • 2014 - 2018 Business and Management Plan Assumptions: • Operating Cash Flow: Oil production increases by 1,269 thous. bpd, generating additional operating cash flow. • Import parity would eliminate downstream losses. Approx. $ 41 billion
  • 36. 3636 54,0 77,1 99,6 107,5 108,3 68,2 94,1 118,6 127,2 125,2 0 20 40 60 80 100 120 2009 2010 2011 2012 2013 COGS SG&A Exploration R&D Other taxes Others COSTS Stable oil price, weaker Real, and cost controls have stabilized costs (ex. imported products) US$Million 16,9 14,2 19,0 19,7 17,0 FX Rate (BRL/USD) % 2.00 - 1.76 -12% 1.67 -5% 1.96 17% 2.16 10% Brent (USD) % 61.51 - 79.47 29% 111.27 40% 111.58 0% 108.66 -3% 38% 26% 7% -2% COGS eliminates cost of imported products by multiplying import volumes by an assumed margin to Brent. Actual import costs may differ.
  • 37. 3737 • Number of employees enrolled: 8,298 12% of the company’s total workforce* and 15% of the expected labor cost for 2014** • Program Cost: R$ 2.4 billion Provisioned in the 1Q14 • Cost Reduction: R$ 13 billion between 2014-2018 Replacement assumption: 60% The cost of the incentive will be compensated on an average period of 9 months following the departure of each professional. • Expected Separation Timeline 55% of separations in 2014. Subsequent separations are scheduled to reconcile the necessary knowledge retention, essential to growth and the Company’s safe and sustainable operations. • Labor Cost Evolution* * Petrobras Holding + BR Distribuidora. Employees in March/2014 = 66,982 / ** Planned cost in PDG 2014 – Global Expenditure Program Voluntary Separation Incentive Plan - PIDV 2014 Commitment towards the increase of efficiency, productivity and capital discipline 2009 11.5 2010 13.1 18.3 2011 15.5 PIDV Reduction 26.9 2012 +3% a.a. 5.0 2015 25.6 2016 25.524.9 4.13.3 Labor Cost 2017 +18% a.a. 2018 1.3 2014 23.8 2013 22.3 R$ billion Employees (thousand) 60.1 61.9 63.5 66.4 67.2 62.6 63.7 63.8 61.9 63.2 R$ 13 billion 2014-2018 -0,6 Projection
  • 38. 3838 PETROBRAS RATINGS Consolidated 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: Baa2 (1 notch below PB) 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
  • 39. 3939 TARGETS FOR 2014 Higher oil and oil products production, operational efficiency and cost optimization will drive 2014 results PROCOP – 2014 Target (R$ billion)Investments (R$ billion) Oil Products Output (kbpd) 850 908 +1% 2014 2,148 480 760 2013 2,124 491 783 Diesel Gasoline Others +11% +68% 2014 7.3 2013 Real 6.6 2103 Target 3.9 Oil Production (kbpd) -9% 2014 94.6 2013 104.4 57% E&P Brasil 64% E&P Brasil UO-BC +5.6 p.p. 2014 81.0 2013 75.4 20142013 1,931 UO-RIO +0.7 p.p. 2014 93.1 2013 92.4 PROEF (Operational Efficiency %) Máximo Meta Mínimo 7.5% +/- 1p.p. +7%
  • 40. Information Investor Relations +55 21 3224-1510 petroinvest@petrobras.com.br www.petrobras.com.br/ir __