Q2 2022 Petroleo Brasileiro SA Petrobras Earnings Call
So our ambition is to have zero fatalities in our main concern is to make sure that we can achieve that ambition. Unfortunately, we had three fatalities.
In the year, but we.
Maintaining our focus on improving our safety levels and making sure that our operations are always running safely as safely as possible next please.
Next please so talking about our ESG.
Agenda in the second quarter.
We highlight the living for its initiative that its initiative of match funding from the Brazilian development Bank <unk> to restore.
38000 acres and capture 9 million tons of carbon better us is investing to meet him. He is in the five year time frame to support that initiative.
Think that it's a very important step towards decarbonization and supporting the reforestation agenda in Brazil.
This is going to go through public selection process for the managing partner and Ford to execution alongside with the Brazilian diversity funds biodiversity fund form view.
So we're very glad to be part of that initiative alongside with the Brazilian development Bank next please.
Looking at our emissions in the quarter.
We can see that both in the upstream and downstream segment, our results were pretty solid and within the targets that we set for the year.
For the upstream my highlight the levels of emission for Boozers into <unk>.
Uh huh.
Both of them below 10 kilos of <unk> per barrel of oil equivalent which is about half the industry average so we reinforce our positioning as a low carbon low cost company.
And the results of our operations are continually.
Back in RF.
Assumption of being a very solid player in that sense.
With respect to the intensity in the refining segment, we can see that the refineries that are part of our rooftop program that is a program focused on energy intensity in a group of refineries has been performing pretty well so were.
Below the target set for the year and when we look at certain refineries like <unk> see a hiccup you hit blend <unk> were even below that so we had the best historical results for a semester and we keep a very high focus.
On reducing the intensity in the refining segment as well next please.
Yeah.
Next please okay looking at the absolute admissions.
It's important to remember that in the second half of 'twenty one.
We had a very high level of.
Thermal power dispatch in Brazil, So thermal electric electricity being produced in Brazil in the second half. So our total admissions increased in the second half of 'twenty one.
But when we look at the overall figures, we can see that the downward trajectory in 2002, our results have come back to a normal level and into our normal trajectory of reducing emissions over time.
Looking at the oil and gas operational emissions it reinforces our commitment to decarbonize, our operations and reduce our emissions into upstream and downstream operations. So we had very solid results in the second in the first half of 2022 next please.
In terms of carbon capture.
As you guys know we have the largest carbon capture program offshore and award and we continue to deliver solid results in that sense in the first half of 'twenty. Two we have already re injected more than what we re injected in the entire year of 2019.
In terms of Seo Chu.
A target of Reinjecting 40 million tons by 2025, and we continue to be highly committed to that target next please.
During the quarter, we also I'm sorry.
During the quarter, we also.
Signed our first sustainability linked loan is it transaction of $1 $25 billion maturing July 27 is our first.
Financial commitment we've.
ESG Kpis, so mainly focused on.
Greenhouse gas intensity in the upstream and downstream segment as well as methane intensity.
So it's from our perspective, we think that is a very solid staff towards moving from just.
Commitments to actually.
Reinforcing towards sustainability linked.
LOE on our.
Desire to deliver on those targets are.
Basically the contracts will become less expensive as we deliver on the lower emission targets that we have so it reinforces our focus and commitment to deliver those targets in terms of engagement of our supply chain. We have started.
A broad survey of the supply chain.
To engage and collect data from our suppliers, we expect to collect data from about 25% to 30% of all suppliers by the end of 'twenty two.
So that we can monitor.
Not only that level of emissions, but also the maturity that they have in terms of our programs to reduce emissions. So this is what we expect for 'twenty, two and start working on that data as well.
S and looking at the training of our workforce, we have delivered online programs for more than 35000 people in the company. We have two different modules. The second module already 10000 people in the company have been trained.
With respect to climate change in the company's position in terms of the energy transition scenario, so very happy to.
Our reinforced their commitment internally as well with our workforce next please.
In terms of governance, we have.
Been focused on.
Automating, our internal controls and we have announced recently this week.
An improvement in terms of the governance of our pricing policy bring in an additional layer of supervision by the board of directors. It doesn't change the company's pricing policy. It brings another layer up supervision and also we have made public our general guidance for the company's pricing strategy.
That is very important that step to make public.
Our pricing guideline document that reinforces the company's commitment to.
Practicing market prices and being a market price play are supporting the market opening scenarios. So I think that it's very important the fact that we've disclosed that the documents publicly next please.
And finally with respect to our contribution.
We paid.
$777 3 billion in.
And taxes over the second quarter.
More than half of our cash generation is returned to the Brazilian society. So we're very glad.
If the results and with the fact that the company has a substantial contributor to the Brazilian Society.
Please.
Next.
Enter into our financial results.
We have a very we had a very solid quarter not only in the upstream segment, but also in the downstream segment, we broke monthly records and moves US we topped up the production of P 68.
We have the production started at the Fps or went to BARDA and the savings from Brazil on the <unk> as well we had important results confirming the productivity of the altered a couple of producers that all.
Area in our exploration segment are very happy with the prospects of that area.
We also had the beginning of the production sharing contract brought up one step here.
This impacted our productions in the quarter, we reduced our production in the quarter given that our working interest in the area has reduced but of course, we have received cash in advance for that for that.
The contract as well so we've been compensated for the for the deferral of the NPV of the project. So we anticipated cash and de risked.
Part of the project.
It's interesting shall highlight not only the high utilization level for our refineries closer to 90% and acquire.
97% at the end of June .
But also the level of integration of our operations and how well.
Entire supply chain has been working from the upstream segment for the downstream segment.
To give a general picture, we usually work with 2% to 3%.
Ms ratio for the planning that versus what we produced over time and does this.
Our ratio was <unk>, 1% in the second quarter of 2022. So you can see that we've been able to deliver.
What we have said in terms of planning for the entire supply chain. So this translated into more prediction and it's more a financial.
<unk> as a consequence.
We started on a pilot basis, producing bio jet fuel with HIPAA. We also had monthly record.
Sales of low sulfur <unk>, so and as I mentioned before.
Lower intensity by our refining segment. Our commitment was to have stopped program is very solid and is already starting to deliver results.
So looking at the financial metrics are we had $20 billion of recurring EBITDA acquirer.
$14 5 billion operating cash flow or free cash flow of $12 $8 million hour.
<unk> death has reduced.
<unk> reduced to $53 6 billion, our net income.
<unk> has a typo there are many more $7 billion and acquire.
So basically looking at the solid financial results and the company's financial situation.
We were able to approve the anticipated dividends of $6 73 per share.
It's a commitment that we set for the quarter. It does not jeopardize the application of our 60% of the free cash flow formula for the upcoming quarters. So as you guys know the way we modeled this we look at the results we apply to 60% Formula We model, what's what we expect to happen and make a risk analysis.
As for the next 12 to 24 months and this payment is compatible with we expect in terms of future scenarios compatible with maintaining the application of the <unk>.
Dividend policy for the next 24 months, so we're very comfortable with.
The dividends that were approved.
Our net debt to EBITDA is six times very solid and very consistent and as I mentioned before we paid $77 3 billion in Texas, $77 3 billion highs in Texas and acquire next please.
With respect to the external environment.
We saw higher Brent prices and period end are an appreciation of the of the present and how.
For the average of the acquirer.
When we look at the period end exchange rates had a negative impact in our net income because of the depreciation of superior to an exchange rate.
As you guys know is not something that impacts cash flow or it's not an economic impact is.
It's an accounting impact.
It doesn't mean any impact on cash flows or future prospects of the company, but impacted negatively the net income for the period.
Next please.
Yeah.
So.
So one please.
No no that's right sorry.
Okay. So looking at the at the future prospects for 'twenty, three and 'twenty four.
We can see that.
Most of the of the contracted that contracting to it has to be done for $23 24 as already.
Concluded. So we expect five units to come online in 2023, and three units to come online in 'twenty four.
We're very glad with the fact that we've been able to anticipate the contracting not only with respect to F dsos, but with the drilling wells the drilling campaigns and also the subsea equipment. So you can see that we're working strongly to make sure that we.
Secure all the contracting.
We have the projects coming online on time.
More than 90% of the of the VAT.
Value of the projects come from making right decisions in terms of investment.
On the way to explore the different fields and also making sure that we deliver the projects on time. So we have a very strong commitment to deliver those projects on time, and we expect to deliver everything that is set for 23% and 24 on time.
Next please.
Next.
So looking at the quarter results are as I mentioned before $20 billion EBITDA for the power better results not only in the upstream and downstream segment, but also.
Natural gas.
We had lower volumes of LNG imports in the car.
And then also supported our results for the second quarter of 'twenty two next please.
Yeah.
So upstream most of course, a favor by higher Brent prices.
Downstream results as I mentioned before the level of integration and the Hyatt or instead of planning also.
Supported has delivered solid results, even if we even when we look at <unk>.
Replacement cost.
It's a very solid quarter for the refining segment as well.
And for the natural gas at a gas and power segment after two quarters with challenging scenarios given the high level of LNG in boards in the high prices in the international market.
Bring working strongly on renewal contracts on changing the contractual dynamic to support better results and of course, the fact that we had lower LNG imports was also.
Accretive to the acquirer. So we had positive results for gas and power segment as well into the second quarter.
Next please.
So looking at the cash flow generation, when we come from a $20 billion EBITDA to a $14 5 billion operating cash flow 2 billion $1 $7 billion Capex, we have divestments.
And the co participation agreement after second notable fields.
Resulting in the $19 $6 billion free cash flow after.
Divestments.
Basically used to maintain our leverage.
In the optimal range and also paid dividends over to acquire so the cash balance.
Hasnt changed substantially from Q1 to Q2 next please.
In terms of our leverage as I mentioned, we're below the optimal range below the 55.
Lower end of the range, but we're comfortable with that level, especially because as you guys know we have 500 units.
In aligning 'twenty, three which is going to bring the leverage upwards again.
So we're comfortable with running it a little bit less and then the 55.
And we expect the trajectory to bring it back upwards.
Of course, a part of this was because of the conditions of the capital markets, where we.
We had favorable.
Open market repurchase and tender offer conditions in the market. So we've done a lot of repurchases.
And Havent had.
Good conditions to issue new debt. So that's why we brought the leverage a little bit down.
We also signed a sustainability linked so basically on a net basis. If we can if we include the Hadrian $854 million.
From the from the tender offer with the $1 25.
Sustainability linked loan.
It averages out on a on a positive basis so.
We'll try to continue to maintain leverage closer to the optimal range.
Of cash levels very solid cash levels. We also have the revolving credit facilities that we can use.
Of course, the cash level at the end of the acquirer.
Doesn't take into account the dividend payments that occurred after the end of the car and the new dividend announcements that we've made.
So we continue to try to bring the cash levels closer to the optimal range of $8 billion to $10 billion in terms of the.
That maturity schedule profile, we're very.
Comfortable with the current levels and we have to.
And with the.
Profile for the next five years, you can see that in terms of financing.
The level of maturity over time is very comfortable with the companies compared to the company's cash flow.
Generation so it's very.
Comfortable situation in terms of liquidity and over the next five years as well next please.
With respect to portfolio management.
We have signed and closed six different transactions in 2022.
$3 $6 billion of cash.
Cash flows already occurred to July 27.
As we included in our earnings release, we have around $5 billion of transactions that were signed but not closed yet. So we're focused on closing those transactions and moving.
Fast towards closing those transactions and we continue to be very committed to the.
Should the portfolio management strategy of the company and deliver on the business plan next please.
Yeah.
So all of this translated in a net income of $11 billion for an acquirer.
As I mentioned.
The one off is the negative impact of the devaluation of the Brazilian how appeared and it impacted negatively net income, but it doesn't change the operational performance and the cash flow and economic situation of the company. So very solid quarter very solid operational results next please.
And finally as I mentioned.
Given all the deciding in the companies.
Financial situation, we approved the dividends of $6 73, <unk> per share to be paid in two installments.
Basically as you guys know, we always look at the 60% of free cash flow formula to make sure that we can comply with the dividend policy and then.
We look at the next 12 to 24 months and our expected cash generation eventually inflows coming from either divestments or for example, the <unk> participation in the cooperative agreement and it allows us to propose extraordinary dividends of course whenever we propose extraordinary dividends were taken into.
The need to continue to comply with the dividend policy over the next 24 months.
So it is something that is very solid for the for the company and doesn't jeopardize.
Delivering on the dividend policy in the future so that was our.
Last lied.
Again, very solid quarter very happy with the results.
I'll pass the floor back to you Carlos we can jump into Q&A session. Thanks, everyone for being with us today.
Thank you we can now move to the Q&A session and the first question that we received comes from Frank Mcgann with Bank of America Merrill Lynch and it's.
Sandy.
Has the change in global energy environment over the last couple of quarters change how the company is looking at the energy transition.
Do not be a good idea for the company to consider increasing exposure to renewables.
Some technologies that could enable the company to start to have more exposure to business.
Over the medium and long time is not right.
Thank you Carla hi, everyone and thanks for being with us today.
I would change our approach to energy transition not at all.
Grant can be volatile local exchange rates can be volatile with our business plan is called system and stable.
We are keeping our lessened spending managed strategy with oil and gas projects with positive NPV value under very low prices at $35 per barrel.
There is by low carbon high energy assumptions, we operate with efficient smaller projects and low greenhouse gas emissions. So very low I would say comparing to other folks who will kind of peak. So we kept our strategy.
And out of <unk>, Yes, we have some actions and investments for example in Florida, we are going to invest more than $20 million in the next year, including the project debt, whether you got a we were presented with the Mds.
And also we are discussing.
The possibility of new business non fossil alternative to be appraised by New war and by Directors and example need to be announced in the next strategic plan.
We have another possibility for diversification. So thank you everybody again for being with US today and thanks for your call again.
Okay.
Thank you have now and the second one the second question Tom Thank you Sue.
The company recently confirmed that Baskin continues to be.
And then put in the company consider going in a different direction and buying the novartis stake to take food go onto raskin and expands in petrochemicals.
Thank you. Thank you Frank for the question.
Yes, you are right. The company continues to have breast cancer is one of its divestment assets.
We don't think it's the best for the company to have a financial interest in.
Any company, even though we think that there is.
There are good prospects for the petrochemicals segment, but not.
Via financial interest.
Petrochemical company. So we continue to be committed to the.
The divestment.
At the moment, we do not consider taking control of breast skin or any kind of M&A transaction that increases our share.
Uh huh.
Nebraskan. So this is what we have now we continue to be looking for potential M&A opportunities to divest from the from the interest that we have thank.
Thank you for the question.
Thank you for video.
The next question comes from.
Mr. Huang with UBS Lee centers, the message that I would like to eat.
We'd like to start my congratulating the companies is that kids and teens.
The outstanding results and continue executing our companys spin, while maintaining a healthy copy govs net was improved in recent years.
The first question from Elyse is just now I do not I also welcome Mr. Alex called Aman.
About the new pricing guidelines.
Pricing guideline is clear in the focus given to value creation for nickel looks better organized provides more details how it expects.
Late into pricing decisions could you also provide more color on the role of the board supervising the policy.
Thanks for question Louise basically we are putting a new layer in our goldblum. This as part of our continuous improvement process.
Yes.
As part of the natural responsibility of the board of directors.
Good morning tour and supervised.
Houston.
All the strategies in all the company policies.
Now formalizing this new guideline too.
Sure.
The board's responsibility.
Sure.
Supervision.
The management.
Observing.
<unk> is executing their pricing policy.
So basically.
<unk>.
Good morning touring and oversight responsibility.
No changes at all in the execution how to conduct their.
Their pricing policies.
Yes.
It's still under the.
Our priority of the Executive Committee.
And also it is important to mention that by keeping this.
Two layers of responsibility increase our governors.
With a more robust transparency transparency and more balanced.
Process, so our expectation and our visibility.
With this new guideline is just to ensure the roles and responsibilities.
For the board the specialty specifically, maintaining the competence for the executive directors to execute.
Pricing policy.
Thank you.
Really really well.
So it's really just too really.
Really.
Policies of the company's bylaws.
Absolutely must be changed.
So we're working.
That's true.
Thank you Fernando Thank you Mr. Allen the second question for Luis is to a stellar as well.
It's about supply imports prices in markets.
Thinking specifically of diesel several agents in the industry has become more vocal on challenged to find these new volumes in the international market.
And then on favorable scenarios for <unk>.
How is the company seeing the supply in how our preparations for an eventual challenge in supply in the country.
Thank you. Thank you for the call my question.
No.
It's to work with some caution.
For the coming months.
Particularly.
With respect to diesel.
It really just too early.
The seasonal increase will demand in the second half of the year.
The availability of progression with refined products.
Thanks to the whole market.
In addition to scheduled maintenance shutdowns.
One is in Brazil.
Yes.
Eventually some availability of refineries in the United States.
Caribbean.
The hurricane season.
From June to Mohan.
Alright.
Constantly evolving market opportunities.
<unk>.
Yes.
Really at the moment at least facing difficulties Macquarie cargos.
The traditional suppliers in Asia.
Our USA where are we.
Hum.
We already do business on a regular base.
We are.
All the time is concerned.
And really ensuring that our customers are well supplied before.
Oh into account we reviewed.
Inventory levels for the second half of the year anticipated some diesel prices. So we will provide the best service levels possible for them.
This scenario.
Okay.
Presence of our trainers.
International offices allows us to monitor the slow oil products.
Of course inventories Rachel demands.
Other agents.
Yes.
That allow us to position ourselves.
And competitive.
Position.
Okay.
Thank you.
Thank you Mr. Allen. The next question comes from Christian Audi with Santander.
He also Santos Ahmed says I'm going to read now I would like to congratulate on the very strong operational results and the ability of the company to continue to positively surprise shareholders on the dividend front.
First question is to do.
Astellas is also a welcome to complement.
The pricing policy front, although the new guidelines keep the decision.
Of making price changes.
Management, how does the company manifest from having the board of directors formally overseeing the process on a quarterly basis.
Thanks Christian.
As I mentioned by having this new layer in our golf business.
Putting this supervisory responsibility under the board.
Of directors.
Yeah.
The executive management should report on a quarterly basis.
Now.
We are performing.
And giving full visibility to the.
The board on our results.
Hum.
At the same time, we expect.
As I mentioned before this will strengthen our golf women's by offering more robustness and visibility and transparency.
We are now.
We're great actions.
The guidelines also emphasize that.
Yes.
<unk> committed.
It is too cheap and preserve the value generation of the company.
And.
Keep the competitive prices.
In the local market.
And.
The rhythm of putting this policy as I mentioned before is basically to continue improving our Gulf.
Govs, our internal mechanisms of controls.
And basically this is another step towards this direction.
Thank you.
I think some of you have made it very clear.
Thank you Pablo the second question.
Pension is to bring in other boxes and also to <unk>.
Question, how is inflation impacting operations, what are you doing and what can be done to minimize its impact.
Yes, Jim.
The Brazilian industry costs is not immediately reflect our marine facilities.
As we have several different contracts with.
With different durations, which allow us to move the effect.
<unk> seen contract will vary overtime.
Some of our current contract had annual.
Readjustment clause.
We define indicator such as PPI.
In the U S.
<unk> in Brazil.
We continue to make good change.
And seek the best opportunities and contract <unk>, managing counteract theorems and partisans avoiding permanent impact.
<unk> increased it costs.
Full.
As natural gas.
Price of Brent remains.
At high levels, new contracts will face some impact of inflation, although these impact tends to be partially diluted.
Pardon me a reasonable read mentioned.
Thank you.
Okay.
All of the downstream perspective, we have called trucks index to inflation rates, especially in the gas transmission construct.
To minimize these impacts risks stands for future renewals or new contracts are maybe considering different tinnitus company has free.
Scenarios that they use.
In addition to the close of revenues contracts. We link two factors that are also in line with inflation rates such as the exchange rate. So its a kind of a hedge position for the banks in the supply contracts, especially for the gas transmission contracts.
<unk>.
Thank you Fernando Thank you.
<unk>.
The next question comes from lunar month on <unk> with Morgan Stanley and its fast I'll handle master alloys also welcome to complement.
It's about a few pricing guidelines can you clarify what the supervision of the board of directors.
After the executive officers deciding to move price up or down is there any veto power from the board.
Thanks Bruno.
Mention and this is important to highlight and emphasize there is no.
<unk> power or conflict in terms of operators and responsibility right.
Policy.
The pricing policy the execution of the pricing policy.
Under the.
The Executive Committee.
And the Executive Committee is responsible to execute.
To report the results.
To the board of Directors, which is the instance, responsible to supervise and monitor.
And by the way that's.
That's the reason why we.
Dave full disclosure to the guideline is fully available in our website because you wanted to check Barry.
Clear.
Conditions around the roles and responsibilities with this through different layers as I already mentioned, thank you very much.
Thank you for joining us.
Alright.
At this time I would like to.
Just you.
Guidelines as a matter of fact is some broader and comprehensive recommendations.
Uh huh.
Directive.
Executive Committee.
Yes.
Pursuing better results for the company.
And making it clear that Bobby.
Whenever the context whenever the evolution of the market can be involved with it that's great.
Thank you. Thank you Mr. Allen.
The next question comes from Bruno <unk> with Goldman Sachs in one last one.
The best International Manny Marc for gasoline.
Gasoline Brian .
Comparing that to the rest priced Gulf coast gasoline might be easily be leaving the difference in quality.
Thank you thank you Robin.
Her question is pretty interesting and this is a very common misconception comparing.
S growth gasoline prices directly to Brazilian prices.
Gasoline in Brazil.
As a matter of fact, my mandate is a mixture of 27% of the hydrous ethanol and <unk>.
62% of parcel gasoline.
Which we call gasoline in Brazil.
Brazilian gasoline because when I see the different quality relation tuition.
With farmers really.
Octane numbers.
Due to the blades well here in Brazil.
So it does actually.
Lower liquidity, making it difficult to evaluate and publish these prices.
And prices of dispositions.
Brazil.
But.
Specialized media.
For example specific applications, where prices already for prices for gasoline he delivered to Brazilian ports.
One of these publications is available.
Available weekly empty A&P National Petroleum agency for Brazil.
Alright.
The proxies of price parity in Brazil they.
They do not necessarily Mitch.
Petrobras view of.
Competitive prices, but they're close so that's virtual visits are a good group.
Uh huh.
Estimates of the import parity for Brazil of course, each player in the market will have their own view of competitive prices.
I'm not sure.
A&P published prices is a very good proxy. Thank you.
Thank you Mr. Allen. The next question also from loan is for you as well.
The company has to comply with import parity on average during the calendar year right.
So who is responsible for these various vacation when does it happen in the samba.
Or as you release in the fourth quarter results.
Thank you. Thank you again.
There is another.
Collyn dumped.
There is another effect that we pursue.
Competitive prices all the time.
And really it's a very important tool to have.
Continuously monitored markets.
And we are continually pursuing.
Compared to prices, but taking care not to.
Yeah.
Translate the international volatility to the domestic market.
There's some.
Learning curve that we.
During the last years.
Well.
Sure.
Net.
Daily complication when all of this is.
All the time.
Right.
At the end of the year when you also compare.
We did average of the prices and matter of fact, as we have a plan we have to have an estimate.
Firsthand.
Off the alignment of prices in Brazil, We had international markets and that's of course, the comparison that it goes.
When you do clean business planning for it for the year.
Of course.
At the end of the year.
Henry.
Mark.
We show the evolution in pricing.
Okay.
So the board of directors.
OE to show that we are effectively.
After this topic.
No we don't wait for the end of the year to online purchases, we do that all the time.
Thank you Mr. Allen.
The next question comes from Noah <unk> with Jpmorgan.
Good question.
Utilization rate in the downstream segment was 89% in the second quarter at one point its organization was as high as 97% with Petrobras has scheduled maintenance for the third quarter. So what should we expect in terms of utilization in the third and fourth quarters.
Therefore, we should expect.
Hi.
Utilization rates for example in on July one.
<unk> expect to close around 94%.
For example, yesterday, we are almost reached 99% of utilization rate.
And if we could see there.
If we see all the second semester, if we consider.
The refiners that we don't have a stoppage.
Probably we are operating at around 94%, but if we consider the refineries that we will have.
Stoppage.
We are around eight 6% on the second semester.
Thank you Heidi.
Next question also from the Doe.
So really what I wasn't pleasant evening, Mrs. Jones day Alto observed in the first half of 2022 could be maintained for the second half as well.
Thank you. Thank you for the Florida question for Alan.
In terms of the of the framework that we use to decide on dividends.
As I've mentioned before of course, our main focus is true for <unk>.
Make sure that we're able to comply with the dividend policy over the next 12 to 24 months or so to continue to be paying quarterly to 60% of free cash flow. So that is the main target and whenever we see in liquidity.
In this quarter that we have additional inflow step so.
Board fan extraordinary dividends.
We will do it and we will try to bring the cash balances close to $8 billion to $10 billion that is the optimal level of cash for us.
So in terms of payouts for the second half of the year of course, it depends on several variables such as pricing levels over time.
Eventually inflows coming from from Divestments or for example, the corporate special agreement for Booz Yours.
So we will monitor this over the course of the second half.
But of course looking at the.
At current price levels are there of course supportive of a higher dividend payments.
But we will factor all of that into into potential payments in the second half. Thank you for your question.
Thank you. The next question comes from bandwidth lineage.
That is a backdrop.
He also census, the message good afternoon to all once again very good to see the company as a result evolving that well and so many different aspects.
Our biggest those questions to her debut quash them and it's about refinery utilization rate.
We saw the refining park utilization rate, reaching 97% in June and the same time, there are some expected maintenance stoppage for <unk>.
Yeah.
Could you talk about what's the levels I'm Dennis idle is expected for the second bench.
And if there is a possibility of any postponement of this maintenance.
If so it will.
Be interested to hear about the market conditions that you see as a tier one bench.
Pivotal is.
Yes.
I told we will expect high utilization rates on the second line.
Semester.
Specially due to diesel market conditions.
Expect between August and the end of <unk>.
September hi.
Volumes of diesel on Brazil market.
And.
We are capturing this opportunity that's important have been mined that our utilization rates.
Of our refineries has two main pillars. The first one is the safe conditions of our operations and the second one is the market conditions and the economic crossings of our utilities.
So.
We analyze from possibilities about postpone some stoppage and at this moment, we decided postpone.
<unk> on have op moved from November till the first quarter of 2023.
This stoppage Culver.
Replacing catalyst in hydro treat many units.
Thank you. The second question from bedroom is to sit in on the launch.
Yeah.
And the last two months, we have seen some important maintenance stoppage impacting the companys production. We note that the guidance remains unchanged for the year, but if you can give a little more color on how you see the evolution of production in the second half of the year Nishu understand.
Upside for annual production to be closer to the top of the guidance.
Yeah first of all yes.
I would like to highlight that we operate.
Sixth production producing platforms.
Our total operated production is good.
Good day 3.6 million.
Joey Birdie.
So it's a lot of.
Work to be done.
Considering the stoppage of our Montana is the <unk>.
First half of the year, we had 22 stops we have fun average production loss around <unk>.
200000 barrels per day and for this second half of the year, we expect to have.
28.
Stoppage for maintenance.
Mt level off production losses around Johan 200.
200000 barrels per day.
Joey.
Oh, Oh, Oh, yeah kiva than most.
Considering the opportunities for ups.
Sides in production.
We have two important ramp ups.
The first one is we affect visceral <unk>.
We expect to reach the maximum production of the Union 180000 barrels per day today, we are wrong, one 150 <unk>.
E. We have true Def visceral guanabara net with you, which we expect to.
To reach the maximum capacity of the unit.
At the end of this year.
Today, we are producing a wrong.
60000 barrel per day at the end of the OA, we hope to have 180000 barrels per day.
And when we look to complement samples of base, we have planted more than wells.
Which four of them is one color too so.
We are stick to our forecast of 2.6.
Early in this year with a range of.
More or less 4%.
We are targeting descent thereof is interval.
Thank you.
Thank you Dan.
And it also has another question in queue is only.
It's about the Sps along with entry models that DSO has already last machine PRN, China. It seems that the remains on time is there any expectation of improvements are possible and station of the first of all you off this platform.
Thank you for the question field.
Yes, it's fluid.
Informative that the American public.
See the oil shipyard in July .
And we.
In the first oil for 2019.
These units are heavy.
Hi, this is.
On the wells to the platforms and you'll have the only PCI quarter.
Low abuse.
Excellent.
And the detour wants it to be.
Be assured that you wanted to the NPD PCI quantities are.
We can sing dates and we understand that.
To anticipate do we need to do at the timeframe that we set for both concepts.
Thank you.
Thank you Julie.
Next question is from hedges cannibalism with credit Suisse.
Is your sense is the message that I'm going to eat.
Graduations to all management team and the company for the extraordinary results. They are in fact memorable.
First question is to continue question and its amount impact from LNG imports.
Prices are still very high international markets. After the reduction evening parts don't believe what's expected of a nice current needs in terms of LNG imports how does the company see that evolving going forward.
Hi has.
Whenever we see the <unk> market, where you see better conditions in our water reservoirs.
Actually the current level at around 6% to 8% better than last year.
And these things back to our.
Needs on a board LNG cargoes.
Why don't we see the outlook for this year, we are working with.
Around 30 cargoes import two hour.
Operations.
This is a very.
Victories number if we consider the scenario that we had on 2021 that it's around 112 Carlos.
We.
When do we see the second semester for the third quarter, we can.
We can have iron increasing dispatch, but it's.
T O.
Until today with the information that we have.
We don't see a high dispatch on this first quarter, but we have a lot of uncertainty on the fourth quarter. So the best information that we have until today.
Cause to this outlook around 40 cargoes this year.
Thank you Rodrigo.
Second question is too thin on the biases.
What are your expectations around timing for closing the 5% stake purchase option transaction exercise by Smokey English.
Okay.
Consortia work it will the initial expectation for our July 1st Bob We're still way jewelry and UPN.
Hey, Manny.
For their approval so they know the expectation or the conclusion of this process is between August and September .
Thank you.
Thank you Fernando now we have questions from the thank you for a long ago, we've basically been key centers the message congratulations on the SaaS delivery in the maintenance of governance policies.
Thanks first question was too much gallium milestone how is the gasoline parity today asking the two price cuts were announced what is the management's view Fargo crack spreads looking ahead.
Thank you thank you <unk>.
Well.
The recent reduction in gasoline prices, just followed a review of the international market evolution, which has stabilized at a lower level for gasoline.
It's happening.
Awesome and it's consistent with Petrobras practicing.
Our pricing, which seeks to have prices.
Balanced with market, while providing fashion on the volatility caused by.
Local events.
The cracks.
<unk> in our view should remain strong.
As long as gold Ryan.
So for your <unk>.
The ongoing geopolitical conflict.
Tanker supply demand balances.
Let's see let's see.
Really when.
When you're talking about queso.
However, higher inflation expectations and his children monetary policies by domain Central banks may raise recession concerns easing demand and consequently.
Consequently, irrigated pressure thanks.
We.
I hope so.
Not a lot.
Translated into practice.
Okay. Thank you.
Thank you Mr. Allen.
The next question comes from <unk>, Bajo, we ceded and its 401.
But even considering the latest material fact, and the recent news about our quietest divestment could you give us an update for the next steps regarding the sale of the assets is there a possibility of trading the assets, leaving falling out or even changing hospital or announce.
Thank you everybody else for your question.
First of all the as we announced recently this week.
The SaaS is still under the assets to under negotiation.
We didn't have any any any further updates to give.
But with respect to the potential.
Potentials spinoff or carve out of the of the formal part of the asset as you guys know if we change the scope from the original teaser we do need to restart the process. So.
The straightforward answer is no I mean, we're not going to restart everything.
It's been a part of the part of the of the asset.
Well of course in terms of a potential earn outs or potential price discussions are now it's can be and in and are being discussed with respect to the future prospects of the assets, but carving out and changing the scope needs to triggers nature. We started a process so that start.
Our plans for now thank you for the questions.
Thank you. The next question also from Gavin.
That was for you and it's regarding the commitment, Wisconsin. So regarding the commitment that we finally signed by the company to Carryout divestments of downstream assets.
Is there any penalty in a scenario in which the company is not successful in say off these assets.
That possibility of extending the deadline to combine with the times is so does the extension has a limit.
Thank you everybody else for the question.
So first of all out of the eight refineries that the company agreed to divest four of them have been already signed so how long has been signed and closed we have him on will be an odd and sixth in six.
<unk> already signed but not closed so working on.
Closing them as fast as we can we expect to be to be able to close them.
During the trial throughout the year.
But with respect to the agreement with <unk>.
We don't have any any penalties as long as the company.
It shows that it's making the best efforts and making everything that is possible to make the transactions occur.
So the trustee that monitors the agreement is continually monitoring the company with respect to the steps that it takes for an example for example, the relaunch of the process that we've done recently.
As part of the of the agreement in terms of the next steps.
There is a penalty there is not a material penalty, but is only in the case in which the company cannot.
That its done its best efforts and eventually in the case that there's no buyer or just don't price agreement, there's no penalty associated as long as the company can show that it's done everything that he could shoot which make the transactions occur. Thank you.
Thank you for doing that there's one more question also for you I E.
Could you give us more information about the startup process of Sps No long lead antibody, who is watching the expected date for SBS Mills first Ohio, how can we expect the platform to ramp up.
Yes. Thank you for the question on <unk>.
We don't have a whole sidoli Franco school on delay.
We expect the first oil in the first half of.
To enter 2003.
Good.
Projections for the hump.
Bruce you want to have.
Hi.
Oh wait.
<unk> will have design the wells too.
To absorb this book.
Potential of the <unk>.
And so we understand that you have.
Good chance to have the peak of the Brazil unit.
They have four wells will it be a fifth.
Yeah.
Our expectation for this unit.
Thank you. The next question comes from.
Now with Seaspan.
Anthem message congratulations on a wonderful results in the creation of another pillar to strengthen corporate governance, which was established with the pricing guideline.
And the rest of his question as to who they are where you.
Excluding the signing bonus capex.
Excluding the signing bonus capex in the first half of the year was $4 million the business plans foresaw a capex of $11 million and this is with more on depreciated exchange range.
In addition to cost inflation in the period should capex at the end of the year be lower than previously forecast ECS right.
Thank you. Thank you Andre for the question I have for the message if we adjust to.
The forecast for the business plan for the setting up for bidding round. It will go down it will go up to around $11 $9 billion in expected capex for the year. Our most recent outlook is 11. So that's what we expect to perform throughout the year.
Of course as you guys know the second half of the year its usually.
There's usually a ramp up in terms of capex in the second half so that's.
That's what we expect you to performing on our most recent outlook. Thank you.
Thank you Denise.
Next question also from Dan.
And on the losses.
Once you expectation regarding the lifting costs for both pre salt and post salt in the third quarter should we expect further cost increases.
Yeah.
We expect our lifting cost in the range of $6 per barrel during the coming months.
Petrobras production.
In the pre salt well.
You'll see our lifting cost in the range of three to $4 per barrel.
And in the Bowl Salt, we should have something around 10 to $12 per barrel in the coming months, but it's very important to stress that the total production costs considering other expenses such as governed.
<unk> and depreciation.
We are being the range of $42 per barrel, that's the real cost.
Thank you.
Thank you Sir the next question comes from when you can get equal is that over there.
When you consensus the messages well I'm going to need it.
Congratulations on the result, the team's capacity from generating results.
Is impressive.
When you guys first question is too high.
How is the status of the divestments and the refiners I'm a quota and also made Dan.
Thank you. Thank you. Thank you for the question and for the masses, So with respect to the refineries in number quarter I just answered that.
Question.
So I'm going to focus on buy up there huh.
What we had in buyout that we had to stop the process for legal injunction from one of the potential bidders.
It is a competitive process, we have very good prospects, we have other anchor ship bidders on the on the process.
I think we can we can sign it very fast as soon as.
We removed the legal barriers that have been imposed on it it's not related to the to the to the company orchard asset or anything like that it was an injunction that was.
<unk> upheld by it but by a judge in favor of one of the one of the potential bidders are we expect to be able to revert it so on and right.
Right after continue with the with the signing and closing of the transaction.
That's where we are now thank you.
Thank you. The next question also from lithium is 200 in Boston and also seen otherwise.
What's the schedule of maintenance stoppage for refineries in the second half of the year in how could this eventually impact production and how about the stoppage platforms is there a plan for livestock year.
Well. Thank you for the refiner is where it's tougher to on our block on the distillation and Coke unit.
Ah the August and September .
That will take around 43 days.
The other subsidies on the <unk> on the hydro treat many year and I'd say.
Between August and September are all 28 days.
The next stop it is on a GAAP.
It's all the Hydra treatment units also and I will take 35 days between August and September and Hep bar will have.
Works on the distillation and hydro treatment units and I will take.
Okay.
31 days on September and.
43 days on October and November .
And all these stoppage willowy backed on diesel around 42000 barrels per day on a gasoline 20000 barrels per day. That's all are.
Estimation on these impacts.
Okay.
Well.
Considering the platforms.
We have a total of six production platforms.
For this year, we have blended 50 stoppage.
Our main Dennis purpose.
In this case of this year, we have some of them that were postponed by pandemic reasons.
And the impact into production.
Were incorporated in our.
<unk> seen our predictions so we hope to reach the target of 2.6.
No.
Of VOA per day this year. Thank.
Thank you.
Thank you for that he would think we found him when he has another question inquires on heekin How's the planned capex for this year being carried out in how we owe this estimate to be impacted by digitally in the house three project, especially I forgot that bridge.
And when he can.
If you sort of did you hear me alright.
<unk>.
40% of the total Capex plan for 2002 into June .
We expect <unk>.
Greece of Capex in the second half.
And when you compare to the first half.
Some milestone of the new units that you are building.
A lot of.
The wells.
Gordon.
It wouldn't be as well.
Spine.
We have vehicle national activities.
Well go next one that we.
Yes.
Our performance in the second half of the year.
On the.
Route agreed.
The impact and the Capex of this project is less than 1% of the total capex.
Petrobras.
Andy.
Yeah.
Not irrelevant for the total amount that we intended to expand.
For the rest of the year.
Thank you. So I'll hit your last question comes from Wuhan to Magna with thoughts with them.
And it's rather difficult question.
With regards to the local gas distribution companies that had injunctions to suspend the price increase has there been a new development is there any discussion leaned down directly with them.
However, we had progress on the second quarter.
We are on the table with four.
Distribution companies that has.
These legal situation.
Around our contracts.
We expect close on the fourth quarter.
Okay.
Thank you for video games.
Thank you all and this time the Q&A session is over and if you have any further questions. You can send this to our investor relations team.
We will now make his final league marks please could you go ahead.
Thank you Carlos Thanks, everyone for being us for being here with US today. This morning.
We're very glad with the solid operational results and of course with the translation of those results into solid financial results for the company and the second part of the year.
Thank you for your time and for the questions.
Please look at our results and our.
<unk> releases in the companies.
IR website, we have also released alongside with the earnings release, our financial statements and our tax report for the second part of 2020 true. Thank you for your time and thank you for being with US we're very happy with the results of our second quarter. Thank you.