Petróleo Brasileiro S.A. - Petrobras (PBR) Earnings

Management highlights

### Exploration & Production Milestones - Q1 2026 average oil production hit 2.58 million bpd, a new record at the time, surpassed by 2.73 million bpd in April 2026, representing 30% production growth compared to 2024 full-year average production - The P79 platform at the Buzios field (the world's largest deepwater oil field, currently producing over 1 million bpd with a target of 1.5 million bpd long-term) started production three months ahead of schedule, with an expected capacity of 180,000 bpd - One existing FPSO platform was expanded from an original 225,000 bpd capacity to 270,000 bpd, adding 45,000 bpd; three additional identical platforms currently under construction in Singapore will each get the same expansion, adding a total of 180,000 bpd of extra production - The Sergipe Deepwater Project was accelerated and approved for two platforms, with total capacity of 240,000 bpd of oil and 22 million cubic meters of gas per day, adding 18 million cubic meters of extra gas supply above the original plan - Two fields (Buzios and 2P) have each surpassed the 1 million bpd production milestone, with pre-salt wells delivering higher-than-expected productivity that enables these capacity gains ### Refining Operational Progress - S10 diesel (Petrobras' highest value-added refined product) hit a record production of 512,000 bpd in March 2026, following completed modernization investments at the Replan and REVAP refineries - Refinery utilization reached 97.4% in Q1 2026, the highest level since 2014, and has since exceeded 100% in subsequent months within safety and regulatory limits - The Renest refinery expansion increased capacity from 85,000 bpd to 140,000 bpd, adding an extra 30,000 bpd of diesel production with additional testing underway to reach 150,000 bpd per train, for a total of 300,000 bpd at the site - The company is currently targeting reaching 100% self-sufficiency for both diesel and gasoline supply to Brazil, up from the original 2030 plan target of 85% diesel self-sufficiency ### Financial and Strategic Highlights - CapEx remains focused on high-return E&P projects, with 90% of Q1 2026 $5 billion total CapEx allocated to this segment; investments in wells increased 11%, subsea activities increased 75%, and rig investments increased 22% year-over-year - The company maintains a disciplined capital structure, with gross debt trending downwards toward long-term targets and robust liquidity above the required minimum cash balance of $6 billion - Petrobras has entered a productive virtual cycle: investments drive higher production of high value-added products, which increases revenue, taxes for Brazilian society, and enables further profitable investment in the project portfolio - The company is pursuing international expansion focused on the Atlantic margin of Africa, opportunities in Mexico (ultra-deepwater exploration and mature field partnerships with Pemex) and potentially Venezuela, maintaining a focus on return and capital discipline for all new ventures - The company maintains a long-standing policy of not passing short-term international oil price volatility through to Brazilian consumers, and has a fruitful partnership with the Brazilian federal government to fund price subsidies that protect domestic consumers while keeping Petrobras profitable on all domestic sales

Guidance

- Full-year 2026 oil production guidance is maintained, with Q1 2026 production already reaching the upper end of the full-year target range; management is actively working to deliver full-year production above the plan midpoint, but no upward revision to official guidance has been made - Full-year 2026 CapEx guidance of $16.9 billion is maintained, with $4.5 billion invested in Q1 2026 in line with the plan; the plan has built-in flexibility to add previously unbudgeted high-return projects as opportunities arise, and management has already added the Sergipe Deepwater Project extra gas capacity to the budget - Full-year 2026 operating expense guidance of $20.2 billion is maintained, with Q1 2026 operating expenses coming in at $5.6 billion in line with projections - Gross debt guidance is maintained: management expects to converge to $67 billion gross debt by the end of 2026, and $65 billion gross debt by the end of the 2026-2030 plan period, with a high likelihood of reaching even lower levels than guided - The long-term strategic plan oil price assumption remains $59 per barrel for the full planning period, unchanged regardless of current higher spot prices; all investment decisions are based on this long-term assumption, not short-term price volatility - Extraordinary dividends are very unlikely to be distributed in 2026, as any surplus cash will first be prioritized for high-value investments and debt reduction before any dividend distributions are considered

Segment performance

The call does not break out financial performance by product segment with separate absolute figures or revenue contribution percentages. Aggregated operational and financial results are reported across the business: Exploration & Production (E&P) delivered average Q1 2026 oil production of 2.58 million barrels per day (bpd), with pre-salt production reaching 2.18 million bpd; Refining delivered 1.8 million barrels of byproducts per day, with record S10 diesel production of 512,000 bpd in March 2026 and a refinery utilization rate of 97.4% (highest since 2014, exceeding 100% in April/May 2026). Aggregated Q1 2026 financial results: adjusted EBITDA of $11.7 billion, adjusted net income of $4.5 billion, operating cash flow of $8.4 billion, total CapEx of $5 billion (90% allocated to E&P projects), gross debt of $71.2 billion, and cash and cash equivalents of $9.1 billion.

Risks & headwinds

- Extreme short-term oil price volatility in the global market driven by the ongoing Middle East conflict, which has led to $20 per barrel price swings within single trading days, creating uncertainty for cash flow and long-term investment planning - Supply chain and price pressure on global refined product markets stemming from the Middle East conflict, which increases the risk of domestic price increases in Brazil and requires government partnership to manage subsidies - Uncertainty around the timeline for receiving government subsidy payments for domestic fuel price stabilization, which creates temporary working capital impacts for the company - All international expansion opportunities (Mexico, Venezuela, African Atlantic margin) are still in very early stages of discussion, with no finalized agreements or defined investment plans, creating uncertainty around whether these opportunities will materialize into producing assets

Analyst Q&A

• Q: What is the current state of downstream supply and pricing in Brazil, is there a shortage risk, and how does the company approach domestic fuel price adjustments?

  A: Petrobras does not pass through extreme short-term international price volatility to domestic consumers, while still maintaining alignment with long-term international price trends. The Brazilian federal government has provided diesel price subsidies to absorb recent price increases from the Middle East conflict, and gasoline price adjustments are carefully timed to account for competition with domestic ethanol given Brazil's widespread flex-fuel vehicle fleet. There is no risk of structural shortage, and refinery utilization is currently running at 100-103% to meet domestic demand.

• Q: Given that current oil prices are much higher than when the 2026-2030 plan was drafted, will the company increase CapEx to accelerate production growth?

  A: The strategic plan already has built-in flexibility to add high-return unbudgeted projects if they make sense long-term. Investment decisions are based on the company's long-term $59 per barrel price assumption, not short-term price swings, and all new projects must go through formal technical and governance approval. The company has already added the extra Sergipe gas capacity project to the budget, and other high-value projects such as Buzios 12 are under evaluation for inclusion.

• Q: What is the current approach to Braskem following the new shareholders agreement, and will the capital structure change?

  A: Petrobras will take a much more active role in Braskem to capture significant operational and supply synergies between Petrobras' refining and gas production and Braskem's petrochemical operations, after being largely absent for the prior decade. Petrobras will remain a minority shareholder (holding 40-46% of voting shares) and will not consolidate Braskem's debt onto its own balance sheet. Work groups are currently assessing synergies, including capturing the benefit of improved petrochemical spreads driven by Middle East supply disruptions from the ongoing conflict.

• Q: What is the company's investment appetite for Mexico and Venezuela compared to the African Atlantic margin, and what investment commitments are already on the table?

  A: The African Atlantic margin remains the top near-term exploration priority for the company, with concrete ongoing projects in Cote d'Ivoire, Namibia, South Africa, and Ghana. Opportunities in the Mexican Gulf of Mexico and Venezuela are still only early-stage discussion items, with no finalized agreements or quantified investment commitments. Petrobras is specifically interested in ultra-deepwater exploration and mature field partnerships in the Mexican Gulf of Mexico, which aligns with the company's core pre-salt deepwater expertise, but these opportunities are still on the company's wish list rather than the approved budget.