Q1 2023 Petroleo Brasileiro SA Petrobras Earnings Call

May 12, 2023

Carla Albano: Hi. Good afternoon, everyone. Welcome to Petrobras Webcast with Analysts, Investors about the Q1 2023 Results. Great to have you join us today. We'd like to inform you that all participants will follow the transmission by internet as listeners. After an introduction, a Q&A session will begin. You can send us questions by email at petroinvest@petrobras.com.br. Today, we have with us Ana Paula Zettel, Upstream Executive Manager, representing the Chief Exploration and Production Officer, Joelson Mendes; Carlos Travassos, Chief Engineering, Technology & Innovation Officer; Clarice Coppetti, Chief Corporate Affairs Officer; Claudio Schlosser, Chief Logistics, Commercialization and Markets Officer; Mario Spinelli, Chief Governance & Compliance Officer; Maurício Tolmasquim, Chief Energy Transition and Sustainability Officer; Sergio Caetano Leite, Chief Financial and Investor Relations Officer; William França, Chief Industrial Processes and Products Officer. To begin, we will watch a message from our CEO, Jean Paul Prates.

Jean Paul Prates: Dear investors, as we open this event to discuss our results, I believe it is of the utmost importance to talk about the future of Petrobras and the perspectives opened up by yet another quarter of solid operational and financial performance, the first under this new management team. In these first 100 days, we focused our efforts on reorganizing the company's structure, preparing Petrobras for the future, especially to lead the Just Energy Transition. We continue to reach production records in the pre-salt and to increase the efficiency of our refineries. Our operating cash generation remains consistent, and our debt reached the lowest level since 2010. We have solid fundamentals which underpin our plan to diversify our investments to strengthen Petrobras as an integrated, robust, and long-living energy company.

Jean Paul Prates: We will always pursue returns on investment and reductions in the cost of capital, maximizing the company's value and seeking to develop the Brazilian market with sustainability. Total attention to people is our non-negotiable priority, because only a skilled and diverse technical staff will allow us to meet the dynamic demands of the market, especially the energy transition. The investment in profitable exploration and production assets, and in adjusting the refining facilities to the Brazilian market's demands, are natural movements to ensure the energy supply that society needs. We will continue our efforts to decarbonize our production processes and to develop greener products, which we understand to be the only way looking forward for the oil and gas industry, reducing its emissions and consolidating clean energy alternatives.

Jean Paul Prates: In fact, we are convinced that Brazil and Petrobras have all the conditions to be global leaders in a fair energy transition without ceasing to be an oil power, establishing partnerships with other companies, and taking advantage of the different vocations and potentialities of all Brazil's regions. We will build this route alongside our partners. This is our path going forward. We make decisions always reconciling our social function and respect for our governance, honoring the trust placed in our company by our shareholders. This is my greatest commitment, as well as that of the entire executive board which I represent. Thank you very much to all of you.

Carla Albano: Thank you. Now I would like to pass the floor to Petrobras CFO, Sergio Caetano Leite, that will begin our webcast presentations of the Q1 2023 results. Please, Sergio, go ahead.

Sergio Caetano Leite: Hello, everyone. Good morning. I'm very happy to be here with you today in my Q1 results webcast, and even happier to talk about the important and solid performance that Petrobras delivered in Q1 2023. We had a very strong quarter from an operational and financial perspective, and I will take a moment to highlight several important deliveries. First, from an operational angle, pre-salt production set a new monthly record in February 2023, and a quarterly record reaching 77% of our total production. In February, we also had a monthly production record at the FPSO Guanabara in the Mero field, whose average oil production reached 179,000 barrels per day. We made the first injection of gas at P-71, which continued its ramp-up in the Itapu field in the Santos Basin pre-salt.

Sergio Caetano Leite: The production of diesel, gasoline, and jet fuel in Q1 2023 reached 767% of total production, one percentage point higher than Q1 2022. We also set production records for 10 PPM diesel at REPAR and REGAP refineries in January, and the REPLAN refinery in March. We advanced in development of more sustainable and efficient products with the certification of diesel oil at the REPAR, the launch of new premium gasoline, the exclusive commercialization of fuel oil with a maximum 1% sulfur content in the domestic market, and with the beginning of trading of Ultra Low Sulfur Marine Gas Oil. Here, it's important to point out that we have recently undergone the organization adjustment to prepare the company for the future by creating the Energy Transition and Sustainability Executive Officer.

Sergio Caetano Leite: In March, we carry out the remaining procurement to resume the works of the natural gas processing unit of the integrated project three in the GasLub cluster in Itaboraí, which is strategic for the new natural gas flow from the Santos Basin. Moving over the financials, I would like to highlight our EBITDA, which reach around $40 billion, a very robust amount for fourth-highest Petrobras history. We had consistent operating cash generation, with cash flow from our operations reaching the solid mark of $10.3 billion. The net debt EBITDA ratio reached its best mark since 2010. It's also important to highlight that we had the lowest level of gross debt since 2010, reaching $53.3 billion. Return on capital employed reached 15.7%, the same level as in Q4 2022.

Sergio Caetano Leite: Our net income reached $7.3 billion, and the free cash flow was around $8 billion, which are very significant levels. We continue with commitment to generate value and financial sustainability by distributing results to society. As can be seen in our fiscal report, in Q1 2023, we paid BRL 63 billion in tax and government take. We also paid BRL 4.2 billion in dividends, bringing our cash levels to $15.8 billion. In terms of the external environment, in the quarter, we had 8% drop in Brent prices, and the average exchange rate went down 1.1% when compared to Q4 2022. As already mentioned, we had a very robust EBITDA.

Sergio Caetano Leite: Recurring EBITDA in Q1 2023 reached $14.3 billion, in line with Q4 2022, despite the 8% devaluation of Brent, mainly explained by lower exploration expenditure and legal contingencies. Next slide. Delving into the results by business segment in Exploration and Production, the impact of the Brent devaluation was partially offset by lower expenses and higher production, causing the segment's EBITDA to decline 1% when compared to Q1 2022. In the Downstream segment, EBITDA was 15% lower than the previous quarter, due mainly to the effect of inventory turnover with the reduction of Brent between the quarters. When we look at the replacement cost, the results for the quarter grew 3%, reflecting higher margins on oil products, mainly gasoline, due to the appreciation of the international margins.

Sergio Caetano Leite: In Gas and Power, EBITDA rose 16% due to the favorable scenario and the actions taken to building a commercial portfolio resilient to the business risks. As mentioned earlier, the resources generated by operating activities and free cash flow reached very significant levels. The level of cash flow generation together with the inflow of resources from divestments were used to remunerate the shareholders, make investments, prepaid debt, and amortize the principal and interest during the period, and amortizing leasing liabilities. When you look at our debt position, we have a very comfortable debt profile in terms of liquidity and financial strength. At the end of Q1 2023, gross debt reached $53.3 billion, as already stated. That's the lowest level since 2010. Net debt was $37.6 billion, a drop of 9.5% compared to year-end 2022.

Sergio Caetano Leite: Our cash position remained quite robust, reaching $15.8 billion at the end of Q1. In addition, it's worth noting that we have available revolving credit lines of $9 billion. We closed the quarter with an average funding rate of 6.5% per year and an average maturity of 12 years. In relation to portfolio management, we are reassessing the process in which no contracts were signed. It's important to emphasize that the projects that have already been signed, which are in current closing stage, shall be owned by the company. Up to April 2023, cash inflows related to these divestments totaled $2.1 billion. In Q1 2023, net income was $7.3 billion compared to $8.2 billion in Q1 2022.

Sergio Caetano Leite: This result is mainly explained by the BRL devaluation and lower financial results, partially offset by the lower operating expenses. In addition, there was a higher income tax expense, which was mainly due to the absence of tax credit in Q1 2022 because of the dividend distribution for fiscal year 2022 as interest on equity. In Q1 2023, tax and government take to federal, state, and municipal governments amount to BRL 63 billion, representing the return to society of 54% of the company's operating cash generation. I finish here my presentation. Please, we can move forward.

Carla Albano: Thank you, Sergio. Now I'll pass the floor to Chief Energy Transition and Sustainability Officer, Maurício Tolmasquim. Please, Tolmasquim, go ahead.

Maurício Tolmasquim: Hi, good afternoon. It's with a great satisfaction that I'm here today as the first Chief Energy Transition and Sustainability Officer in Petrobras history to present to the market the excellent results obtained in Q1 2023. As we can see in the graphs, we remain aligned with our sustainability commitments with carbon intensity levels below 2022. The carbon intensity in our exploration and production operation reached 14.7 kilograms of CO2 per barrel in Q1 2023, as the first graph. This level is lower than that achieved in 2022, and this is the result of our continuous effort to reduce emissions from our operations. We have reinforced the competitiveness of pre-salt oil fields, which represent an increasingly relevant percentage of the company's total production. Why this is important?

Maurício Tolmasquim: This is important because the emission intensity from the pre-salt field is lower than the other fields. For example, if we look to Tupi and Búzios fields, both have emissions of 10.6 and 9.3 CO2 per barrel respectively. These new figures are well below the national and international emission intensity. When we look to the next graph at the refining indicator, you can see a continuous reduction in carbon intensity too. This improvement is associated with increased energy efficiency through, for instance, the reduction of gases sent to the torch and process optimization. Finally, look the third graph. In the third graph, I would like to highlight the decrease in carbon intensity from thermal power generation. There are two explanations for this reduction in the carbon intensity.

Maurício Tolmasquim: First, the improvement of the thermal power plant itself. Second, the reduction of the dispatch of thermal power plants, reducing the dispatch of the less efficient plants. Now let's take a look at the absolute emissions. In terms of absolute emissions, there is also a good performance. There was an important reduction of total operational emissions between 2022 and the first part of 2023. The same happened regarding the operational emission from oil and gas, as you can see in the other graph. In what concerns the total emission, there are two main explanations for the emission reductions. First, the improvement in our process. Second, the reduction of thermal power plant's dispatch. I would like to highlight in this light the three aspects related to climate and decarbonization. The first point to be highlighted is related to the climate supplement.

Maurício Tolmasquim: In the period, we released the new additions of the climate supplement with information about progress made in the decarbonization pathway, the carbon neutral program, and other decarbonization initiatives. The document details information regarding emissions performance in 2022 and the project already implemented can be find also in this report. It presents also company's strategy risks and governance about the challenge of climate change. We detail in the document our actions to reduce methane emission, our position on just transition, and the strategy to use carbon credits. I invited all to read this document. The second point that I want to highlight is that in the period, we made some important partnership to leverage new business and decarbonization opportunities. Finally, the third point to highlight concerns our supply chain.

Maurício Tolmasquim: We are a reference in sustainability by CDP, indicate our commitment to encourage good environmental practices and climate change mitigation measures when dealing with our supply chain. Finally, in the last slide, please. In the last slide, we are going to focus on the gas and energy segment. The performance of the period in the period was quite robust. It is the result of actions to build a commercial portfolio resilience to business risk that explain this good performance. Petrobras continues working to meet its contractual commitments for the sale of gas, and this quarter, it achieved 100% delivery reliability. In Q1 2023, the Petrobras natural gas market remained at the same level of Q4 2022.

Maurício Tolmasquim: However, compared to Q1 2022, there was a decrease of 16 million cubic meters per day. Two factors explain this drop. The first is the opening of the natural gas market in the country, and as consequence, the increase in the participation of other agents that produce gas and used to sell it to Petrobras that are now selling to the market directly. The another factor that explain this reduction of the market was the lower thermoelectric consumption, given the recovery of reservoir levels in April. The levels of the reservoir ended at 88%, a very high level in the power sector, Brazilian power sector history. The lower thermoelectric dispatch partially explain the excellent result of this follow-up in this Q1. Why that?

Maurício Tolmasquim: Because the drop of thermoelectric dispatch made that less LNG was imported at a time when the fuel is very expensive in the international market. The lower dispatch of thermal power plant at this moment, where the natural gas price is very high in the world, was very good for Petrobras result. It was also mentioned regarding the relationship with the non-thermal market of gas distributor, a commercial action to solve disputes that arose in recent past, and the signing of a new contract with an extension of sales portfolio. That's what I had to say now. Thank you very much.

Carla Albano: Now we'll continue with Carlos Travassos, Chief Engineering, Technology & Innovation Officer, to present the E&P results.

Carlos Travassos: Thank you very much, Carla. Good afternoon, everyone. I'm Carlos Travassos, Engineering, Technology and Innovation Chief Officer. Today, I will present both the results of Exploration and Production and Engineering, Technology and Innovation. Joelson Mendes underwent a minor surgery, and he will not be able to be here with us. He's fine, and by next week, he's going to be back. Well, we can start with the next slide. So you can see here that you have reached a 2% growth on the operated production in comparison with the first quarter 2022. We achieved 3.74 million barrels a day. What I mean is that Petrobras is talking about equivalent barrels here.

Carlos Travassos: We can see a growth comparing with Q4 2022 and then also 2.3% if we compare with Q1 2022 as well. If you take a look at oil and gas and our production, again, we have a growth comparing with the last quarter. This growth was mainly due to ramp up of P-721, and from entry of 8 wells in Campos Basin, and also improvement in our efficiency. Going to the right, if you take a look at pre-salt, our production, and we can see an increase of the share of pre-salt in our total production. Yeah, we achieve in this quarter 77% of pre-salt production as a share of our total production.

Carlos Travassos: Now talking about some achievements, important achievements. We actually have broken some records. We've broken a monthly record, 2.13 million barrels a day. That was taking place in February. Yeah, actually a quarterly record with 2.05 million barrels. If you take a look at individual production as well, we're having an amazing result with Garimpeiro FPSO, 179,000 barrels a day. What means 100% efficiency that was achieved in February. The last time that we had the record was in November with Carioca. That means that we have just broken our records. Now, let's talk about costs. Yes, now I'm showing a little bit about our lifting costs in Brazil. Just to understand this picture, we segregate into three layers.

Carlos Travassos: The yellow one is onshore and shallow waters that will reduce our cost from $18.8 in Q4 last year to $14.7. This major is related to some portfolio movements that we have done. We also had results of lifting costs on deep water, basically in Campos Basin, but not only Campos Basin, but basically there. Here you can see a drop as well of the cost, mainly due to the wells that we put in production, and of the pre-salt as well, having a good result mainly due to ramp up of P-721. Yeah. That's so. Those results bring us a drop of our lifting costs from $6.1 to $5.5. Yeah.

Carlos Travassos: Now, showing a little bit about total cost of our production. So if you take a look in the Q4 2022, that was 38, and we have a reduction of 11% on that cost. So here we include depreciation, depletion, amortization, and the government take is considered here, and of course, the lifting cost. Of course, important to highlight that here, we must include for them to have a view of the total cost. We are not including those numbers in those numbers, the investments is not here. The capital cost is not here as well. Now talking about our exploration. We achieved a discovery in 2021, and we have now started extension well drilling on Aram block, Curaçao.

Carlos Travassos: This is the first drilling that we are doing, the first well. We have six more to be done and to declare as a commercial one. Okay, I think this is the last one for Exploration Production. Now I start talking about Engineering Technology and Innovation. Okay, here you have a picture of Anna Nery. Actually, this unit, we just started production in Anna Nery. Yesterday night, we connected the second well on that unit. Reminding you that it's part of Marlim Revitalization program. The Marlim Revitalization. You can go to the next, please. In Marlim Revitalization, we are gonna remove nine units and gonna replace by two units, Anna Nery and Anita Garibaldi. Anna Nery, we have start producing, like I said, Anita Garibaldi is, we are in the mooring at this moment.

Carlos Travassos: Actually, if you take a look at our strategic plan 2023-2027. From these 18 units, we have four in the final location. P-78, that is already producing that we anticipated. Anna Nery now is in production as well. Anita Garibaldi, that is, it's in the mooring process. We also have Almirante Barroso that is ready to start production, waiting for authorization. Coming back to the revitalization, that's a fantastic program. We intend to increase it 20% in our production and reduce 6% of greenhouse gas. This is a progress.

Carlos Travassos: All the time that's talking about production systems, I used to show the units, but it's important to remind that we have and a very hard subsea working, especially when talking about revitalization, when we're gonna build 14 new wells and relocate 61. And in these kind of projects, we have a special feature that we also have had to remove some lines here and there that's required for us synchronization and a very good planning to do. Okay, talking about updating the start-up schedule for 2022, 2027. I think all of you are very familiar with this picture, yeah. That's the 18 units that we are gonna start operation and this strategic plan. We have made some shifts with Búzios 7, IPD.

Carlos Travassos: Just highlighting that we're talking about, despite all that is changing the year, we're talking about minor shifts; it's not big, and there is no impact on our production curve. In this slide, you can also see the picture of the P-78 for Búzios unit for Búzios that is in standard construction. Talking about Downstream. We're having a very important achievement in this quarter that we signed the contract to restart our process gas units in Itaboraí GasLub. That was interrupted next year, and we got putting back again in a fantastic time, in six months time. Now we have all the contract signing, and actually the people mobilize on sites. We keep the planning to start operation 2024.

Carlos Travassos: Another important achievement is the contract for expansion of train number one of RNEST. In train number one, we are actually gonna expand from 115,000 barrels a day to 130,000 barrels a day. The completion of this work is scheduled for 2024. Just another information, probably most of you know, the construction of the area emission removal unit is already in progress in RNEST as well. Well, that's what I have for today. Thank you very much for your attention.

Carla Albano: Thank you, Travassos. Now pass the floor to William França, Chief Industrial Processes and Products Officer.

William França: Good afternoon for everyone. It's a pleasure to stay here and to present the highlights of refinery segments in Q1 2023. I'm so happy to be in charge of our refineries and our gas plants. In Q1 2023, we are going to prioritize two indications in this presentation, okay? Utilization factor in our refineries and operational availability. In the first quarter, the utilization factor in our refineries was 85%. We think that it's an important and excellent result, considering that we had three big turnarounds during this period in Refap, Revap, and RPBC. We spent almost BRL 1.2 billion by maintaining more than 800 large equipment like heat exchangers, pipelines, pumps, towers, and reactors.

William França: We had more than 10,000 collaborators contributed and performed in this big challenge, helping us. In April, we had a utilization factor of 29%, and at beginning of May, we are performing above 90%. Regarding the operational availability, in the first quarter of 2023, we obtained a result above 96%, which most of our refineries achieve the level of the best refineries, including the companies of the United States. Okay. Thank you for your kind attention. Have a nice day.

Carla Albano: Now I call Claudio Schlosser, Chief Logistics, Commercialization, and Markets Officer. Schlösser, go ahead.

Claudio Schlosser: Thank you, Carla. Yeah, thank you. Hello, everybody. It's a pleasure to be here with you today to talk about our Q1 2023 results. In this slide, we'll talk about oil product sales. As you can see, there was a reduction in sales of oil products in the domestic market of 5% compared with the previous quarter. This was already expected since diesel and gasoline seasonally have a weaker consumption in the Q1 of the year. It is important to say that in this quarterly comparison, there is still the impact of divesting of the REMAN that occurred at the end of the last year. Even so, it is important to highlight that gasoline sales were the highest registered for the Q1 in the last 6 years, driven by the greater competitiveness of gasoline in relation to ethanol.

Claudio Schlosser: Regarding the foreign markets, the drop of fuel oil export was caused by lower production through the scheduled shutdowns of some of our biggest refineries, as mentioned by Director William França. To conclude the topic of the product sales, I would like to take the opportunity to reinforce our focus on the market. The same market has even become part of the name of this board. That's why I want to highlight the startup of the new diesel and gasoline sales center in Rondonópolis, Mato Grosso do Sul. This action strengthens our presence in the Midwest and enables the practice of a specific commercial action in the region. This is a very important milestone that guarantees Petrobras presence in the region that should grow the most in the coming years. We will talk about our oil exports.

Claudio Schlosser: As you can see in this slide, talking about oil exports, our main destination remains China. However, it is important to emphasize that we continue to work constantly to seek global opportunities and to develop new clients, which generates more value for Petrobras in addition to diversifying the client portfolio. Another key action is the market development for other oil streams, such as Sururu, Mero, and Atapu. The Búzios and Tupi streams are already well-known in the international market, with the guarantees of better liquidity and pricing. Finally, I present the highlights of the quarter that reinforce Petrobras' commitment to supplying more responsible fuels, yes. We had a first bunkering filling fuel testing with renewable content with the Darcy Ribeiro. The ship that is in the picture is part of the Transpetro fleet.

Claudio Schlosser: This fuel was formulated with a 10% soy biodiesel, reducing around 7% of the greenhouse gas emissions. Considering the complete life cycle of the fuel, a big step towards the goal of reducing carbon emissions. During the 40 days of testing, no anomalies were reported by the crew or operational differences in relation to the mineral bunker. Samples of collected fuel and ship monitoring data are in the final stage of analysis. Another action in the same line was that we started offering the domestic market exclusively fuel oil with a maximum sulfur content of 1%, discontinuing the sale of fuel oil with a maximum sulfur content of 2%. By ensuring that all fuel oil sold by the company in the domestic market has a low sulfur content, we help consumers in the industrial segment to reduce their emissions.

Claudio Schlosser: I also highlight the sales of the new product, the Ultra Low Sulfur Marine Gas Oil. Marine fuel with the maximum sulfur content of 0.1%. The new marine gas oil is produced at the Presidente Bernardes Refinery, RPBC, in Cubatão, São Paulo. Previously, the product sold at the Port of Santos to long-haul and carriage shipowners was conventional Petrobras marine gas oil, containing a maximum sulfur content of 0.5%. By introducing this ultra-low sulfur MGO, we started helping shipowners to reduce emissions of the potent pollutant sulfur oxide, in addition to avoiding fueling stops on the way of the vessels passing through the sulfur emission control areas, reducing the cost and the time.

Claudio Schlosser: These actions show that we are on the right track in developing cleaner fuels and guaranteeing lower emissions, generating great value for the company, society, and the environment. That's the final slide. I'm going back to Carla.

Carla Albano: Thank you all. We can move to our Q&A session. The first question that we receive comes from Bruno Montanari with Goldman Sachs, and it's for Sergio. Sergio, Petrobras CapEx is poised to grow in the next few years under the current and possibly the new strategic plan to be announced. What is the comfortable level of cash position the company should target? More, less or in line with the prior management target of $8 billion?

Carla Albano: Thank you all. We can move to our Q&A session. The first question that we receive comes from Bruno Montanari with Goldman Sachs, and it's for Sergio.

Bruno Amorim: Sergio, Petrobras CapEx is poised to grow in the next few years under the current and possibly the new strategic plan to be announced. What is the comfortable level of cash position the company should target? More, less or in line with the prior management target of $8 billion?

Sergio Caetano Leite: Thank you, Bruno, for your question. I believe that the levels set up in the current business plan are very prudent. I think we must keep solid parameters in terms of liquidity and leverage. We want to always keep a robust financial structure, which allows us to face inevitable down cycles in oil prices. Also, we need to be sure that our investments will be self-funded with our operational cash flow.

Sergio Caetano Leite: Nonetheless, allow me to emphasize that the discussion of the new business plan may result in a revision of the current targets. Thank you, Bruno.

Carla Albano: The next question comes from Vicente Falanga with Bradesco BBI, and it's for Travassos. Travassos, the company recently announced the delay in the startup of some platforms. What was the major cause of that?

Carla Albano: The next question comes from Vicente Falanga with Bradesco BBI, and it's for Travassos.

Vicente Falanga: Travassos, the company recently announced the delay in the startup of some platforms. What was the major cause of that?

Carlos Travassos: That's a very good question. Actually, it's a minor adjustment on the schedule. Despite of we see the shift from one year to another year, yeah, we are talking about a minor change. Maybe due to some perception of our risk analysis. This perception is regarding for the supply chain markets, both for topsides and also for subsea. Just for your information, if you take a look in IPB, we're talking about 13 days of shifts, yeah. Not too much. Of course, when you see a shift from one year to another year, it seems that you're having a big change, yeah. Here we're not talking about a big change.

Carlos Travassos: Petrobras, all the time that we're having a change that appears in our business plans, we are very transparent and it is important to show up and analyze its markets, yeah. This change does not bring any impact on our production curve. Okay. Thank you very much for your question.

Carla Albano: Thank you, Travassos. The next question comes from Luiz Carvalho with UBS, and it's for Maurício Tolmasquim. Maurício Tolmasquim, we've seen a series of comments regarding the company's focus in the future, particularly with diversification of investments focused on energy transition. Could you list some potential investment options? How fast the investment portfolio could be built? This portfolio could be made through organic investments or potential acquisitions. Will the company pursue assets in petrochemicals, renewable power generation, offshore wind, fertilizers, biofuels, fuel distribution, new refiners, or some other sector? In your view, is there any target on how much this could represent from future investment plans?

Carla Albano: Thank you, Travassos. The next question comes from Luiz Carvalho with UBS, and it's for Maurício Tolmasquim.

Luiz Carvalho: Maurício Tolmasquim, we've seen a series of comments regarding the company's focus in the future, particularly with diversification of investments focused on energy transition. Could you list some potential investment options? How fast the investment portfolio could be built? This portfolio could be made through organic investments or potential acquisitions. Will the company pursue assets in petrochemicals, renewable power generation, offshore wind, fertilizers, biofuels, fuel distribution, new refiners, or some other sector? In your view, is there any target on how much this could represent from future investment plans?

Maurício Tolmasquim: Well, in fact, we are planning to diversify our investment regarding renewables. Let's say, we are talking about maybe investing in offshore wind, green hydrogen, CCUS, and other possibilities. We still doing our strategic plan for the next cycle. So it is this strategic plan that we are be able to understand, to know which technology we are going to invest. The investment can be, let's say, through organic investments, but it's not discard the possibility to make some acquisition also. Our preference for organic investments, we want to do this mainly with partnership with other companies. I think is the best way to do new investments, and mainly with the big companies.

Maurício Tolmasquim: In terms of target about future investment plans, we don't have yet the targets because, as I have said, the strategic plan is being done. I could say that we are going to do this with financial responsibility. The idea is that it's possible to do some diversification, but maintaining our financial indicators good. Thank you for the question.

Carla Albano: The next question, also from Luiz Carvalho, UBS, is for Schlosser. Schlosser, the company's current fuel price policy considers international price and import costs. What parameters could be used in a possible new policy? Is export parity for the domestically produced product an option? Does the company consider holding lower margins on the domestically produced product in order to reduce price pressure for the final consumer?

Carla Albano: The next question, also from Luiz Carvalho, UBS, is for Schlosser.

Luiz Carvalho: Schlosser, the company's current fuel price policy considers international price and import costs. What parameters could be used in a possible new policy? Is export parity for the domestically produced product an option? Does the company consider holding lower margins on the domestically produced product in order to reduce price pressure for the final consumer?

Claudio Schlosser: Hey, thanks for your question, Luiz. First, I would like to take the opportunity to comment that, although the term price policy is used a lot, what is left to Petrobras is to elaborate its commercial strategy. That being said, the import parity is a reference to the cost of our importing competitors, but it doesn't have to be the only reference for Petrobras. We have other opportunities that we can explore through our installed refinery capacity, logistics integration with all the chain, and the operational efficiency, which allows us to compete efficiently, preserving the company's value generation. That is, that's the answer. Back to you, Carla.

Carla Albano: Monique Greco with Itaú BBA. She sent us a message. Thank you for the opportunity for addressing our questions. On behalf of Itaú, I would like to wish the new executive board good luck in this new phase. The first question from Monique is to Spinelli. Spinelli? Could you comment on the challenge you expect to encounter in your new position, and if possible, share some of the plans and ideas to be implemented during your term.

Monique Greco: Spinelli? Could you comment on the challenge you expect to encounter in your new position, and if possible, share some of the plans and ideas to be implemented during your term.

Mario Spinelli: Hi, Monique. Thanks for your question. First of all, I think that we must consider that we have a very robust integrity and governance system. That doesn't mean that there isn't anything to do. Quite the contrary. What we need to do is now to enhance this system so that it becomes more sustainable and totally aligned with our business. There are important aspects related to improving our performance that can be considered, such as our strategy to prevent and combat harassment. It's just an example. This is an important point for us, and we will improve it. Moreover, some technology tools can be incorporated into our compliance actions, making them more efficient and agile.

William França: We will enhance our compliance risk management, also focusing on issues that may represent risks of damage to the company's strategic objectives. With this, we will be able to identify the most exposed areas and work in a preventive way. The point that I consider most important is that we need to ensure that our integrity program is strong and responsive enough to protect our assets, to protect the company, and at the same time to ensure our efficiency, respecting all the rules and focusing on people. I think that's it. Thank you, Monique.

Mario Spinelli: We will enhance our compliance risk management, also focusing on issues that may represent risks of damage to the company's strategic objectives. With this, we will be able to identify the most exposed areas and work in a preventive way. The point that I consider most important is that we need to ensure that our integrity program is strong and responsive enough to protect our assets, to protect the company, and at the same time to ensure our efficiency, respecting all the rules and focusing on people. I think that's it. Thank you, Monique.

Carla Albano: The next question from Monique is to William. William, despite the refinery maintenance carried out in the recent quarters, the company has managed to maintain high levels of refinery utilization rate. In this regard, is there still room to increase the current utilization levels? What would be the desired level of refinery utilization for the refining part as a whole?

Carla Albano: The next question from Monique is to William.

Monique Greco: William, despite the refinery maintenance carried out in the recent quarters, the company has managed to maintain high levels of refinery utilization rate. In this regard, is there still room to increase the current utilization levels? What would be the desired level of refinery utilization for the refining part as a whole?

William França: Hi, Monique. Thank you for a good question for us. The answer is yes. We have got conditions to increase our refinery utilization because of two reasons, okay? First one, we are operating our refineries with an excellent reliability. So important, okay, to remain in this kind of performing. The second one, the second point, it's because we won't have got big turnarounds for the next months until the end of the year. I think that we have a good route to increase our refinery utilization for the next months above 90%, in order to capture market opportunities, okay?

William França: The goal is to maximize our production in our, in the course of our operations by respecting all of the aspects of safety, environment, health, and integrity, okay? Thank you for your question, Monique.

Carla Albano: The next question is about E&P, and I'll call Ana Paula Zettel. Ana Paula, regarding the equatorial margin, could you comment on the company's expectation regarding the approvals at IBAMA? If the regulatory agent's president follows the negative opinion presented by the technical area earlier this month, could you discuss the medium, long-term alternatives for the company to continue increase its production figures?

Carla Albano: The next question is about E&P, and I'll call Ana Paula Zettel.

Monique Greco: Ana Paula, regarding the equatorial margin, could you comment on the company's expectation regarding the approvals at IBAMA? If the regulatory agent's president follows the negative opinion presented by the technical area earlier this month, could you discuss the medium, long-term alternatives for the company to continue increase its production figures?

Ana Paula Zettel: Thank you, Carla. Thank you, Monique, for your question. Well, Petrobras is waiting for IBAMA positions on the pre-operational assessment. This is an exercise to evaluate the company response capacity in an unlikely accident event. It's part of the process, and we are pursuing that authorization to the next steps of the permitting process. We are following strictly the requirements of IBAMA, and there are no pending issues from Petrobras. All the resources are in the locations waiting for IBAMA's authorization. We understand that the activity in the region is very safe. That's the reason we have planned $3 billion to drill 16 wells in the equatorial margin. We also have investments planned in exploratory phase. We are monitoring closely all opportunities abroad.

Ana Paula Zettel: That's part of our strategy to build up our reserves and to manage our portfolio. Thank you very much, Monique, again.

Carla Albano: Thank you, Ana Paula Zettel. The next question comes from Gabriel Barra with Citi, and it's for Maurício Tolmasquim. Tolmasquim, could the managers give us more information, return levels, time for construction on offshore wind farms projects being studied together with Equinor?

Carla Albano: Thank you, Ana Paula Zettel. The next question comes from Gabriel Barra with Citi, and it's for Maurício Tolmasquim.

Gabriel Barra: Tolmasquim, could the managers give us more information, return levels, time for construction on offshore wind farms projects being studied together with Equinor?

Maurício Tolmasquim: Well, thank you for the question. Until the moment we have only, let's say, a memorandum of understanding on some projects, some areas that we apply to environmental license at IBAMA. Let's say we are waiting for the establishment of the regulatory framework to start studying specific projects. At the moment, we don't have any figures about investments, time frame, and so on. I believe that in a short time we are going to have this kind of formation.

Carla Albano: Thank you, Maurício Tolmasquim. Thank you all. At this time, the Q&A session is over. If you have any further questions, you can send to our investor relations team. I would like to thank you all for your attention. It's a very important quarter with a solid result from operational and financial point of view. Thank you all, and have a great day.

Good afternoon, everyone welcome to better priced web crashed with analysts and investors about the first quarter 2023 result, great to have you join us today likely inform you that all participants will follow the transmission by Internet as listeners after an introduction a Q&A session will begin.

Can send us questions by email at that sort of invest it at the thought of us not Collin Dawson D. R.

Today, we have with us unapologetic they'll upstream as active managers, representing the chief exploration and production officer, Israel's will mean dish.

Congress that avast wish Chief Engineering technology, and innovation officer.

Finally, SCOR Bachus, Chief Corporate Affairs Officer.

Loudish philosophy, Chief logistics commercialization and market Officer March Canadian Chief governance, and compliance officer.

So my ski Chief energy transition and sustainability officer.

Based on the latest Chief financial and Investor Relations Officer, and we didn't person chief industrial process and product officer.

To begin we will watch a message from our CEO, Jim Boldt brands.

Jim Boldt: Dear investors as we opened this event to discuss our results I believe it is of the utmost importance to talk about the future of Petrobras and the perspectives, we bring up by yet another quarter of solid operational and financial performance. The first.

This new management team in these first 100 days, we focused our efforts on reorganizing the company structure preparing Petrobras for the future, especially to leave the just energy transition.

Jim Boldt: We continue to reach production records in the pre salt and to increase the efficiency of our refineries.

Jim Boldt: Our operating cash generation remains consistent and our debt reached the lowest level since 2010.

We have solid fundamentals, which underpin our plan to diversify our investments to strengthen Petrobras is an integrated robust and long the living energy company, we will always pursue returns on investment and reductions in the cost.

Jim Boldt: Of capital maximizing the company's value and seeking to develop the Brazilian market with sustainability.

Jim Boldt: Total attention to people is our nonnegotiable priority, because only a skills and diverse technical staff will allow us to meet the dynamic demands of the market, especially the energy transition.

Jim Boldt: The investment in profitable exploration and production assets and in adjusting the refining facilities to the Brazilian market demands are natural movements to ensure the energy supply that society needs. We will continue our efforts to decarbonize, our production processes and two.

Jim Boldt: Develop greener products, which we understand to be the only way looking forward for the oil and gas industry, reducing its emissions and consolidate in clean energy alternatives.

Jim Boldt: In fact, we are convinced that Brazil, and Petrobras have all the conditions to be global leaders in a fair energy transition without seizing to be unoiled power, establishing partnerships with other companies and taking advantage of the different locations and potentialities of all Brazil.

S regions.

Jim Boldt: We will build this route alongside our partners. This is our path going forward, we make decisions always reconciling our social function and respect for our governance honoring the trust placed in our company by our shareholders. This is my greatest commitment as well as.

Jim Boldt: Is that off the entire executive board, which I represent thank you very much to all of you.

Speaker Change: Thank you now I would like to pass the floor.

Speaker Change: Cause pepper right CFO sensor catering later that will move on our webcast presentations of the first quarter 2020 train results.

Sachin: Sachin go ahead.

Sachin: Hello, everyone. Good morning, I'm very happy to be viewed as being my first quarterly results webcast and even happier to talk about the important and solid performance that Petrobras believer in the first quarter of 'twenty two 'twenty three.

We had very strong quarter for an operational and financial perspective, and then take a moment to highlight several important deliveries.

Sachin: First for our operational NGO press felt production set the new mindful haircut.

Sachin: In February 2023, and our quarterly Hercules, reaching seven 7% of our total production.

Sachin: In February we also had a monthly production haircuts at <unk> got a buyer in the matter of the matter with fields, whose average oil producers reach.

Sachin: <unk> 179000 barrels per day.

Sachin: We made the first injection of gas at these seven one with continued its ramp up in the top fulfilled in Santos basin pre salt.

Sachin: The production of diesel gasoline and jet fuel in the first quarter of 'twenty to 'twenty three reached seven 6%, 7% total production one percentage point higher than the <unk>.

Sachin: First quarter of 'twenty to 'twenty. Two we also set production haircuts for 10 ppm diesel to refi and recap refiners in January and the hip blur refinery in March we advances therefore of more sustainable and efficient products with the certification of diesel.

Sachin: At the bar the launch of new premium gasoline this call ziv commercialization of fuel oil with a maximum 1% sulfur content in the domestic market.

Sachin: And with the beginning of trade of ultra low sulfur marine gas oil.

Sachin: Here, it's important to point out that we have with sample underground.

Sachin: Organization adjustment to prepare the company for the future by creating the energy transition and sustainability Executive officer.

Sachin: Andy match, we carry out the remaining procurement to resume the works of the natural gas processing needs.

Sachin: I think the great projects three in the gas a little closer.

Sachin: <unk>.

Sachin: Wheat is a strategy for the new natural gas flow from this center space.

Sachin: Moreover, the financials I would like to highlight how we.

Sachin: We can reach out round.

Sachin: <unk> $40 billion, a very robust amount for trough hires Bertram rise history.

Sachin: We had consistent operating cash generation with cash flow from our operations, reaching this solid mark of standpoint $3 billion.

Sachin: The net debt EBITDA ratio reached its best Mark since 2010, it's also important to highlight that we had the lowest level of gross debt.

Sachin: 22%, reaching 53.3.

Sachin: $3 billion.

Sachin: He'll turn on capital employed reached 15, 7% the same level.

Sachin: As the fourth quarter of 2022.

Sachin: And our net income reached seven $3 billion and the free cash flow was around $8 billion, which are very significant levels.

Sachin: We continue with commitment to generate value and financial sustainability by distributing results to society as can be seen in our fiscal <unk> part in the first quarter of 2023, we paid $6 3 billion of <unk> in tax and government take we also.

Sachin: Paid $4 2 billion in dividends, bringing our cash levels to $15 $8 billion in terms of the sterno environment in the quarter, we had 8% drop in Brent prices and the average exchange rate went down one 1%.

Sachin: When compared to the fourth quarter of 'twenty into 'twenty, two as already mentioned, we had a very robust recruiting.

Sachin: <unk> in the first quarter of 2023 reach.

$14 three $3 billion in line with the first quarter of 'twenty to 'twenty two.

Sachin: The eight Santa <unk> brand, mainly explained by lower exploration expanding.

And legal contingencies next.

Sachin: Next slides.

Sachin: Now turning to the results by business segment exploration and production the impact of the Brent devaluation was partially offset by lower expenses and higher productions goes in this segment's EBITDA to decline, 1% when compared to first quarter of 'twenty into 'twenty two.

Sachin: In the downstream segment EBITDA was 15% lower than the prior to squad doing man to the effect of inventory turnover with reduction of <unk> between the quarters.

Sachin: When look at the replacement cost.

Sachin: Results for the quarter grew 3%.

Sachin: <unk>, reflecting higher margins on oil projects main gasoline during the appreciation of the international margins.

Sachin: In gas <unk> power, a reached our rose 16% due to the favorable scenario and the actions taken to building a commercial portfolio resilient to the business risks as mentioned early the resources generated by operating activities and free.

Cash flow reached very speaking Scott levels.

Sachin: The level of cash flow generation to gather the inflow of resources from divestments were used to Illinois to shareholders, making investments prepaid depth and amortize the principal and interest during the period.

Sachin: And amortize them leasing liabilities.

Sachin: Look at our debt position, we have a very comfortable debt profile.

In terms of liquidity and financial strength at the end of the first quarter of two into 'twenty three gross debt reached.

Sachin: <unk> three <unk>.

Sachin: $3 billion as already stated.

Sachin: It's still the lowest level since 2008 at that net debt was.

Sachin: 13 seven.

$6 billion, a drop of nine 5% compared to year end 2022.

Sachin: Our cash position remain quite robust, reaching $15 8 billion at the end of the first quarter. In addition.

Sachin: <unk> not seen that we have available revolving credit lines of $9 billion.

Sachin: We closed the quarter.

Sachin: Average funding rates of six 5% per year, and an average maturity of 12 years with relation to portfolio management. We are reassessing the process in each no contracts were signed it's important to emphasize that the projects that have already signed with.

Sachin: <unk> current closing stage shall be honored by the company.

Up to April 2023, cash inflows related to these divestments totaling $2 1 billion of dollars in the first quarter of 2023 net income was $7 3 billion compared to $8 $2 billion in the first quarter of 'twenty.

Sachin: 'twenty two.

Sachin: This result is mainly explained by the brain devaluation and lower financial results, partially offset by the lower operation.

Sachin: <unk> and the addition, there was a higher income tax expense, which was mainly due to the absence of tax credit in the first quarter of 2022 because of the dividend distribution for fiscal year 2022 as interest on equity in this first quarter.

Sachin: To enter 23 tax and government take to federal state and municipal governments amount to $6 3 billion Reais, representing a return to society of 54% of the company's operating cash generation.

Sachin: Yeah.

Sachin: I finished my presentation. Please we can move forward.

Sachin: Now I'll pass the floor to energy transition and sustainability offset one is connect.

Speaker Change: Please go ahead go ahead.

Speaker Change: <unk> product alone.

Speaker Change: Retail great satisfaction that guidance here today.

Speaker Change: First chief and as it transition sustainability office, and Petrobras history to present to the market.

Speaker Change: Excellent results with paying off in the first quarter of 'twenty three.

Speaker Change: See in the.

Speaker Change: The graphs.

Speaker Change: We remain aligned with our sustainability commitments with Cabo intends to levels below 2022.

Speaker Change: Gabor intense in our exploration.

Speaker Change: Produce sugar operation reached four point Sir.

Speaker Change: Seven kilograms of silver to buy barrels in the first quarter of 'twenty three is the first figure out.

Speaker Change: This level is lower than that.

<unk> 2022.

The result of our continuous effort to reduce emissions.

Speaker Change: Our operations.

Speaker Change: We have reinforced the competitiveness of pre salt the audio.

Speaker Change: Feuds return represents.

Speaker Change: Pleasingly relevant best centers of the company's total production why this is important this is important because the initial.

Speaker Change: Initial intensity from the pre salt field.

Speaker Change: Lower than the other fields for examples for example.

Speaker Change: If you look through two.

Speaker Change: Bruce fuels.

Speaker Change: <unk> boasts.

Speaker Change: Bose hazard ratios of $10 six or 93.

Speaker Change: Sure.

Speaker Change: Barrow.

Speaker Change: Tivoli.

Theres not figures that well below the national Nash.

Speaker Change: National emission intensity.

Speaker Change: When we look to the next.

Speaker Change: Yes.

Speaker Change: The refining indicator.

Speaker Change: <unk> see.

<unk> is a reduction in <unk>.

Speaker Change: Intensity tool.

Speaker Change: This improvement is a cessation associated with it.

Increased energy efficiency truce for instance, the reduction of gas.

Speaker Change: The torch.

Speaker Change: The process optimization.

Speaker Change: Finally.

Speaker Change: Look the third graph does lie a graph I would like to highlight.

Speaker Change: Gabor intense to farm down.

Speaker Change: Power generation.

Speaker Change: <unk>.

Four.

Speaker Change: For this reduction.

Speaker Change: The gasoline Thats the first thing.

Speaker Change: Improvement of the thermal power plant itself.

Speaker Change: Second the reduction of the dispatch of thermal power plants.

Speaker Change: Reducing the dispatch of the less assistance plan.

Speaker Change: Now, let's take a look to the absolute emissions in terms of absolute emissions. There is also a good performance. There was an important reduction of total operational emissions between 2022 and the first part of 'twenty three.

Speaker Change: The same happened regarding the operational in addition from oil and gas as you can see.

Speaker Change: They are there.

Speaker Change: In what concerns the total emissions.

Speaker Change: Two main explanation for the emissions reductions.

Speaker Change: The improvement in our process.

Speaker Change: Second the reduction of thermal power dense spot.

I would like to have bright light in this light.

Speaker Change: Three aspects related to climate.

Speaker Change: The carbonization.

Speaker Change: First point to highlight is related to the climate supplement.

Speaker Change: The theater.

Speaker Change: The new additions.

Speaker Change: The climate supplement.

Speaker Change: Information.

Speaker Change: Progress made in the cannibalization pessary carbon neutral program and other decarbonization.

Speaker Change: It is.

Speaker Change: The documented things reformulation.

Formulation.

Speaker Change: Got emissions per pharmacy in 2022 under project already implemented refined also.

Speaker Change: Yes.

Speaker Change: The report it presents also pinpointing slash startup risks.

Speaker Change: Gordon it's about the challenge of climate change.

Speaker Change: The document our actions to reduce methane emissions are deep position on just physician this starts to use.

Speaker Change: Gagan credit.

I invited.

Speaker Change: All to read this document the second point that.

Speaker Change: I want to highlight is that as it is.

Speaker Change: In the period.

Speaker Change: Some important partnership to leverage new business, the carbonization path Dortmund.

Speaker Change: And finally, the third points to highlight.

Speaker Change: On the dollar.

Speaker Change: Pricing.

We are referenced.

Sustainability by CDP indicate that our commitment to enquiries good environment and climate change.

Speaker Change: Additional measures.

Speaker Change: Dealing with our supply chain.

Speaker Change: Finally.

Speaker Change: Net less slide please.

Slide.

Speaker Change: We are going to focus on the.

Speaker Change: And as a segment.

Speaker Change: The performance of the period.

Speaker Change: In the period was quite robust.

Speaker Change: The result of access to build a commercial portfolio is resilient to business risks that explain this.

Yes.

Speaker Change: Good performance.

Speaker Change: <unk> continues to work to meet its contractual commitments for the sale of gas and the score and this is this quarter achieved 100%.

Victor.

Speaker Change: Reliability.

Speaker Change: In the first quarter of 2023.

Speaker Change: <unk> natural gas market.

Speaker Change: Aimed at things level off the faucet.

Speaker Change: Out of 22 however.

Speaker Change: However.

Speaker Change: To the first quarter of 'twenty two there was a decrease of 16.

Speaker Change: Cobra commuter straight days.

Speaker Change: The two sectors.

Speaker Change: Playing there is zero.

Speaker Change: First is the opening of the natural gas market in the county.

Speaker Change: S concept brands, increasing the participation of all other agent that used to produce.

Speaker Change: Produced good eyes and used to sell its to Petrobras that allows fell into.

Speaker Change: Trigger lock is a day that Claude.

Speaker Change: Another factor that's playing.

Speaker Change: With books of Denmark.

Speaker Change: The lower tend to lag consumption.

Speaker Change: Oh very often.

Speaker Change: Of our reservoir levels.

Speaker Change: The April the levels of the reservoir ended at eight 8%.

Hi, there.

Speaker Change: In the power sector within our power sector Hyster.

Speaker Change: The lower thermoelectric dispatch.

Speaker Change: So they are displaying the accident or a result of the.

Speaker Change: Just follow up in this first quarter.

Why that.

Speaker Change: The drop of demo.

Speaker Change: Spot needs.

Speaker Change: Laugh and energy was imported.

Speaker Change: At that time.

The view is that expense.

Speaker Change: The international market, so the lower dispatch of thermal power plant at this moment.

Speaker Change: Got it.

Speaker Change: Natural gas prices very high.

Speaker Change: <unk>.

Speaker Change: Very good.

Speaker Change: Petrobras resort.

Speaker Change: The doors.

Speaker Change: I also mentioned the garden they have relationship where it took a long time a lack of support.

Speaker Change: <unk>.

Speaker Change: Commercial action to solve with this.

Speaker Change: Puts that arose from the recent past.

Speaker Change: The signing of new contracts.

Speaker Change: An extension of sales portfolio.

Speaker Change: That's why as I had to say now. Thank you very much now we'll continue with cash instead of assets Chief Engineering technology, and innovation officer to present, the E&P results. Thank you very much Carla.

Speaker Change: Good afternoon, everyone and kind of some furnaces.

Speaker Change: Intermediate technology innovation Chief Officer.

Speaker Change: Today, we will present, both the results of exploration and production and engineering technology and innovation.

And she also mainly the rise in the range of minus surgery.

Speaker Change: And he was not able to be EBITDA ish is fine and by next week.

Speaker Change: It's going to be back.

Speaker Change: And starts with the next next slide so you can see here that you have to reach its 2% growth.

Speaker Change: <unk> operated production in comparison with the first quarter 'twenty two.

Speaker Change: We achieved three Chevy 4 million barrels a day.

Speaker Change: Repeaters are talking about acute agents here.

Speaker Change: So we can see it.

Speaker Change: And glue comparing with the last quarter to 82.

Speaker Change: And then there's also two 3% if you compare this.

Speaker Change: The first quarter to the last year as well.

If you take a look in all your cash into our ounce production again, we have.

Speaker Change: And.

Speaker Change: And grow compared with the last quarter. This growth was mainly due to the impact of 71.

Speaker Change: And for entry of eight wells in Kansas, Beijing, and also an improvement in our efficiency.

Speaker Change: And go into variety if you take a look and push out our own production and you can see that increasing of the shell shocked on our total production we achieved in this quarter shares in 70% of this sharp reduction.

Speaker Change: Sure.

Speaker Change: Total production.

Speaker Change: Now talking about some achievements important achievements, we actually read.

Speaker Change: Broken some records we.

Speaker Change: We broken in a monthly records two to one 3 billion barrels a day that was taking place in February.

Speaker Change: And actually a quarterly records with two points or five meters damage.

If you take a look and give you though production as well has an amazing results, it's going to vary Sps show 179000 barrels a day.

Speaker Change: That means 100% efficiency that was achieved.

Speaker Change: February at the last time that we have any records in November we've got you, okay, and so that new states. We've just broken records now lets talking about crushed, yes, now and showing a little bit of both our lifting cost in Brazil.

Speaker Change: To understand his picture.

Speaker Change: The secret gate three layers.

Speaker Change: So the yellow one each one short and shallow waters that you reduce.

Speaker Change: Our costs from $18 eight in the last quarter of last year.

Speaker Change: $214 seven.

Speaker Change: This major it.

Speaker Change: Related sound portfolio movements that you have done and then we also had results of lifting costs and GP warranted basically can put spacing, but not only kept space but.

Speaker Change: Basically there.

We have been here can see dropped as well if the cost mainly due to derail essentially putting production.

Speaker Change: And of the pre salts as well.

Speaker Change: Good results.

Speaker Change: <unk> two.

Speaker Change: Two impact of presenting two one.

Speaker Change: So those results bring us a drop of lifting costs from six one to five five now.

Speaker Change: Now showing a little bit about total cost so far a prediction. So if you take a look in the last quarter of 2002 that wasn't very aging.

Speaker Change: A reduction of 11% some debt.

Speaker Change: So here.

Speaker Change: Depreciation depletion and amortization and the government take is considered here and of course, the lifting cost is of course important to highlight that year.

Speaker Change: Most include foot into to have a view of total cost we are not including that numbers in those numbers.

Speaker Change: That investment is not to hear yes.

Speaker Change: Any catch up questions not here as well.

Now talking about.

Speaker Change: Our exploration.

We achieved.

Speaker Change:

Speaker Change: <unk> in 2021, and we are now we have started the extension drilling and adding blocks. So yeah. So this is the first of the first thing that we're doing the first well.

Speaker Change: We have six more to be done in June to declare as a commercial one.

Speaker Change: Okay. I think this is the last one for exploration production knowledge to a chunk of it.

Speaker Change: About engineering technology.

Speaker Change: And innovation, Okay. Okay do you have a picture of an annuity.

Speaker Change: <unk> units should we just started production in an added yesterday night you connect the second well.

Speaker Change: Net units.

Speaker Change: Reminding you that your spot of myelin utilization prove them yeah.

Speaker Change: <unk> you can go to the next please.

Speaker Change: And with utilization, we are going to remove nine units yes.

Speaker Change: To replace by two years.

Speaker Change: On an AD and you take a bulge in annuity we have start production late surge in Utica apologies, we added a moving it just women's here.

Speaker Change: Actually now from if you take a look at it is.

Speaker Change: His strategic plank $23 87.

Speaker Change: And so these <unk>.

Speaker Change: 18 units, who have forward and find a location to chassis to one that is already producing that should be anticipated in an entity now used in production as well and I need to get your biology that she's each the moving process and we have we also have Amit <unk> that she is ready to start production.

Speaker Change: <unk> four.

Speaker Change: Utilization coming back to the utilization.

Speaker Change: That's the program and then we intend to increase two 8% in our production and reduce seeks to change.

Speaker Change: Yes.

Speaker Change: Green greenhouse gas.

And this is a program at the time that you're talking about production system. They used to show the units, which is important to remind that you have in it and as should see working in a very hard since youre, working, especially when talking about where utilization when youre going to be huge 14, new wells and <unk>.

Speaker Change: Relocate 61.

Speaker Change: So and these kind of projects we have in it.

Speaker Change: Special feature that we also have <unk>.

Speaker Change: Remove some lines here and there.

Speaker Change: Great photos <unk>.

Speaker Change: Synchronization and has very good plenty to do.

Speaker Change: Hey, Chuck and you're about to Predating just starts scheduled for 'twenty treatment setting and I. Thank you. All of you are very familiar with this picture, yes. That's deep 18 units that we are going to start.

Speaker Change: Operation and disease, such as explained we have made some shifts with bruises seven IPD.

Speaker Change: <unk> highlighted that you were talking about despite all that just changing the year, which often about minor shifts as much big and there is no there is no impact or now.

Speaker Change: Production costs.

Speaker Change: As the industry is that you can tell us who can see the picture <unk> range for <unk> that is in construction.

Speaker Change: Just talking about downstream.

Speaker Change: It has been a very important achievement in this quarter that will be signing the contracts to restart the process guys unit see temporary absolutely, yes, so that to us.

Speaker Change: Dilutive next year.

Speaker Change: And we got bringing back again in this in test time six months times now we have to do all the contract signage and.

Speaker Change: Really the people mobilizing sides, yeah. So we keep the plant to start operation in 2024.

Not at.

Speaker Change: Unfortunately achievements this GE contract to expansion.

Of change one off hand niche so and trained number one we are actually going to spend from 115000 barrels a day to 130000 barrels a day and the completion of this work is scheduled.

Speaker Change: For 'twenty 'twenty, four and then dosing that information probably most of you know we have already construction.

Speaker Change: <unk> Air emission there both with unit. She is the construction is in progress and Nash as well.

Speaker Change: <unk>.

Speaker Change: That's what I have for today.

Speaker Change: Very much for your attention. Thank you sort of asses now.

Speaker Change: Now that the Florida, two medium finanza, chief industrial process and product officer, whose afternoon for everyone.

Speaker Change: <unk> stay here and to present the highlights of the refining segment in the third quarter of 23.

Speaker Change: And then so happy to be charge off how refiners.

Speaker Change: Aaron.

Speaker Change: Gas plants.

Speaker Change: In the first quarter of two and three.

Yes.

Speaker Change: I'm sorry, we have we are going to pure eyes.

Speaker Change: <unk> utilization factor more refineries in operational availability.

Speaker Change: In the first quarter.

Speaker Change: Figure to residual sensory I'll refer.

Speaker Change: <unk>.

Speaker Change: It was eight 5% we think that.

Speaker Change: It is an important and excellent results.

Speaker Change: Considering that we had three big turnarounds during this period in hip hop here Bob.

Speaker Change: Good to see.

Speaker Change: We spent almost $1 2 billion.

Speaker Change: By maintaining more than H hundreds larger keep much like you hit that changes by blind spots.

Speaker Change: Reactors.

Speaker Change: And we we.

Speaker Change: <unk>.

We had more than 10000 collaborators contributed if performance is big Charlie's helping us enable.

Speaker Change: In April we hear those are diesel factor.

Speaker Change: After 2009.

And net begin off who may not be performing above 90%.

Speaker Change: Regarding the operational availability.

Speaker Change: In the first part of 'twenty three.

Speaker Change: We obtain a result above 96%.

Speaker Change: Which most of our refineries achieved the level of the best.

Speaker Change: Refiners, including nickel bodies off.

Speaker Change: United States.

Speaker Change: Hey.

Speaker Change: Okay.

Speaker Change: <unk> have a nice day now I'll call quality, Schloesser, chief logistics commercialization and market offset losses go ahead Ian.

Thank you.

Ian: Hello, everybody.

Ian: For the year with year to date deposit volatility.

Ian: Alright.

Ian: The theme is this at this level of debt the bulk oil.

Ian: Yes.

Ian: As you can see it.

Ian: With some of these players also.

Ian: It's in the domestic market quite this soon.

Ian: The previous quarter.

Ian: As already expected pace of dividends, evidenced busily ever weaker consumption in the first quarter of the year.

Ian: It is important to say that this quantity and there isn't there is.

Ian: These bids.

Ian: Also divested investor remains low.

Ian: Good.

Ian: But the rest of the year.

Ian: Even so it is important to highlight that.

Ian: <unk>.

Ian: S business.

Ian: The first quarter.

Ian: In the last six years, driven by a decorated even as revenue.

Listening to ethanol.

Ian: Regarding the foreign markets.

Ian: <unk>.

By later.

Ian: It will be scheduled shutdowns.

Ian: Some of our biggest refine those estimates are influenced by that.

Lisa.

Ian: So there is a topical.

Ian: So I would like to take the.

Really for us all sectors in the market.

Ian: The market has even become part of.

Ian: Okay.

Ian: That's why I want to highlight that this start.

Ian: Diesel and gasoline sales center.

Ian: As most of the rest of the suite.

Ian: He is actually displace all flavors.

Ian: Midwest and enables.

Ian: Office commercial excellence in the region. This is a really important milestones that boost.

Ian: And the reason that should grow at most in the coming years. The bulk of all of its flow as you can see in this slide talking about that at all.

Ian: All main destination within China.

However, it is important.

Ian: That said, we continue to work.

Ian: Bethany.

Ian: Global opportunities.

Ian: To develop new brands.

Ian: Generates a more value.

Ian: With us in the beaches of.

Ian: With our diversified client base.

Ian: Paul.

Ian: Other key action is market development.

Ian: Other oils.

F C.

Ian: Neville.

Ian: Okay.

Ian: The causes them to be.

Ian: Already we all know can be done ethanol market with again.

Ian: It has been better liquidity.

Ian: Finally.

Ian: The highlights of the quarter that reinforced.

Ian: <unk> commitment to supplying more disposable sales yes.

Ian: Yes.

We had our first thank you Julie.

Ian: Best of luck.

Ian: Renewable content.

Ian: With the CV data.

Ian: That is the is in the picture.

Ian: And despite that weakness.

This deal was formulated with the business and soil biodiesel with dosing of one 7% that's the Ingalls designations.

The complete life cycle of this year.

Ian: The biggest cause of resistance on the seven emissions.

Ian: Today's a fifth lower anomalies.

Speaker Change: Reported by the team.

Speaker Change: National differences in relation to the mineral above them.

Speaker Change: Samples.

Speaker Change: Like this year.

Speaker Change: Moratorium data are in the final stages of analysis.

A lot of action in the same way was that we started offering the domestic air market.

Speaker Change: <unk> since it went up 1%.

Speaker Change: Mr Guinee with cellular.

Speaker Change: With a maximum Super Bowl.

Speaker Change: With us today.

Speaker Change: Let me assure you that all fuel oils sold by the company in the domestic market as a low cyclical dip.

Speaker Change: We will all see this and.

Speaker Change: In this segment and reduce their emissions.

Speaker Change: I'll also highlight the status of that.

Speaker Change: <unk> growth.

Speaker Change: Ultra low sulfur marine gas oil.

Speaker Change: And if you with the mechanism for quarter one.

Speaker Change: 1%.

Speaker Change: The new blood into gas oil is the discipline.

Speaker Change: There is a discipline that is at a final benefit to efficacy.

Speaker Change: That simple.

Speaker Change: Previously deployed sold.

Speaker Change: Before the surface.

The long haul.

Speaker Change: Debt with its shareholders.

Speaker Change: Based on our business doesn't have any gas oil daily.

Speaker Change: In less than a Super Bowl debit.

Speaker Change: 5%.

Speaker Change: And with the addition of this ultra low sulfur.

Speaker Change: We start with equities.

Speaker Change: It was super bowls.

Speaker Change: This emissions.

Speaker Change: It has been so for upside in.

Speaker Change: In addition to that what is really the steps.

Speaker Change: All the way there.

Speaker Change: This does conclude the sulfur emission control areas with us in the us.

Speaker Change: Alright.

Speaker Change: This access showed up.

Speaker Change: And the right play in developing its use in guaranteeing lower emissions generating great value for the company Society.

Speaker Change: Vital.

Speaker Change: Yes.

Speaker Change: A final but the slides.

Speaker Change: Slides.

Speaker Change: Darla.

Darla: Thank you all we can move to our Q&A session and the first question that we receive.

Speaker Change: Comes from.

Speaker Change: We don't know lighting with Goldman Sachs and it's fast fashion.

Speaker Change: It's in our best Capex is poised to grow in the next few years and then the current and possibly the new strategic plan to be announced.

Speaker Change: I'll turn the call from a level of cash position the company should target.

Speaker Change: Lasse are in line with the prior management target of $8 million.

Speaker Change: Thank you Bruno for your question I believe that the level set up in there.

Speaker Change: Current business funnel very prudent.

Speaker Change: I think we must keep solid environment.

Speaker Change: Terms of liquidity and leverage.

Speaker Change: We want to always keep a robust financial extra tree, which allow us to face and feasible don't cycles in oil prices.

Speaker Change: Also need to be sure that our investments will be self funded.

Speaker Change: Our operational cash flow.

Speaker Change: Nonetheless alone want to emphasize that the distribution of new business plan May result in a revision of the Huron targets. Thank you Bruno and the next question comes from the sense of how long ago.

Speaker Change: The other issue, maybe and explore that advantage over fish.

Speaker Change: The company recently announced the delay in the start up of some platforms. What was the major cause of net debt. That's a very good question actually.

Speaker Change: We have written it actually is a minor adjustment.

Despite of BCD shipped from one year to another year, Yeah, we are talking about and minor minor change and maybe do you choose <unk> perception of our risk and manage it.

And this reception is.

Speaker Change: Regarding for the supply chain markets, both for top sides and also follow suit, but just from information you could take a look into <unk> and APB and <unk>.

We're talking about 13 days of ships.

Speaker Change: Not too much of course, when you see a ships for one year to another year. She is that you haven't seen a big change yet, but here we are not talking about a big change, but Petrobras all the time that we have and the change that some debts appears in their business plans.

Speaker Change: Very transparent and it is important to show a pensioner licensed markets.

Speaker Change: <unk>.

Speaker Change: But this change does not break and impact of narrow prediction.

Speaker Change: Thank you very much for your question. Thank you sort of asses. The next question comes from Rich <unk> with UBS.

Speaker Change: The lesson that muscle.

Speaker Change: A series of comments regarding the Companys focus in the future, particularly with diversification of investments focused on and then just transition.

Speaker Change: Well there is some potential investments options, how fast the investment quality convenient this portfolio could be made for organic investments or potential acquisitions.

Speaker Change: The company first of all assets in petrochemicals renewable power generation offshore wind fertilizers, biofuels tier distribution, new refiners or some other factor.

Speaker Change: Our view is there any target on how much this could represent strong future investment plans well.

Speaker Change: In fact, we are operating to diversify our investor regarding renewables, let's say.

Talk to you about.

Speaker Change: They are investing offshore OEM.

Speaker Change: Green hydrogen for Cfos.

Speaker Change: Other possibilities.

Speaker Change: Still doing our strategic plan for the next cycle. So this statistical plan that we are be able to understand to know.

Speaker Change: Uh huh.

Speaker Change: Technologically avalanche or to invest in what cause the investment can be let's say through cost course organic investments, but it's not to discount the possibility to make some acquisition model.

Speaker Change: Our preference for.

Speaker Change: Organic investments.

Speaker Change: This mainly with partnership with two other companies I think is the best way to do.

Speaker Change: More investments.

Randy.

Speaker Change: These companies.

Speaker Change: Uh huh.

Speaker Change: <unk>.

Speaker Change: It comes off.

Right.

Speaker Change: Volatile future investment plans.

Speaker Change: Don't have yet the targets because.

Speaker Change: As I have said that the statistical plan.

Speaker Change: <unk> been doing but I could say that we are going to do this with the risk financial responsibility.

Speaker Change: And as that is possible to do so with this the K show, but.

Speaker Change: One thing our financial indicators.

Speaker Change: Good. Thank you part of your question and the next question also from Michigan value UBS is for philosophy philosophy. The Companys current fuel price policy considers international price any part cost.

This could be used in a possible new policy is export parity.

Speaker Change: Mexico for both product and option then the company can see Theres holding lower margins on the domestically produced product in order to reduce price pressure for the final consumer. Thanks for your question Luis.

Speaker Change: I would like it to.

Speaker Change: The opportunity to Poland.

Speaker Change: So all this is this is the law.

Speaker Change: That is up to date with US is can you elaborate.

Speaker Change: Is that it.

Speaker Change: That being said in Australia.

Speaker Change: Workers for the cost of new competitors.

Speaker Change: Got it.

Speaker Change: It could be the only reference the pivotal dose.

We have all the opportunities that we can explore.

Speaker Change: Who all is available with plenty of capacity.

Speaker Change: Integration with all the same.

Speaker Change: And the operational efficiency did allows us to compete efficiently efficiency.

Speaker Change: Reserve and the company's value is innovation.

Speaker Change: That's the answer.

Speaker Change: Yes.

Speaker Change: When you think getting a call.

Speaker Change: Over there.

Speaker Change: Yes.

Speaker Change: Thank you for the opportunity.

Speaker Change: Dressing our questions on behalf of <unk> I'd like to wish menu with active Bart good luck.

Speaker Change: Thanks.

The first question is from when you can assume there has been an issue.

Speaker Change: Comment on the challenging expect to encounter in your new position and if possible share some of the plans and ideas to be implemented doing nurture Hamlin.

Speaker Change: <unk>. Thanks for your question.

Speaker Change: First of all I think that we must consider that we had a very robust.

Speaker Change: Integrity and government system in.

Speaker Change: That doesn't mean that.

Speaker Change: There isn't anything to do.

Speaker Change: Quite the contrary.

What we need to do is now to enhance the system.

Speaker Change: It becomes more sustainable and totally aligned with our business.

Speaker Change: And there are important aspects related to improving our performance that can be considered.

Speaker Change: Our strategy to prevent and combat harassed.

Speaker Change: Just some examples.

Speaker Change: We will run important points for us and we recruited Moreover, some technology tools can be incorporated into our compliance actions, making them more efficient.

Speaker Change: Ed.

Speaker Change: We will enhance our compliance and risk management policy focusing on issues that may represent the risks of damage to the company.

Speaker Change: <unk> strategic objectives.

Speaker Change: And with this we will be able to identify the most exposed areas and working preventively.

Speaker Change: But the point that I can see the most important is that we need to ensure.

Speaker Change: Our integrity program is a strong and responsive in this to protect our assets.

Speaker Change: Protecting the company and at the same time to ensure efficiency.

Speaker Change: Respecting all the rules and foreclosing on people I think that that's it thank.

Speaker Change: Thank you.

Speaker Change: The next question.

Speaker Change: And when he gets to even despite the refinery maintenance carryout in the recent quarters. The company has managed to maintain high levels of refinery utilization rate.

In this regard is there still room to increase the current sensitization levels, what will meet the desired level of refinery utilization for the refining park as a whole by Monique tanker for a good question for us.

Speaker Change: I'm sorry, yes.

Speaker Change: We have bought conducive to increase our refinery utilization because of two reasons first of all I am not performing under operating our refineries.

Speaker Change:

Speaker Change: Nextgen it reliability.

Speaker Change: So imports on its Q2 to remain engaged.

Speaker Change: Of this one and then Jack will go off the shelf with voyage, which because we won't have much bigger.

Speaker Change: <unk> done our own further in that small and short.

Speaker Change: The end of the year, Dan I think that we have.

Speaker Change: Yeah.

Speaker Change: Good refill twinkies or refinery utilization utilization for the next March.

Speaker Change: Above above 90%.

Speaker Change: In order to get to market portfolio.

Speaker Change: Opportunities, okay, but the goal is to maximize our pollution.

Speaker Change: <unk> of our operations.

Speaker Change: The risk factor.

Speaker Change: Over the aspect.

Speaker Change: Safety environment health anything okay.

Our cash and when is the next question is about TNT and I'll call on Apollo's It's al.

Speaker Change: And a follow up regarding the equatorial margin could you comment on the companys expectations regarding the approval that evolve them.

Speaker Change: If the regulatory agency President follows the negative opinion presented by the technical area.

Speaker Change: Earlier this month could you discuss the knievel long term alternatives for the company to continue to increase its production fingers. Thank you Carla. Thank you my question well that summarizes our waiting for ibama positions on the pre operational assessment.

Speaker Change: This exercise to evaluate the company.

Speaker Change: Response capacity in an unlikely event accident event.

Speaker Change: So it's part of the process and we are pursuing that optimization to the next steps of the permitting process. We are following Italy. We're following strictly the requirements of the bomber and then no pending issues from Thats advertise all the research site locations waiting for.

Speaker Change: But there's also renovation itself.

We understand that activity in the region is very safe. That's the reason we have planned $2 billion to drill 16 wells in the equatorial margin.

Speaker Change: But we also have some investments planning exploratory phase and we are monitoring closely all opportunities abroad.

Speaker Change: That's part of our strategy to build up our reserves and tool and to manage our portfolio. So thank you very much I'm wondering can thank you Ana Paula and the next question comes from Anthony <unk> with Sidoti and its for Multistem asking.

Speaker Change: Okay.

Speaker Change: With their managers and gave US more information return levels time for construction of offshore wind farm projects being studied together with economic well. Thank you for the question.

Speaker Change: So at the moment, we have only let's say a memorandum of understanding some project some of the areas that we apply to.

To environmental license at the bomber, but let's say we are waiting for.

Speaker Change: The establishment of the regulatory framework to stock.

Speaker Change: Thirdly specific projects so at the moment, we don't have any figures.

Speaker Change: Vest amongst timeframe.

Speaker Change: And so on.

Speaker Change: I believe that.

Speaker Change: I'm not.

Speaker Change: Short time off of where you are going to have this kind of formation. Thank you. So much. Thanks. Thank you all at this time the Q&A session is over you should have any further questions you can sell to our Investor relations team I would like to thank you all for your attention. It's a very important quarter with a solid results from.

Speaker Change: Ratio and financial.

Speaker Change: Many of you. Thank you all and have a great day.

Q1 2023 Petroleo Brasileiro SA Petrobras Earnings Call

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