Q2 2022 Petroleo Brasileiro SA Petrobras Earnings Call
Next please.
So with respect to safety as you guys know we will have safety is a very strong value for the company and were very.
Turned about improving.
Our overall safety in our metrics and we're glad that we can see the trajectory of the total recordable injuries over time, and especially that we have been able to maintain a level that is below our acceptable limit of seven so it reached 50 chew in the second quarter of 'twenty two.
Of course, our ambition is to have zero fatalities in our main concern is to make sure that we can achieve that ambition and unfortunately, we had three fatalities.
During 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.
Thinking about our ESG.
Agenda.
Second quarter.
We highlight the delivery 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 <unk>.
Carbon better us is investing to meet him. He is in the five year time frame to support that initiative.
I 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 fund 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 car.
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.
Both of them below 10 kilos of <unk> two per barrel of oil equivalent which is about half the industry average. So we reinforce our positioning as a low carbon low cost a company and the results of our operations are continually.
Back in August .
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 emissions.
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 into a 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 in the 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 in the program offshore and award and we continued to deliver solid results in that sense in the.
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 <unk>, we have 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 sorry thanks.
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.
S. G kpis, so mainly focused on.
Greenhouse gas intensity in the upstream and downstream segment as well as maintain intensity.
So it's from our perspective, we think that is a very solid step 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.
Reinforced their commitment internally as well with our workforce next please.
In terms of governance, we have.
<unk> focused on.
Aldo meeting 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 for the company's pricing strategy, we think.
That is very important that staff to make public.
Our pricing guideline document that reinforces the company's commitment to.
Practicing market prices and being a market price player 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 for our contribution.
We paid.
$777 3 billion in taxes over the second quarter.
More than half of all of our cash generation is returned to the Brazilian society. So we're very glad.
With the results and with the fact that the company has a substantial contributor to the <unk>.
In Society next please.
Next.
Enter into our financial results.
We have had a very solid quarter not only in the upstream segment, but also in the downstream segment, we broke monthly records and what was yours.
We topped up the production of P 68.
We had the production started at the Fps or went about AR and the savings you'll Brazil off on <unk> as well we had important results confirming the productivity of the outage a couple for you since it all area.
Area in our exploration segment are very happy with the prospects of that area.
We also had the beginning of the production sharing contract for Wattup when 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.
Contract as well so we're being 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 of 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.
Our 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%.
Uh huh.
<unk> ratio for the planning that versus what we produced over time and does this.
<unk> ratio was 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 results 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.
We had $20 billion of recurring EBITDA in quarter.
$14 5 billion operating cash flow or free cash flow of $12 $8 million.
Our.
Gross debt has reduced.
Reduced to $53 $6 billion, our net income.
Slide <unk>.
Typo there are many more.
Billions of dollars and acquire.
So basically looking at the solid financial results and the company's financials 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 for the <unk>.
Next 12 to 24 months.
This payment is compatible with we expect in terms of future scenarios compatible with maintaining the application of the.
Dividend policy for the next 24 months, so we're very comfortable with.
The dividends that were approved.
Our net debt to EBITDA is one <unk>.
Six time, very solid and very consistent and as I mentioned before we paid $77 3 billion in Texas, $77 3 billion highs in Texas and a farm next please.
With respect to the external environment.
We saw higher Brent prices and period and an appreciation of the of the present and how.
For the average of the quarter.
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.
Okay.
So.
So back 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 there has to be done for $23 24 as already.
Concluded. So we expect five units to come online in 2023, and three units should come on line in 'twenty four.
So 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 are.
Secure all the contracting.
We have the projects coming online on time.
More than 90% of the of the VAT.
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 and acquire.
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 industry planning also.
Supported has delivered solid results, even if we even when we look at.
Replacement cost I was a very solid quarter for the refining segment as well.
And Florida natural gas at the 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.
We've been 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 million EBITDA of $14 five.
<unk> operating cash flow 2 billion $1 $7 billion Capex, we have divestments.
And Nicole participation agreement after the ball fields.
Resulting in the $19 $6 billion free cash flow after.
Divestments.
Basically used to maintain our leverage.
Within the optimal range and also paid dividends over to acquire so the cash balance.
It Hasnt changed substantially from Q1 through 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.
Coming online in '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.
We expect that trajectory to bring it back upwards.
Of course.
Part of this was because of the conditions of the capital markets.
We have we have favorable.
Open market repurchase and tender offer conditions in the market. So we've done a lot of repurchases.
And.
I haven't had.
Uh huh.
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.
In terms 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 quarter.
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 debt.
Debt maturity in the 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.
<unk> generation, so it's very comp.
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 three.
<unk> three $6 billion of 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've.
The portfolio management strategy of the company and deliver on the business plan next please.
Yes.
So all of this translated into net income of $11 million for acquire.
As I mentioned.
The one off is the negative impact of the devaluation of the Brazilian how appeared and it impacted negatively and that 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 divestments or for example, the Bulls used.
Participation in a cooperative agreement and it allows us to propose extraordinary dividends of course whenever we propose extraordinary dividends with taking into account 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 company and doesn't jeopardize.
Delivering on the dividend policy in the future. So that was all that was.
Last slide.
Again, very solid quarter very happy with the results.
I'll pass the floor back to you Carlo So 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.
I would not be a good idea for the company to consider increasing exposure to renewables or invest in some technologies that enable the company to start to have more exposure to business that could prosper 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 left standing managed strategy with oil and gas projects with positive NPV value under very low prices at $35 per barrel characterized by low carbon high energy assumptions, we operate with efficient north project in la.
Low greenhouse gas emissions, so very low I would say comparing to other folks who will kind of peak so we keep to our strategy.
Out of four so yes, we have some actions.
For example, in Florida, we are going to invest more than $20 million in the next year, including the project debt.
We were presented with the NDA and also we are discussing.
The possibility of new business non fossil alternative to be appraised by newborn and by directors and example need to be announced in the next strategic plan.
I agree with you we have another possibility for diversification. So thank you everybody again for being with US today and thanks for your call again.
Okay. Thank.
Thank you have now in the second.
Second question, Tom Thank you Sue.
The company recently confirmed Raskin continues to meet its divestment puts funding.
The company considered going in a different direction by the Novartis takes to take full control of raskin and expand in petrochemicals.
Thank you. Thank you Frank for the question.
Yes, you're 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 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 brascan or any kind of M&A transaction that increases our share.
Uh huh.
Nebraskan. So this is what we have now we continue to should we 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.
<unk> with UBS Lee centers, the message that I would like to.
We'd like to start my congratulating the companies is that kids and teens.
Outstanding results.
Are you guilty of companies.
While maintaining a healthy corporate governance next was improved in recent years.
The first question is just how long do I also welcome nasty armor to complement.
The new pricing guidelines.
Rising guideline is clear in the focus given to value creation for nickel looks better organized provides more detail.
It.
Needs to translate 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 governor this as part of our continuous improvement process.
<unk>.
Understand that part.
All of the natural responsibility of the board of directors is to monitor and supervise.
Thank you Sharon.
All the strategies in all the company policies.
We are now formalizing theres no guideline to confirm the board's responsibility.
Sure.
Supervision.
The management is.
Observing.
Executing the pricing Paul so basically.
Sure.
Touring and oversight responsibility.
No changes at all in the execution how to conduct their pricing policies.
There.
It's still under the.
On top of.
Executive Committee.
And also it is important to mention that by keeping this too.
Two layers of responsibility increased our governors.
More robust transparency.
Patterns and more balanced.
Hmm process, so our expectation and our visibility.
With this new guideline is just to ensure.
Roles and responsibilities.
The board, especially specifically maintaining the competence for the executive directors to execute the price impulse.
Sure.
Really really well.
So it's really just too.
Really.
Policies in the company bylaws.
Absolutely not be changed.
We're still working.
Sure.
Thank you Fernando Thank you Mr. Allen the second question for me is to my stellar as well it's.
It's about supply imports prices in markets.
Im thinking specifically of diesel several agents in the industry has become more vocal on challenged to find decent 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.
We are working with some caution.
The coming months.
Particularly.
With respect to diesel.
Mainly due to.
Seasonal increase overall demand in the second half of the year renewal.
Availability of progression of refined products.
The whole market.
Uh huh.
<unk> two scheduled maintenance shutdowns at Groupon.
It is in Brazil.
And <unk>.
Eventually some unavailability of refineries.
Owners in the United States.
Guardian.
The hurricane season.
From June to November .
But we are constantly evolving market opportunities.
We are not really at the moment at least facing difficulties Macquarie cargoes.
From the traditional suppliers in Asia.
Our USA.
<unk>.
We already do business on a regular basis.
We are.
All the time consumed.
And ensuring that our customers are well supplied before.
Thank you.
Oh into account we reviewed.
Inventory levels.
Second half of the year and anticipated some diesel purchases. So we will provide the best service levels possible for them.
In this scenario.
Okay.
The presence of our trainers.
Our international offices allows us to monitor the slow.
Oil products.
Of course inventories range will demand and.
Other agents movements.
That allow us to position ourselves.
Hum.
Position.
That's it.
Thank you.
Sure.
Thank you Mr. Allen. The next question comes from Christian Audi Santander.
He also Santos Ahmed says I'm going to read I.
I would like to congratulate 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 welcome to complement.
On the pricing policy fault.
The new guidelines to keep the decision.
Of making price changes in the hands of 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 governance.
Putting this supervisory responsibility under the board.
Of directors.
Basically.
<unk>.
The executive management should report on a quarterly basis.
How.
We are performing.
Sure.
<unk>.
And giving full visibility.
To the board on on our results.
Uh huh.
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.
And our rate actions.
The guidelines also emphasize that.
Executive Committee.
Judy is too steep and preserve the value generation of the company.
Keep the competitive prices in the law.
Local market.
And.
The rhythm of putting this policy as I mentioned before is basically to continue improving our.
Govs, our internal mechanisms of controls.
And basically this is another step towards this direction.
Thank you.
Thanks Ryan.
Some of them have made it very clear.
Thank you Pablo the second question.
Pension is to fill in on the boxes and also to <unk> question.
Inflation impacting operations, what are you doing and what can be done to minimize its impact.
Uhm.
The Brazilian industry costs is not immediately reflect our marine facilities.
As we have several different contracts.
With different durations, which allow us to move the effects.
<unk> changed the contract will vary overtime.
Some of our current contract had annual.
Re adjustment clause.
Redefined indicators such as PPI.
In the U S.
<unk> in Brazil.
We continue to negotiate.
And seek the best opportunities and contract <unk>, managing director and Carlos avoiding permanent impact.
<unk> increased it costs.
Got it.
As natural gas.
Price of Brent remains.
At high levels, new contracts will face some impact of inflation, although busy back tends to be partially diluted.
Bartlet Rezoning Reade mentioned.
Thank you.
Okay.
The downstream perspective, we have called trucks index to inflation rates, especially in the gas transmission contracts.
To minimize these impacts risk stands for future renewals or new contracts are maybe considering different tinnitus company has free.
Scenarios that they use.
And in addition to the close of revenues contracts. We link two factors that are also in line with inflation rates such as the exchange rates. So it's a kind of a hedge position for the effects in the supply contracts, especially for the gas transmission contracts.
<unk>.
Thank you Fernando Thank you.
<unk>.
The next question comes from Bruno Montanari with Morgan Stanley and its first I wanted to 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 officer 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 then.
There is no.
<unk> power or conflict in terms of our toy and responsibility right the policy.
The pricing policy the execution of the pricing policy.
Under the.
Decorative committed authority.
The Executive Committee is responsible to execute.
And to report the results.
The board of directors, which is the instance, responsible to supervise and money for.
And by the way that's the reason why we.
Dave full disclosure to the guideline will be available on our website, if you want to check Barry.
Clear.
Conditions on our own.
<unk>.
<unk> responsibility with this through different layers as I already mentioned, thank you very much.
Thank you for joining us.
I'm sorry [laughter].
Thank you.
So go ahead Jeff.
Hi, there.
Your guidelines.
And then I think he has some broader and comprehensive recommendations.
Sure.
Direct.
The Executive Committee.
Pursuing better results for the company.
And making it clear that.
Policies whenever the context whenever the evolution of the market can be involved with that that's very important.
Thank you. Thank you Mr. Allen.
Next question comes from Bruno <unk> with Goldman Sachs in one less down than what's in the best International match Mark for petrol gasoline Brian .
Comparing that to the right price.
Coast gasoline might be easily be leaving the difference in quantity.
Thank you thank you Robin.
Your question is pretty interesting. This is a very common misconception comparing.
Go gasoline prices directly to original guidance.
Gasoline in Brazil.
As a matter of fact, my mandate is a mixture of 27% of the hydrous ethanol.
62% of wholesale gasoline.
Recall gasoline in Brazil.
Brazil, and gasoline because over 90 different quality relation tourists in apparel.
Ms Thomas Neely.
Octane numbers.
Due to the brains with ethanol in Brazil.
No.
Those actuals.
Lower liquidity, making it difficult to avoid and publish these prices.
And prices of these transactions.
Brazil, but.
Specialized media.
For example specific obligations with prices already.
Gasoline the delivery to the Brazilian ports.
One of these publications is.
Available weekly ANP national petrol agents for Brazil.
Alright.
The proxies of price parity in Brazil.
They do not necessarily Mitch.
Petrobras view of.
Competitive prices, but they're close so that's virtual visits are good good.
Estimates of the import parity for visible of course, each player in the market will have their own view of competitive prices.
That's not true.
The A&P published prices.
Very good proxy thank you.
Thank you Mr. Allen. The next question also from loan is for you as well.
Company has to comply with import parity on average during the calendar year right.
So who is responsible for engines verification when does it happen in the samba.
Sure as you release in the fourth quarter results.
Thank you. Thank you again.
There is another.
Got it.
It was another effect we pursue.
Competitive prices all the time.
And it's very important to highlight that we.
Continuously monitored markets.
And we are continually pursuing and competitive prices, but taking care not to.
Translate the international volatility to the domestic market.
There's some.
Learning curve that we have.
During the last years.
Well.
Morris.
Net.
Daily complication, you'll notice.
Is all the time, but at.
At the end of the year when you also compare.
We did average off of the pricing as a matter of fact.
As we have a plan we have to have an estimate.
Firsthand.
The alignment of prices in Brazil, with international markets and that's of course, the comparison that goes.
When you do clean business planning for it for the year.
Of course.
At the end of the year.
Every three months.
We show you evolution in pricing okay.
Just.
So the board of directors.
<unk> OE to show that we are effectively going after this market.
But no we've got to 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 Windows lines, you Lee with Jpmorgan.
Good question.
With your inflation rate in the downstream segment was 89% in the second quarter at one point. It organization was as high as 97% with visitor Vas has scheduled maintenance on 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 on the July .
We expect.
Expect 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.
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 have any of them. The next question also from the Doe.
You still have the what I wasn't pleasant evening, Mr lay out to observed in the first half of 2022 could be maintained for the second half as well.
Thank you. Thank you for the question hopefully Oh 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 to 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 like we did in this.
In this quarter that we have additional inflow step.
Port 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 co participation agreement for Booz Yours.
So we will monitor this over the course of the second half.
But of course looking at the.
Current price levels, there of course supportive of a higher dividend payments.
But we will 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 Brandon is flattish.
Is it back to Tom.
He also census, and message and good afternoon to all once again very good to see the Companys results evolving that's well in so many different aspects.
Our biggest those questions to her debut quash them anytime.
<unk>.
Finally utilization rate.
The refining park utilization.
Utilization rates, reaching 97% in June and the same time there are some expected maintenance stoppage for he got the Hitler inova.
Could you talk about what's the level.
This item is expected for the second word.
And if there is a possibility of any postponement of this maintenance.
If so it would be interested to hear about the market conditions that you see as a tier two events.
Pivotal as I.
Told we will expect higher utilization rates on the second.
Semester.
Especially due to diesel market conditions we.
Specced between August and the end of.
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 are we.
We analyze some possibilities about postpone some stoppage and at this moment, we decided postpone stoppage.
Stoppage on have op moved from November till the first quarter of 2023.
These stoppage Culver.
Replacing catalyst in hydro treat many units.
Thank you for the second question compared to them is to take another launch.
And the last two months, we have seen some important maintenance stoppage impacting the company's 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 and if you understand there is an upside for <unk>.
Production to be closer to the top of the guidance.
First of all I would like to highlight that we operate.
Sixth production for.
Loosing platforms.
Our total operated production is.
Good day 3.6 million VOA birdie.
So it's a lot of.
Work to be done.
Considering the stoppage of or maintain these the first half of the year. We had 22 stops we have average production loss around 200000 barrels per day.
And for this second half of the year, we expect to have linear.
28.
Stoppage for maintenance.
This same amount level off promotional losses around two home 200.
200000 barrels per day.
Joey.
Oil equivalent well.
Considering the opportunities for ups.
Outsides in production.
We have two important ramp ups.
The first one is we affect visceral God York subject to you Richard.
We expect to reach the maximum production of 180000 barrels per day today, we are wrong one 150.
E. We have true Def vis you'll run a BARDA narrow view, which we expect to.
To reach the maximum capacity of the unit.
At the end of this year.
Today, we are producing around.
60000 barrels per day at the end of the OA, we hope to have 180000 barrels per day.
And when we look to complement surplus 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 the center of this interval.
Thank you.
Thank you Dan.
And it also has another question in queue is only.
It's about the Sps alone with entry level.
So has there any last mission PR in China. It seems that the remains on time is there any expectation of improvements are possible and station of the first of all I'll ask this platform.
Thank you all for the question.
Yes, it's true.
Eddie informed to the market that the ominous about Hulu.
The oil <unk> shipyard in July .
And we are.
Yeah, the first oil for two dwells independently.
And these units.
Hi this.
On the wells to the platforms and you'll have the only PCI quoted.
Low abuse connection of new wells and the detour quantity be assured that you wanted to the NPD PCI quantities are.
We can sing dates Andy we understand that you don't have your room.
To anticipate do we need to do the timeframe that we set for both concepts.
Thank you.
Thank you. The next question is from <unk> with credit Suisse.
Is the message that I'm going to eat congratulations to all management team and the company for the extraordinary results. They are in fact memorable.
How does this first question is still gonna do question and it's about impacts from LNG imports LNG prices are still very high international markets. After the reduction in main 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.
It.
Hi has.
Don.
Whenever we see the more led to co 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 in port to our operations.
<unk>.
This is <unk>.
Barry.
Sure.
Victories number if we consider the scenario that we had on 2201 that it's around 112 cargos.
We went.
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 Western informations that we have.
We don't see a high dispatch on this first quarter, but are we have a lot of uncertainty on the fourth quarter. So the best information that we have until today.
Cause to these outlook around 40 cargoes this year.
Thank you for video games.
Second question is to fan the biases.
What are your expectations around timing for closing the 5% stake purchase option transaction exercise by silky English.
Hi.
Consortia work.
The initial expectation for July 1st Bob, We're still way jewelry and UPN.
Hey, Manny.
For their approval so in all of the expectation of the conclusion of this process is between August and September .
Thank you.
Thank you for Honda now we have questions from the thank you for Alonso with mandates could remain key centers the message congratulations on the fast delivery and the maintenance of government policy.
The first question was too much gallon milestone how is the gasoline parity today. After the two price cuts were announced what is the management's view for golf crack spreads looking ahead.
Thank you. Thank you this limited.
Well.
The recent reduction in gasoline prices, just followed a review of the international market evolution of Retrans stabilized and then lower level for gasoline.
It's happening.
Two broad awesome, and it's consistently Petrobras practicing thanks.
Some of our pricing, which seeks to have prices.
And the balance with market, while providing fashion.
Volatility caused by.
Locally.
The cracks well.
<unk>.
In our view should remain strong.
As well as worldwide.
Separately the breakthrough.
The ongoing geopolitical conflict.
The supply demand balances.
I'd say I'd say.
Sure.
Can you talk about diesel.
However, higher inflation expectations and stronger monetary policies by domain Central banks may raise a recession concerns is in demand and consequently.
Consequently, irrigated pressure group cracks that we.
Oh, sorry.
Mark.
Translated into practice.
Okay. Thank you.
Thank you Mr. Allen.
The next question comes from company owned Baja we see deep and its 400 watt hours.
But considering the latest material fact, and the recent news about our quarters divestment could you give us an update for the next that's the regarding the sale of the assets is there a possibility of trading the assets, leaving forno out or even changing possible or announce.
Well. Thank you everybody else for further question.
First of all the as we announced recently this week.
The das is it still on the desk, that's still 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 changed the scope from the regional 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 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's not a.
And our plans for now thank you for the questions.
Thank you <unk> next question also.
That was for you and if you regarding the commitment, Wisconsin. So regarding the commitment with Sandy 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 disaster.
Is there possibility of extending the deadline to comply with the terms. If so does the extension has a limit.
Thank you for the question so.
So first of all out of the eight refineries that the company agreed to divest four of them have been already signed so hilla has been signed and closed we have him on Libyan oil and sixth in six are 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 transfer off 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 of the next steps.
There's a penalty there is not a material benefit penalty, but it's 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 no price agreement, there's no penalty associated as long as the company can 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 need you.
Could you give us more information about the startup process of FBS and when we'd actually about who is the what is the expected date for Sps those first Ohio, how can we expect the platform to ramp up.
Yes. Thank you all for the question on <unk>.
We don't have a whole Sidoli law school on delay.
We expect the first oil in the first half.
Two into 'twenty three.
Good.
Projections for the hump.
Bruce you wouldn't have.
Hi.
Oh wait.
The wells, we have designed the wells tool.
To absorb this.
Potential of the.
And just so we understand that you have.
Good chance to have the capability of doing it.
They have four wells would be yes.
Our expectation for it is going to it.
Thank you. So the next question comes from.
Now with Seaspan.
He sends a message congratulations on the wonderful results in the creation of another pillar to strengthen Cochrane gardens, which was established with the pricing guideline.
And the rest of the question as to who they are where you. So what are 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 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.
The forecast for the business plan for the step down at the poor bidding round. It will go up.
Go up to around 11 $9 billion in expected capex for the year.
Our most recent outlook is.
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.
Usually a ramp up in terms of capex in the second half so.
That's what we expect you to performing on our most recent outlook. Thank you.
Thank you Jose.
The next question also from them Dan.
Just staying on the losses.
Once these expectation regarding the lifting costs for both pre salt and post salt in the third quarter should I expect.
<unk> further cost increases.
Hmm.
We expect our lifting cost in the range of $6 per barrel during the coming months or the total debt.
Petrobras production in the pre salt.
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 costs.
Thank you.
Thank you. The next question comes from when you could get equal lease it over there.
When he consensus the messages well I'm going to read it congratulations on the results the team's capacity from generating results.
Yes.
When you guys first question is to what I was.
Mr. <unk> after the divestments in the refiners I'm, a quota and also about lithium.
Thank you. Thank you. Thank you for the question and for <unk>, So with respect to the refineries in number quarter I just answered.
A question.
Recently.
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.
So it is a competitive process and we have very good prospects, we have ottar <unk> bidders on the on the process.
We think we can we can sign it very fast as soon as.
We've 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 by a judge in favor of one of the one of the potential bidders are we expect to be able to revert at sone and <unk>.
Right after continue with the with the signing and closing of that transaction.
That's where we are now thank you.
Thank you. The next question also from when he came into his new 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 in our platforms is there a plan for livestock year.
For the refineries will have its tougher to on our block.
Block on the distillation and cocky unit.
Ah the August and September .
That will take around 43 days.
The other stuff like this on the last.
On the hydro treat many known entity.
Between August and September are all 28 days.
The next stop it is on a GAAP.
It's all the hydro treatment units also and I will take 35 days between all of US in September .
An hep bar.
We'll have.
Works on the distillation and hydro tradesmen units and I will take.
Hi.
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.
Sure.
Considering the platforms.
We have a total of six production platforms.
For this year, we have blended 50 stoppage.
And 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.
Marcin you know our predictions so we hope to reach the target of 2.6.
No.
Of VOA per day this year. Thank.
Thank you.
Thank you.
And under him when he has another question as far as on Hagen How's the planned Capex for this year being carried out in how we owe this estimate to be impacted by the delay in the house three projects, especially up in quarter three.
And when he can.
And if you sort of did you hear me okay.
Hydrology, 40% of the total Capex plan for 2022.
We expect.
In Greece of debate.
Capex in the second half.
When you compare to the first half.
Some milestone of the new units that you are building.
A lot of.
Wells.
<unk>.
<unk>.
At this time, we have equal national activities.
Well connects one that would include us.
Our performance in the second half of the year.
On the.
Route agreed.
And the Capex of this project is less than 1% of the total capex.
Therefore with us.
Indeed.
Yeah.
Not the hail event for the total amount that we intended to expand.
For the rest of the year.
Thank you Kim and the last question comes from co head of Magna with fat for 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 being done directly with them.
Ohio, we.
We had progress on the second quarter.
We are on the table with four.
Distribution companies that has.
These legal situation.
Around our contracts.
And we expect close on the fourth quarter.
Okay.
Thank you for video.
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 remarks. Please 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 the results interest 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 in our.
Releases in the companies.
IR website, we have also released alongside with the earnings.
These are financial statements and our tax report for the second part of 2022.
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.