01.06.2009 Presentation of Investor Relations Executive Manager, Theodore M. Helms- Fixed Income...

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01.06.2009 Presentation of Investor Relations Executive Manager, Theodore M. Helms- Fixed Income...

  1. 1. FIXED INCOME PRESENTATION Pre-Salt Reservoir June 2009
  2. 2. REOPENING SUMMARY TERMS • Issuer: Petrobras International Finance Company (PifCo) • Guarantor: Petróleo Brasileiro S.A (Petrobras) • Size: Benchmark Size • Ranking: Senior unsecured • Security: 7.875% Global Notes due Mar 2019 • Ratings: Baa1 (Moody’s); BBB - (S&P); BBB (Fitch) • Form of offering: SEC Registered • Listing: NYSE • Law: NY Law • Book Runners: Citi, HSBC, JPMorgan, Santander Investment • Co-Managers: BB Securities, Societe Generale
  3. 3. OVERVIEW
  4. 4. DISCLAIMER The presentation may contain forecasts about future events. Such forecasts merely reflect the expectations of the Company's management. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein. The Company is not obliged to update the presentation/such forecasts in light of new information or future developments. CAUTIONARY STATEMENT FOR US INVESTORS The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as oil and gas resources, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. 4
  5. 5. A WORLD-CLASS, PUBLIC, INTEGRATED ENERGY COMPANY 2008 Proven Reserves (SEC) 2008 Oil & Gas Production 23.0 17.9 3.9 3.8 3.2 (mmboe/d) 11.7 11.2 11.2 2.5 (bln boe) 10.5 10.2 2.4 2.4 2.3 1.9 1.8 6.6 5.6 XOM BP RDS PBR CVX ENI TOT STL COP XOM BP RDS CVX PBR COP TOT STL ENI Source: Evaluate Energy and Company reports Source: Evaluate Energy and Company reports 2008 Refining Capacity Market Value as of May 27, 2009 5,675 333.3 3,905 (US$ bn) (mcb/d) 3,119 2,917 2,600 2,223 2,083 168.0 163.0 150.2 130.7 129.4 828 93.8 299 65.9 62.5 XOM RDS BP COP TOT PBR CVX ENI STL XOM PBR RDS BP TOT CVX ENI COP STL Source: PFC Energy WRMS (barrels per calendar day, considering company % shareholding and including JVs) Source: Bloomberg Note: Peer companies selected above have a majority of capital traded in the public markets. 5
  6. 6. COMPETITIVE ADVANTAGE IN THE DEEPWATER Petrobras operates 22% of global deepwater production and 18% of all operating vessels 2008 Gross Global Operated Deepwater FPS Operators Production (mboe/d) All Contracted Vessels (252 Vessels Total) HES REL MUR MUR REL HES MUR 1% 1% 2%1% 1% 0 20 40 60 80 100 120 2% BG Petrobras 45 APC 4% PBR Shell 15 5% 22% StatoilHydro 15 CVX ExxonMobil 13 6% BP 12 APC 6% Chevron 12 TOT 8% Anadarko 10 XOM Total 9 14% CNOOC 8 BP ConocoPhillips 8 9% XOM ENI/Agip 5 STL RDS Others 100 14% 14% FPSO Semi Spar TLP Other Source: (1) PFC Energy | Note: Estimated volumes above reflect what operators are responsible for producing, not what they keep on a net working interest or entitlement basis. Minimum water depth is 300 meters; twelve operators above account for 94% of global deepwater 6 production in 2008. (2) Copyright © 2008 ODS-Petrodata, Inc.
  7. 7. MAINTAINING INVESTMENT GRADE INDICES 2009-2013 Plan 2008-2012 Plan FX Rate (R$/US$) 2.0 2.18 2009 – 58.00 2010 – 61.00 2008 – 55.00 2011 – 72.00 2009 – 50.00 Brent for Funding (US$/bbl) 2010 – 45.00 2012 – 74.00 2013 – 68.00 2011-2012 – 35.00 Projected Net Cash Flow (After 148.6 104.4 dividends) (US$ bn) Projected Investments (US$ bn) 174.4 112.4 Net Debt/Net Debt + Shareholders´Equity (Leverage) Up to 35% 20% Minimum cash balance (US$ bn) - 5 7
  8. 8. CAREFULLY CRAFTED SPENDING PROGRAM TO SUPPORT OUR VISION Business Plan 2009-2013 2% 2% 2% 3% US$ 174.4 billion 7% 5.6 3.0 E&P 11.8 2.8 RTC 3.2 G&E Petrochemicals 43.4 104.6 (*) Distribution 25% 59% Biofuels Corporate (*) US$ 17.0 billion allocated to Exploration Business Plan 2008-12 2% 1% 2% 4% US$ 112.4 billion 6% 4.3 2.6 E&P 6.7 1.5 2.5 RTC G&E Petrochemicals 26% 29.6 65.1 Distribution 59% Biofuels Corporate 8
  9. 9. FLEXIBLE PIPELINE OF PROJECTS 2009-13: BY PHASE 1.5% A substantial portion of our 28.3% Phase I (Under Evaluation) investment plan has yet to be approved and contracted Phase II (Conceptual) Only projects with a positive 49.2% Phase III (Design) NPV at cost of capital will be 6.7% Phase IV (Approved) approved Acquisition 14.3% 9
  10. 10. PRINCIPAL OPERATIONS
  11. 11. CONSISTENTLY DELIVERING RESERVES GROWTH Maintained a ~120% reserve Targeting a reserves to replacement rate in 2008. Over the production life of 15 years past decade, reserve replacement has principally been driven by internal additions in Brazil 13.75 13.92 14.09 13.02 13.23 0.92 1.23 0.88 0.88 Production Production Production Production (0.67 bn boe) (0.70 bn boe) (0.70 bn boe) (0.75 bn boe) Reserves Reserves Reserves Reserves Replacement 12.35 Replacement 12.52 Replacement 13.04 Replacement 13.17 Index Index Index Index (131%) (174%) (124%) (123%) 2004 2005 2006 2007 2008 11
  12. 12. PURSUING NEW PROJECTS WHILE MAXIMIZING PRODUCTION FROM EXISTING ASSETS Petrobras Total Production (000 boe/d) 5,729 632 7.5% avg CAGR 1177 3,655 5.6% CAGR 341 2,757 634 2,400 244 8.8% avg 2,223 2,305 2,308 CAGR 2,042 2,027 265 250 243 224 463 1,812 252 269 277 273 321 3,920 1,637 60 251 265 274 70 252 232 2,680 1,855 2,050 1,684 1,778 1,792 1,335 1,500 1,540 1,493 2001 2002 2003 2004 2005 2006 2007 2008 2009 2013 2020 Oil production - Brazil Gas production - Brazil International productionl (oil & gas) 12
  13. 13. FOCUSED & DISCIPLINED INVESTMENT Total Investments of US$ 104.6 billion in E&P through 2013, of which US$ 92 will be spent in Brazil 12% 13% Exploration 17% Santos Pre-salt Development International 58% 13
  14. 14. ESTIMATED OIL PRODUCTION IN BRAZIL Out of the 824 kb/d in The biggest contribution in The PN 2008-2012 Brazil oil domestic production the domestic production target for 2015 was 2,812 k growth through 2013, 566 growth of 1,240 kb/d b/d. The new target kb/d will come from fields between 2013 and 2020 will represents an increase of where we have already come from pre salt 19% (+528 kb/d) declared commerciality production Petrobras Total Production (000 b/d) 3,920 3,340 2,680 2,050 1,855 2008 2009 2013 2015 2020 Light Oil ≥ 31º API Medium Oil Heavy Oil ≤ 22º API 14
  15. 15. SIGNIFICANT PRODUCTION INCREASE FROM 2008 TO 2009 Oil and Natural Gas Average Domestic Production 7% +3% 2,261 2,120 2,195 330 309 304 Thous. bpd 1.816 1.865 1.952 1Q08 4Q08 1Q09 Record for daily production of oil in Brazil Oil and NGL Natural Gas (05.04.2009) 2,059,063 barrels • 3% increase in production due to: • production increase in platforms P-52 and P-54 (Roncador) ; • start-up of P-51, in Marlim Sul, P-53, in Marlim Leste, and FPSO Cidade de Niterói, in Marlim Leste; • Due to a decline in the domestic market demand, natural gas production decreased 6%. We currently have installed capacity to produce an additional 87 thousand boed of natural gas if the market demands. 15
  16. 16. CHALLENGES AND GOALS: TUPI DEVELOPMENT FPSO BW Cidade de São Vicente PHASE 3 DRILL WELL P1 POÇO 3-RJS-646 LDA: 2.200m 3 MONTHS LINE PHASE 2 RELOCATION Challenges: PHASE 1 POÇO P1 6 MONTHS POÇO 3-RJS-646 •Special coating for well and flexible risers to 6 MONTHS support aggressive fluid and high pressure; •Supplementary recovery with alternating water Extended Well Test: and gas injection*; •Capacity: 30,000 bpd •Reinjection of CO2 associated with the fluids •Duration: 15 months produced in the reservoir*; •Wet Christmas trees at water depths never used •API: 28-30o in Brazil*; Main information to be collected during the EWT: •High resolution seismic acquisition in some areas to identify reservoirs; • long-term behavior of producing reservoir; •Completion of wells in an environment with high • fluids flowage and drainage during production; pressure; • subsea outflow; • geometry of final wells. (*) expected for the Pilot Project in 2010 16 16
  17. 17. PRE-SALT OIL PRODUCTION Petrobras Pre-salt Oil Production (000 b/d) 1,815 1,336 632 463 219 582 62 160 1,183 873 157 422 2013 2015 2017 2020 Pre-Salt Petrobras Pre-salt Partners Pre-salt Capex Through 2020 2009-2013 2009 -2020 Petrobras Total Pre-salt Capex (Production Development) 28.9 111.4 Santos Basin Pre-salt 18.6 98.8 Espírito Santo Pre-salt (includes post-salt fields) 10.3 12.6 17
  18. 18. DOWNSTREAM OPEATIONS: VERTICALLY INTEGRATED SYSTEM TO CAPTURE SYNERGIES WITHIN THE VALUE CHAIN Upstream Operations Downstream Operations Existing Pipelines Refineries Petrobras Marine Terminal Other Companies In Land Terminal 18
  19. 19. DOMINANT POSITION IN A LARGE AND GROWING EMERGING MARKET 2007 Total Oil Consumption by Country (mmbo/d) 20.7 8 7.9 6 5.1 4 Brazil is world’s ninth- 2.7 2.7 2.4 2.4 2.3 2.2 2.2 2.0 largest oil consumer 1.9 1.7 1.7 2 1.6 0 US France S. Korea Germany Mexico China Japan Iran India Canada Italy UK Brazil Russia Saudi Total Oil Consumption mb/d (index) 160 Brazil OECD World 150 140 Brazil oil consumption growing 130 at 2.4% p.a. 120 OECD oil consumption growing 110 at 1% p.a. 100 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1990 1992 1995 1996 1997 1991 1993 1994 Source: BP Statistical Review 2008, PFC Energy 19
  20. 20. OIL AND OIL PRODUCTS IMPORTS AND EXPORTS Financial Surplus 2007 Financial Deficit 2008 US$ 71 Million US$ 928 Million 672 615 81 570 Thousand barrels/day 102 538 152 70 51 160 97 127 439 353 390 373 77 102 Exports Imports Net Exports Exports Imports Net Exports Despite surplus in volumes, a financial deficit in trade balance; Investments focused in capturing margins through increase in refining capacity of domestic crude. 20
  21. 21. FINANCE
  22. 22. LIFTING COST IN BRAZIL LIFTING COST US$/barrel R$/barrel 80 140 80 121.37 70 114.78 120 70 96.90 54.40 60 51.14 60 100 43.20 50 41.48 50 80 34.24 40 54.91 40 31.08 30.27 44.40 60 34.80 36.79 30 24.82 30 28.04 22.39 16.33 18.11 40 20 21.20 20.06 14.69 20 16.16 10 9.87 6.87 20 10 15.16 16.34 17.61 19.09 17.91 8.66 9.88 10.21 8.24 7.82 0 0 0 1Q08 2Q08 3Q08 4Q08 1Q09 1Q08 2Q08 3Q08 4Q08 1Q09 Lifting Cost (US$) Govr. Take (US$) Brent Lifting Cost (R$) Govr. Take (R$) • Lifting cost without government take, both in Reais and in Dollar, have been decreasing in the 1Q09, following international oil prices; • 3 new units launched recently (producing 25% of the capacity) contributed to increase this cost, besides reduction of 6% of natural gas production. 2222
  23. 23. AVERAGE REALIZATION PRICES – ARP US$/bbl R$/bbl 1Q08 4Q08 1Q09 1Q08 4Q08 1Q09 160 140 250 120 77.40 176.48 200 181.83 100 104.79 163.59 80 150 163.07 161.89 93.90 71.64 60 70.53 123.72 100 40 53.48 50 20 0 0 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 dez/06 mar/07 jun/07 set/07 dez/07 mar/08 jun/08 set/08 dez/08 mar/09 ARP EUA ARP Petrobras PMR EUA PMR Petrobras • Petrobras announced on June 8, 2009 a decrease of 4,5% in gasoline and 15% in diesel prices. • Our price policy follows the long term tendency of the international markets. 23
  24. 24. GROWING CASH FLOW DRIVES CAPEX SOURCES 35,000 25,000 US$ million 15,000 5,000 -5,000 2004 2005 2006 2007 2008 -15,000 OCF Net Debt USES 45,000 35,000 US$ million 25,000 15,000 5,000 -5,000 2004 2005 2006 2007 2008 CAPEX Dividends Acquisition 24
  25. 25. HISTORICALLY, CONSERVATIVE PLANNING HAS LED TO A BALANCE BETWEEN OCF AND CAPEX Projected Historical US$ 148.6 bn (2009 – 2013) US$ 88.5 bn (2003 – 2008) Net Debt Net Debt Capex OCF (US$ 174 bn) OCF (after dividends) (after dividends) Capex (US$ 92,3 bn) Sources Uses Sources Uses Average Brent: Average Oil Production: Average Brent (e): Average Oil Production (e): US$ 60/bbl 1,720 (thousand boe/d) US$ 66/bbl 2,398 (thousand boe/d) 25
  26. 26. INCREMENTAL NET DEBT TO FINANCE GROWTH 35,000 29,874 28,600 30,000 25,000 20,000 15,000 11,600 US$ MM 10,000 5,000 - Capex 2008 Capex 2009 Est. Maintenance Capex E&P Downstream Gas & Energy International Distribution Corporate Much of Petrobras Capex spending is related to growth 26
  27. 27. PETROBRAS REFERENCE PRICE SIMILAR TO FORWARD CURVE Projected Brent Curves 120 100 80 US$ bbl 60 40 20 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Brent - Forwa rd Curve (01/23/09) PIRA (Ja n 09) Petrobra s (Ba se Cas e) Petrobras (Fundi ng 09-10) WoodMackenzi e (Dec 08) Brent- Forwa rd Curve (05/27/09) Financial needs assume very low prices. Source: Bloomberg/PIRA/Mackenzie 27
  28. 28. FINANCIAL PLANNING BASED ON A WORST CASE SCENARIO Key Variables to Petrobras Cash Flow • International price of crude oil and oil products • Internal domestic prices and Exchange Rate • % of investment execution and Cost of capital investment Minimum Projected Cash Flow (US$ bn) 2009 2010* OCF including amortization and after dividends 10.5 16.0 Capex 28.6 35.0 Funding Needs (18.1) (18.9) Brent (US$ / bbl) 37 40 2009 2010 Sources • BNDES: US$ 12.5 bn Sources • Capital Market: US$ 6,5 bn (bridge loan) *US$ 1,5 bn (7,875% Global Notes due 2019) • BNDES: US$ 10.0 bn • US Exim : US$ 2 bn • CDB: US$ 10 bn * Capex for 2010 is based on the annual average of the Plan´s total spending. 28
  29. 29. CAPITAL STRUCTURE AND CREDIT METRICS IN MORE DETAILS In Million US$ 3M09 2008 2007 Cash and Cash Equivalents 8,126 6,499 6,987 Total Debt 29,959 27,351 21,895 Net Debt 21,833 20,852 14,908 Shareholders Equity 64,499 61,909 65,179 Net Debt / Net Capitalization 25% 25% 19% Net Debt/ Market Capital 13% 22% 6% Net Debt / Boe Production (USD/boe)* 22.5 23.8 17.8 Net Debt / Proved Reserves (USD/boe) 1.45 1.38 1.0 Reserves/Production (Years, SPE Criteria)* 16.29 17.24 17.86 3M09 2008 2007 Net Income 2,636 18,879 13,138 EBITDA 5,521 31,308 25,333 Net Debt/EBITDA* 0.99 0.67 0.59 * Annualized 29
  30. 30. CASH FLOW US$ Million* 1Q09 2008 2007 Cash Flow from Operating Activities Net Income 2,636 18,879 13,138 Depreciation, depletion and amortization 1,328 5,928 5,544 Others 1,938 3,413 3,982 CFFO 5,902 28,220 22,664 Net Cash Used in Investing Activities Capex + Aquisition (6,528) (29,466) (24,026) Cash Flow from Financing Activities Net from Financing Activities 2,192 2,778 (5,988) Cash and Cash equivalents at the beginning of the period 6,499 6,987 12,688 Cash and Cash equivalents at the end of the period 8,126 6,499 6,987 • Increase in the Company’s Capex as a result of the strong cash generation; • Cash flow from Finance Activities in 2008 indicates that debt level will increase to finance investments. *US GAAP 30 30
  31. 31. DEBT PORTFOLIO 6% FUNDING SOURCES 25% (US$bn) Mar-09 Dec-08 Dec-07 Comercial Banks Debt 7.9 6.9 4.7 69% International Bonds 7.2 5.7 5.3 Local Bonds 1.6 1.6 2.1 JPY US$ R$ ECA’s 1.3 1.4 1.6 Project Finance 4.2 4.5 4.4 BNDES* 2.8 2.9 2.5 37% Other 1.3 1.0 1.3 63% BB/CEF 3.7 3.4 Total Debt 30.0 27.4 21.9 % Capital Market 29% 27% 34% Fixed Floating * Including Project Finance 31
  32. 32. For more information: Investor Relations www.petrobras.com.br/ri +55 21 3224-1510 petroinvest@petrobras.com.br

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