Petróleo Brasileiro SA Q3 FY2024 earnings call

Exploration and Production

• Started operation of 2 FPSO (Maria Quitéria in Jubarte field and Marechal Duque de Caxias in Mero field), received Almirante Tamandaré for Búzios field (to start operations next year).
• Record 2P production at 3 billion barrels. Mero's Sepetiba FPSO reached peak production in less than 8 months. Discovered fields in Colombia and South Africa.

Refining and Byproducts

• 95% utilization in Q3, 97% in September. Best greenhouse gas emissions in refining park. Increased sales of byproducts in Midwest; partnership with Vale on low carbon products (diesel R with 5% renewable content).

Natural Gas

• Natural gas production unit in Rio ready to start commercial operations at 50% capacity, aiming for 21 million cubic meters per day by year-end.

Talent

• Back to top 10 ranking of companies to work for after 4 years.

Recurring EBITDA was $11.6 billion, recurring net income was $5.9 billion, cash generated was $11.3 billion (a 24% quarter-on-quarter increase), free cash flow was $6.9 billion. Gross debt was under control at $59.1 billion, with financial debt at its lowest level since 2008. Taxes paid were BRL 64.4 billion, and dividends approved were BRL 17.1 billion. No specific breakdown by product segments was provided.

Financial

• Recurring EBITDA $11.6 billion, recurring net income $5.9 billion, cash generated $11.3 billion, free cash flow $6.9 billion. Gross debt under control at $59.1 billion, financial debt at lowest since 2008.

Dividends

• Board approved BRL 1.32 per share in 2 equal installments in February and March; JCP to be defined by year-end.

Investments

• $4.5 billion invested, 30% above previous quarter, related to OLP projects, P-84 and P-95 construction.

Operational Shutdowns

• Scheduled and unscheduled shutdowns impacted production in Q2; ongoing efforts to address ANP requirements for unit longevity.

Market Volatility

• Brent oil price drop, crack spread reduction, but offset by higher byproduct sales.

Cash Management

• Need to balance surplus cash with investment and operational needs.

Q: Can you give us more color on the Q3 production levels?

A: Sylvia dos Anjos discussed scheduled and unscheduled downtimes, impact on production, and outlook for future production.

Q: What is the company doing regarding explorations both in Santos and Campos basins?

A: Sylvia dos Anjos mentioned investing over $3 billion in exploration, focusing on replenishing reserves in Santos, Equatorial Basin, and considering investments outside Brazil.

Q: How is the CapEx projection refinement process proceeding?

A: Renata Baruzzi discussed aligning physical and financial advancements, changing chartering models, and addressing commodity price impacts on equipment costs.

Q: Do you have an intention to reduce surplus cash?

A: Fernando Melgarejo mentioned investigating scenarios and alternatives to manage surplus cash, with an answer expected by November 21.

Q: What is the current status of the Pelotas Basin project?

A: Sylvia dos Anjos discussed acquiring seismic data and being in the early stages of exploration in the Pelotas Basin.

Q: How are you going to get away with the problem of FPSO hiring in 2025?

A: Renata Baruzzi discussed changing chartering models, using BOT, and increasing participation of companies in EPCI bids.