Q4 2021 Petroleo Brasileiro SA Petrobras Earnings Call
Good morning, everyone welcome to fit their branch webcast with analysts and investors about all from fourth quarter 2021 regional it's great to have you join us today.
To inform you that all participants will follow the transmission by Internet as listeners.
Turning to production our Q&A section will begin you can send us questions by email at capital investment at Petrobras Dot Com Dot BR.
We also inform you that all executives are participating in the advance remotely and their individual loans respecting the health and safety protocols.
So they would have the first cloud much Dallas, She is trading and logistics officer, Dan on the Walsh Chief exploration and production officer joined US to hit some housing Chief production Development Officer, Giuliano Bonefish, Chief digital transformation and innovation officer.
My final Chavez, chief sustainability, and institutional Relations officer.
Our origin, Chief financial and Investor Relations officer, but they were cautious chief refining and natural gas officer, and solid look at the home chief governance and compliance officer.
To initiate our pass the floor to put the rescue sample code billable hours.
Go ahead.
Thank you Carla.
Thank you for being here today with us.
It's a great pleasure to be here with you to announce our results for fourth quarter 2021.
And.
Of course for <unk>.
We're happy with.
The results that we had in.
Deliveries that we've made but especially when we consider that we were able to achieve all the targets that we set into 'twenty, one 'twenty five business plan for the year 'twenty one.
So we are quite okay.
Satisfied with the results with our cash flow generation of our financial position.
And we're going to get into more details about the results for the fourth quarter next slide please.
Next please.
So starting with ESG.
It's always very important to remind them safety is a it's a value for us and this is a quite fundamental value and we're always aiming at our ambition of zero fatalities. Unfortunately for 'twenty. One we had three fatalities in our operations, but while we always aiming to eliminate all fatalities, where a ball.
So true.
<unk> reduced our total recordable injuries per million man hours from <unk> 56 in $2022 54 in 'twenty one.
That's below our chop metric of.
The maximal acceptable limit of one seven.
But regardless, we're always focusing on improving safety and reducing the risks of our operations. So safety is something quite relevant for US next slide please.
Yeah.
In terms of our contribution to.
The Brazilian society.
You have seen in our 'twenty to 'twenty six business plan are we.
We expect to return about 58% for our cash flow generation, which is society via taxes dividends.
And the.
The companies are quite relevant in terms of its contribution should a country in in 'twenty. One. This was not different we were able to return about 57% of our cash flow generation.
Considering dividends being paid in taxes paid should different.
Government levels in Brazil.
Of course this number of 130 beat in HAE is does not include the dividends that we announced yesterday. The addition.
Dividends for year 'twenty one.
Here, we're talking about the cash basis contribution, but again the company's contribution is quite relevant and we're quite satisfied with the results we had in for anyone.
Next slide please.
In terms of our social performance, we had whereas several.
Different projects with relevant impacts in local communities in places where the company is performing its operations.
We will have a wide range of programs focused on education on FTE.
Ocean preservation Marine water preservation and also forest preservation.
And it's also relevant to remind you of the programs that we announced in 'twenty. One one of them focused on LPG for low income families. In Brazil, we have more than 4 million people affected by a program and we're very happy with the <unk>.
Anticipation of other players in the oil and gas industry in Brazil, as well as the Michael but it is a foundational alongside with US So we've been able to.
Improve the impact of this program by.
Inviting other companies to join us in the actions that we're doing.
And we also.
Donated $4 3 million in high <unk> to the states have managed horizon by year that were affected by floods are caused by heavy rain in the beginning of 'twenty, two and also to Petro pennies.
Has been recently affected by heavy rain in Brazil as well.
Next please.
In terms of our level of emissions.
The results that we have for 'twenty one.
Are quite compatible with the targets that we set in terms of E&P carbon intensity, we were able to.
Reduce our emissions from $15 nine kilos of Seo chew per barrel of oil equivalent produced to $15 seven thats below our target of 17.
In terms of the intensity in the refining segment. We were also able to reduced when compared to 2020 and also below the target that we set.
This is part of our low carbon low cost strategy and will have relevant targets for 'twenty two and also for the for the <unk>.
Of the 22006 business plan that we're going to show in the next slide please.
Next please.
So we have targets for not only for 2030, but also for 2025.
And especially when we compare to the level that we have.
In the upstream in 2009, and when we compared to the levels that we have and we head into downstream in 2015 in 2015.
We've been able to substantially reduce our emissions and we're quite focused on.
Both the carbon decarbonising our upstream operations.
As you know we have set a decarbonization fund in our most recent business plan and also in downstream, we announcing 21 a program called rooftop that is focused on.
Energy efficiency in the downstream segment, so we're being able to deliver important results in their area and we expect to continue.
See our emissions and cleaning our.
Operations over time, and that's also compatible with the long term ambition that we announced along alongside <unk> and.
September 21.
Often that zero ambition in the timeframe of the Paris agreement.
It's also relevant to highlight.
As I mentioned before as.
As part of our low carbon low cost strategy.
Pre salt.
Oilfields are quite relevant in terms of low emission when we look at the <unk>. For example, there was this.
Tests and emission level and intensity level of 10 kilos of silver two per barrel of oil equivalent and to be as $9 one.
Compared to the average of the portfolio that is around $15 seven so Jos.
Quite competitive assets and supported also by the portfolio more portfolio management movements that we're making.
Do you expect to continue to reduce our emissions both from scope one and two.
Next please.
And I've.
I've mentioned, the de Carbonization fund, but our total investment in the business plan of $2 $8 billion.
So we continue to move towards also programs rather than issue biodiversity and climate.
We had several important milestones that we're realizing in 'twenty one.
Wolfson, both in terms of <unk> and also in terms of reforestation. It's it's always important to mention that Petrobras has the largest since <unk> offshore program award. So we're quite focused on reducing our emissions and improving our environmental performance next please.
Yeah.
With respect to governance the company continues to alongside with its financial turnaround story to continue to improve.
Its governance as well we've received relevant awards in 'twenty one.
We also had $1 3 billion recovered from.
Investigations within the car wash operation in 'twenty one.
So that's an important.
Recovery of funds.
Were missed used by the company as suppliers in the past and are returning to the company.
We also had an important event in the end of 'twenty one.
Petrobras dialogues integrity in ESG that we're focused that was focused on yes.
ESG aspects, especially governance aspects as well.
We had more than 30 speakers and about 13000 participants. So we had a quite successful and relevant event to discuss best practices and.
Ways to improve the company's golf Vernon's and its <unk> strategy.
Next please.
Okay.
Next please.
With respect to our financial highlights and operational highlights of 'twenty one.
We've we had several important.
Achievements in the year of 'twenty one.
Beginning with the level of reserves that we incorporate into 'twenty, one we had the highest.
Incorporation of results of reserves in the history of the company 197 billion barrels of oil equivalents. We also had the completion of the ramp up of the <unk> and the startup of <unk> Orca.
Both quite competitive.
That's in the pre salt layer in Brazil, contributing to improving the participation of the pre salt in our total production. We also had the bidding round for the transfer of rights.
Of SAP in our pool.
In the end of 'twenty one.
That was a quite competitive bidding round and we had international players quite interest in those assets and beam.
Joining us in.
In partnership for the exploration of the surplus of the transfer of rights of stepping up the pool.
So we're quite happy to.
It could be part of the exploration of those assets and improve our production in pre salt as well with the surplus of the transfer frights bidding round.
In terms of utilization factor in our refineries, we had our highest level in the last five years, so had 83%.
Utilization in our refineries for the year 'twenty one.
That level is already up to 88% in the fourth quarter of 'twenty, one and we expect <unk> to remain around this level.
So it's a it's.
Quite important to add value through our operations, especially when we think about few oil for example that we've been able to substantially improves our exports a few wild after I am or 2020.
Given the low sulfur level of fuel oil so we're quite happy with far.
Low carbon footprint and low sulfur production that is supporting the improve of our commercial strategy and not only in Brazil, but internationally.
In terms of production, we were able to meet our target for 'twenty, one and the pre salt already represent 70% of our production it.
It's also important to highlight the.
Power generation options that we had in the end of 'twenty one.
We had.
<unk> is a fixed stream of cash flow that supports our.
All of the fixed cost of our thermal power plants natural gas fired thermal plant rents. So that was quite relevant in terms of our energy strategy as well.
We also had a record level off.
<unk> S 10 diesel production to 10 ppm diesel production and also 10 ppm diesel sales. So we see that the phase out from the 500 ppm to the 10 ppm is moving quite fast and the company has been able to improve the quality of its refining assets and produce more S. J in DSO.
To support that transition as well.
In terms of market opening.
Quiet successful transactions not only in the refining segment, but also natural gas.
But we highlight the closing of Halo So starting off December 1st in Brazil December 1st Tony One we had hail ambien operated by a private player in Brazil.
We also had the signing of <unk> six so out of the eight refineries that we announced in the agreement that we have we've done some tourist authorities in Brazil.
They have one closing in and choose signings.
So those assets will soon be operated by third parties, improving the level of competitiveness and openness of the Brazilian fuel market.
In terms of the general financial results, we've achieved our $60 billion debt target 15 months in advance.
We were also we also had our credit rating upgraded by Moody's.
We had relevant inflows from portfolio management highlighting hello.
Binary by year and also banned distribute what our retail business that we were able to finalize the arb divestment and had the last.
Part of our follow on in June 2021.
Selling the remaining portion of the state that we're heading the hardest with water we.
We also had the conclusion of the obligations that we head into the agreement with the Doj in 'twenty one.
We've returned to the Dow Jones sustainability index as well.
We were also able to.
We view our dividend policy to make relevant improvements in terms of predictability and.
Supporting our commitment to distribute 60% of our free cash flow a quarterly so that's quite relevant in terms of dividend policy.
And finally <unk>.
Terms of cash flow and free cash flow.
Quite successful year that we're going to detail later on and we also were awarded in terms of transparency of our financial statements. So that's and also that's another relevant aspects for our governance sources.
Please.
Looking at the external environment.
We had a year where the company was.
That said its a its targets based on a $45 per barrel scenario, and we had a year where the <unk>.
Average Brent prices were above $70 per barrel and that's.
Quite supportive of our case and.
And it's interesting to see that we were able to navigate both.
2020 with quite relevant results when we had.
Very low oil prices and we were able to show the resilience of our portfolio and then in 'twenty. One we were able to capture all of the price upside that we saw during the year. So it's a quite relevant to show the resilience and the quality of our portfolio that is able to capture upside when we see.
Higher oil prices, but it is also able to navigate through quite challenging scenarios, especially considering that our approval.
Brent price for the long run for our project is $35 per barrel or so.
Quite conservative in terms of project approval.
And.
The results have shown should be quite relevant, especially in 'twenty one.
Next please.
In terms of our EBITDA.
The recurring EBITDA has.
And that has reduced in the fourth quarter of 2021 from 12 point you to 11 <unk>.
That's mostly related to higher LNG acquisition costs.
We had a relevant increase in LNG imports, both volumes and costs in the fourth quarter of 2021, and given the dynamic so far natural gas contracts.
Those are hardly adjusted so well we have some delay in terms of capturing price increases in the short run for natural gas contract.
Of course, we expect that to rebalance over time, but it was rather flat in terms of impact for the fourth quarter of 2021.
We also had.
<unk> up 8% of Brent prices an acquirer.
That support it are our earnings for the for Q4.
That were also impacted by lower export volumes and also lower gasoline LPG and diesel margins in there.
And acquire next please.
When we look at the EBITDA by segment.
Our upstream results were 5% higher than Q3, especially given the appreciation of Brent prices, but we also had.
Lower production in the quarter given the scheduled stoppages that we had in the fourth quarter, we have relevant pre salt stoppages in the fourth quarter.
But we also saw an important increase in terms of the spread of our oil, especially to P. When compared to Brent prices and that's a quite relevant results from our commercial strategy.
<unk>, which is C oils like two P boots shoes, and other pool being.
Having relevant spreads positive spreads in the market. So that's part of our commercial strategy.
In terms of the results of our RTC segment over the downstream segment, we saw.
The lower margins and volumes when we consider.
Our EBITDA at replacement cost.
But when we look at the results of the quarter, we saw them.
Positive inventory turnover impacts.
Supporting the earnings of Q4 as well finally in terms of gas and power I mentioned before.
We had a relevant impacts a relevant impact of increase in LNG import cost.
That impacted our <unk> or our fourth quarter results of 21.
And as I mentioned, that's that's part of our.
Natural gas contracting dynamics, but would you expect would you expect that your balance overtime next please.
When we look at the cash flow from our operations in 2021.
Of course, we have had a very solid year.
Solid year in terms of cash flow from our operations.
We had a 37 8 billion dollar of cash flow from operations.
After investments we had a 31 five free cash flow in 'twenty one.
Considering the inflows.
From portfolio management and from the Boozers agreement.
We had a total free cash flow after divestments of $39 1 billion.
<unk>.
Quite expressive results for 'twenty one.
And that pretty much that free cash flow was used for deleveraging. The company. So we were able to reach our.
Gross debt target 18 months in advance but.
But at the same time, we were able to substantially improve our dividend distributions. So we paid $13 1 billion in dividends for the year 'twenty, one resulting in a net cash change.
One three negative net cash change for the year.
So we were able to anticipate our dividend distribution given the fact that we achieved a gross debt target a.
Much sooner than we expected.
Please.
So looking at our gross debt.
We were able to reduce our gross debt below 60 billion as I mentioned before.
Don't expect that to continue to reduce substantially.
We see that the optimal level for our gross debt is between 55 and $65 billion.
But we do expect to continue to be active.
Both in terms of bilateral transactions and debt capital markets as well so that we can improve the maturity and reduce the cost of our debt.
If we look at the profile off or off our debt.
We've been able to improve the maturity $4 13, four years, that's quite compatible with the duration of the cash flow from our upstream projects. So that's.
That's a quite important for us in terms of financial sustainability in the future.
We also received a liability management or from Latin finance for 'twenty, one and we're also able to issue the company's lowest 30 year bonds.
Or if.
You had a 575%.
Next please.
With respect to portfolio management.
As I mentioned before we were able to just signing close relevant transactions over a year I am not going to go through each one of them, but I would highlight are the follow on BMS with water and also the transaction involving how long that was signed and closed.
In 'twenty one.
That's a very important milestone in terms of opening up the refining market in Brazil.
We have also signed six in humans that we expect to close.
Soon in 2022.
So in total we have a cat and we had a cash inflow of $5 $6 billion in 'twenty, one and we signed transactions in a total of $6 8 billion next please.
So looking at our net earnings for the years.
We had a four to four <unk>.
421, we had $4 $3 billion of.
Net income compared to three three.
In the third quarter looking at the recurring net income of course.
The actual net income was $5 six compared to a $5 nine so it's quite stable, we had higher volumes and higher prices, but we also had higher cost in terms of input costs and government take as well.
We also had a lower impact of.
The foreign exchange rate the end period foreign exchange rates.
Q4 results next please.
I've already mentioned our distribution of dividends.
In 2021, so we were able to chew anticipate.
Our 60% of free cash flow formula for the year 'twenty one.
So yesterday, we announced an additional dividend distribution of 13.
<unk> seven 3 billion highs.
$2 86 per share debt.
<unk> represents 60% of our free cash flow for the year.
The dividend distribution is quite aligned with the company's financial sustainability and reinforces our commitment with the correct capital allocation and we will if the distribution of the offer better that would generate so we expect to continue.
Distributed 60% of our free cash flow and of course whenever we have the possibility depending on the price and end market scenarios, we would be able to distribute additional dividends.
The company's performance next please.
Okay.
There's a we also allows.
Go back one please okay. So alongside with our financial statements yesterday, We also released our climb.
Climate change book club for the year 2021.
Climate change supplement.
Quite relevant document that discusses our strategy in terms of climate change our positioning in terms of energy transition and brings relevant information about our ESG strategy. So.
That's a quite relevant document in terms of our climate strategy.
We're also having on March 14th a webinar to discuss our climate strategy and you're talking about our climate change supplement anymore detail. So I invite you all to join US for our webinar in March on March 14 to discuss our our climate change supplement next please.
And finally alongside with <unk>.
Financial statements are tax report and our earnings call of our earnings press release yesterday. We also released our annual report and I would highlight that we included specific chapter to discuss our economic value added management system and bring some clarity in terms of.
The value creation cases.
That are supportive of our strategy. So we've included relevant information about our strategy in terms of value creation and how the management system is running.
To bring us new value creation opportunities.
That's quite supportive for the delivery of our of our business plan and our strategy.
Thank you for your time today and now I'll pass virtual color that we can go to our Q&A session. Thank you.
Thank you well thank.
Thank you all for your attention we can now move to the Q&A session. The first question that we received comes from Frank Mcgann with Bank of America Merrill Lynch.
The first question as far as he can.
I think upside pressure related to inflation Nio service costs equipment costs or other costs.
Good afternoon.
For the question Frank.
Yeah.
We have.
The loyalty, we tell our suppliers.
Indeed, we can see.
Very well.
It can be.
The tumor.
But when we analyze or portfolio.
<unk>.
The next two five years.
I'm sure that the.
The big amount of the quantity.
I'll, let Simon do we do.
Goodbye.
So the big.
Portfolio.
We think he is very low.
Do we just go with you.
He has only India, but this is not the right.
You will know.
Yeah.
Nowhere and then as we think that the.
In order to have you.
Okay.
Inflation will be costly.
We need to have.
Perspective that.
We may.
Hum.
Hi, Bryce.
Luna viewed otherwise.
It did not make feasible.
Mark let me until the project debt.
Would be.
Yeah.
The price is stable for a long time.
Thank you.
Please go ahead.
Next question from Frank Raphael.
I'll file its Marc Hoffman your strategy. The company has indicated it could spend and new technology.
Eventually lead to potential new business.
Are there any concrete moves on this front.
Hi, everyone. Thanks, Colin Thanks for the question Yeah. There are some moves I should say that each member of our board and many high level executives are right now discussing the next strategic plan and new business opportunity matching our capability each.
Each one.
It has a strong preference.
But.
Acknowledging that must be suitable for Petrobras.
Petrobras is good in building projects that are high density technological content.
Some capital Big projects. So there are many options that are actually suitable for Petrobras for example, nuclear our subsea mining Hydro Haynesville are you all look hill, caramel, and even only oil and low vacation and all are right now on the table. So we are running.
Move to discipline on discussions to reach a conclusion.
One may expect that these one for the next strategic plan to be announced by the end of the year. Thank you.
Yeah.
Thank you I'll pass. The next question comes from Chris analogy with something there.
Paul Hudson of course.
Anthony.
Even with the Russians attack on the Ukraine, and the likely impact this could have on the natural gas prices in LNG.
Operational trends.
Yes.
I'd like to continue during the first quarter of 2022.
Great.
Well the way to then has a rather implement some structural measures to diversify its LNG acquisitions and sales in our portfolio.
Here I emphasize what Rick mentioned during the presentation, that's the way we sold.
One 8 million cubic meters per day last year index to <unk>.
In the bid rounds.
The energy sector in Brazil last year.
And.
We guarantee.
Our fixed income to the company around the 17 billions.
Reais and the time horizon until 2041.
Very.
Good.
<unk> for our portfolio.
We'll continue to evaluate all other commercial and financial measures to reduce the exposure.
The variations of the cost of natural gas supply portfolio.
In the first quarter of this year, we are reducing our LNG volumes to our own.
When do we see January and February around 40.
14 million cubic meters per day that represents a decrease of 10 million cubic meters per day.
When you compare with the less water.
This is <unk>.
<unk> falling.
Our level of our reservoirs here in Brazil that we see is strong.
<unk>.
Ann.
We see that the level of prices in this first quarter is still high.
Around $25 per million Btu.
Two strong level off price and probably could impact our results in the first quarter.
Okay.
Thank you.
The second question from Crimson is about fewer imports into our much down.
Alan can you talk about your strategy for gasoline and diesel imports during the fourth quarter 2021, and what you expect for the first quarter 2000 10-Q.
Thank you Christian.
Yeah.
How are your thoughts.
Okay.
2021 and two.
Patients truly fleet.
Contractual obligations to our clients in addition to our refining ratio production.
Specifically for November we received two.
Very typical.
Additional demand much higher than expected.
Yes.
Even with all of our refineries.
Thank you Linda.
Always look possible for us to meet the extra demand.
Turning to presume producing 10% for gasoline.
Will you absorbed to her behavior in January and February this year.
The Brazilian market before going to see.
Have not and will not be shelters in place currently several please defunct Petrobras distributors importers.
Lines, which produce anymore.
And there are fully capable of meeting.
Sure demands.
Yes.
Supply.
Richard Mark.
Thank you.
Yeah.
As Alan.
<unk> also.
Baja we CD and the first question is also for you we believe the high fuel prices will continue.
Medium term.
Looking at the import parity, we see that the company charging prices below import parity price.
Therefore, we would like to better understand how big are brands might be thinking about pricing policy for the current moment and also for the future.
Is there any possibility of changing your strategy regarding the pricing policy.
Okay.
The simple answer is no.
No change.
Gross.
Integrations in the future.
Sure.
Prices.
Alright.
We have to make sure dynamics Susanne Petrobras in the other regions.
Sure.
Risks and opportunities and your vision.
Keep it going.
Okay.
Thank you Mr. Allen.
Now we received questions from no mathematical.
No.
The first question is for the album Lemonade, considering the current oil price scenario. The split the RASK consider to anticipate projects that are not in the current business plan to the sharp army.
Oh. Thank you. Thank you. Thank you for your question well I think that first of all it's a it gets you to remind you of what we included in our latest 'twenty to 'twenty six business plan about the level of commitment of our capex for the for the timeframe of the plan.
And when we look at the first years of the plan you can see that we have a high degree of commitment and of course that means that we don't have.
Too much room for for relevant changes in terms of Capex for the for.
For the beginning of the business plan so much of our Capex for 'twenty, two and 'twenty three is already contracted.
And it's pretty much focused on.
Projects that have already been approved.
So we don't expect relevant changes in terms of Capex for the short term.
Also one thing that were quite.
Quite concerned about is making sure that all of our projects go through a very high.
Hi, thresholds and go through our resilient scenario.
First test to be approved so we Don.
Well, we're not going to approve projects that are not resilient in our Brazilian scenario, if the business plan.
It considers at $35 per barrel scenario for the long run.
So even though of course, we see price upside now but.
We're always focused on making sure that the projects are sustainable and value accretion projects are in the long run. So we don't expect to change our approval policy for projects in the short run.
So basically we while we expect this to continue to perform like especially for the first two years up to <unk> to perform close to what we.
Included in the business plan. Thank you.
Thank you for bidding.
There are now also Samsung on the question for you as well could you provide an update on the refinery.
Divestment proceeds is there any expectation on the timing for the signing of those refineries.
Thank you. Thank you.
While we are still as a as I mentioned in the Portuguese earnings call, we're still negotiating.
We will be north and a hiccup with potential buyers, we don't have a timeframe to share with you right now.
But we do expect to see advances in the in the next months.
But we don't have a specific timeframe to share with you now.
And considering the three processes.
We're <unk>.
They were unsuccessful in the first attempt.
<unk> and <unk>.
We're now.
Looking at the projects with with Ganji and talking to potential buyers and.
Prospect in the market to see what the best timing for those processes will be.
And as she has of course, a specific challenge related to the conclusion of the second refining unit.
But especially have fought and hip aten and <unk> are looking at.
Market appetite and discussing with market participants potential buyers and the Brazilian antitrust authority.
About the best timing to relaunch those process processes. Thank you for your question.
Okay.
Thank you Anthony.
Three questions also from <unk> <unk> with UBS.
First question is for you Nicole.
But he has been very vocal in the central part of aligning the company's potential contribution to society and the farmer.
How can we see this developing.
12 months could be kind of a nice increase dividends how could we understand the potential for distribution could there be a case.
Facial high percentage, 60% of the difference of operating cash flow and Kathy.
Thank you. Thank you Luis for your question.
I think thats first of all when we look at the at our turnaround story over the last six years.
It's very clear that our efficient management focused on our resilient portfolio and having value creation as the company is focused and the distribution of that value.
It's a relevant contributor contribution should the Brazilian society I think that's a quite clear that that's the correct if path for the company to go and we're quite focused on continuing on that trajectory that has brought us here with.
With this very impressive turnaround so I think that something quite relevant for us and we continue to be our focus.
In terms of dividends, we expect you to first comply with our 60% of free cash flow dividend.
Dividend policies, so over the next quarters.
We expect to distribute 60% of our free cash flow.
Doing that on an earnings calendar. So we expect to announce the results for Q1 and right after distributed dividends, 60% of the free cash flow related to the first quarter.
And subsequently, but in terms of additional payments of course, depending on the price scenario the inflow from portfolio management and the company's financial.
Sustainability and financial situation, we could see the distribution of additional earnings.
But.
That's something we would expect to do.
Closer to the end of the year not not right now in the in the beginning of the year, but thank you for the question.
Oh, sorry.
Sorry, I thought you asked something about Capex, but no. It was 60% of the free cash flow.
Operating cash flow.
After capex. Thank you.
Okay.
Thank you how many of them were received questions sung <unk>.
<unk> with Morgan Stanley .
First question for Mustang.
And Brazil has been below international parity, while crude oil prices have to rebase at a higher level.
That's comfortable sustaining and discount versus therapy for a long time.
When could you expect price adjustments to come.
Yeah.
Well. Thank you for a further question.
We maintained our commitment to practice.
Price.
We noticed within international markets.
Same time, we avoid through through this volatility.
Specific events.
To our clients.
This is balanced.
<unk> is equilibrium.
David.
Naturally the resilience and the supply to the market.
And we don't lease consortium approaches alright.
Hi.
Producers in corners.
Recently, who international scene.
Some of it was oil prices rising.
Joe Please quotations.
And at the same time, we hedged the dollar devalue.
Relative to Brazilian real so for us it was possible to maintain your prices.
Diesel.
And we will see this January .
The current condition.
Specifically.
Hi.
The volatility of the markets we serve.
Do we need to better evaluate what.
The effects will be.
For us to take a position.
Okay.
Thank you Mr. Allen the second license homegrown.
But I was hoping you can cash capex disbursements in 2021.
Increased over 17% to meet the 2022 buckets, how come how confident is the company that's it.
Thank you much larger disbursements.
Should I think that capex will be concentrated in a particular quarter or spread throughout the year.
Thank you Bruno Thank you for your question well first of all in terms of are performing.
Performing the planned capex.
I think that over time, we've been able to both used in risk management and ports and project management.
We've been able to improve the level off of assertiveness of our Capex predictions. So if you look at the the last the last three to four years.
Were performing much closer to what we expected in the business plan.
Of course, when we have events like COVID-19, and disruptive events like that with.
We definitely we will see.
Impacts in terms of performing Capex, but again.
We're being able to move much closer to the planned level of Capex.
We're running relevant risk analysis for the for the Capex that we provide in the business plan. So that's also an important part of the project management framework.
So for 'twenty, two we do expect to perform quite close to what we announced in the business plan.
We don't see any relevant disruptions at this point.
In terms of the spread throughout the year, our historically we have.
Some increase in the in the last part of the year.
But of course, it depends a lot on.
On the scenario and what we can see for the upcoming months.
We don't expect any disruptions now so we do expect you to perform somehow smoothly.
Over 22.
For your question.
Yeah.
Thank you. The next question comes from has just gone GA with previously.
And the first one is for you.
I'd like to clarify two aspects of the dividend permit first should we interpret this $65 billion gross debt as the limit to applying the formula.
The $60 billion.
It remains as a threshold for this one.
Second point, how does the cash in from divestments.
Should this cash can be distributed.
Uh huh.
<unk> balance sheet.
The company could decide to distribute the excess of cash only at the end of the year.
Thank you had just thank you. Thank you for your question well first in terms of the $65 billion threshold.
I think this is this was one of the improvements that we made in the dividend policy.
The 2019 policy was drafted.
Thinking about the scenario in which we were deleveraging the company and focusing on reaching to 60.
Billions of dollars of debt target.
But after we reach that.
Reasonable to have some upside and downside room for specific events for example, having an F BSO coming online that are temporarily increases our debt level.
And not stopping the dividend policy because of that kind of events. So that's why we had the 65.
The billion dollar flexibility, so that threshold would be.
The 65 of course, the optimal level continues to be $60 billion.
And we're going to be continually looking at the price scenario and what's happening in terms of liquidity and financial sustainability.
Those aspects are relevant, but but the threshold would be the 65 and the way. We expect you to run the dividend policy is to have the Harley.
Payment of the previous quarter free cash flow of 60% of the free cash flow on a on an earnings on an early earnings calendar.
Throughout the year.
But then.
Of course, we would have.
Cash inflows from divestments that are usually spread throughout the year.
So depending on the timing and.
The price scenario market scenario would be able to distribute additional dividends, but those dividends would be probably.
More will be probably closer to the end of the year.
We expect you to first comply with a 60% and then consider potential additional dividends. Thank you for the question.
Thank you everybody.
Thank you for all the questions for you.
Yes.
Second when I see the possibility to divest from risking preferred shares still in play.
Nathan too.
What about the common shares.
Thank you thank you hedges.
As you've probably seen.
We had a failed attempt or a follow on transaction.
Now in February .
Basically impacted by the volatile market conditions and of course, what we're seeing today is quite <unk>.
Significantly.
In terms of volatility so we're going to continue to monitor the market scenario.
At the meantime, we are discussing with novel nor are they at the relevant shareholder.
Potential improvements in governance and potential movements that can be made into.
In the meantime.
Of course.
Given the volatility that we have knowledge is quite difficult to make.
Predictions in terms of timing, but what I can reassure us that the company continues to be.
<unk>.
The divestment in <unk>.
Divesting off its entire stake in Braskem.
It has definitely not changed.
What we're doing now is much more and monitor the market conditions and trying to move with the governance improvement agenda.
In the meantime, thank you.
Thank you for the room, we have another question also from hedges.
Just one on the bonds as well.
What kind of expectations around timing for closing of the transactions of the 5% stake.
Option exercise price to Nokia.
Which are the main precedent conditions for the closing.
And then second is there any update regarding the negotiations around the conversations.
Any expectations on timing for those receivables.
Thanks Harriss.
No questions.
Considering Basel closings expected for the second part of this year after the approvals by Division.
<unk> costs will also come on to the SaaS Scott the national.
Agency and the Ministry of mines.
Compensation, Seth and then negotiations around the progress with the partners.
Because the deadline of the signing of the corporates visual agreement established.
Notes is April .
Duane the ninth.
This year, we expect that all amounts will be receiving.
Dismount fluffy.
Thank you for that.
Now we have questions from <unk> <unk> with Jpmorgan. Your first questions go ahead Daniel.
Anyway.
Our earnings release.
There was an eight $7 million impact restaurants, and again just thank you.
It does have higher LNG prices, how do you expect the spread between Brent and LNG prices to behave during the year.
And how should that impact.
Profitability.
Although for the LNG price and there is still uncertain as well.
Youre seeing today due to this geopolitical scenario.
Yeah, well you expect.
Spreads between 'twenty five 'twenty person.
Between Brent and LNG price by the way, we are seeing some forecasts for on market specialists that points in the second semester rump Darwin this price scenario to $15 per million.
Btu, so let's see if there's anything there would be a new trend.
Hearing Petrobras, we work with long term and short term contracts.
Our portfolio is.
Major.
Major making by law.
Long term.
Long term contracts and short term contracts the commercial conditions is totally aligned with our cost opportunity costs.
At this time is our opportunity cost as the LNG price.
But in the medium and long term contracts.
Following the previous conditions established and away you fulfilled the contractual conditions and provide all the variability to our customers for the new sales contract that's her but I still see the demand forecasts and the respective supply boards.
Volume.
We used the most update.
<unk> forecasts that we that we have inside the company and also construct mechanisms to our clients to reduce price volatility and different terms and flexibility conditions regarding volumes stay called <unk> and <unk>.
Perfect clause.
Andrew will you try to.
Set these car T cells, and as I said in the medium and long term horizon.
Thank you for being the second question also Silverado is fine tune on the branches are enjoying it.
Increase in oil prices to be more structure, how much flexibility would you have on your production plan.
Hello.
Petrobras constantly monitor price and making decisions with a long term perspective.
Without losing sight of the perspective of resiliency of our projects.
Too early to say what impact the current situation may have long term, sometimes these assessment will take place as part of your updated thoughts on our strategic plan.
And changes to our investment plan, we announced at the <unk>.
I'm off the next strategic plan.
And the women thing.
When do you see the or.
We had the 15 the units already.
And the head units.
Not if I didn't know.
In order to do.
You had.
Ed.
More more oil.
Our business plan.
The physical.
Critical path for deals.
This fuel consumption and it leaders.
Three years to four years, so we don't have the room to.
Change in the plan before you only.
Space some movie.
Memphis is when new equals to do.
Single needle single aisles in the.
These <unk> platforms. So there is not the room to change the best production landing the.
The next three or four years.
Thank you Fernando Thank you Joey. Thank you. The next question from a little known wedding with Goldman Sachs.
Sure Dan Good question.
Let me now simulation capacity such a bank your size below historical high but we saw an increase towards the end of <unk> can you. Please clarify the strategy for volumes and capacity utilization at the refinery going forward.
GBP internal fuel Consumptions are expected to remain on the sidelines.
So do you intend to gain market share versus imports by third party.
Bruno the main PPI of our refining segment was the highest utilization rate of all bark, reaching 88%.
Last quarter in the fourth quarter of last year.
And in the average of last year, where you're reaching around 83%. This is the highest utilization level in the last five years reflects the improvements in our management efficiency.
Our ability reliability conditions.
Last year, we invest around two point free billions of Hey ice.
The amendment of our refineries.
And we almost reached four follows on equipment that we improve.
Efficiency.
We also highlight the decision.
Also the level of use of our refineries is complex because involve a lot of product around more than 50 product plans.
Planning the third round.
Rusty shouldn't restrictions.
<unk>.
We're a treatment prices and demand conditions. So that's.
A very tough.
Scenario two planning all of these variables and all of our decisions is to add value to the company and we are.
Take this decision on technical.
Economic criteria.
We are considering verse, meaning now are we flying now refraining refineries updating of our Honda and adapt to our oil output in the upstream segment.
Yeah.
Do you have any of them.
The next question is strong thanks Paula.
No.
Yes.
And on the bus.
Yes.
Let's talk it's very strong in 2019.
Any positive surprise on he's already expected when the company put out with guidance for me.
The St.
As high conviction performance was mainly due to.
Fewer maintains its puppets.
The ramp up of the so can you walk on yields and good efficient in all of the.
All of us.
However, considering the working interest reduction that we're going to have a little skewed.
The increased participation while soup.
The co participation agreement the settlement and a couple of fields.
Due to net me.
These results. These two in line with our production disclosed to the market of $2 6 million definitely to Valeant.
Debate for a museum.
Considering the margin more or less 4%.
Okay.
Thank you Fernando.
We received two last questions and then is it down.
And it's why your line is now open.
The results presented.
21% quarter on quarter increase we saw.
Is this a sign that inflation cost rise at E&P in Brazil pre salt.
What can we expect in terms of cost increase for Chris' thoughts for the next quarters.
The lifting cost.
In the last quarter of last year and that has been.
Please go.
Bluetooth risk assumption.
The level of activity, if the pandemic intends to decrease.
For the first months left this year, we tend to maintain this level due to our need to carry out my denison conventional debt.
During the pandemic.
After that.
Some of these tenants like logging does here.
Delivered cost we will stabilize at a lower level than the current base grows fueled the five Bob.
Yeah wireless per barrel.
Thank you to them. So we have our last question is for everybody with constant also.
Uh huh.
The magnitude of that.
Gas and energy.
<unk>.
Litigation, Yes.
Readjustments.
Should we expect another negative.
Should we expect another negative EBITDA for this segment.
First quarter of 2017.
Awesome.
Yeah.
Right.
The negative result.
<unk> of gas and power in the last quarter is a further evidence of the gap between the cost of LNG necessary to meet that.
But it's constructive commitments and.
The conditions previously established contractually.
Our opinion these litigations will represent a threat to the open enough natural gas market by putting legal certainty at risk and interfere.
Two market price and future investments in the country.
Along 2021.
Working hard for several months in.
The bid rounds of.
Distribute your companies to provide the best conditions for our clients sulfur and natural gas.
With terms of six months, one year four years different reference of indexes in this contract and our flexibility in the in the conditions offtake and cheaper page and we think that the.
To solve these litigations in.
In the.
Cable meetings to reach of course answers are wrong or all of these conditions.
For this first quarter, we reduce our exposure in LNG volumes, we reduce around 10 million cubic meters per day, if we compare the performance of January and February .
With the last quarter.
But the level of price around $25 per million Btu, probably will impact our results in this first quarter.
Thank you Rodrigo.
Find the Q&A session is over.
Any further questions you can send it to our Investor relations team.
Glad I was you will now make his final remarks. Please nobody would go ahead.
Thank you Carla thanks, everyone for being with us today.
As I mentioned in the beginning we're quite happy with the company's financial results for 2021, I invite you all to visit our Investor Relations website, just see both for our climate change supplements our tax report in our annual report that we also released alongside with our needs today.
Thank you for being with us.
And our IR team will.
It will be available for any further questions.
You have a great day.
Yeah.