Petróleo Brasileiro SA Q2 FY2024 earnings call

Magda's Vision

• Top priority is to make Petrobras enduring and relevant for Brazil, requiring efficient growth and profitability, adherence to safety, governance, and replenishing reserves while moving to net zero.
• Emphasized the importance of replacing oil and gas reserves, exploring equatorial margin, Pelotas Basin, and foreign territories, and recent gas discovery off Colombia's coast.

Operational Highlights

• Oil and gas production up ~2.4% in the last 12 months. New production systems like Marechal Duque de Caxias, FPSO Maria Quitéria, and Almirante Tamandaré are part of a new generation of efficient platforms. Refining had a utilization factor above 90% in Q2 with good byproduct sales. ROTA 3 pipeline is strategic for increasing natural gas supply to Brazil.

In the second quarter of 2024, the pre-salt contributed 81% of the company's total oil and gas volume. Refining maintained a high level of processing with a utilization factor above 90% in Q2, and had the highest sale of byproducts than the previous quarter, with better performance in diesel, gasoline, and QAV, reaching about 70% of the total volume produced.

Forward-Looking Statements

• Projected investments for 2024 range from USD 13.5 million to USD 14.5 billion, a 7% to 15% increase from 2023. Expect to initiate production at FPSO Maria Quitéria ahead of schedule, and ROTA 3 pipeline to start commercial gas in Q3. Board approved dividends of BRL 1.05 per share for Q2 2024.

Risks

• Exchange rate volatility impacted internal accounting but not cash flow. Delays in licensing processes for exploration in Brazilian equatorial margin and other basins could affect production and employment. Potential issues with operational safety and environmental compliance in offshore exploration.

Q: About compensation to shareholders and international exploration, including Namibia's basins.

A: Fernando Melgarejo clarified that dividends depend on cash flow, not accounting reserves. Petrobras aims to diversify exploration portfolio, including Namibia, and will consider opportunities that generate value for shareholders.

Q: On RLAM refinery and pre-salt integrity.

A: William da Silva discussed synergies with RLAM refinery, and Magda Chambriard emphasized robust teams and technical alignment for pre-salt reserve management, including investment in reserve engineers and 4D seismic analysis.