Q3 2023 Petroleo Brasileiro SA Petrobras Earnings Call

November 10, 2023

Operator: It's a pleasure to be here with you. This event is being held in Portuguese, and it is simultaneously translated into English. Links to hear both languages are available on our investor relations page. We would like to inform you that all participants will be in listen-only mode during the company's presentation. After this introduction, we will have a questions and answer session, and you may send your questions to petroinvest@petrobras.com.br. We have with us today Ana Paula Zettel, Executive Director for Partnerships and Exploration and Production Processes, representing the Executive Director of Exploration and Production, Joelson Mendes. Carlos Travassos, the Executive Director for Engineering, Technology and Innovation. Claudio Schlosser, Executive Director for Logistics, Commercialization and Markets. Mauricio Tolmasquim, Executive Director of Energy Transition and Sustainability. Sergio Caetano Leite, Financial and Investor Relations Officer, and William França, Executive Director for Industrial Processes and Products.

This event is being held in Portuguese and it is simultaneously translated into English.

Links to hear both languages are available on our Investor Relations page, we would like to inform you that all participants will be in listen only mode. During the Companys presentation.

After this introduction, we will have a questions and answer session and you may send your questions to Petro invest at Petrobras Dot Com Dot BR, we have with US today, unapologetic <unk> executive director for partnerships and exploration and production processes representing.

The executive director of exploration and production Jolson vendors.

Carlos <unk> executive director for Engineering Technology and innovation.

Cardio Schlosser: Cardio Schlosser executive director for logistics commercialization and markets.

Mauricio Thomas King Executive director of energy transition and sustainability.

Sergio Caetano: Sergio Caetano lead to.

Financial and Investor Relations Officer, and William <unk> Executive director for industrial processes and products.

To start off we will hear a message from orange.

Operator: To start off, we will hear a message from our CEO, Jean Paul Prates.

Speaker Change: CEO John Paule properties.

Yes.

Speaker Change: Yes.

Okay.

Good morning to all of you we are very proud to present the results of the third quarter of our management Petrobras has once again achieved records and significant figures, which highlight the quality of the work being done.

Jean Paul Prates: Good morning to all of you. We are very proud to present the results of the Q3 of our management. Petrobras has once again achieved records and significant figures which highlight the quality of the work being done. We broke our quarterly record for operated oil and gas production, reaching around 4 million barrels of oil equivalent per day, which represents an 8% increase compared to the Q2 of this year. Our results prove the high productivity of the pre-salt, this giant that collects exceptional results. Since December last year, we have already started up four new production platforms, and we still have one more planned for the end of the year, with the start of production from FPSO Sepetiba in the Mero fields.

Speaker Change: We broke our quarterly record for operated oil and gas production, reaching around 4 million barrels of oil equivalent per day, which represents an 8% increase compared to the second quarter of this year.

Speaker Change: Our results prove the high productivity of the pre salt this giant that collects exceptional results since December last year, we have already started up for new production platforms and we still have one more planned for the end of the year with the start of pre.

Speaker Change: Duction from <unk> in the marrow fueled.

Speaker Change: The installation of these five units in the space of 12 months.

Jean Paul Prates: The installation of these five units in the space of 12 months is a major milestone, adding 630,000 barrels to the company's oil production capacity. I'd like also to highlight the operational performance of our refineries in this Q3. We had record utilization of our refining plants reaching 96%, the highest quarterly level in 9 years, as well as a record production and sales of 10 ppm diesel. We continue to launch products with a lower environmental impact, such as Podium gasoline, carbon neutral, the first gasoline on the Brazilian market to have its greenhouse gas emissions fully offset through carbon credits, CAP Pro AP, high penetration petroleum asphalt cement with a high capacity for recycling aged asphalt. We also made progress with the plan to sell diesel with renewable content under the biorefining program of Petrobras, with record sales in September.

Speaker Change: A major milestone, adding 630000 barrels to the company's oil production capacity.

Speaker Change: I'd like also to highlight the operational performance of our refineries in this third quarter, we had record utilization of our refining plans, reaching 96% the highest quarterly level in nine years as well as a record production and sales of 10 ppm.

Speaker Change: Diesel.

Speaker Change: We continue to launch products with a lower environmental impact such as the boardroom gasoline neutral carbon the first gasoline on the Brazilian market to have its greenhouse gas emissions fully offset through carbon credits and GAAP pro AP high penetration Petra.

Speaker Change: Volume asphalt cement with a high capacity for recycling aged asphalt.

Speaker Change: We also made progress with the plan to sell diesel with renewable content under the bio refining program of Petrobras with record sales in September we closed the third quarter with a robust operating cash flow the fourth highest in the company's history.

Jean Paul Prates: We closed this Q3 with a robust operating cash flow, the fourth highest in the company's history. Operating cash flow was influenced by the appreciation of Brent, higher oil exports, and sales of oil products in our domestic market. Our investments continue to grow, and the company's debt remains under control. All of this was accomplished with total attention to people through actions such as the approval of the Diversity, Equity, and Inclusion Policy, published in September. Taking another step towards becoming a benchmark in these areas, ratifying our relentless pursuit of a diverse, inclusive, and safe environment for all people. In October, Petrobras celebrated its 70th anniversary, and today it is the largest offshore oil operator and one of the oil producers with the lowest emissions in the world.

Speaker Change: Operating cash flow was influenced by the appreciation of brands.

Speaker Change: Higher oil exports and sales of oil products in our domestic market our investments continue to grow and the companys debt remains under control.

Speaker Change: And all of this was accomplished with total attention to people.

Through actions such as the approval of the diversity equity and inclusion policy published in September.

<unk> another step towards becoming a benchmark in these areas ratifying, our relentless pursuit of a diverse inclusive and safe environment for all people.

Speaker Change: Tober Petrobras celebrated its 70 <unk> anniversary and today. It is the largest offshore oil operator, and one of the oil producers with the lowest emissions in the world, but we want to evolve even further towards a low carbon economy relying on <unk>.

Jean Paul Prates: We want to evolve even further towards a low carbon economy, relying on partnerships with various companies and institutions. Looking ahead, Petrobras goals focus on the sustainability of the business and the world. The decarbonization of processes and products and the fair energy transition are a philosophy with which the entire company is in tune and determined to deliver. The results we have achieved and our ambitions for the future are only possible due to an extremely dedicated and skilled workforce, which enables us to guarantee the energy Brazil needs to continue developing. Thank you and have a good event.

Ships with various companies and institutions looking ahead Petrobras goals focused on the sustainability of the business and the world the decarbonization of processes and products and the Fer energy transition, our philosophy with which the entire company is in tune.

Speaker Change: And that the mine to deliver.

Speaker Change: The results, we have achieved and our ambitions for the future are only possible due to an extremely dedicated and skilled workforce, which enables us to guarantee the energy Brazil needs to continue developing thank.

Speaker Change: Thank you and have a good event.

Speaker Change: We will now start our <unk>.

Operator: We will now start our Q3 2023 results presentation.

Speaker Change: Q3, 2023 results presentation.

Speaker Change: And for that I'll give the floor to our financial and Investor Relations Director Circle H E.

Sergio Caetano Leite: For that, I give the floor to our Financial and Investor Relations Director, Sergio Caetano Leite. Good morning. Thanks for participating in the results webcast. As President Jean Paul Prates said, it's a record-breaking quarter for Petrobras and its workforce, its business partners, the public and private sectors, and society in general. Celebrating great numbers as we're going to see. As you can see, we have a very robust quarter. Our EBITDA reached $13.6 billion, a consistent net profit, a good operational cash flow generation, and a free cash flow in line with our growth at $8.4 billion. A net debt EBITDA rate that's consistent return to society of around BRL 56 billion. Payment of BRL 9 billion in dividends. Approved dividends at BRL 17.5 billion.

Operator: For that, I give the floor to our Financial and Investor Relations Director, Sergio Caetano Leite.

Sergio Caetano Leite: Good morning. Thanks for participating in the results webcast. As President Jean Paul Prates said, it's a record-breaking quarter for Petrobras and its workforce, its business partners, the public and private sectors, and society in general. Celebrating great numbers as we're going to see. As you can see, we have a very robust quarter. Our EBITDA reached $13.6 billion, a consistent net profit, a good operational cash flow generation, and a free cash flow in line with our growth at $8.4 billion. A net debt EBITDA rate that's consistent return to society of around BRL 56 billion. Payment of BRL 9 billion in dividends. Approved dividends at BRL 17.5 billion.

Speaker Change: Good morning.

Speaker Change: Thanks for participating in the <unk>.

Speaker Change: Results webcast.

Speaker Change: As President Champeau practice said, it's a record breaking quarter for Petrobras and its workforce.

Speaker Change: Its business partners, the public and private sectors.

Speaker Change: Society in general.

Speaker Change: Celebrating.

Speaker Change: Great numbers.

Speaker Change: As we're going to see.

Speaker Change: As you can see we have a very robust quarter.

Speaker Change: Our EBITDA reached $13.6 billion and consistent.

Speaker Change: Net profit a good operational cash flow generation.

Speaker Change: And our free cash flow in line with our growth.

Speaker Change: At $8.4 billion.

Speaker Change: And net debt.

Speaker Change: A bit at a rate that's consistent.

Return to society of around 56 billion Reais.

Speaker Change: A man of.

Speaker Change: <unk> 9 billion re eyes and dividends.

Speaker Change: <unk> dividends.

Speaker Change: And 17.5 billion Reais.

Speaker Change: As I said, it's a record breaking quarter and we have a few operational highlights a few of which have been mentioned by the president in his speech.

Sergio Caetano Leite: As I said, it's a record-breaking quarter, and we have a few operational highlights, a few of which have been mentioned by the President in his speech, but it's worth highlighting a few more aspects. A record-breaking production of 25 BOED coming from gas, the use of the refining park. This is a direct consequence of the commercial strategy that we adopted, reflecting, among other things, our prices through an integration between the oil and gas company and a refining park of global dimensions, and with a use of 96% of the park. An adequate FUT, in addition to being high, also very efficient. The energy intensity of 101.7. An important operational milestone is diesel S-10, representing 62% of our total sales. Pre-salt natural gas processing, also breaking records.

Speaker Change: But it's with <unk>.

Speaker Change: Highlighting a few more aspects a record breaking production of 22 point at 25.

Speaker Change: B O E D coming from gas.

Okay.

A the use of the <unk>.

Refining.

Speaker Change: Park a farm. This is a direct consequence of the commercial strategy that we adopted reflecting among other things our prices.

Speaker Change: Through an integration.

Speaker Change: Between the oil and gas company and a refining farm.

Speaker Change: Of global dimensions.

Speaker Change: And with the use of <unk>.

Speaker Change: 96% of the firm.

Speaker Change: And an adequate S E. T. In addition to being a high also very efficient energy intensity of 101.7.

Speaker Change: An important operational milestone is diesel S Tan representing 60.

Speaker Change: 2% of our total sales be salt natural gas processing also breaking records all of these.

Speaker Change: Highlights in the presentation are at New records. The refining emissions index also in line with our requirements and we also brought a new tag any bouchie.

Sergio Caetano Leite: All of these highlights in the presentation are new records. The refining emissions index also in line with our requirements. We also brought Anita Garibaldi as a highlight, which in around 4 to 5 months, reached peak production at 150 million barrels in a record-breaking time. The carbon emission index per barrel under control with a forecast of decreasing. We had a forecast of 2.1 for oil and gas, and now it's updated for 2.3. The commercial production at 2.3 million BOED, and that was moved to 2.4. A total production from 2.6 to 2.8 million barrels. A few more milestones worth highlighting are in line with our strategic guidelines published in March.

As a highlight which in around.

Speaker Change: Four to five months reached peak production.

At a 150 million barrels.

Speaker Change: In a record breaking time.

Speaker Change: The carbon.

Emission index per barrel under control.

Speaker Change: With a forecast of.

Speaker Change:

Speaker Change: Decreasing and we had a forecast of 2.1 for oil and gas and now it's at updated for 2.3 of the commercial production at $2 3 million B, Oed's and where that was moved to $2 four and a total production and from 2.6 of 2.8 million.

Speaker Change: Barrels.

Speaker Change: A few more milestones.

Speaker Change: Worth highlighting are in line with our strategic guidelines published in March the diversity policy of Petrobras.

Sergio Caetano Leite: The diversity policy of Petrobras was approved and is being consistently implemented. The strengthening of the company's governance, the restructuring of the corporate board of directors, and the launch of a new department, in addition to transparency that was approved by NIFO, the main institution to measure the transparency index of companies in Brazil. We reinforced our governance, and we added transparency to our entire process as we grow. Petrobras is the biggest developer of wind farm projects in Brazil. Developers are those that take a project from the very beginning, and recently it signed a partnership with WEG to develop the biggest aerogenerator onshore and the biggest campaign for mapping the capacity and potential of generation. New job positions. We're coming from a phase of divestments, and with divestments, the workforce of the company diminished.

Was approved and is being consistently implemented the strengthening of the company's governance the restructuring of the corporate.

Board of directors and as the launch.

Speaker Change: Of.

Speaker Change: E a new department.

Speaker Change: In addition to transparency.

Speaker Change: That was approved by Antifog domain institution to measure the transparency index of companies in Brazil, So we reinforced our governance and we added transparency too.

Our entire process as we grow.

Speaker Change: Okay.

Speaker Change: Petrobras is the biggest developer of a wind farm.

Speaker Change: Projects in Brazil are developers are those that take a project from the very beginning.

Speaker Change: And it's celebrated it signed a partnership with VAG to develop the biggest original reader on shore and the biggest campaign for mapping the capacity and potential of generation new jumped positions.

Speaker Change: We're coming from a face of divestments and with divestments. The workforce of the company have diminished to now are at a different stage merit, we are reassessing, our our portfolio and making investments.

Sergio Caetano Leite: Now we're at a different stage where we are reassessing our portfolio and making investments in the traditional business areas and also in new areas. With that, we have to make adjustments to our workforce. We hired approximately 270 new employees between July and September. We are now looking into hiring more personnel. Also, the largest public selection of socio-environmental projects, followed by the launching of the Podium carbon-neutral gasoline. If you use this gasoline, you're actually buying carbon credits from the market to offset the emissions of the Podium carbon-neutral gasoline during that period. We have a few more highlights in terms of products. As the president mentioned, the CAP Pro AP asphalt and also sustainable products and the decommissioning of P-33.

Speaker Change: In the traditional business areas and also in new areas and with that we have to make adjustments to our workforce.

Speaker Change: We hired approximately 270, new employees between July and September.

Speaker Change: And.

Speaker Change: We are now looking into hiring.

Speaker Change: Hiring more personnel.

Speaker Change: Also the largest public selection of social environmental projects.

Speaker Change: By the.

Speaker Change: Launching of the podium carbon neutral gasoline.

Speaker Change: If you use this gasoline you actually are buying carbon credits and from the market too.

Speaker Change: Offset the emissions of the podium.

Gasoline during that period.

Speaker Change: We have a few more highlights in terms of products as the President mentioned.

Speaker Change: The camp Pro a P asphalt.

Speaker Change: Hence also.

Sustainable products and the decommissioning of P thirty-three.

Speaker Change: There are several platforms and oil rigs that will be decommissioned in the next few years and that will be done.

Sergio Caetano Leite: There are several platforms and oil rigs that will be decommissioned in the next few years, and that will be done with a social environmental responsibility in mind. Regardless of all of these records, we're dealing with adverse external conditions, both Petrobras and all the oil and gas companies. If we look at Q3 2022 and Q3 this year, Brent went down by 14%. That had a huge impact on all oil and gas companies. The crack spread of diesel, the main refining product in Petrobras, decreased by 16%, and the fields went down by 7%. The external environment, in addition to the geopolitical or in spite of the geopolitical instability, yielded good results.

Speaker Change: With a social environmental responsibility in mind.

Speaker Change: And regardless of all of these are records for dealing with adverse external conditions, both Petrobras and all of the oil and gas companies. If we look at the third quarter of 2022, and the third quarter of this year the brands win.

Down by 14% that had a huge impact on all oil and gas companies the crack spread of diesel domain.

Speaker Change: Refining our products in Petrobras decreased by 16% and this builds went down by 7%. So the external environment. In addition to the geopolitical.

Speaker Change: Or in spite of the geopolitical instability.

Speaker Change: Yielded good results the EBITDA.

Speaker Change: In line with the external.

Sergio Caetano Leite: The EBITDA, in line with the external conditions, grew between Q1 and Q3 of this year. Petrobras is on an expansion route. We had an EBITDA growth, if you consider the adjusted EBITDA of 15% from the last quarter to this quarter, in spite of the adverse external conditions. We keep on growing. If you compare the adjusted EBITDA of this quarter with the same quarter of last year, there was a decrease of 22% in addition to intrinsic issues at Petrobras, PPI, FUT, and the use of refineries was much lower than it is today. We didn't have this perspective of Petrobras being an integrated energy companies. There was a decrease of Brent and the exchange rate. There was a decrease of 22%.

Speaker Change: Conditions.

Speaker Change: It grew between the first and third quarter of this year.

Speaker Change: So Petrobras is on an ex pension route.

Speaker Change: We had an EBITDA growth if you consider the adjusted EBITDA of 15% from the last quarter to this quarter in spite of the adverse external conditions, we keep on growing if you compare the adjusted EBIDTA of this quarter with the same quarter of last year. There was a decrease.

Speaker Change: Of 22% in addition to you in Turin sake.

Speaker Change: Issues at Petrobras PPI FUT.

Speaker Change: And the use of refineries was much lower than it is today, we didn't have this perspective.

Speaker Change: Petrobras being an integrated energy companies.

Speaker Change: There were there was a decrease of our brands.

Speaker Change: And to the exchange rate. So there was a decrease of 22%.

Speaker Change: But it's important to say that on average this decrease reaches 43% Petrobras is more resilience than the external market and that's a good quality of the company which is.

Sergio Caetano Leite: It's important to say that on average, this decrease reaches 43%. Petrobras is more resilient than the external market, and that's a good quality of the company, which is in a growing path, as you can see between quarters. If you look at the EBITDA per business segment, the EBITDA of exploration went up by 25% between the last quarter and this quarter, in line with the growth of the company. Refining, transportation, and marketing. This segment is more sensitive to external conditions. If you look at the EBITDA with the inventory turnover, the growth was 32%, and the replacement cost reflected the crack spread and the Brent decrease at a negative rate. In case of gas and power, we saw a growth of 49%.

Speaker Change: In a growing <unk>.

Speaker Change: Half.

Speaker Change: As you can see you between.

Speaker Change: Orders if.

If you look at the EBITDA per business segment, the EBITDA of exploration went up by 25%.

Speaker Change: I mean, the last quarter and this quarter and lineup with the growth.

Of the company refining transportation and marketing.

Speaker Change: This segment is more sensitive to external conditions. If you look at the EBITDA with the inventory turnover the growth was 32% and the replacement cost reflected the crack spread and the Brent decreased at a negative rate in case of gas.

Speaker Change: In power, we saw a growth of 49%.

Speaker Change: R. F C O R O C F. In the cash generation of the company is robust and it's sufficient to deal with and that men and investment requirements.

Sergio Caetano Leite: Our FCO or OCF and the cash generation of the company is robust, and it's sufficient to deal with endowment and investment requirements, and cash flow, which is quite robust and continues to be robust. Our CapEx was BRL 9.1 billion in the nine months of 2023. This investment CapEx is 31% higher than the investments in the same period. What's new about this information? Well, absolutely nothing. The previous strategy was one of divestment and concentration in EP, and not considering Petrobras as an integrated energy company, but rather as an exploration company that explores a pre-salt, which would jeopardize the investments of the company owners and shareholders. That would decrease the company's resilience for the future.

Speaker Change: And cash flow.

Speaker Change: Which is <unk>.

Speaker Change: <unk> robust and continues to be robust our capex was 9.1 billion in the nine months of 2023. This investment Capex is 31% higher than the investments in the same period.

Speaker Change: So what's new.

Speaker Change: And this about this information.

Speaker Change: Lee nothing the previous strategy was one of divestments and a concentration in a P and not considering Petrobras as in integrated energy company, but rather as in exploration.

Speaker Change: Company that explore is a pre salt, which would jeopardize the investments of the company owners and shareholders that would decrease the company's resilience for the future. So in line with the strategic changes and in line with the new guidelines.

Sergio Caetano Leite: In line with the strategic changes and in line with the new guidelines, after analyzing the first nine months of 2022 compared to those of 2023, Petrobras is investing more and better. We have forecast the year to be ending at around BRL 13 billion worth of investments, which will represent more than 30% of what was invested last year.

Speaker Change: After analyzing the nine first months of 'twenty, two compared to those of 2023, Petrobras is investing more and better we have forecast.

Speaker Change: The year to be ending at around 13 billion. He is worth of investments, which will represent more than a 30% of what was invested last year.

Speaker Change: Alright dancer under control as we all know.

Sergio Caetano Leite: Our debts are under control. As we all know, our endowment is under impact of the IFRS standards and our internal CRC in Brazil. The debts reach $61 billion, which is within the variation range band between $55 and $65 billion. One of the measures adopted by Petrobras, the $61 billion, if you discount the cash flow, the result is $43 billion. The gross is $61 billion, and the net debt of $43 billion. Our financial debt is around $29 billion. Out of $61 billion that Petrobras has in terms of total gross debts, $29 billion are from financial debts and debts issued in the market with an average term of 11.5 years for payment. It's a well-structured debt that's very comfortable for our cash flow. With the rest, the balance between $29 billion and $61 billion coming from FPSOs that increase our debt.

Speaker Change: Our and that man is under impacts of the I F. R. S standards and our internal CRC in Brazil. The deaths are reached $61 billion, which is.

Speaker Change: Within the variation bench band between 55, and 65 1 billion.

Speaker Change: One of the measures adopted by Petrobras, how these 61 billion. If you discount the cash flow is the result is 43.

Speaker Change: The gross is 61 and the net debt of 43 billion our financial debt is around a 29 billion out of 61 billion that Petrobras has in terms of total gross debt's 29 are.

Speaker Change: From a financial debts and debts issued in the market.

With an average term of.

11.5 years for a payment.

Speaker Change: It's a well structured debt that's very comfortable for our our cash flow with the arrest of the balanced between 29 and 61 are coming from F. P. S. Sows that increase our debt next slide please.

Operator: Next slide, please. This year, with our new investment policy, in line with the main companies of the market, with the major peer companies, we have started a share buyback program. This was approved by the board as we reviewed our shareholder payout policy. It is a part of our shareholder payout policy. When it was approved, we disclosed this buyback program as the first one under controlled dimensions between, well, an acquisition of up to 157 million preferred shares. So far, we have reached 35%, about 28 million in September and 27 million in October. Next slide, please. Net income. On this graph, we can see a comparison between Q2 and Q3.

Sergio Caetano Leite: Next slide, please. This year, with our new investment policy, in line with the main companies of the market, with the major peer companies, we have started a share buyback program. This was approved by the board as we reviewed our shareholder payout policy. It is a part of our shareholder payout policy. When it was approved, we disclosed this buyback program as the first one under controlled dimensions between, well, an acquisition of up to 157 million preferred shares. So far, we have reached 35%, about 28 million in September and 27 million in October. Next slide, please. Net income. On this graph, we can see a comparison between Q2 and Q3.

Speaker Change: This year with our new investment policy in line with the main companies of the market.

Speaker Change: With the major peer.

Peer companies.

Speaker Change: We.

Speaker Change: Have started a share buyback program. This was approved by the board as.

As we reviewed our shareholder payout policy. It is a part of our shareholder payout policy.

So when it was approved we.

Speaker Change: Disclosed this buyback program as the first one.

Speaker Change:

Speaker Change: <unk>.

Speaker Change: Trolled dimensions.

Speaker Change: Between.

Speaker Change:

Speaker Change: Ah well on acquisition of up to 157 million preferred shares and so far we have reached 35%.

Speaker Change: About 28.

Million and September and $27 million in October next slide please.

Speaker Change: Net income so on this graph, we can see a comparison between the second and third quarters. We can also see a comparison between the third quarter of 22 in the third quarter of 23, you can see that the net income for Petrobras between the second and third quarters.

Operator: We can also see a comparison between Q3 2022 and Q3 2023. You can see that the net income for Petrobras between Q2 and Q3 reflected the company's performance, meaning it is growing. Gross income is lower than what we had in Q3 2022, and this is due to the external environment. Again, Brent is dropping 14%. The crack spread for diesel, which is Petrobras' main product, is also dropping. We also had exchange, foreign exchange effects. With all of these, factors combined, we really have to celebrate Petrobras resilience. There's a debt impairment effect here when we consider foreign exchange and other financial, values that can impact our net income to some extent. Next slide.

Sergio Caetano Leite: We can also see a comparison between Q3 2022 and Q3 2023. You can see that the net income for Petrobras between Q2 and Q3 reflected the company's performance, meaning it is growing. Gross income is lower than what we had in Q3 2022, and this is due to the external environment. Again, Brent is dropping 14%. The crack spread for diesel, which is Petrobras' main product, is also dropping. We also had exchange, foreign exchange effects. With all of these, factors combined, we really have to celebrate Petrobras resilience. There's a debt impairment effect here when we consider foreign exchange and other financial, values that can impact our net income to some extent. Next slide.

Reflected the company's performance, meaning it is growing.

Speaker Change: Gross income is lower than what we had in the third quarter of 'twenty two.

Speaker Change: And this was due to the external environment.

Speaker Change: Again.

Brent is a dropping 14% the crack spread for diesel which is Petrobras main product is also dropping and we also had exchange foreign exchange effects. So with all of these factors combined we'd really have to celebrate a petrobras resilience.

Speaker Change: So.

Speaker Change: Bears that impairment effect here, when we consider foreign exchange and other financial Ah <unk>.

Speaker Change: Values that can impact our net income to some extent.

Speaker Change: Next slide.

Speaker Change: Okay.

Speaker Change: It's also very important to see.

Operator: It's also very important to see, Petrobras' strategic drivers, meaning taking care of society and taking care of, people. We are providing returns to society. BRL 65.5 billion have been paid in taxes and dividends this quarter, a significant amount. Here we can see the split per federal level, so federal, state, municipalities, government, and dividends. When we add all of that up, we can see the importance of Petrobras for society. Remuneration to shareholders. We have approved BRL 17.5 billion in dividends. We had a total buyback of BRL 974 million. According to our policies, this buyback is coming out of dividends. We approved BRL 18.4 billion in dividends minus buyback. That is BRL 974 million.

Sergio Caetano Leite: It's also very important to see, Petrobras' strategic drivers, meaning taking care of society and taking care of, people. We are providing returns to society. BRL 65.5 billion have been paid in taxes and dividends this quarter, a significant amount. Here we can see the split per federal level, so federal, state, municipalities, government, and dividends. When we add all of that up, we can see the importance of Petrobras for society. Remuneration to shareholders. We have approved BRL 17.5 billion in dividends. We had a total buyback of BRL 974 million. According to our policies, this buyback is coming out of dividends. We approved BRL 18.4 billion in dividends minus buyback. That is BRL 974 million.

Petrobras is strategic drivers, meaning taking care of society and taking care of our people.

Speaker Change: So we are providing returns to society $65 5 billion Brazilian reals have been paid in taxes of dividends this quarter, a significant amount and here we can see the split per.

Speaker Change: Federal level, so federal state municipalities government add dividends when we add all of that up we can see the importance of Petrobras for society.

Speaker Change: Our remuneration to shareholders, we have approved 17.5 billion and dividends, we had a total buyback of $974 million.

Speaker Change: According to our policies this buyback is coming out of.

Speaker Change: Dividends so we.

Approved $18 4 billion in dividends.

Speaker Change: Minus the buyback.

Speaker Change: That is $974 million.

Speaker Change: So we are paying out our dividends.

Operator: We are paying out our dividends and JCP, representing excuse me, BRL 17.7 billion. This concludes our presentation. This was a summary of our results for this quarter. As I said, this is a record quarter for Petrobras that we should celebrate. The company is moving towards a more resilient future, so we're keeping investments in the most traditional areas of the company, oil and gas, but we're also reinforcing our investments into new areas. Thank you for listening. Thank you, Sergio. We will now begin the questions and answers session. The first question we received came from Mr. Bruno Montanari from Morgan Stanley. He's asking a question to Sergio. About potential extraordinary dividends for the 2023 fiscal year, what financial indicators will the company use to decide on this payment?

Sergio Caetano Leite: We are paying out our dividends and JCP, representing excuse me, BRL 17.7 billion. This concludes our presentation. This was a summary of our results for this quarter. As I said, this is a record quarter for Petrobras that we should celebrate. The company is moving towards a more resilient future, so we're keeping investments in the most traditional areas of the company, oil and gas, but we're also reinforcing our investments into new areas. Thank you for listening.

Dividends in I O C representing 100.

Speaker Change: Excuse me $17 7 billion in Brazilian Reals.

Speaker Change: Okay.

Speaker Change: So this concludes our presentation.

Speaker Change: This was a summary of our results for this quarter.

Speaker Change: As I said this is a record quarter for Petrobras that we should celebrate.

Speaker Change: The company is moving towards a more resilient future. So we're keeping investments in the most traditional areas of the company oil and gas, but we're also reinforcing our investments into new areas. So thank you for listening.

Operator: Thank you, Sergio. We will now begin the questions and answers session. The first question we received came from Mr. Bruno Montanari from Morgan Stanley. He's asking a question to Sergio. About potential extraordinary dividends for the 2023 fiscal year, what financial indicators will the company use to decide on this payment?

Sergio Caetano: Thank you Sir hero.

We will now begin the questions and answers session.

Sergio Caetano: The first question, we received came from Mr. Bruno Montanari from Morgan Stanley.

Speaker Change: He's asked the question to Sergio.

Speaker Change: Yeah.

Speaker Change: About potential extraordinary dividends.

For the 2023 fiscal year.

Speaker Change: What financial indicators will the company used to decide on this payment Petrobras is working at a very low leverage level, even when we look at the last 12 to 24 months it seems like the companies.

Sergio Caetano Leite: Petrobras is working at a very low leverage level. Even when we look at the last 12 to 24 months, it seems like the company's cash position is robust and could afford a dividend payout. What should we expect for this year? Sergio? Hi, Bruno. Thank you for your question. It's true, the company's indebtedness is under control, but it should fluctuate between BRL 55 billion as an average level and 65 billion as the maximum level. As we published, we are currently at BRL 61 billion. That's 4 billion away from the upper threshold. Of course, we have amortization. We're paying interest rates for this debt consistently in the first 9 months of the year. Until the end of the year, we will pay more than what we paid last year.

Operator: Petrobras is working at a very low leverage level. Even when we look at the last 12 to 24 months, it seems like the company's cash position is robust and could afford a dividend payout. What should we expect for this year? Sergio?

Speaker Change: Our cash position is robust and could afford a.

Speaker Change: Dividend payout so how should we what should we expect for this year.

Speaker Change: Joe.

Speaker Change: Hi, Bruno Thank you for your question.

Sergio Caetano Leite: Hi, Bruno. Thank you for your question. It's true, the company's indebtedness is under control, but it should fluctuate between BRL 55 billion as an average level and 65 billion as the maximum level. As we published, we are currently at BRL 61 billion. That's 4 billion away from the upper threshold. Of course, we have amortization. We're paying interest rates for this debt consistently in the first 9 months of the year. Until the end of the year, we will pay more than what we paid last year.

It's true the company's indebtedness is under control but.

Speaker Change: It should fluctuate between 55 billion as an average level and 65 billion.

Speaker Change: Billion as the maximum level as we published we are currently at 61 billion Brazilian Reals. So.

Speaker Change: That's four.

A billion away from the upper thresholds of course, we have amortization, we're paying our interest.

Speaker Change: Interest rates for the sedan consistently in the first nine months of the year and until the end of the year, we will pay more than what we paid last year. So our debt is under control, but we're not only looking at that we're also looking at investment needs.

Sergio Caetano Leite: Our debt is under control. We're not only looking at that, we're also looking at investment needs. We're looking at the external environment, the adversities caused by the wars. We're not only looking at the quarter either. As you know, extraordinary dividends are usually paid out at the end of the year. We're looking at the probabilities for the next two years, simulating several scenarios with different levels of confidence for each scenario. We're being very cautious in our management to control our debt. Only by doing that and looking at our future investments is that we can look at this possible payout, and then this can be approved. That's the criteria we look at to answer your question. It's not only based on a quarter or our indebtedness, but we look at many quarters.

Speaker Change: We're looking at the external environment. The adversity is caused by the wars, but we're not only looking at the quarter either so as you know external or extra ordinary dividends are usually paid out at the end of the year.

Speaker Change: And we're looking at the probability is a for the next two years stimulating several scenarios with different levels of confidence for each scenario. So.

Speaker Change: We're being very cautious in our managed led to.

Speaker Change: To control our debt.

Speaker Change: And only by doing that and looking at our future investments.

Speaker Change: Yes.

Speaker Change: Is that we can look at this possible payout and then.

Speaker Change: This can be approved.

Speaker Change: So that's the criteria we look at to answer your question, it's not only based on a quarter or our indebtedness, but we look at many quarters as you know pets.

Speaker Change: Petrobras is a major company and any decision that you take.

Sergio Caetano Leite: As you know, Petrobras is a major company, and any decision that you take during Q3 may impact your entire next year. We have to look at that in order to make these decisions. Thank you, Sergio. Bruno has a second question for Ana Paula Zettel. The company posted robust results this quarter, which was a surprise. Internally, is your production performance also a surprise for the company? Would it make sense to think that the future production levels can have an upside bias? Ana? Thank you for your question, Bruno. Good morning, everyone. Actually, it was not a surprise. We have a risk analysis for our projection considering units that have been implemented and new units. We have a 12-month study in which we started 5 new units. We look at the risk factors that may affect our production.

Speaker Change: Take during the third quarter May impact your entire next year. So we have to look at that in order to make these decisions.

Thank you Sergio Bruno has a second question for Ana Paula.

Operator: Thank you, Sergio. Bruno has a second question for Ana Paula Zettel. The company posted robust results this quarter, which was a surprise. Internally, is your production performance also a surprise for the company? Would it make sense to think that the future production levels can have an upside bias? Ana?

The company.

Speaker Change: Posted robust results this quarter, which was a surprise internally is your production performance also a surprise for the company what it makes sense to think that the future production levels can have an upside bias.

Speaker Change: Anna.

Speaker Change: Yes.

Speaker Change: Thank you for your question Brito good morning, everyone.

Ana Paula Zettel: Thank you for your question, Bruno. Good morning, everyone. Actually, it was not a surprise. We have a risk analysis for our projection considering units that have been implemented and new units. We have a 12-month study in which we started 5 new units. We look at the risk factors that may affect our production.

Speaker Change: Actually it was not a surprise.

Speaker Change: We have a risk analysis for our projections considering.

Speaker Change: The units that have been implemented and new units. So we have a 12 month study.

Speaker Change: And which we started five new units. So we look at the risk factors that may affect our production what we've seen throughout the year is that it's been robust and it has not been as affected by outside factors. So our production is at the upper threshold of our margin of error.

Ana Paula Zettel: What we've seen throughout the year is that it's been robust and it's not been as affected by outside factors. Our production is at the upper threshold of our margin of error, and this allowed us to review our production guidance. This was a part of the material fact that we had yesterday. Twelve point eight equivalent barrels. This is not a surprise. As we can see, our production was robust, but this was according to our projections. Thank you. Thank you, Ana. The next two questions will be asked by Vicente Falanga from Bradesco BBI, and they're directed to Sergio. The first one is: Does the company intend to publish in its strategic plan how much will be dedicated for M&As, and may this decision be out of the plans? Sergio? Hi, Vicente. How are you? Thank you for your question.

This allowed us to review our production guidance.

Speaker Change: This was a part of the material fact that we had yesterday.

Speaker Change: So it's a trough 0.8.

Speaker Change: Equivalent barrels. So this is not a surprise as we can see our production was robust but this was according to our projections. Thank you.

Speaker Change: Thank you on the next two questions will be asked by you.

Operator: Thank you, Ana. The next two questions will be asked by Vicente Falanga from Bradesco BBI, and they're directed to Sergio. The first one is: Does the company intend to publish in its strategic plan how much will be dedicated for M&As, and may this decision be out of the plans? Sergio?

Speaker Change: Vicente Falanga from Bradesco, PPI and they're directed to search out the first one is.

Speaker Change: Does the company intend to publish and its strategic plan, how much will be dedicated for M&A and made this decision to be out of the planets social.

Sergio Caetano Leite: Hi, Vicente. How are you? Thank you for your question.

Speaker Change: Ivy Sinti how are you. Thank you for your question.

So we have been discussing this plan.

Operator: We have been discussing this plan. As always, the new strategic plan for Petrobras is highly expected by the market because of the effects that it causes. We truly are talking about this right now. A lot has been said in the press, but it's still an ongoing process, so it might change. We're in a stage in which we'll be validated by the different executive managers, by the board, and by the upper leadership. This is something that is watched closely in the company. We don't have a full answer to your question yet. There are several possibilities, but we want to be in line with what I said before. We want to be transparent. We want to give predictability for everything that Petrobras does.

Sergio Caetano Leite: We have been discussing this plan. As always, the new strategic plan for Petrobras is highly expected by the market because of the effects that it causes. We truly are talking about this right now. A lot has been said in the press, but it's still an ongoing process, so it might change. We're in a stage in which we'll be validated by the different executive managers, by the board, and by the upper leadership. This is something that is watched closely in the company. We don't have a full answer to your question yet. There are several possibilities, but we want to be in line with what I said before. We want to be transparent. We want to give predictability for everything that Petrobras does.

Speaker Change: As always.

The new strategic plan for Petrobras is a highly expected by the market.

Speaker Change: Because of the effects that it causes so we truly are talking about this right now a lot has been said on the press.

Speaker Change: But it's still an ongoing process so.

Speaker Change: It might change where in a stage in which were will be validated by the different executive managers by the board by.

Speaker Change:

Speaker Change: D a.

Speaker Change: Upper leadership so.

Speaker Change: This is something that is.

Speaker Change: Watched closely in the company, we don't have a full answer to your question yet there are several possibilities but.

Speaker Change: We want to be in line with what I said before we want to be transparent we want to give.

Speaker Change: Predictability for everything that Petrobras does so we want to give an idea to the market about what we're going to do.

Operator: We want to give an idea to the market about what we're going to do. The most important thing is to say how we're going to do the future mergers and acquisitions. As you know, these processes have their own rules. They're guided by confidentiality agreements. Not everything we want to do is allowed. We need to be very cautious, especially because of, you know, strategic reasons. This is a part of the business that has a lot of competition, not only in Brazil, but we have competition from around the world. Petrobras works on a global stage, and we can't simply say that we intend to buy something in this or that industry. Once the decision has been made, once we decide to propose an acquisition internally, then, of course, we're going to disclose this with every step.

Sergio Caetano Leite: We want to give an idea to the market about what we're going to do. The most important thing is to say how we're going to do the future mergers and acquisitions. As you know, these processes have their own rules. They're guided by confidentiality agreements. Not everything we want to do is allowed. We need to be very cautious, especially because of, you know, strategic reasons. This is a part of the business that has a lot of competition, not only in Brazil, but we have competition from around the world. Petrobras works on a global stage, and we can't simply say that we intend to buy something in this or that industry. Once the decision has been made, once we decide to propose an acquisition internally, then, of course, we're going to disclose this with every step.

Speaker Change: Yes.

Speaker Change: But the most important thing is to say, how we're going to do the future mergers and acquisitions.

Speaker Change: As you know these processes have their own rules, they're guided by confidentiality agreements not everything we can we want to do is allowed.

Speaker Change: So we need to be very cautious.

Speaker Change: Especially because of the strategical reasons. This is.

Speaker Change: A part of the business that has a lot of competition not only in Brazil.

Speaker Change: But we have competition from around the world.

Speaker Change: Petrobras works on a global stage and we can't simply say that we intend to buy something in this or that industry.

Speaker Change: But once the decision has been made once we decided to propose an acquisition internally then of course, we're going to.

Speaker Change: Disclosed us with every step we have this obligation to publish a relevant information to.

Operator: We have this obligation to publish relevant information to the market. To answer your question directly, yes, we will make an effort to show what our budget is for mergers and acquisitions in our plan. Thank you, Sergio. Bruno's second question is: How do you assess a potential asset for an acquisition? What's that process like, and will you reveal that in your strategic plan? Vicente, our process for acquisitions, in general terms, is broadly known by the market. We work with an investment and divestment methodology that is well known. There are different levels to each guideline. They have statutory committees that the company doesn't participate in, so we have executive managers who deliberate on that. These processes are very transparent. We have a very solid governance that discloses all of these things.

Sergio Caetano Leite: We have this obligation to publish relevant information to the market. To answer your question directly, yes, we will make an effort to show what our budget is for mergers and acquisitions in our plan.

Speaker Change: The market.

Speaker Change: So to answer your question directly yes, we will make.

Speaker Change: Make.

In effort to.

Show, what our budget is for mergers and acquisitions and our planet.

Sergio Caetano: Thank you Sergio.

Speaker Change: So Bruno second question is.

Operator: Thank you, Sergio. Bruno's second question is: How do you assess a potential asset for an acquisition? What's that process like, and will you reveal that in your strategic plan?

How do you assess a potential asset for an acquisition, what's that processes like and will you reveal that in your strategic plan.

Sergio Caetano Leite: Vicente, our process for acquisitions, in general terms, is broadly known by the market. We work with an investment and divestment methodology that is well known. There are different levels to each guideline. They have statutory committees that the company doesn't participate in, so we have executive managers who deliberate on that. These processes are very transparent. We have a very solid governance that discloses all of these things.

Speaker Change: You said they are.

Speaker Change: Ross us for acquisitions.

Speaker Change: Acquisitions.

Speaker Change: Yeah.

Speaker Change: In general terms is broadly known by the market.

Speaker Change: We work with and investment and divestment methodology that is well known.

Speaker Change: There are different.

Speaker Change: Levels to ICH guideline they have.

Speaker Change: Statutory committees that the.

Speaker Change: Company doesn't participate in so we have executive managers who've deliberate on that.

Speaker Change: So these processes are very transparent.

Speaker Change: We have a very solid governance that.

Speaker Change: Discloses all of these things of course, we can't disclose some aspects which refer to our.

Operator: Of course, we can't disclose some aspects which refer to our competition. This process of acquisitions and divestment are communicated to the market. Whenever we have a decision at our board, this is published. The central bank keeps track of this process at every stage, from a proposal to a viability study. With every step, this is followed by the Brazilian TCU, and this is online and systems shared with the Brazilian TCU, and this is communicated to the market and to control agencies. This process has been established in Petrobras for many years, and it will be maintained.

Sergio Caetano Leite: Of course, we can't disclose some aspects which refer to our competition. This process of acquisitions and divestment are communicated to the market. Whenever we have a decision at our board, this is published. The central bank keeps track of this process at every stage, from a proposal to a viability study. With every step, this is followed by the Brazilian TCU, and this is online and systems shared with the Brazilian TCU, and this is communicated to the market and to control agencies. This process has been established in Petrobras for many years, and it will be maintained.

Speaker Change: Petition, but this process of acquisitions add this investments are communicated to the market.

Speaker Change: So whenever we have a.

Speaker Change: <unk>.

Speaker Change: Our board this is published.

Speaker Change: Central banks keeps track of this process at every stage from.

Speaker Change: A proposal two.

Speaker Change: A viability study with every step this is followed by the Brazilian TCU.

Speaker Change: Atlas's online and systems shared with the Brazilian T for you and this.

Speaker Change: Is communicated to the market and to control agencies. This process has been established and Petrobras for many years and it will be maintained.

Speaker Change: Thank you Sergio.

Operator: Thank you, Sergio. The next question comes from Bruno Amorim, Goldman Sachs. The creation of the new reserves allows us to allocate 70% of the profit for the payment of dividends. What are the pre-defined criteria if the cash will become a reserve, or will it be extraordinarily distributed eventually? Sergio, over to you.

Speaker Change: The next question comes from.

Speaker Change: Bruno Marine.

Speaker Change: Oldman Sachs <unk>.

Speaker Change: Creation of the new reserves allows us to allocate.

Speaker Change: 70% of the profit from the payment of dividends for either pre desk defined criteria. If the cash will become a reserve or will it be extraordinarily distributed.

Speaker Change: Eventually Sergio over to you.

Sergio Caetano: Hello, Bruno Thank you for your question.

Sergio Caetano Leite: Hello, Bruno. Thank you for your question. The oil and gas companies have characteristics. Companies that work with commodities have very specific characteristics in terms of how they define cash flow and net profits. They're not interconnected. We revise the asset values that have a direct impact on the assets and that will have an impact on the net profit. We could have a high net profit and not produce the same increase on the cash flow and vice versa. They're not interconnected, as you probably know. The reserve that we created is a reserve that's allocated, and you know that the creation of a reserve has a purpose. The purpose of it is to equalize the payment of dividends. It's an evolution in Petrobras' governance in terms of maintaining the interests of shareholders, whether they're private or public.

Speaker Change: The oil and gas companies have characteristics companies that work with commodities have.

Speaker Change: Very specific characteristics.

Speaker Change: And in terms of how they define cash flow and.

Speaker Change: Net profits, they're not interconnected.

We revised the asset values that have a direct impact on the assets and that will have an impact on the net profit and we could have a high net profit and.

Speaker Change: Not <unk>.

Speaker Change: Produce the same increase on the cash flow and vice versa, they're not interconnected as you probably know the reserve that we created is a reserve that's allocated and you know that the creation of a reserve.

Speaker Change: Has a purpose so the purpose of it is to.

Speaker Change: Equalize the payment of dividends, it's an evolution in Petrobras governance in terms of maintaining the interests of shareholders, whether they're private or public you can have.

Speaker Change: Lots of dividends on one year or a quarter and you may not see the same effects in the next quarter or you may see a variation between this.

Sergio Caetano Leite: You can have lots of dividends on one year or a quarter, and you may not see the same effects in the next quarter, or you may see a variation between this supposed connection between the cash and net profit, and the shareholders may choose to allocate part of their dividends to this reserve. The resources that are in the reserve are allocated to the payment of dividends. If it goes to the reserve, it will-

Speaker Change: Supposed connection between the cash and net in net profit and the shareholders may choose to allocate part of their dividends.

Speaker Change: To this reserve.

Speaker Change: The resources that are in the reserve are allocated to the payment of dividends. So if it goes to the reserve. It will definitely go back to the payment of dividends. It's important to make that clear that Petrobras has a reserve for investments in capital and all.

Sergio Caetano Leite: Definitely go back to the payment of dividends. It's important to make that clear. Petrobras has a reserve for investments in capital, and oftentimes in the past the disclosure of this information caused a lot of buzz in the press. Many people would ask, "Well, will Petrobras retain the dividends and then reinvest them?" The dividends are paid after the investments. Petrobras has a market reserve for that. It would be necessary to create a new reserve, if that was the intention. The reserve is strictly allocated to the payment of dividends. That's a positive thing for investors and for shareholders. The dividend payment policy of Petrobras is linked to the cash flow. We're going to pay the gross cash flow and deduct the CapEx.

Speaker Change: Oftentimes.

Speaker Change: In the past the disclosure of this information caused a lot of buzz in the press many people would ask well Petrobras retained the dividends and then reinvest them at the dividends are paid after the investments Petrobras has a market reserve for that it wouldn't be necessary.

Speaker Change: If right to create a new reserve if that was the intention of the reserve is strictly allocate it to the payment of dividends, that's a positive thing for investors and for shareholders.

Speaker Change: The dividend payment policy of Petrobras is linked to the cash flow. So we're going to pay the.

Speaker Change: Gross cash flow and deduct the capex.

Speaker Change: And of over the rest of we apply the formula and our policy for dividends payments. So there is no direct connection as we said.

Sergio Caetano Leite: Over the rest, we apply the formula and our policy for dividends payment, so there's no direct connection as we said. Other big companies in Brazil have the same reserves or companies abroad as well. That's a revamping of our governance and an additional tier so that we have more predictability to the payment of dividends. We are reinforcing the predictability in line with everything we do in terms of providing greater transparency and trying to publish our resources allocated to mergers and acquisitions, and payment of dividends. It's the same thing, we wanna add transparency and allow investors to have greater visibility. Also the fact that the reserve was proposed and it has not been approved yet. It's important to say that the creation of the reserve has not yet been approved.

Speaker Change: Other big companies in Brazil have the same reserves or companies abroad.

Speaker Change: As well, that's a revamping of our governance and an additional tiers. So that we have more predictability to the payment of dividends we are.

Speaker Change: Re enforcing the predictability in line with everything we do in terms of providing greater transparency and trying to.

Publish our resources allocated to mergers and acquisitions and the payment of dividends is the same thing and we want to add transparency and allow investors to have greater visibility.

Speaker Change: And also the fact that the reserve was proposed and it has not been approved yet it's important to say that the accretion of the reserve has not yet been approved it's still at the.

Speaker Change: Approval level. It hasnt been created so the fact that the reserve is approved if it is approved.

Sergio Caetano Leite: It's still at the approval level. It hasn't been created. The fact that the reserve is approved, if it is approved, is not linked to the payment of extraordinary debts or not at all. The payment of dividends, not debts, dividends, meets the requirements of the policies. It requires a decision that has to go through several different levels. Paying or not paying extraordinary dividends is not connected to the creation of the reserve at all. The reserve may be approved or not at the shareholders' assembly, and in case of approval, the resources may not be allocated in the next quarter or the quarter after that, or the one after that. It will only be there as an additional guarantee that will maintain the rights of shareholders at Petrobras. Thank you. Thank you.

Speaker Change: It is not linked to the payments of extraordinary deaths or not at all.

Speaker Change: The payment of dividends not deaths dividends.

Speaker Change:

Speaker Change: It means the requirements of the policies.

Speaker Change: It requires a decision that has to go through several different levels.

So pain or no not paying extraordinary dividends.

Speaker Change: Is not connected to the accretion of the reserve at all the.

Speaker Change: The reserve may be approved or not.

Speaker Change: At the shareholders' Assembly.

Speaker Change: And in case of approval.

The resources may not be allocated in the next quarter or the quarter after that or the one after that it will only be there as an additional guarantee that we will maintain the rights of shareholders of Petrobras. Thank you.

Speaker Change: Now I have three questions from Pinterest story as the first one to honor.

Operator: Thank you.

Ana Paula Zettel: Now I have three questions from Pedro Soares. The first one to Ana. Today, the company understands that E&P assets outside of Brazil that they're interesting. Does it make sense to say that we might grow to other regions of Latin America? If yes, so where do you see the biggest opportunities? Ana, over to you. Thanks for your question, Pedro. We're always monitoring the opportunities to explore both inside and outside of Brazil, and that is related to our participation in bids in other countries. Also in Brazil, Petrobras is the preferred operator of many companies. 70% of our production comes from partnerships. We have around 20 partner companies. They also provide opportunities to explore abroad.

Operator: Now I have three questions from Pedro Soares. The first one to Ana. Today, the company understands that E&P assets outside of Brazil that they're interesting. Does it make sense to say that we might grow to other regions of Latin America? If yes, so where do you see the biggest opportunities? Ana, over to you.

Speaker Change: Today, the company understands that.

Speaker Change: In P.

Speaker Change: Assets are outside of Brazil that Theyre interesting does it makes sense to say that we might grow to other regions of Latin America, if yes, so where do you see the biggest opportunities and over to you. Thanks.

Speaker Change: Thanks for your question Pedro.

Ana Paula Zettel: Thanks for your question, Pedro. We're always monitoring the opportunities to explore both inside and outside of Brazil, and that is related to our participation in bids in other countries. Also in Brazil, Petrobras is the preferred operator of many companies. 70% of our production comes from partnerships. We have around 20 partner companies. They also provide opportunities to explore abroad.

Speaker Change: We're always monitoring the opportunities to explore both inside and outside of Brazil, and that's is related to the to our participation in bids in the countries and also in Brazil Petrobras is the preferred operator.

Speaker Change: <unk> of many companies, 70% of our production comes from partnerships. We have around 20 partner companies. So they also provide opportunities to explore abroad and we keep on monitoring these opportunities and we evaluate them and if we think that something is interesting to us was submitted for approval of <unk>.

Ana Paula Zettel: We keep on monitoring these opportunities, and we evaluate them, and if we think that something is interesting to us, we submit it for approval. Of course, that's a strategy that affects our competitiveness, so we do not disclose our areas of interest. In terms of South America and Latin America specifically, we have a project of exploration in Colombia, which has been published in our plans, and it's also our CapEx reserve project in our strategic plan. Thank you. Thank you, Ana. The next question to Mauricio Tolmasquim. Concerning the energy transition, Petrobras has been very vocal about the greenfield investments it will make over the course of the next few years. I'd also like you to talk about the brownfield project opportunities and companies that are already operating.

Speaker Change: Of course, that's a strategy that affects our competitiveness. So we do not disclose our areas of interest in it in terms of South America, and Latin America, specifically, we have a project of exploration in Colombia, which has been published in our plants and it's also our Capex reserve.

Speaker Change: Projects in our strategic plan. Thank you.

Speaker Change: Thank you Ana.

Operator: Thank you, Ana. The next question to Mauricio Tolmasquim. Concerning the energy transition, Petrobras has been very vocal about the greenfield investments it will make over the course of the next few years. I'd also like you to talk about the brownfield project opportunities and companies that are already operating.

Speaker Change: The next question to Thomas Glynn.

Speaker Change: Concerning the energy transition Petrobras has been very vocal about the greenfield investments that we'll make over the course of next few years I'd also like you to talk about the brownfield project opportunities and companies that are already operating in other words are there potential target companies that might expedite of the transition.

Mauricio Tolmasquim: In other words, are there potential target companies that might expedite the transition process at Petrobras? Mauricio Tolmasquim, please. Thanks for the question, Pedro. We're looking at three project categories. First, from companies that are already operating, and the idea here is to have the partnership formed with an existing project. The biggest benefit of that is to immediately generate a cash flow for the company and to bring renewable energy to our portfolio. We're also looking at, or more specifically, we are mainly looking at projects under development. Here we have two categories: projects that are at an advanced stage with environmental license that are connected to the grid and that are ready to be built, and other projects under development. Of course, the less mature the project, the longer the construction time, but so is the upside.

Operator: In other words, are there potential target companies that might expedite the transition process at Petrobras? Mauricio Tolmasquim, please.

Speaker Change: Assess at Petrobras Thomas.

Thomas Kim: Thomas Kim please.

Thomas Kim: Thanks for the question Pedro.

Mauricio Tolmasquim: Thanks for the question, Pedro. We're looking at three project categories. First, from companies that are already operating, and the idea here is to have the partnership formed with an existing project. The biggest benefit of that is to immediately generate a cash flow for the company and to bring renewable energy to our portfolio. We're also looking at, or more specifically, we are mainly looking at projects under development. Here we have two categories: projects that are at an advanced stage with environmental license that are connected to the grid and that are ready to be built, and other projects under development. Of course, the less mature the project, the longer the construction time, but so is the upside.

Thomas Kim: We're looking at a three project categories.

Thomas Kim: First.

Thomas Kim: From companies that are already operating.

Thomas Kim: And the idea here is to have the partnership.

Thomas Kim: Formed with an existing projects and the biggest benefit of that is do you immediately generate a cash flow for the company and to bring renewable energy to our portfolio.

Thomas Kim: We're also looking at or more specifically, we are mainly looking at are projects under development and here. We have two categories projects that are at an advanced stage of with environmental license.

Thomas Kim: That are connected to the grid.

Thomas Kim: And that are ready to be built.

Thomas Kim: And other projects under development of course.

The less mature the project.

Thomas Kim: The longer the construction time, but so is the upside.

So our intention is to find a balance between.

Mauricio Tolmasquim: Our intention is to find a balance between operating projects that are ready to start construction, and projects that are still under development. Thank you, Mauricio Tolmasquim. Pedro's last question goes to Sergio. The press has been talking a lot about litigation at CARF. What are the internal and governance-related projects at the company to approve an agreement about that? Is there any amount that you would consider to be unfair for this agreement if it ever happens, Sergio? Well, Pedro, it's important to say something. As you saw in the presentation, Petrobras pays taxes at several different levels, federal, state, municipal levels, and it's common practice in our history to be in constant contact with the Secretariats of Finance.

Mauricio Tolmasquim: Our intention is to find a balance between operating projects that are ready to start construction, and projects that are still under development.

Thomas Kim: Operating projects projects that are ready to start construction and projects that are.

Thomas Kim: Still under development.

Speaker Change: Thank you it's almost skin.

Operator: Thank you, Mauricio Tolmasquim. Pedro's last question goes to Sergio. The press has been talking a lot about litigation at CARF. What are the internal and governance-related projects at the company to approve an agreement about that? Is there any amount that you would consider to be unfair for this agreement if it ever happens, Sergio?

Speaker Change: Pedro last question goes to Sergio.

Speaker Change: The press has been talking a lot of bounce litigation said coffee what are the internal and governance related projects that the company to approve agreements about that is there any amount that you would consider to be unfair for this agreement if it ever happens Sergio.

Speaker Change: Yeah.

Sergio Caetano: Well Pedro it's <unk>.

Sergio Caetano Leite: Well, Pedro, it's important to say something. As you saw in the presentation, Petrobras pays taxes at several different levels, federal, state, municipal levels, and it's common practice in our history to be in constant contact with the Secretariats of Finance.

Sergio Caetano: Important say something as you saw in the presentation Petrobras.

Sergio Caetano: Pes taxes.

Sergio Caetano: At several different levels.

Sergio Caetano: Federal state and municipal levels, and it's common practice in our history to be in constant contact with the secretary asked of finance the national.

Sergio Caetano: Taxation system is full of different laws and regulations and for a company as big as Petrobras It causes certain.

Sergio Caetano Leite: The national taxation system is full of different laws and regulations, and for a company as big as Petrobras, it causes certain clashes or disagreements between interpretations, where the legal team and other teams will have different interpretations about the same standards. If that's the case, we try to contact the Secretariat beforehand. It's been a historical practice at Petrobras to be in daily contact with the Secretariats. Either we call them, or they'll call us, and to try to sort out this type of situation. At the federal level, there is a chamber which is CARF, which is not super legal. Which is to say that for any decision, we might appeal against that decision.

Sergio Caetano: Clashes or disagreements between interpretations, where the legal team and other teams will have a different interpretations about the same standards and if that's the case, we try to quantify the secretary at beforehand. So it's been a historical practice at Petrobras to be in a daily.

Sergio Caetano: Contact with the Secretary adds either we call them or they'll call us and to try to sort out this type of situations at the federal level. There is a discussion December which chamber, which is.

Sergio Caetano: <unk>, which is not super legal which is to say that.

Sergio Caetano: For any decision.

Sergio Caetano: We might appeal.

Sergio Caetano: Against that decision.

Sergio Caetano: And Petrobras understands that.

Sergio Caetano Leite: Petrobras understands that, and it's always on the lookout for litigations or claims, and it always attempts to meet all requirements. Whereas at the same time, we also try to save as much resources as possible. It's in this from this perspective that Petrobras analyzes if we will accept or propose an agreement. Any agreement entered into with any of the government levels, whether it is the federal, state, or municipal levels, if it's proposed to Petrobras, and these proposals are always analyzed by the board of directors, depending on the proposal and legal and taxation teams, it's not a discretionary process. Actually, this word is never even heard at Petrobras. It's something that is constantly ruled out in any decision that the company makes.

Sergio Caetano: And it's always on the lookout for litigations or claims and B.

Sergio Caetano: We always attempt to meet all requirements.

Sergio Caetano: Whereas at the same time, we also have a try.

Sergio Caetano: To save as much resources as possible and it's in this.

Sergio Caetano: From this perspective that Petrobras analyses, if we'll exempt or propose an agreement. So any agreement entered into with any of the government levels, whether it is the federal or state or municipal levels. If it's proposed to Petrobras.

Sergio Caetano: And this these proposals are always analyzed by the board of directors, depending on the proposal and legal and taxation teams, it's not a discretionary process actually at this word is never even heard at Petrobras, it's as something that is.

Constantly rolled out in any decision that the company makes if Petrobras.

Sergio Caetano: Understand that there is economic and financial.

Sergio Caetano Leite: If Petrobras understands that there is economic and financial benefits to Petrobras, if the agreement creates a positive VPL, if the agreement will be entered into Petrobras, then we'll discuss it. There were many statements referring to BRL 40 billion, 30 billion, 50 billion. Many things have been bandied that I ended up giving up on watching the news about that. I can tell you that yes, that exists and there are discussions between Petrobras and the Revenue Service. They go through a first level of decisions, which is CARF. Recently, a decision by the CARF was approved, providing more benefits to agreements.

Sergio Caetano: Benefits to Petrobras if the agreement creates a positive a V P L.

Sergio Caetano: If the agreement will be entered into Petrobras is then we'll discuss it.

Sergio Caetano:

There were many statements referring to a 40 billion 30 billion or 50 billion. There's so many things have been vented at that I ended up giving up line.

Sergio Caetano: Watching the news about that but I can tell you that yes as that exists and there are discussions between Petrobras and the <unk> of the revenue service.

Sergio Caetano: <unk>.

Sergio Caetano: They go through a first level of decisions, which is coffee and recently a decision by the coffee was approved providing more benefits to agreements. So Petrobras always analyzes if the V. P. L of the agreement is positive or if it's better.

Sergio Caetano Leite: Petrobras always analyzes if the VPL of the agreement is positive, if it's better to settle the amount or if internal or legal teams or governance recommends that Petrobras initiates an appeal against the decision. There is no preset amount, BRL 15, BRL 20, BRL 30, but we might see small agreements at all levels, federal, state, and municipal, as long as it's beneficial, advantageous for Petrobras to pay and not moving on with the discussion. It's at this point that we are now. We are now having a discussion with the Revenue Services. Thank you, Sergio. Now I have three questions from Caio Ribeiro from Bank of America. The first one to Ana. How does the company see the different potentialities of the basins of the equatorial margin?

<unk> to settle the amount or if our internal legal teams or our governance recommends that Petrobras.

Initiate.

Sergio Caetano: An appeal.

Sergio Caetano: Against the decision so there's no pre set amounts.

Speaker Change: Theme of 2030.

Speaker Change: When we might see small agreements at all.

Speaker Change: Levels Federal state and municipal as long as it's a beneficial advantageous for Petrobras to pay.

Speaker Change: And not moving on with the discussion and it's at this point than we that we are now.

Speaker Change: We arent now having a discussion with the revenue services.

Operator: Thank you, Sergio. Now I have three questions from Caio Ribeiro from Bank of America. The first one to Ana. How does the company see the different potentialities of the basins of the equatorial margin?

Speaker Change: Thank you Spirit, you know I have three questions from Kyle Rivera from Bank of America. The first one.

No.

Speaker Change: How does the company see the difference potentialities of the basins of the Equatorial margin do you believe that the fault of the Amazon has more potential than the others.

Sergio Caetano Leite: Do you believe that the Foz do Amazonas has more potential than the others?

Operator: Do you believe that the Foz do Amazonas has more potential than the others?

Speaker Change: Okay. So we have a robust portfolio.

Ana Paula Zettel: Okay, we have a robust portfolio. We have six blocks in the Amazonas basin. In Amapá, in deep waters, we have two blocks and one assessment plan for the Pará Maranhão basin, one block and two discovery assessment plans in the Barreirinhas basin, and three blocks and one plan in the Potiguar basin, meaning that we are very well-positioned in that area. We operate all of these blocks, and we have a relevant amount for these investments for our 2023-2027 strategic plan. Our exploration team believes in the potential of this area due to how close it is to Guyana and Suriname, but this needs to be proven through explorations in the region. We're waiting for IBAMA's position and the obtainment of a license to explore this area. That's all.

Speaker Change: We have six blocks in the Amazon us.

Speaker Change: Basin and Amapa in deep waters, we have two blocks in one assessment plan for the part out buying your own basin. One block in two discovery assessment plans in the Bahia genius, a basin and three.

Speaker Change: Three blocks in one plan and be put Uruguay basin.

Speaker Change: Meaning that we are very well positioned in that area. We operate all of these blocks and we have a relevant amount.

Speaker Change: For these investments for our 'twenty three 'twenty seven strategic plan, our exploration team believes in the potential of this area due to how close it is to Guyana, and Suriname, but this needs to be proven through explorations in the region and we're waiting for Ibama is.

Speaker Change: Physician and D obtained of a license to explore this area. That's all that's when we will be able to know if there is potential and if it is commercially viable.

Ana Paula Zettel: That's when we will be able to know if there is potential and if it's commercially viable. We need to wait to see how this portfolio will unfold to assess its potential. Once it has been discovered, then we can imagine that it will become significant for the country, will lead to regional development, and will generate income for people. Thank you, Ana. Here's another question from Caio about the Bahia Terra asset, which was removed from the divestment plan. Do you expect to continue onshore developments in Brazil? Are there any partners to develop this asset? And what kinds of contracts is the company considering for this project? Okay, we had a change in our strategic direction in 2023. Our strategic direction so far had been deep and ultra-deep waters, and now we're focusing on profitable assets.

Speaker Change: So we.

Speaker Change: We need to wait to see how this portfolio will unfold to assess its potential but once it has been.

Speaker Change: Discovered then we.

Speaker Change: We can imagine that it will become significant for the country will lead to our original development and will generate income for people. Thank.

Speaker Change: Thank you Anna.

Speaker Change: Here's another question from Chiro.

Operator: Thank you, Ana. Here's another question from Caio about the Bahia Terra asset, which was removed from the divestment plan. Do you expect to continue onshore developments in Brazil? Are there any partners to develop this asset? And what kinds of contracts is the company considering for this project?

Speaker Change: About the bio asset, which was removed from the divestment of <unk>.

<unk> do you expect to continue onshore developments in Brazil.

Speaker Change: Are there any partners to develop this asset and what kinds of contact as the company.

Speaker Change: Considering for this project.

Speaker Change: Okay. So we had a change in our strategic direction in 2023, our strategic direction. So far had been deep and ultra deep waters and now we're focusing on profitable assets. So based on this update.

Ana Paula Zettel: Okay, we had a change in our strategic direction in 2023. Our strategic direction so far had been deep and ultra-deep waters, and now we're focusing on profitable assets.

Ana Paula Zettel: Based on this update, we are assessing our portfolio. We're actively managing our portfolio and reassessing our position. That's why we published a conclusion for the divestment projects for Manati, Urucu, and Araiti. Since they were profitable, they were maintained in our portfolio. Once we have them in our portfolio, we will try to add more value to the assets. That is, having complementary investments to extract more value from the assets. Partnerships have not been ruled out. As I said, 80% of our production comes from assets with partnerships. We have many partners in Brazil and abroad, so we don't rule out any partnerships, including Manati in Bahia. This is an asset in which we have a 35% stake with partnerships with other stakeholders. Thank you, Edu. Thank you, Ana.

Speaker Change: We are assessing our portfolio. So we're actively managing our portfolio and reassessing our position.

Speaker Change: So that's why we published a conclusion.

Speaker Change: Conclusion for the divestment are projects for my Arthur how Oracle in R. A T.

Speaker Change: Since they were profitable they were maintained in our portfolio.

Speaker Change: So.

Speaker Change: Once we have them in our portfolio, we will try to add more value to the assets that is having complementary investments to extract more value from the assets and so partnerships have not been ruled out as I said, 80% of our production comes from assets with partnerships. We have many partners in <unk>.

Speaker Change: Brazil and abroad. So we don't rule out any partnerships, including monarchy in by year. This is an asset in which we have 35 for F 35% stake with partnerships.

Speaker Change: And with other stakeholders.

Speaker Change: Yeah.

Speaker Change: You would do.

Speaker Change: Thank you Ana.

Operator: Thank you, Ana.

Speaker Change: This is the last question and it's asked to Trump Faso's Cavazos Kayo has one last question. So how does the company see the platform supply market today.

Carlos Travassos: This is the last question, and it's asked to Travassos. Caio has one last question. How does the company see the platform supply market today, and how has that affected new contracts? Good morning. Thank you for your question, Caio. We do see some significant movements in the FPSOs market and in the supplier market overall. We see a post-COVID effect of you know, prices going up in our supplier market. We've also seen some changes to the market which is transforming itself and looking towards the future with its own take on the energy transition. We've seen some mergers, some temporary scarcity that affects the second and third supply layers, and there's also a difficult access to funding.

Operator: This is the last question, and it's asked to Travassos. Caio has one last question. How does the company see the platform supply market today, and how has that affected new contracts?

Speaker Change: Today, and how has that affected new contracts.

Speaker Change: Okay.

Carlos Travassos: Good morning. Thank you for your question, Caio. We do see some significant movements in the FPSOs market and in the supplier market overall. We see a post-COVID effect of you know, prices going up in our supplier market. We've also seen some changes to the market which is transforming itself and looking towards the future with its own take on the energy transition. We've seen some mergers, some temporary scarcity that affects the second and third supply layers, and there's also a difficult access to funding.

Speaker Change: Good morning. Thank you for your question Kyle.

Speaker Change: So we do see some significant movements in the <unk> market and in the supplier market overall.

We see a post COVID-19 effect of prices going up.

Speaker Change: At our supplier market. We've also seen some changes to the market, which is transforming itself and looking towards the future with its own take on the energy transition we've seen some mergers some temporary.

Speaker Change: Scarcity that.

Speaker Change: Affects the second and third supply layers and Theres also a difficult access to funding.

Speaker Change: All of these are.

Speaker Change: Effect have.

Carlos Travassos: All of these effects have reverberated across our projects, and naturally, we've considered them in our plans for the future. We're taking some actions to recognize the impacts of these effects on the ongoing projects. With all of that, we have had to redesign and readjust our plans and even the way we approach the market. Our main source of information has been the market itself. We usually have collaboration rooms, and we actively listen to all of the feedback we receive, and we adjust our plans to ensure that the process is competitive. But we also have to recognize and understand that when we look at our strategic plan, there are 17 units across it. Five are in allocation and four are in production. Some we intend to start this year.

Speaker Change: Reverberated across our projects and naturally we've considered them in our plants and our plans for the future.

Speaker Change: We're taking some actions to recognize the impact of.

Speaker Change: These effects on the ongoing projects so with all of that we.

Speaker Change: We have had to redesign and readjust our plans.

And even the way we approach the market.

Speaker Change: Our main source of information has been the market itself.

Speaker Change: We usually have collaboration rooms, and we actively listen to all of the feedback we received.

Speaker Change: And we adjust our plans to ensure that the process is competitive.

Speaker Change: But we also have to recognize and.

Speaker Change: Understand that when we look at our strategic plan there are 17 units.

Speaker Change: Across it.

Speaker Change: Five.

Speaker Change: Our in allocation and a four or a production so.

Speaker Change: Some we intend to start this year.

Speaker Change: So nine are contracted and ongoing and there are three units, which are still under auctions.

Carlos Travassos: 9 are contracted and ongoing, and there are 3 units which are still under auctions. This shows a very positive process. We really believe that we have a winner in this market. There are 6 units that we are still looking at. Of these, 3 already have proposals. We have Sépia 2 and Atapu 2. We've received proposals from the market on those, and we have 2 SEABs and Barracuda, which are also open for proposals. The main source of demand for FPSOs in the world is that it's a very robust plan. Of course, we expect the market to respond, but we're paying close attention to this process, and we're looking at this auction by auction. This is how we've been working, Caio. Thank you, Travassos. We now have a question from Rodolfo Angele from JP Morgan.

Speaker Change: So.

Speaker Change: This shows a very positive process.

Speaker Change: We really believe that we have a winner in this market there are six units that.

Or still.

Speaker Change: I'm looking at so.

Speaker Change: Of these three already have proposals we have.

Speaker Change: Separate dose you're going to talk with two doses.

Speaker Change: So we have received proposals from the market on those and we have to see ads.

Speaker Change: And Barracuda.

Speaker Change: We're also open four proposals so.

Speaker Change: The main source.

Speaker Change: Source of demand for Fps OS in the world.

Speaker Change: Is that.

Speaker Change: It's a very robust plan.

Speaker Change: Of course, we expect the market to.

Speaker Change: Bond, but we're paying close attention to this process and we're looking at this auction by auction.

Speaker Change: This is how we've been working tayo.

Speaker Change: Thank you trip ourselves.

Operator: Thank you, Travassos. We now have a question from Rodolfo Angele from JP Morgan.

Speaker Change: We don't have a question from Rodolfo <unk> from J P. Morgan.

Speaker Change: I'll pass it over to philosophy.

Claudio Schlosser: I'll pass it over to Schlosser. Refining results have been resilient with good margins. With the increase in production, we've seen that utilization rates have reached 96% in Q3 2023 for Santa Maria. What should we expect for this industry, considering utilization rates and sustainable margins? Good morning, everyone. Hi, Rodolfo. Thank you for your question. Although we see some volatility in the international market, our expectation is that margins for diesel will be sustained for the next months. Why am I mentioning diesel? Because diesel still accounts for about 40% of our production of by-products, so it's a significant driver for this market. Gasoline has international markets, which impacts the next few months, but this is due to seasonal factors, and they usually get weaker as we come close to the winter in the northern hemisphere.

Operator: I'll pass it over to Schlosser. Refining results have been resilient with good margins. With the increase in production, we've seen that utilization rates have reached 96% in Q3 2023 for Santa Maria. What should we expect for this industry, considering utilization rates and sustainable margins?

Refinement results have been a resilient with good margins.

Speaker Change: With the.

Speaker Change: Increase in production, we've seen that utilization rates have reached 96% in the third quarter of 2012 is a free force of Maria So what should we expect for this.

Speaker Change: Industry.

Speaker Change: Considering utilization rates and sustainable margins.

Speaker Change: Okay.

Speaker Change: Good morning, everyone, Hi, Rodolfo. Thank you for your question.

Claudio Schlosser: Good morning, everyone. Hi, Rodolfo. Thank you for your question. Although we see some volatility in the international market, our expectation is that margins for diesel will be sustained for the next months. Why am I mentioning diesel? Because diesel still accounts for about 40% of our production of by-products, so it's a significant driver for this market. Gasoline has international markets, which impacts the next few months, but this is due to seasonal factors, and they usually get weaker as we come close to the winter in the northern hemisphere.

Speaker Change: Okay.

Speaker Change: Although we see some volatility in the international market our expectation is that.

Speaker Change: Margins for DSO will.

Speaker Change: Be sustained for the next months why am I mentioning desalt, because diesel spill response for about 40% of our production of byproducts. So it's a significant driver for this.

Speaker Change: This.

Speaker Change: Market.

Speaker Change: Gasoline.

Speaker Change: Has international markets, which impact the next few months, but this is due to seasonal factors and they usually get weaker.

Speaker Change: As we come close to the winter in the northern Hemisphere.

Speaker Change: So our planning models and the economic utilization for the downstream do indicate that utilization rates for refinement will still be high I'll pass it over to William who will add to those answer who will give his take on that.

William França: Our planning models and the economic utilization for the Downstream do indicate that utilization rates for refinement will still be high. I'll pass it over to William, who will add to this, answer. Who will give his, take on that. Thank you for your question, Rodolfo. Thank you, Claudio. It's important to highlight, as Claudio said, that we are receiving many demands, in logistics, which is quite good. We've been able to meet this demand with high utilization rates, as Claudio said. What's important to highlight here is that our prediction is that, considering, seasonal effects for the next quarters, for the Q4 and the Q1 of 2024, that this demand will remain strong, as, Claudio said. We're working to ensure that we will continue to have good utilization rates.

Claudio Schlosser: Our planning models and the economic utilization for the Downstream do indicate that utilization rates for refinement will still be high. I'll pass it over to William, who will add to this, answer. Who will give his, take on that.

Speaker Change: Thank you for your question Rodolfo.

William França: Thank you for your question, Rodolfo. Thank you, Claudio. It's important to highlight, as Claudio said, that we are receiving many demands, in logistics, which is quite good. We've been able to meet this demand with high utilization rates, as Claudio said. What's important to highlight here is that our prediction is that, considering, seasonal effects for the next quarters, for the Q4 and the Q1 of 2024, that this demand will remain strong, as, Claudio said. We're working to ensure that we will continue to have good utilization rates.

William: Thank you Claudio it's important to highlight as Claudio said that we are receiving many demands and logistics, which is quite good.

William: We've been able to meet this demand with high utilization rates as Claudio said, what's important to highlight here is that our prediction is that.

William: Considering seasonal effects for the next quarters for the fourth.

William: Fourth quarter and the first quarter of 2024 that this demand will remain strong.

Speaker Change: As Claudio said, so we're working to ensure that we will continue to have good utilization rates.

Speaker Change: So we're going to reinforce our asset management tools.

William França: We're going to reinforce our asset management tools. We're making a strong effort in downtimes, so planned downtime, so that we can have the best maintenance level for our equipment, our reactors, our pipeline systems, so that we can have planned downtime in our refineries at the right level of quality and with good operational availability. Operational availability means the possibility of starting a refinery. You know, there are some problems that might lead to stoppages for a plant or a system, and the utilization factor is having a higher load in comparison to our reference load. In the last quarter, or rather in the last two quarters, we were able to increase our rates with very good yields. We went from 66 to nearly 70%.

And we're making a strong effort and Ah <unk>.

Downtime.

Speaker Change: So planned downtime so that we can have the best maintenance level for our equipment our reactors are.

Speaker Change: Pipeline system, so that we can.

Speaker Change: Have planned downtime in our refineries at the right level of quality and with good operational availability.

Speaker Change: Yeah.

Speaker Change: And operational availability means.

Possibly of starting a refinery.

Speaker Change: You know there are some problems that might lead to stop pitches for a plant or a system and the utilization factor is.

Speaker Change: Having a higher load in comparison to our reference load.

Speaker Change: And the last quarter or rather in the last two quarters, we were able to incur.

Speaker Change: Increase our rates.

Speaker Change: With a very good yields.

Speaker Change: So.

We went from 66 to nearly 70%.

Speaker Change: So it's important to highlight that our utilization rate is going up.

William França: It's important to highlight that our utilization rate is going up, loads are going up, but we're not just melting this value for fuels. We're producing diesel and aviation fuel. As Claudio said, we have good expectations here. We're working to ensure that our systems will be able to have higher utilization factors, and this will ensure that we have good demands for our logistics and utilization areas. Thank you, William. We have two questions from Monique Greco from Itaú BBA for Schlosser. Schlosser, in the last weeks, we saw a significant reduction in international refining margins, especially for gasoline. How has that reflected in your, in the company's strategic management? Is there any scope for seeing the rates reflecting the international market? Thank you for your question, Monique. You're asking about how we monitor our commercial strategy.

Speaker Change: Loads are going up.

Speaker Change: But we're not.

Speaker Change: Just melting this value for our fuels were producing a diesel and aviation fuel.

As Claudio said, we have good expectations here, we're working to ensure that our systems will be able to have higher utilization factors.

And this will ensure that we have good demand for our logistics and utilization areas.

Speaker Change: Thank you William we have two questions from when you keyed graco from it'll be be a for schlosser. So.

Operator: Thank you, William. We have two questions from Monique Greco from Itaú BBA for Schlosser. Schlosser, in the last weeks, we saw a significant reduction in international refining margins, especially for gasoline. How has that reflected in your, in the company's strategic management? Is there any scope for seeing the rates reflecting the international market?

Speaker Change: So schlosser in the last weeks, we saw a significant reduction in international refinement margins, especially for gasoline.

Cardio Schlosser: How is that reflected in your in the company's strip.

Cardio Schlosser: Strategic management.

Is there.

Any space are seeing interest rates are reflecting the international market.

Speaker Change: Thank you for your question what are your key.

Claudio Schlosser: Thank you for your question, Monique. You're asking about how we monitor our commercial strategy.

Speaker Change: So you're asking about how we monitor our commercial strategy, so I'd like to underscore that one off.

Claudio Schlosser: I'd like to underscore that one of our commercial operations core values is to mitigate the volatility seen in the international market. That includes foreign exchange rates and the price of fuels for the Brazilian market. Right now, we are seeing high volatility again, as we've seen before. This is being caused by what everyone knows, right? The uncertainties on the supply and demand sides for fuels. On the other hand, we have some data on the Chinese economy that raises some concerns. We also have geopolitical conflicts that affect us and, you know, the production cuts in Saudi Arabia and Russia, which create some pressure on the supply side. It's a complex environment to monitor. We're always keeping our eye on that, and this is reflected in our commercial strategy. You asked specifically about gasoline.

Speaker Change: Our commercial operations core values is to mitigate the volatility seen in the international market that includes foreign exchange rates and the price of fuels for the Brazilian market right now.

Speaker Change: We are seeing high volatility again as we've seen before this is being caused by.

Speaker Change: What everyone knows right the uncertainties on the.

Speaker Change: Supply and demand sides for fuels.

Speaker Change: On the other hand, we have some data on the Chinese economy that.

Speaker Change: Raises some concerns we also have geopolitical conflicts that affect us and you know the production cards.

Speaker Change:

Speaker Change: And Saudi Arabia, and Russia, which create some pressure on the supply side.

Speaker Change: It's a complex environment to monitor and we're always keeping our eye on that and this is reflected in our commercial strategy you ask the assistant specifically about gasoline. So the end of this cycle and it's deceleration with oil has allowed us to.

Claudio Schlosser: The end of this cycle and its deceleration with oil has allowed us to reduce prices in October. Right now, as we see a high level of volatility, we're still looking at the basis for the market. If gasoline prices go to a different level that is structural, of course, Petrobras will analyze it and readjust its internal prices to maintain balance. We can't give you any details on what these readjustments will be like, though. Thank you for your question. Thank you, Schlosser. This is another question from Monique about imports. We see that there was a reduction in volumes of diesel and GLP and imported. Will this affect refining, and how should the company see this for the future? Well, certainly the increase in the production of byproducts at our refineries.

Reduced prices in October.

Speaker Change: So right now as we see a high level of volatility.

Speaker Change: Looking at the.

Speaker Change: Basis for the market.

Speaker Change: If gasoline prices go to a different level that is structural of course, Petrobras will analyze it and readjust its internal prices to maintain balance.

Speaker Change: Yeah.

Speaker Change: We can't.

Speaker Change: I give you any details on what these readjustments will be liked though thank you for your question.

Speaker Change: Thank you <unk>. So this is another question from Monique <unk> about imports.

Operator: Thank you, Schlosser. This is another question from Monique about imports. We see that there was a reduction in volumes of diesel and GLP and imported. Will this affect refining, and how should the company see this for the future?

Speaker Change: We see that there was a reduction in volumes of diesel NGL camping and imported.

Will this affect refinement and how should the company see this for the future.

Claudio Schlosser: Well, certainly the increase in the production of byproducts at our refineries.

Speaker Change: Oh, certainly the increase in the prediction of byproducts that are our refineries.

Speaker Change: This production increase follows certain quality standards, which are.

Claudio Schlosser: This production increase follows certain quality standards, which are for the production of diesel, and that led to the reduction of imports. About the future forecasts, the decision to import is a result of a complex operational planning involving several company departments that we use, computing tools, just like every other competitor does, to maximize the value of assets. These plans take into account a series of factors, just like seasonality of demand and the availability of our logistic assets and the stock level that we're exposed to, as well as the future expectations of the market. That is our position. Thank you, Schlosser. Gabriel Barra from Citi has three questions. The first to Ana. Could you give us more information about the discussions with the environmental authorities about the developments of the Foz do Amazonas?

Speaker Change:

Speaker Change: For the prediction of diesel and that led to the reduction of imports about.

Speaker Change: <unk> future forecasts the decision to import is a result of a complex operational planning involving several.

Speaker Change: The company departments that we use computing tools just like every.

Speaker Change: Other competitor does to maximize the value of assets in these plans take into account a series of factors.

Speaker Change: Just like.

Speaker Change: Says analogy of demand and the availability of our logistic assets and the stock level.

Speaker Change: That we're exposed to as well as the future expectations of the market.

Speaker Change: That is our position.

Speaker Change: [laughter].

Speaker Change: Thank you Schloss Kimbriel Baja from C. T has at three questions Firstly on op.

Operator: Thank you, Schlosser. Gabriel Barra from Citi has three questions. The first to Ana. Could you give us more information about the discussions with the environmental authorities about the developments of the Foz do Amazonas?

Speaker Change: Could you give us.

Speaker Change: More information about the discussions are with the.

Speaker Change: Environmental authorities about the developments of the Amazonas false.

Speaker Change: Is the project in line with the pre salt projects after.

Ana Paula Zettel: Is the project in line with the pre-salt projects after an approval, if it happens, and when can we expect the company to produce the first oil? Thank you. Thank you for the question. As I said, we're well-positioned at the equatorial margins, especially at the Foz do Amazonas, what we call the Amapá Deep Waters. According to our latest discussions, we had a denial, refusal from IBAMA that did not allow us to drill at Morpho, and then we made an appeal. In August, there was a decision stating that an environmental assessment of these areas is not required to issue an environmental license, which is in line with the Supreme Court decision.

Operator: Is the project in line with the pre-salt projects after an approval, if it happens, and when can we expect the company to produce the first oil? Thank you.

Speaker Change: An approval if it happens and.

Speaker Change: In.

Speaker Change: When can we expect the company to produce the first oil. Thank you. Thank you for the question.

Speaker Change: As they said, we're well positioned at the equatorial margins, especially at the fault of the Amazon.

Ana Paula Zettel: Thank you for the question. As I said, we're well-positioned at the equatorial margins, especially at the Foz do Amazonas, what we call the Amapá Deep Waters. According to our latest discussions, we had a denial, refusal from IBAMA that did not allow us to drill at Morpho, and then we made an appeal. In August, there was a decision stating that an environmental assessment of these areas is not required to issue an environmental license, which is in line with the Supreme Court decision.

Speaker Change: Amazonas.

Speaker Change: What we call the M of PAH deep waters.

Speaker Change: Gordon to our latest discussions we had a denial refusal from ibama.

Speaker Change: That did not allow us to.

Drill at Morpho and then we made an appeal and in August there was a decision staining that's.

And environmental assessments of these areas is not required to issue an incremental license, which is in line with the Supreme Court decision. Since then with the conciliation process. That's in course suite, we've been trying to solve any disagreements.

Ana Paula Zettel: Since then, with the conciliation process that's in course, we've been trying to solve any disagreements to then obtain the license to perform the pre-operational assessment and to move forward with our exploratory activities. Right now, we cannot estimate an investment. I can tell you that our business plans allocate $3 billion for the drilling of 16 wells in that area. After there is a decision from IBAMA, and I'd like to highlight our

<unk>.

Two then obtain the license to perform the pre operational.

Speaker Change: Testaments and to move forward with our exploratory activities right now we cannot estimate and investments I can tell you that our business.

Business plans allocates, a $3 billion for the drilling.

Speaker Change: Drilling of Wells 16 wells in that area and after there is the decision.

Speaker Change: From Ibama and I'd like to highlight our.

Speaker Change: Understanding that we need each and every incremental requirement then only we will be able to proceed and have more information about any businesses in the region.

Ana Paula Zettel: Understanding that we meet each and every environmental requirement, then only we'll be able to proceed and have more information about any businesses in the region. Thank you, Ana. Second question from Gabriel to Sergio. According to the news, there is a discussion about the selling of Braskem that may be completed before Q1 2024. We've been seeing some integrated oil and gas companies trying to find a way out from this in the long run. In the perspective of the company, would it make sense to have control over Braskem or should it continue to be a minority shareholder? Can we expect this to be completed before Q1 2024? What do you expect from a new partner in this business? Sergio. Hello, Gabriel. Thank you for your question.

Ana Paula Zettel: Understanding that we meet each and every environmental requirement, then only we'll be able to proceed and have more information about any businesses in the region.

Sergio Caetano: Thank you Anna second question from Gabriela This is Sergio.

Operator: Thank you, Ana. Second question from Gabriel to Sergio. According to the news, there is a discussion about the selling of Braskem that may be completed before Q1 2024. We've been seeing some integrated oil and gas companies trying to find a way out from this in the long run. In the perspective of the company, would it make sense to have control over Braskem or should it continue to be a minority shareholder? Can we expect this to be completed before Q1 2024? What do you expect from a new partner in this business? Sergio.

Sergio Caetano: According to the news there is the discussion about the selling of Braskem that may be completed before the first Q of 224, we've been seeing some integrated oil and gas companies are trying to find a way out from as you know this in the long run and the perspective.

Sergio Caetano: The company would it make sense to have control over breast camera or should it continue to be a minority shareholders can we expect this to be completed before the first Q 'twenty 'twenty four want or do you expect from a new partner in this business Sergio.

Speaker Change: Hello, Gabriel and thank you for your question.

Sergio Caetano Leite: Hello, Gabriel. Thank you for your question.

Petrobras and the oil industry as a whole and.

Sergio Caetano Leite: Petrobras and the oil industry as a whole, and more specifically Petrobras, we see a lot of value in petrochemicals, and this is not something new. Internal monitoring and the sharing of information about future possibilities is occurring internally at Petrobras, and this led the administrative council to approve the integration of petrochemicals into the business scheme of Petrobras. There are guidelines currently stating that Petrobras should assess its investments in petrochemicals. We have a relevant position in the petrochemical industry through Braskem, and for that reason, and because we believe in the future, we believe that petrochemicals contribute to the energy transition. We and the board see a greater resilience in the medium and long term in the petrochemical industry at the expense of gasoline. It's a rational and strategic movement.

Speaker Change: More specifically Petrobras will see a lot of value in petrochemicals.

Speaker Change: And this is not something new.

Speaker Change: Internal monitoring.

And the sharing of information about future possibilities is occurring.

Speaker Change: Internally at Petrobras.

Speaker Change: And this.

Speaker Change: Led the.

Speaker Change: Administrative council to approve the integration of petrochemicals into the business scheme of Petrobras.

No. There arent guidelines currently stated that Petrobras is should assess its investments in petrochemicals, we have a relevant position in the petrochemical industry through brass Kim.

Speaker Change: And for that reason.

Speaker Change: And because of weak because we believe in the future we believe that petrochemicals contribute to the energy transition.

Speaker Change: We and the board see a greater resilience in the medium and long term in the petrochemical industry at the expense of gasoline so at St.

Speaker Change: Rational and strategic movements all of the integrated companies in the World are doing the same thing. So yes, so the growth of petrochemicals Israel events for Petrobras.

Sergio Caetano Leite: All of the integrated companies in the world are doing the same thing. Yes, the growth of petrochemicals is relevant for Petrobras. In this specific case of Braskem and the offers posed by Braskem, you can see that so far the proposals have been non-binding. If I'm not mistaken, two or three non-binding proposals made about the acquisition of the Novonor share. These proposals were made to Novonor, which is actually the seller of their share. They inform the banks and Petrobras as the business partner. A proposal is made to Novonor. I wanna highlight that, just to state the fact that the decision to sell or not is not with Petrobras. Petrobras has a tag along and a selling preference if it deems that the price is fair.

Speaker Change: In this specific case of Braskem.

And the offers posed by brass camera.

Speaker Change: You can see that.

Speaker Change: So far the proposals have been non binding.

Speaker Change: So I'm not mistaken.

Speaker Change: Two or three non binding proposals made about the acquisition of the Inova nor a share. These proposals were made to November which is actually the seller of their share.

Speaker Change: They.

Speaker Change: Informed the banks and Petrobras as the business partner so.

Speaker Change: Then a proposal is made in November.

Speaker Change: And I want to highlight that.

Speaker Change: Just to state.

Speaker Change: The fact that the decision to sell or not is not with Petrobras Petrobras has a tag along and E as selling preference if it.

Speaker Change: Deems that the price is fair.

Speaker Change: Okay.

The fact that the administrative board approved.

Sergio Caetano Leite: The fact that the administrative board approved this and that Petrobras has been monitoring the petrochemical industry in Brazil and in the world as a potential for growing its businesses, these decisions may not be conflicting with Braskem, the selling of Braskem, or it may further reiterate the decision to purchase Braskem. Petrobras is currently doing due diligence. These proposals, like I said, are non-binding proposals, and if it becomes a binding proposal, Petrobras will have to make a decision, since it has the right of preference in the purchase or tag along. Petrobras has a refining firm that's quite powerful and updated. What we see in the world is that, the integration with petrochemical industry is oftentimes made directly at the refinery level.

Speaker Change: They're sent that Petrobras has been monitoring the petrochemical industry in Brazil, and in the world as a potential for growing its businesses.

Speaker Change: These decisions may not be conflicting with braskem the selling of Braskem.

Speaker Change: Or it may.

Speaker Change: And further reiterate the decision too.

Speaker Change: Purchase breast camera. So Petrobras is currently.

Speaker Change: Doing due diligence.

These proposals like I said, our non binding proposals and if it becomes a binding proposal Petrobras will have to make a decision.

Speaker Change: And since it has the right of preference and the purchase or a tag along Petrobras has a refinement of farm. That's so quite powerful and updated what we see in the world is that the integration with petrochemical industry is oftentimes made directly at the refinery level.

Speaker Change: So of course, Bruce Cam is a shortcut, but it's not the only way out we have at Petrobras. The only solution, we have I need to make that clear so that there's no confusion as to whether Petrobras has decided to buy or sell we're analyzing the business and analyzing it very carefully after all we have.

Sergio Caetano Leite: Of course, Braskem is a shortcut, but it's not the only way out we have at Petrobras, the only solution we have. I need to make that clear so that there's no confusion as to whether Petrobras has decided to buy or sell. We're analyzing the business, and we're analyzing it very carefully. After all, we have 47% of the shares. It's a very relevant position at the company. Concerning the timeframe or partners, I wouldn't be able to give you an idea, Gabriel, because right now it does not depend only on Petrobras. Last week we saw a new non-binding proposal about the purchase, and there has been no decision from Novonor. There is a timeframe, a deadline for them to make a decision.

Speaker Change: 47%.

The shares it's a very relevant position at the company.

Speaker Change: Concerning.

Speaker Change: The timeframe or partners I.

Speaker Change: Wouldn't be able to give you.

Speaker Change: And ADR Gabrielle because right now it's it does not depend only on Petrobras last week, we saw a new non binding proposal about the purchase.

Speaker Change: <unk> been no decision from Nova nor there.

Speaker Change: There is a timeframe it deadline for them too.

Speaker Change: To make a decision and this is not at the hands of Petrobras. So I can't give you an idea of when that's going to happen in terms of the decision.

Sergio Caetano Leite: This is not at the hands of Petrobras, so I can't give you an idea of when that's gonna happen. In terms of the decision as to whether we're gonna have a business partner, yes, Petrobras intends to grow in this sector, and the Petrobras partners should be aligned with Petrobras' vision. Given the importance of Petrobras in Brazil, it's very important that buyers take care of all the interests of those involved, and that the interests are aligned with those of Petrobras, potential investments, and technical capability, and that they preserve the interests of the creditors of Braskem, any creditor at that, and the Novonor interests. Petrobras is interested in making the business grow in harmony. That's what I can tell you right now, Gabriel. Thank you. Thank you, Sergio. Gabriel's last question goes to Travassos.

Speaker Change: As to whether we're going to have a business partner, yes, Petrobras intends to grow in this sector and the a bench.

Speaker Change: Petrobras partners should be aligned with Petrobras This vision, but.

Speaker Change: Given the importance of Petrobras in Brazil, it's very important that lawyers take care of all the interests of those involved and that the interests are aligned with those of Petrobras potential investments in technical capability and that they preserve the interests of the creditors of Braskem.

Sergio Caetano: And then any creditor event and the novo nor interests Petrobras is interested in making the business grow in harmony. That's what I can tell you right now Gabrielle. Thank you. Thank you Sergio.

Cambrian ones last question goes to traverse Soc, the oil and gas industry spin.

Operator: Thank you, Sergio. Gabriel's last question goes to Travassos.

Carlos Travassos: The oil and gas industry's been constantly concerned about inflation and the costs of investments. The market is quite tight for the acquisition of new rigs, ships, and platforms. How can we find a balance? Can we expect to see the company investing again and capitalizing these assets? Over to you, Travassos. Thank you for your question, Gabriel. That is somewhat connected to my previous answer. Actually, the market is quite upset when it comes to the escalation of costs. We've been defining the strategy on a case-by-case and proposal-by-proposal basis. Our intention is still one of diversifying. We do that in the FPSO market. The subsea lines and systems market. In that market, we acquired these components.

Operator: The oil and gas industry's been constantly concerned about inflation and the costs of investments. The market is quite tight for the acquisition of new rigs, ships, and platforms. How can we find a balance? Can we expect to see the company investing again and capitalizing these assets? Over to you, Travassos.

Speaker Change: Constantly concerned about inflation and the cost of investments the AR market is quite tight for the acquisition of new rigs ships and platforms. How can we find a balance can we.

Speaker Change: Expect to see the company investing again in capitalizing these assets over to you traverses.

Speaker Change: Thank you for your question Gabriel.

Carlos Travassos: Thank you for your question, Gabriel. That is somewhat connected to my previous answer. Actually, the market is quite upset when it comes to the escalation of costs. We've been defining the strategy on a case-by-case and proposal-by-proposal basis. Our intention is still one of diversifying. We do that in the FPSO market. The subsea lines and systems market. In that market, we acquired these components.

Speaker Change: That is somewhat connected to my previous answer actually the market is quite.

Speaker Change: Absent when it comes to the escalation of courses and we've been defining the strategy on a case by case and proposal by proposal basis.

Speaker Change: And our intention is.

Speaker Change: Is still one of diversifying we do that in the MTS so market.

Speaker Change: The sub sea lines and systems, our market in that market. We are quiet these components and then the market risks.

Speaker Change: We work with.

Carlos Travassos: In the market of rigs, we work with rates, and these are temporary demands for rigs. To answer your question, we have no intention of purchasing the rigs. We keep on monitoring the market and entering into contracts that are more advantageous to us, that allow us to reduce the risk of operators and contracts where we can guarantee the demand and when we can flexibilize the use of the rigs. That is how we've been dealing with the tightness, as you call it, of the market. Thank you, Travassos. The last two questions come from Luiz Carvalho. The first one goes to Sergio.

Thanks, and said this is a these are temporary demands where our rigs so to answer. Your question. We have no intention of purchasing the rigs we keep on monitoring the market and entering.

Speaker Change: Into contracts that arent more advantageous to us that allow us to reduce the risk of upper readers and contracts to where we can guarantee the demand and when we can flexible lives or the use of the rigs that is how we've been dealing with the tightness as you call. It.

Of the market.

Operator: Thank you, Travassos. The last two questions come from Luiz Carvalho. The first one goes to Sergio.

Speaker Change: Thank you <unk>.

Speaker Change: And last two questions come from Luis Carvalho, the first one goes to Sergio.

Sergio: If the company generates cash and extensively referenced referenced cash flow that's been.

Sergio Caetano Leite: If the company generates cash in excess of the reference cash flow that's been defined, what are the policies, dividends above the policy, are at which point of the list of priorities does the company think about finding a balance between distributing dividends as it did in 2023, as opposed to the new reserve? Sergio, over to you. Thank you for your question, Luiz. Well, as I said in some of my previous answers, we should take into account that there might be a lack of a connection between a net profit and cash flow. The reserve is built based on a cash flow. The cash flow is not directly related to that.

Operator: If the company generates cash in excess of the reference cash flow that's been defined, what are the policies, dividends above the policy, are at which point of the list of priorities does the company think about finding a balance between distributing dividends as it did in 2023, as opposed to the new reserve? Sergio, over to you.

Defiance, Oh, what are the policies dividends above the policy at which.

Speaker Change: Point of the list of priorities does the company think about.

Speaker Change: Finding a balance between distributing dividends.

Speaker Change: As it did in 2023 as opposed to the new.

Sergio Caetano: Reserve Sergio over to you.

Sergio Caetano: Thank you for your question Louis.

Sergio Caetano Leite: Thank you for your question, Luiz. Well, as I said in some of my previous answers, we should take into account that there might be a lack of a connection between a net profit and cash flow. The reserve is built based on a cash flow. The cash flow is not directly related to that.

Well.

Sergio Caetano: As I said in some of my previous.

Sergio Caetano: Hamsters, we should take into account that there might be.

Sergio Caetano: A lack of connection between our net profit and cash flow. The reserve is comprised as.

Sergio Caetano: Is is built based on our cash flow the cash flow is not.

Sergio Caetano: Directly related to them so we need.

Sergio Caetano: To take that a lack of connection into account because of the reserve was created to guarantee the dividends.

Sergio Caetano Leite: We need to take that lack of connection into account because the reserve was created to guarantee the dividends, resolving any kind of problems with the cash flow and net profit. To your point, the guidelines state that we have to maintain a strong and robust balance across all of its levels, assets, liabilities, indebtedness, maintenance of the net assets of the shareholders, and whatnot. The first guideline for the generation of cash is to reinforce our balance always, and that is what is going to help us make sure that the company will keep on growing. It's one of Petrobras' growth vectors. At Petrobras, we have this value creation culture. We look at the cash allocation from a perspective of value creation, and this will keep on happening.

Resolving any kind of problems with the cash flow and that profit.

Sergio Caetano: But to your point.

Sergio Caetano: The guidelines state that we have to maintain a strong and robust balance across all of its levels assets liabilities indebtedness maintenance of the net assets of the shareholders and whatnot. So the first guideline.

Sergio Caetano: For the generation of cash is to reinforce our balance always and that is what is going to make sure that the to help us make sure that the company will keep on growing its one of Petrobras this growth vectors.

Sergio Caetano: And Petrobras we have this.

Sergio Caetano: Value creation culture, we look at the cash allocation.

Sergio Caetano: From a perspective of.

Sergio Caetano: Value creation, and this will keep on happening.

Sergio Caetano: We will keep on focusing on the creation of value cash has to be allocated wherever it adds more value to the company's portfolio, including oil and gas energy transition any area of the company decides to invest in dividends are an important part and one of the reasons.

Sergio Caetano Leite: We'll keep on focusing on the creation of value. Cash has to be allocated wherever it adds more value to the company's portfolio, including oil, gas, energy transition, any area the company decides to invest in. Dividends are an important part, and one of the reasons for the company to exist is to compensate its partners. There are others, of course, to contribute to society, I mean, several others. Dividends are a very important part of it. The decision to create a reserve indicates that Petrobras is still committed to meeting all of its requirements.

Sergio Caetano: <unk>.

For the company to exist is to compensate.

Sergio Caetano: Compensate its partners and there are others of course to contribute to society I mean, several others dividends are a very important part of it. So the decision to create a reserve indicates that Petrobras is still committed to.

Meeting all of its requirements the generation of cash flow.

Is intended to generate value considers the creation of dividends and the creation of the reserve was meant to add transparency and to rule out any possible impacts are in adverse scenarios ended this lack of connection between cash flow and that nets province, any potential impacts on the payment of dividends.

Sergio Caetano Leite: The generation of cash flow is intended to generate value, considers the creation of dividends, and the creation of the reserve was meant to add transparency and to rule out any possible impacts in adverse scenarios and this lack of connection between cash flow and net profits, any potential impacts on the payment of dividends. Our policy of 45% over the net cash flow. These are our priorities, to generate value and allocate capital in investments that generate value for the company. Of course, always taking care of the payment of dividends, which is fundamental for the company. Thank you, Sergio. The last question goes to Mauricio Tolmasquim. In addition to offshore wind, does the company see itself as a producer of biofuels, whether it is in ethanol or biodiesel? And what about new biofuels like SAF and renewable diesel?

Sergio Caetano: Our our policy.

A 45% over the.

Sergio Caetano: Net cash flow.

Sergio Caetano: So these are our priorities to generate value and allocates capital and investments that generate value for the company.

Speaker Change: Of course.

Speaker Change: Always.

Speaker Change: Taking care of the payment of dividends, which is fundamental for the company.

Speaker Change: Yeah.

Thank you Sergio and the last question goes to Thomas Quinn.

Operator: Thank you, Sergio. The last question goes to Mauricio Tolmasquim. In addition to offshore wind, does the company see itself as a producer of biofuels, whether it is in ethanol or biodiesel? And what about new biofuels like SAF and renewable diesel?

Speaker Change: Okay.

Thomas Quinn: In addition to offshore wind does the company see itself as a producer of Biofuels, whether it is in ethanol or biodiesel and what about new buyer feels like staff and renewable diesel.

Speaker Change: What are the company's ambitions, given the Brazilian excellence and producing sustainable biomass.

Mauricio Tolmasquim: What are the company's ambitions given the Brazilian excellence in producing sustainable biomass?

Operator: What are the company's ambitions given the Brazilian excellence in producing sustainable biomass?

Speaker Change: Thank you for your question Luis So.

Mauricio Tolmasquim: Thank you for your question, Luiz. As you said, Brazil has this gift of producing biomass very well. We have a lot of land available. We receive a lot of sunlight. We have abundant water. We really are the country of biomass. Besides that, it makes sense for Brazil, especially Petrobras, to be in liquid fuels, because we have logistics for that. We have our infrastructure built for oil by-products. At Petrobras, we're looking at this entire chain. We're seeing how consumption takes place and how biofuels can play there. In transportation, we're looking at renewable biodiesel, which uses a 5% mixture of plant-based oils. This requires very little investment, and it produces high-quality products, meaning diesel with the same quality as diesel that is produced from oil.

Speaker Change: As you said, Brazil.

Has this gift.

Speaker Change: Producing biomass very well, we have a lot of land available we receive a lot of sunlight. We have abundant water. So we really are the country of biomass. Besides that it makes sense for Brazil, especially petrobras to be in liquid fuels.

Speaker Change: Because we have logistics for that we have our infrastructure build for us.

Speaker Change: Sure.

Speaker Change: Oil byproducts so at Petrobras, we're looking at this entire chain.

Speaker Change: We're seeing how consumption takes place and how biofuels can play there.

Speaker Change: So in transportation, we're looking at renewable biodiesel, which.

Speaker Change: Use is 5% 5% mixture of.

Speaker Change: Plant based oils this requires very little investment.

Speaker Change: And it produces high quality products.

Speaker Change: Meaning diesel with the same quality as on diesel that is produced from oil.

Speaker Change: In aviation.

Speaker Change: We have plants.

Mauricio Tolmasquim: In aviation, we have plants that are dedicated to use 100% plant oil for aviation fuel. What's the importance of that? Well, from 2027 on, the aviation industry has a goal of decarbonizing itself. It will be a huge market that will open up in a short while, and Petrobras is very well-positioned to supply this market. In the maritime industry, we also have significant opportunities. We have a ship operated by Transpetro, and it uses a 24% biodiesel mix, and the results have been very good. Still concerning biomass, but not necessarily biofuels, we can also talk about the replacement of some petrochemical products. We have the Riograndense Refinery in southern Brazil, using vegetable oil to produce substitutes for petrochemical products. It makes a lot of sense.

Speaker Change: That are dedicated.

To use 100%.

Speaker Change:

Speaker Change: Plant oil for aviation fuel.

Speaker Change: What's the importance of that well from 2027 on.

The aviation industry has the goal of Decarbonising itself. So it will be a huge market.

Speaker Change: It will open up in a short while and Petrobras is very well positioned to supply this market.

Speaker Change: In the maritime industry, we also have significant opportunities.

We have a ship operated by trends Petro.

Speaker Change: And it uses a 24% biodiesel mix.

Speaker Change: And the results have been very good.

Still concerning biomass, but not necessarily bio fuels. We can also talk about the replacement of some petro chemical products, we have the Rio Grande and say refinery.

Speaker Change: In southern Brazil, using vegetable oil too.

Speaker Change: To produce substitutes for petrochemical products. So it makes a lot of sense, but I'll pass it over to William who.

Mauricio Tolmasquim: I'll pass it over to William, who is responsible for the refinery area, and he can give us more details on that.

Speaker Change: Is responsible for the refinery area and he can give us more details on that.

Speaker Change: Okay.

Speaker Change: So Luis Carvalho asked the question right.

William França: Luiz Carvalho asked the question, right?

Speaker Change: Yes exactly.

Speaker Change: So thank you.

Operator: Yes, exactly.

William França: Thank you.

Speaker Change: So his answers was great I'll just add something.

Operator: His answer is, was great. I'll just add something. Along with the energy transition area that is being led by Professor Tolmasquim, we have three important fronts. The first one is biorefineries. We have three plants producing or processing R5, which is renewable biodiesel. In Cubatão, RPBC was the first one. Now this week, we're starting operations with REPLAN. By the end of December, we're also going to have REDUC. That will give us some capacity of 10,000 m³/day. Considering renewable plants, as Professor Tolmasquim said, we have a plant in PL 2327 under studies in Cubatão, where we're going to have HEFA technology, meaning hydro refineries. It will be completely plant-based to create our Sandiesel, our 100 diesel, and Safi, as was said.

William França: His answer is, was great. I'll just add something. Along with the energy transition area that is being led by Professor Tolmasquim, we have three important fronts. The first one is biorefineries. We have three plants producing or processing R5, which is renewable biodiesel. In Cubatão, RPBC was the first one. Now this week, we're starting operations with REPLAN. By the end of December, we're also going to have REDUC. That will give us some capacity of 10,000 m³/day. Considering renewable plants, as Professor Tolmasquim said, we have a plant in PL 2327 under studies in Cubatão, where we're going to have HEFA technology, meaning hydro refineries. It will be completely plant-based to create our Sandiesel, our 100 diesel, and Safi, as was said.

Speaker Change: Along with the energy transition area that is being led by Professor Thomas scheme, we have three important fronts.

Speaker Change: The first one is bio refineries we have three.

Speaker Change: Plants are producing or processing or five which is renewable biodiesel in Quebec, Don hip basket was the first one.

Speaker Change: And now this week were starting operations with Revpar.

Speaker Change: By the end of December we're also going to have her duca, so that will give us.

Speaker Change: Some capacity of 10.

Speaker Change: Thousand cubic meters.

Speaker Change: Good day.

Speaker Change: Considering renewable plants as professor Thomas Kim said.

Speaker Change: We have a plan to NPL 'twenty three 'twenty seven.

Speaker Change: Under studies aimed.

Speaker Change: And cobalt down where we're going to have.

Speaker Change: Fr technology, meaning hydro refineries.

Speaker Change: So it will be completely plant base to create our sand DSO are 100 diesel and sofie.

Speaker Change: As Ah was set.

Speaker Change: And that won't comply to international regulations.

Operator: That will comply to international regulations. In refineries, we had a test with our Braskem partners and the Ofra Group in the Riograndense Refinery, processing 2,000 tons of soybean oil. We're producing some by-products there that are completely plant-based, especially green naphtha that has a significant market, and green propane, which is very interesting, and many other green products. With this test, we're talking to a few partners. We will have a bio refinery that is completely green, and we hope to have it by the end of 2026. That's the first pillar. We're talking about energy transition here. We're also working with our own energy efficiency program to reduce the carbon footprints for our refineries according to our international consultants that analyze many companies in all continents.

William França: That will comply to international regulations. In refineries, we had a test with our Braskem partners and the Ofra Group in the Riograndense Refinery, processing 2,000 tons of soybean oil. We're producing some by-products there that are completely plant-based, especially green naphtha that has a significant market, and green propane, which is very interesting, and many other green products. With this test, we're talking to a few partners. We will have a bio refinery that is completely green, and we hope to have it by the end of 2026. That's the first pillar. We're talking about energy transition here. We're also working with our own energy efficiency program to reduce the carbon footprints for our refineries according to our international consultants that analyze many companies in all continents.

Speaker Change: In <unk>.

Speaker Change: Our refineries, we had a test with our brass Cam partners.

Speaker Change: And the old for group.

Speaker Change: And the Rio Grande and say refinery processing Ah.

2000 tons of a story.

Speaker Change: Being oil.

Speaker Change: So we're producing some byproduct there that are completely plant based.

Speaker Change: Especially green NAFTA.

Speaker Change: Well that has a significant market and green propane, which was very interesting and many other grain products. So with this test and we're talking to a few partners we will.

Speaker Change: Have a bio refinery that is completely green.

Speaker Change: And we hope to have it by the end of 2026.

Speaker Change: So that's the first.

Speaker Change: Pillar, we're talking about energy transition here, we're also working with our own energy trend.

Speaker Change: Efficiency program.

Speaker Change: To reduce the carbon footprint for our refineries according to our international consultants.

Speaker Change:

Speaker Change: That analyzes many companies in all continents. So we're working on that.

Operator: We're working on that. We have artificial intelligence in this program as well. We have a digital twin, so we're optimizing our refineries, not only in processing products, but also reducing the consumption of. With that, we'll reduce our carbon footprint. Besides that, as was said before, we're also working to improve the quality of our energy production. We have four refineries still being studied with the transition area. We want to include photovoltaic cells in some of them. The first one is REDUC, and if it's approved, it will start in H1 2025. First 11MW, and then 80MW of production. REPLAN, REPAR and REVAP are also studying that. To give you an idea, our proposal is to have 80MW of production.

William França: We're working on that. We have artificial intelligence in this program as well. We have a digital twin, so we're optimizing our refineries, not only in processing products, but also reducing the consumption of. With that, we'll reduce our carbon footprint. Besides that, as was said before, we're also working to improve the quality of our energy production. We have four refineries still being studied with the transition area. We want to include photovoltaic cells in some of them. The first one is REDUC, and if it's approved, it will start in H1 2025. First 11MW, and then 80MW of production. REPLAN, REPAR and REVAP are also studying that. To give you an idea, our proposal is to have 80MW of production.

Speaker Change: We have artificial intelligence in this program as well we have a digital twin.

Speaker Change: So we're optimizing our refineries not only.

Speaker Change: In processing products, but also reducing their consumption.

Speaker Change: <unk>.

Speaker Change: Caulk.

Speaker Change: And.

Speaker Change: With that we will reduce our carbon footprint.

Speaker Change: And besides that as was said before we're also working to improve the quality of our energy production, we have four refineries.

Speaker Change: Still being studied with the transition area.

Speaker Change: We want to include a photovoltaic cells and some of them. The first one is regatta and if it's approved.

Speaker Change: It will start in the first half of 2025. So first 11, and then 80 megawatt hours of production Rick plant Red nest and revolver are also studying that.

Speaker Change: So to give you an idea.

Speaker Change: Our proposal is to have 80 megawatts of production so.

Speaker Change: We're going to be net exporters of energy depending on season as you know solar power is intermittent.

Operator: We're going to be net exporters of energy depending on season. As you know, solar power is intermittent. The third pillar is a proposal that we're also looking at, which is replacing the gas we use in our hydro refineries to produce low sulfur gasoline. Then we'll replace it for hydro refinery using hydrogen. This is a capacity of 500 tons a year of hydrogen consumption. We hope to replace this production, which is now being done with natural gas for green gas, biomass, methane, or electrolysis. We're talking to several international technology companies, and we hope to move in that direction. That will also be a very important step. We have an agreement with Unigel to produce green ammonia through FAFEN Bahia synthesis generator.

William França: We're going to be net exporters of energy depending on season. As you know, solar power is intermittent. The third pillar is a proposal that we're also looking at, which is replacing the gas we use in our hydro refineries to produce low sulfur gasoline. Then we'll replace it for hydro refinery using hydrogen. This is a capacity of 500 tons a year of hydrogen consumption. We hope to replace this production, which is now being done with natural gas for green gas, biomass, methane, or electrolysis. We're talking to several international technology companies, and we hope to move in that direction. That will also be a very important step. We have an agreement with Unigel to produce green ammonia through FAFEN Bahia synthesis generator.

Speaker Change: Yeah.

Speaker Change: And the third pillar is a proposal that we're also looking at.

Speaker Change: Which is.

Speaker Change: Or replacing the gatsby used in our hydro refineries.

Speaker Change: Produce low sulfur gasoline.

Speaker Change: And.

Speaker Change: Then we'll replace it for hydro refinery using hydrogen.

Speaker Change: And this has a capacity of 500.

Speaker Change: Tons, a year of hydrogen consumption. So.

Speaker Change: Okay.

Speaker Change: We hope to replace this production, which is now being done with a natural gas for green gas biomass based methane or Electra licenses. So we're talking to several international technology companies and we hope to move in that direction.

Speaker Change: That will also be a very important step.

We have an agreement with when you shall too.

Speaker Change: Our produce green ammonia.

Speaker Change: Through funding by a synthesis generator.

Speaker Change: We have an NDA signed so we can't give you any details there, but that's the third pillar.

Operator: We have an NDA signed, so we can't give you many details there, but that's the third pillar, replacing gas with a green nitrogen. This is what we have been doing with Mauricio Tolmasquim's areas. That's what we're doing regarding energy transition. Thank you for that question. Thank you, William França and Mauricio Tolmasquim, and everyone who participated. This concludes our questions and answers session. If you have any additional questions, you can send them to our investor relations team. I will now hand it over to our investor relations director, Sergio Caetano Leite. He will give us his closing remarks. Thank you to everyone who sent us questions. It's very important for Petrobras to get questions from analysts, to answer them and understand, you know, what needs to be clarified to you.

William França: We have an NDA signed, so we can't give you many details there, but that's the third pillar, replacing gas with a green nitrogen. This is what we have been doing with Mauricio Tolmasquim's areas. That's what we're doing regarding energy transition. Thank you for that question.

Speaker Change: Replacing.

Speaker Change: Gas with a green nitrogen so.

Speaker Change: This is what we have been doing with Thomas Kings areas.

Speaker Change: So that's what we're doing for them.

Speaker Change: Concerning energy transition. Thank you for that question.

Operator: Thank you, William França and Mauricio Tolmasquim, and everyone who participated. This concludes our questions and answers session. If you have any additional questions, you can send them to our investor relations team. I will now hand it over to our investor relations director, Sergio Caetano Leite. He will give us his closing remarks.

Speaker Change: Thank you William and Thomas skiing, and everyone who participated this concludes our question and answer session. If you have any additional questions you can send them to our investor relations team.

Speaker Change: I will now hand it over.

Speaker Change #100: To our Investor Relations director of socially tree, who will give us his closing.

Closing remarks.

Speaker Change #100: Okay.

Sergio Caetano Leite: Thank you to everyone who sent us questions. It's very important for Petrobras to get questions from analysts, to answer them and understand, you know, what needs to be clarified to you.

Speaker Change #100: Thank you to everyone, who sent us questions its very important for Petrobras to get.

Questions from analysts to answer the matter.

Understand.

Speaker Change #100: What needs to be clarified to you.

Speaker Change #101: We'd also like to thank our fellow directors, who participated in this webcast. So just as a closing remark.

Sergio Caetano Leite: We'd also like to thank our fellow directors who participated in this webcast. Just as a closing remark, I'd just like to say that Petrobras is still growing. It's solid. It has provided robust results. It grew during Q2 and Q3 and continued to provide solid results. Of course, comparisons are always pertinent, and they help our management team. The team that organized this event, in fact, deserves congratulations. You know, accounting risks, and everyone involved has provided a lot of information to the market. We need to be very careful when we draw comparisons. If you look at the same company in different strategic moments, that comparison requires some attention. During the same quarter last year, the company was reducing its investments and concentrating on exploration and production.

Speaker Change #101: I'd just like to say that Petrobras is still growing.

Speaker Change #101: Okay.

Speaker Change #101: It's solid it has provided a robust results. It grew during the second and third quarter and continued to provide solid results of course.

Speaker Change #101: Comparisons are always pertinent item they help our management team are the team to organize this event in fact is.

Speaker Change #101:

Speaker Change #101: Deserves congratulations.

Speaker Change #101: Yeah, counting risks and everyone involved.

Speaker Change #101: Has provided a lot of information to the market but.

Speaker Change #101: We need to be very careful when we draw comparisons.

Speaker Change #101: If you look at the same company in different strategic moments that comparison requires some.

Speaker Change #101: Attention so.

Speaker Change #101: During the same quarter last year.

Speaker Change #101: The company was a reducing its investments and concentrating on exploration and production.

Speaker Change #101: Right now.

We're looking at our resilience for the next 70 years.

Sergio Caetano Leite: Right now, we're looking at our resilience for the next 70 years. We hope to deliver value to our investors for the next 70 years. Petrobras' growth and market value right now reflects how we understand this strategy and what deliveries the team will provide. We're growing 75% of the market cap, about 8% in the first nine months of the year. This growth is based on some strategic changes which require discounts. We had a reelection, the team changed. For the first year, it's expected for the company to go down because there are different expectations on what the new management will be like. As the team has been working and as strategic drivers become clear, some risks are ruled out, and usually the company is valued again at the level it deserves.

Speaker Change #101: So we hope to deliver value to our investors for the next 70 years and Petrobras is growth in market value.

Speaker Change #101: Right now reflects.

Speaker Change #101: How we understand this strategy in what deliveries of team will provide we're growing 75% of our market cap.

Speaker Change #101: Yeah.

Speaker Change #101: About 8% in the first nine months of the year.

Speaker Change #101: This growth is based on some strategic changes, which required discounts we had a reelection orbit.

<unk> changed so for the first year, it's expected for.

Speaker Change #101: The.

Speaker Change #101: A company to go down because there are different expectations on what the new management will be like and as the team has been working and as strategic drivers become clear.

Speaker Change #101: Some risks are rolled out.

Speaker Change #101: And usually the company is valued again at the level it deserves.

Yes.

Speaker Change #101: So, although we have faced adversity that Aldo.

Sergio Caetano Leite: Although we have faced adversities, and although we had a reduction in our brand, in our crack spread, although we had a 7% foreign exchange effect, our gross income is going up, our EBITDA is going up. We're having record level production, so we're giving value to our investors. Again, thank you, and as per usual, recommend that people buy Petrobras shares. That's the best thing that you can do. Thank you, and have a good day. Thank you, Sergio. This concludes our presentation. It's already available on our investor relations website, and this webcast will soon be available there as well. Thank you, and have a good Friday.

Speaker Change #101: We had a a reduction in our brand and our crack spread although we had a 7% foreign exchange effect. Our gross income is going up our EBITDA is going up we're having a record level.

Production, so we're giving value to our investors.

Speaker Change #101: So again, thank you and as per usual recommend that people buy a petrobras shares that's the best thing that you can do.

Sergio Caetano: Thank you and have a good day, thank you Sergio.

Speaker Change #102: This concludes our presentation.

Operator: Thank you, Sergio. This concludes our presentation. It's already available on our investor relations website, and this webcast will soon be available there as well. Thank you, and have a good Friday.

It's already available on our Investor Relations website, and this webcast will soon be available there as well. Thank you and have a good Friday.

Q3 2023 Petroleo Brasileiro SA Petrobras Earnings Call

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