Q2 2025 Petroleo Brasileiro SA Petrobras Earnings Call

Speaker #1: Perfect. Just put into this feed by the entire team. This platform, in the next few weeks and following weeks, will reach two hundred twenty-five thousand barrels a day.

Speaker #1: And there will be a fifth pre-salt oil production well. So I really think about what does that mean? One hundred twenty-five thousand barrels a day?

Speaker #1: Only with five pre-sorted oil wells. These efforts by Petróleo Brasileiro are ongoing. We are considering increased production. The needs for increased production also include cost reduction needs.

Speaker #1: We are aware that we made our strategic planning last year considering an oil price level of $83 per barrel. And today the price is $76.67 per barrel.

Speaker #1: We are absolutely aware of this fact. And we are ready to respond by increasing production and reducing cost. As for production increases, this year we have linked over fifty wells.

Speaker #1: What does that mean? This means that by the middle the year we had already linked more oil wells and also started production of more oil wells.

Speaker #1: Then in the entire year of 2024, this was only possible because of our joint efforts and a great partnership between all our top executive suite members with lots of processes, collaboration, and partnership, analysis, and also inventory optimization.

Speaker #1: From the perspective of our C-suite and their teams, we have delivered more and spent less. So we are congratulating all teams and expressing our total support and incentive for them to continue on this very good track.

Speaker #1: We are also presenting a new question. We will soon be presenting the beginning of the B78 platform operation. That will work with pre-sorting with a capacity of an additional 180 barrels a day.

Speaker #1: I'd like to remind you that these platforms they were inhabited in were vacant. They had no crews. So we changed this procedure.

Speaker #1: So now that they have a crew, they go straight to their location or their sites, which also anticipates production and operation of more oil.

Speaker #1: Again, to benefit our investors, both government and private sector investors. That's another improved procedure that ultimately means more oil in our tanks.

Speaker #1: We also had more natural gas supply offered to the market. We increased our gas production by fifteen percent to the market. And this was a result of our route three reaching the state of Rio de Janeiro in the Boa Ventura complex.

Speaker #1: And this also means that, in addition to Route 3, there has been a lot of effort put into processing this gas in a gas processing unit in the Boa Ventura complex in the Itaboraí hub.

Speaker #1: Ladies and gentlemen, we are very happy to have all this good news to share with you. These deliveries are under our control. We're totally in control of them.

Speaker #1: So we are delivering them. We're improving on them. And you can rest assured that in our daily work, that means continuous improvement. And this is done when the company realizes that there are challenging scenarios, geopolitical challenges, ahead of us when we consider the price of our final product.

Speaker #1: Crude oil and gas. As I said, these factors are not controlled. The price of crude oil is not under our control. However, mitigating the effects of these price variations, this is indeed under our control.

Speaker #1: So we are responding by increasing production with also increased production, and this is a very strong perspective on cost reduction. In the second order, you know, the second order was impacted by a falling oil price that was around $68 per barrel.

Speaker #1: That was ten percent down as compared to last year. Last semester. And we responded by increasing our production by five percent. And that mitigated that effect.

Speaker #1: Considerably the effect of oil price falls. In our balance sheets. We are now, working hard. And you can invest assured that we're doing this to make our projects increasingly more competitive in this scenario of uncertainty and in this scenario of price falls of our final project.

Speaker #1: In the major product, crude oil, you will see that we will have more earnings in our next business plan, which will be presented by the end of the year.

Speaker #1: So we are analyzing all possibilities. simplifying and optimizing our project to reduce cost. And also to increase efficiency gains.

Speaker #2: Heavy, Fernando. I'd like to repeat what I mentioned in the previous webcast. And what I have been saying since the beginning of my speech today we are absolutely committed to looking for the best possible results for our investors.

Speaker #2: And for the Brazilian society as a whole. We will generate value even in challenging scenarios. In terms of oil prices. Our projects will be profitable.

Speaker #2: And valuable. For the portfolio of our company. We will dedicate to the things we do best, which is to explore and produce oil and gas and its products selling these products efficiently and with quality.

Speaker #2: Always reconciling all these efforts, considering our needs to provide a fair energy transition. Thank you very much for joining us. And now we will proceed to the presentation of our CFO.

Speaker #2: Fernando Melgarejo. Who will talk about the financial results of our company? Fernando, the floor is yours. Good morning, everyone. Good morning to those who are listening to us.

Speaker #2: And I'd like also to greet everyone from the Spanish. Thank you for joining us for another Petroleo Brasileiro webcast. And I'll begin by presenting the key figures for the second quarter of twenty twenty-five.

Speaker #3: Well, Magda has already highlighted in her opening remarks the remarkable growth in our production this quarter on this slide. You can see that while brand prices declined by ten percent quarter over quarter, going from seventy-five point seven from sixty point seven to seventy-five cent, we had an increase of five percent with new production systems and improved operational efficiency across our fields.

Speaker #3: As our CEO mentioned at first half of the year, we already reached the midpoint of our twenty twenty-five production target, which is two point three million barrels per day.

Speaker #3: Commercial gas production also grew significantly. Petroleo Brasileiro increased its gas supply to the market by fifteen percent, mainly due to the progress of the rota three pipeline and the Boa Ventura gas prop CC unit.

Speaker #3: When considering total production, we reached a new record of four point two million barrels of oil equivalent per day. This increased production of oil in quarter two was key to delivering financial results.

Speaker #3: In line with the previous quarter, it was only made possible through consistent CAPEX execution and strong engagement from our workforce. And our CAPEX has been discussed in many situations.

Speaker #3: If it would be productive, it would have an impact on our production. And this is being presented now. Let's move on to slide six.

Speaker #3: Our operational slide six. So we reported net income excluding one of events of four point one billion US dollars and EBITDA also excluding one of events of ten point two billion US dollars.

Speaker #3: These figures are on par with the previous quarter, when brand prices were ten percent higher. In other words, our strong operational results offset external factors that were beyond our control.

Speaker #3: For example, the price of the commodities. Efficient management of our commercial strategy also positively contributed to the results. We implemented three diesel price reductions in the quarter two and one gasoline price reduction during the period.

Speaker #3: Maintaining competitive margins and profitable operations and also the company's share. Operating cash flow was seven point five billion US dollars. Here we saw a decline compared the previous quarter.

Speaker #3: Mainly due to known events such as peace consistent credit related to last year's tax transaction, we positively impacted Q1 2025 results. But that was not the case for this quarter.

Speaker #3: Additionally, the payment of variable remuneration which had a higher breadth, which is the basis to payment to government shareholders, and payment of variable remuneration which usually impacts company cash flow in the quarter two after the shareholders' meeting.

Speaker #3: All events that will not happen in the next quarter. Additionally, in quarter two, we had higher selling expenses. Mainly due to increased crude oil export volumes because of our production.

Speaker #3: Slide seven. Here we present our debt history. You can see that both financial debt and chartering remain under control. And that over sixty percent of total indebtedness relates to leases of platforms, vessels, and rigs.

Speaker #3: Which, according to accounting standards, must be recognized as debt. It is important to remember that this lease portion refers to us as generating production and consequently revenue for the company.

Speaker #3: When we commissioned this year the SO's Alexandre Dumont in Tamandaré, both chartered platforms, we had to record lease liabilities as debt. These two platforms added three point seven billion to our debt this year.

Speaker #3: But on the other hand, we added two hundred seven thousand barrels per day of production capacity for our company. Considering other vessels and amortizations, leases added approximately five billion US dollars to our debts in the first half of twenty twenty-five.

Speaker #3: So these leases are associated with more capacity, more production, and therefore they add revenue to our company. Well, regarding financial debt, this quarter we highlight a successful public offering of the ventures totally three billion Brazilian reals.

Speaker #3: It was successful with high demand and allowed us to raise funds at the local market. Something we hadn't one for eight years. With competitive costs in line with our liabilities management strategy.

Speaker #3: Slide eight. We are going to talk about CAPEX. We invested four point four billion US dollars in quarter two. Which added to the first quarter leads to eighteen point five billion US dollars for this year.

Speaker #3: We are, according to our plan, guiding for eighteen point five for the year. We have a firm commitment to the market to execute what we planned.

Speaker #3: Accelerating value generating deliveries and anticipating revenue. Due to these efforts, we started production from the SPSO Alexandre de Guzmão starting over two months ahead of schedule.

Speaker #3: As our CEO has already mentioned, they are within Tamandaré. A huge platform began operating in February has already reached two hundred thousand barrels with only four producing wells.

Speaker #3: Soon we will reach peak of production in twenty twenty-five. We have already connected more wells than in the entire previous years. Forty-eight wells including three thirty producing and eighteen injecting wells.

Speaker #3: In the same period last year, we had thirty-one, twelve producers, and nineteen injectors. This is therefore a CAPEX that is very much focused on production.

Speaker #3: National procedures line number nine. Petroleo Brasileiro Investment has been bringing benefits to the company. Its shareholders and society. We are talking here about more production and consequently more operational cash flow.

Speaker #3: And we are now important exporters of commodities contributing to Brazil's trade balance. It's not just investment in new projects we are improving efficiency. Adjusting our maintenance schedules and managing reservoirs efficiently.

Speaker #3: All these contribute to the production curve growth. Our CEO mentioned in her opening remarks production in July which exceeded the previous quarter. We are talking here about three hundred and an increase of three hundred eighty thousand barrels per day only in seven months.

Speaker #3: With this trend and ongoing efforts, we expect average oil and gas production in twenty twenty-five to be at the upper end of the target range, representing about one hundred thousand barrels per day above the midpoint.

Speaker #3: At a price of seventy US dollars, US dollars we will have an additional two point five billion US dollars revenue. And this current planned production curve carries less risk.

Speaker #3: Today than when the plan was approved. In other words, for the same confidence level, we would have a higher curve today. Slide number ten.

Speaker #3: We have talked about CAPEX production and now we will talk about dividends. I want to remind you of the strength of our shareholders' remuneration policy.

Speaker #3: The formula ensures dividends aligned with different oil prices. Without compromising the company's financial robustness. Accordingly, we apply the formula set forth in our policy and we will distribute forty-five percent of a free cash flow from quarter two.

Speaker #3: Therefore, the board approved a distribution of eight point seven billion Brazilian reals equivalent to point sixty-seven per share to be paid in two equal installments in November and December this year.

Speaker #3: Well, this concludes my presentation. And thank you again for your attention. So along with the other directors, 'm available to answer your questions. Now I hand over to Eduardo who will then continue with the Q and A session.

Speaker #2: Thank you, Fernando. Thank you, Magda. So let's start with the Q and A session. Irene, can you hear us? You can proceed with the question.

Speaker #4: Good morning. Thank you very much for the call. So I will allow CAPEX results with the what you mentioned yesterday. So that you work with natural gas distributors as CEO mentioned, Petroleo Brasileiro has been focusing CAPEX particularly on upstream.

Speaker #4: Delivering operational results. We'd like to understand what we can expect in s of new investments in the next few years and how this is generating this integrated to the business plan including a strategy from the board and timing for this operation.

Speaker #2: Thank you for the question. We are a company that is started already integrated. So Petroleo Brasileiro is seventy-one years old and it is started and it became what it is because it is a company that is integrated all over.

Speaker #2: So with that, we are looking at the possibility of reaching synergy. When we look at an increase in gas production for example, we are looking at what it represents.

Speaker #2: For ample, in terms of more LNG for the market, we import LNG and we will deliver more. This margins related to our product they also need to be captured.

Speaker #2: So what we did yesterday was to say the following. Well, here we have the product that will have an increasing production and if it's a good good business for the company, if that's profitable and if this is properly attractive, why not have this additional synergy?

Speaker #2: So we have three insights right now. There is no project to acquire LNG. There is nothing in Petroleo Brasileiro's portfolio, but we guarantee and make sure that we want to keep the doors open for a possibility if the project is good and profitable and if the project's attractiveness is in line with what Petroleo Brasileiro demands.

Speaker #4: Well, maybe we can say basically Petroleo Brasileiro has already been working to be the best choice to our customers and being the best choice to our customers means to have competitive prices to really have availability where the demand for the product.

Speaker #4: So we have already been doing that to the extent that we have direct sales. We have been trying to have direct sales to big customers.

Speaker #4: So we are doing that already. We have tried to access terminals, channels, and advancing in a way. Obviously, this is a way of distributing.

Speaker #4: We will get to the source. It's something that is natural. As our CEO has mentioned, we will have a significant production of diesel. We will have an increase in production of LNG.

Speaker #4: So all well for that we need markets. So the market is the way to monetize and it's the most profitable thing for our company.

Speaker #4: This is where our efforts go. In this regard, we have been advancing in direct sales, specifically in direct sales of LNG where we have infrastructure available.

Speaker #4: We are talking with big customers to supply LNG directly to them, capturing a margin, as our CEO said. I would say that this vision is very natural.

Speaker #4: So we have a driver here I think it's on the table for discussion and we will look at it. And obviously finding this economic rationale as our CEO mentioned and we are going to look at it and this will be considered for approval going through our board well just adding to that from the point of view of governance.

Speaker #4: As we've ready said, we will follow all the assessment by governance availability of funds in order to make investments when needed. So we are really sure that any project it will be implemented if it creates value for our shareholders and if there's discipline.

Speaker #4: Discipline in the capital to be used in the project. So it has to do with the debt limit we have and we have have been strongly managing our debt and we intend to reach the target we presented in our strategic plan for twenty twenty-five twenty twenty-nine.

Speaker #4: Thank ou.

Speaker #2: Fernando Magna Mileni for the question. Ask question by Bruno Montanari. Morgan Stanley. Good afternoon. Thank you for taking my question. I'd like to congratulate the company for the significant increase in production in such a short period of time.

Speaker #2: It's very clear the ramp up of the new platforms and the pre-sort layer I'd like to understand about the risk factors that is less than leading to a more conservative curve and connected to a better execution.

Speaker #2: Try to advance a potential revitalization of Isapinhoa so that you have even greater production in the midterm. Thank you very much.

Speaker #4: Good morning, everyone. We are in a very special quarter. We had an increase in our production, which brought a reduction in costs. Last quarter, we produced more and also strongly reduced our expenses.

Speaker #4: So the issue of production in this field we are talking about this growth and this really refers to this reservoir. We have a reservoir in the pre-sort layer and the effective response of this reservoir is only given when the field is connected.

Speaker #4: We have had very good surprises expectations have been confirmed in terms of increasing production and wells that are really very productive. We have four wells with over two hundred thousand production and by the end of the year we are planning to increase production but we'd like to remind you that we will have the digital platforms.

Speaker #4: We have started some big platforms and we will have the planned shutdown. So this increase will level off but anyway by the end of this year we will have an increase reaching our target as for plan but at the upper portion of our target.

Speaker #4: We are looking at Isapinhoa and Tupi improving optimization with new units. To increase production there.

Speaker #1: Now adding to the question you mentioned Tupi in particular, right? So as Sylvia mentioned, Tupi is being is having at least another two projects.

Speaker #1: Revitalizing Tupi and what we call complementary Tupi. Our challenge is to make Tupi reach the level of one million barrels of oil a day.

Speaker #1: Thank you. Thank you, Sylvia. Thank you, Mark.

Speaker #4: Magda, thank you Bruno for your question. Now Vicente. Vicente of Bradesco. Bradesco so Vicente over to you.

Speaker #5: Good afternoon, everyone. Thank you for taking my question. I'd like to discuss the GLP release. For LPG release you published last night. So any M&A any movements in this sector they need to be approved in the November plans first and only then you would do any make any transactions.

Speaker #5: Then you also mentioned other release that you had would have partnership distribution partnerships according to quote unquote provisional contract provisions. So what kind of partnership is this?

Speaker #5: What are these con contract provisions? Thank you.

Speaker #4: As executive director or Claudio Claudio Schlosser mentioned as our production increases our greatest challenge is to really to put these products onto the market and also to widen our market base.

Speaker #4: We have increasing production, which means extending our refinery facility or refinery system. We want to increase diesel as a ten, which is highly profitable, and at least an additional 200,000 barrels a day.

Speaker #4: As a result, there's more pressure for increasing our markets. So what have we been doing? We knock at the door of our largest consumers, including agribusiness in Brazil.

Speaker #4: Agri business consumers. We are now having LLGP LLPG not only industrial but also domestic. In other words, we are expanding our natural gas market.

Speaker #4: As you can see, our efforts to have natural gas in Brazil's free market meant that a large number of companies are now part of this movement led by Petroleo Brasileiro.

Speaker #4: This is why we extended this gas market by fifteen percent. Now, what we cannot have is limitations. To make strides to make progress in this area.

Speaker #4: So whatever is needed B to B or sales to large consumers sales to final consumers in gas stations or even in terms of gas.

Speaker #4: What we want is to have open doors to make choices to choose the best company that will add the most value possible. And in the most efficient way of really placing our product in the market.

Speaker #4: Now after we understood that Petroleo Brasileiro over time Petroleo Brasileiro has chosen to leave some markets behind. We had this duty. So why having this duty of leaving some markets?

Speaker #4: Why can't we leave this door open? So that this door may be used in the best possible way. And this is what we did yesterday.

Speaker #4: Thank you, Magda. Thank you for your question. Now Gabriel Bardo of City. Gabriel, you have the floor.

Speaker #6: Thank you, Nat. President Magda Fernando, thank you for taking my question. My point here is just one. One of the major topics that has been discussed with investors is, of course, your investment plan for next year.

Speaker #6: We have a perspective and taking the cue of the last commitment when you discussed efficiency gains and the difficulty we have today hiring new personnel in in tighter industry environment.

Speaker #6: We have a software price movement for probes, but I think what I need to understand better is what's going to happen.

Speaker #6: What can we expect next year? When you look at our plans for the future and also considering your previous CAPEX data. So how flexible are you for next year?

Speaker #6: And what solutions could you provide or improve for twenty twenty-six? And what are M&As and also LPG or other fuels. So how does that mean more CAPEX efficiency?

Speaker #6: Or a market that is a little more uncertain in terms of oil pricing the next few months or even next few years. Okay. I'll start answering and then I'll give the floor to Fernando.

Speaker #6: And also Sylvia and Renata if they believe they should also comment on the estion.

Speaker #7: Well, what we are what we've been telling you is that we do have extremely relevant business opportunities in exploration and production of oil. The company has the major focus.

Speaker #7: Its major focus is exploration and production. With highly profitable projects you saw the profitability level of these projects. So when we show results in the second quarter we have decreased prices that were offset by increased production levels.

Speaker #7: So, when we look at these projects, first we will check whether they are profitable, and number two, whether their profitability level is desired. If this is the case, then we move on.

Speaker #7: In other words, we will not destroy value rather we will move on with profitable projects and in a way it's we should also inform you that for the first time in all Petroleo Brasileiro's life project changed its phase.

Speaker #7: So we had projects that were progressing in our portfolio advancing. In their phases moving on in their phases. You know you have zero one two three and four assigned to our projects.

Speaker #7: Four means the project is totally mature. So we had projects that were expected to migrate from phase three to phase four. Now when we look at them with this new level they went back to level two.

Speaker #7: The idea was that these projects should be optimized. In other words, we won't leave these projects behind. They are still profitable; they used to be profitable before.

Speaker #7: But the profitability level that they had at that time with the current oil price we decided to put them a few phases back back to the drawing board so that these projects to be better optimized.

Speaker #7: I'll now give the floor to Fernando and then Renata, so that they can give you a little more details.

Speaker #8: Thank you, Gabriel, for your question. First, I should stress that the current scenario is more challenging in that it reflects on our business plan.

Speaker #8: And as we have a this commitment with a capital discipline all our business plans structure needs to be adequate. To reflect the needs for this new scenario.

Speaker #8: In other words, we'll be able to restructure all our CAPEX that will then meet the needs of our investing capacity. Considering our new production curve that we will deliver until a potentially even a above the margin.

Speaker #8: But within the margin or even in the upper range. Nate then Brent. Brent is lower. So we need to offset that. And then the cash flow generation that is possible.

Speaker #8: So, I believe the greatest goal and our greatest commitment is really to reduce costs for the company and also optimize projects that our president mentioned.

Speaker #8: It's the first time we went back to phase one to consider engineering aspects and then also productivity. So all these factors together they are integrated in our business plan.

Speaker #8: The idea is for us to devise a business plan that shows all this capital discipline with adjusted debt. Adjusted to our size. We do not want to increase our debt.

Speaker #8: For no reason, of course. Our target is still $65 billion. This will remain. So we want to create a portfolio in a business plan that is safe and secure and adapted to the current situation and scenario.

Speaker #8: Hello, Gabriel. I think they've said everything that had to be said. What I'd just like to add one more point. Whatever the value of our business plan in twenty twenty-six rests assured that we will realize make it happen this year.

Speaker #8: In the first quarter of last year it was at thirty percent and this quarter it is aligned to what we had planned. It was thirty below what the expected level.

Speaker #8: So whatever the value we will execute as planned. Now Magda Fernando Renata. Thank you and thank you, Gabriel, for your question. Now Lilian Yan of HSBC.

Speaker #8: You have the floor, Liliane.

Speaker #9: Hello and thank ou for the opportunity. Can you please tell us about how different the results are today as compared to what you promised in your strategic plan?

Speaker #8: Of course. It's ter than expected. You brought me at the top of the guidance. But again, can you please make comments about your CAPEX, your eighteen point five billion investment plan?

Speaker #8: So in summary, is it safe to say that today there's a higher likelihood of this CAPEX being higher this year? Are you feeling pressure from providers, suppliers, can you can you can expect Petroleo Brasileiro put more money into Braskem and that might be a good consumer of your gas?

Speaker #8: Thank you. Hello, Liliana. Thank you for your question. All contracts for our twenty twenty-five plan and part of twenty twenty-six they are already the contracts have already been signed.

Speaker #8: So there's no possibility of our or any idea of really exceeding our guidance. We will meet whatever was set on our guidance. Our commitment is a short.

Speaker #8: There are no surprises ahead for Braskem. If you allow me to just go out of protocol and pinpoint some of the things you've discussed.

Speaker #8: 've you had four hundred and seventy product that was the production number for July. And then new platforms this year. So I'd like to confirm something that you said earlier.

Speaker #8: That the curve with two four hundred and seventy is still growing and then there's the effect of schedule shutdowns. Maybe you can give me more details.

Speaker #8: This, I think, has to do with previous comments I wanted to repeat. These points, and maybe if you could clarify them a little bit more.

Speaker #8: And then the question is about the last auction with the Amazonas blocks. In particular, what was that partnership with Axon like? Do you believe there's synergy?

Speaker #8: With the Guyanas and Suriname? Thank you. Okay, Regis.

Speaker #5: With regard to the ramp up, there was indeed a production increase in in our reports. You you can see that you have efficiency in the linking of the wells.

Speaker #5: Of the wells, now I'm going to tell the labels you said seven. And the reservoir then responded well, and we had a rapid production increase.

Speaker #5: But this growth will be offset by the other large platforms that are programmed to start production. So I can confirm that there's safety.

Speaker #5: We want our platforms to have a long life, and we also want to ensure that we have future operations. Therefore, scheduled shutdowns are essential.

Speaker #5: They need to be done. But we are within our plan goal and in fact in the upper range that's about four. So we will have a very positive result.

Speaker #5: It is important to mention that the pre-sort layer is really surprising in s of productivity. It's been a very positive surprise. With very good results and earnings.

Speaker #5: We have an oil column that's as high as Ponta Sucre Mountain and the size of Guanabara Bay, and the bruises are twice as large as Guanabara Bay.

Speaker #5: And this is only confirmed when you start producing. As for the auction, yes, we did. I had the auction and defined the ten blocks.

Speaker #5: We now have sixteen blocks in the in Amapa. We're just waiting for environmental licensing to test our productivity out. I should stress that the blocks we have there they're very similar to the one that we have in Venezuela and Guyana.

Speaker #5: And very similar to what we have here in the campus of Basin as well. So we know them really well. And then the partnership with Axon and Shell.

Speaker #5: We have over thirty partners here. Petróleo Brasileiro has over thirty partners. So choosing to work with Axon, which is a great operator, has resulted in very significant outcomes.

Speaker #5: At that, Guyana, and that's very similar to the equatorial margin results. So, and so best operator for us to share risks and knowledge. Thank you, Sylvia.

Speaker #5: And hat for our quest Regis for your question. Now Dick Greco of Itau Monique. Monique, you have the floor, Monique.

Speaker #10: Hello, good afternoon and thank you for taking my questions. By the way, congratulations for your operating performance. It's really impressive. Congratulations to the entire team.

Speaker #10: My I have one question only. The message that that your CAPEX and gas was very that message was very clear. Now we know that there are some potential movements on the radar in the on the horizon in the next few months like President Magda Chambriard mentioned.

Speaker #10: Movements in ethanol, for instance. You know that the government will hold auctions for areas the pre-sort layer areas that were not hired. This year still.

Speaker #10: So, can you clarify what we're expecting in terms of CAPEX execution in addition to the $18.5 billion when you consider these additional movements that are on the short-term horizon?

Speaker #10: Can you maybe explain especially in the non-hired areas? Thank you. Hello, Monique. Thank you for your question. Okay. Petroleo Brasileiro will always be present when we discuss any opportunity of auctions.

Speaker #10: The Brazilian territory is our home. In other words, when pre-sort layer areas are being offered, we will always be present at such auctions. This is really in our interest.

Speaker #10: However, irrespective of any other factor, this will only happen if it makes economic sense to us. No one is considering embarking on a wild adventure, of course.

Speaker #10: If the project is worth it and if it is on our business plan, this is the direction we'll be taking. The same thing applies to ethanol.

Speaker #10: Our project portfolio includes investments in renewable fuels, energy transition, and biofuels. It also expects considerable effort, for instance, in electricity, including thermal power plants.

Speaker #10: So again, we will do it provided the project is profitable and attractive. The project must meet the attractiveness and expectations of our company in terms of economic returns.

Speaker #10: Thank you, Magda. Thank you, Monique, for your question. Next question by Luis Cavallo from BTG. Luis, the floor is yours. Good afternoon. Thank you for taking my question.

Speaker #10: I would like to congratulate you on your production ramp-up. It's really nice to see it. I have a question. I'd like to reconcile it.

Speaker #10: I don't know, maybe to our CEO, Magda, or Fernando, the initial estimates for the year have planned oil at $83 per barrel, as Fernando said.

Speaker #10: Now it's around sixty-seven, sixty-eight. That's the oil price right now. And in this scenario you have a gap, a delta for cash generation that is below what was initially planned when we look at that graph.

Speaker #10: We know that it's a five-year plan, but this year cash generation should be less than planned. And you are keeping that CAPEX guidance for this year and also for next year.

Speaker #10: So, my question is: what is the flexibility depending on oil prices and changes in oil prices vis-à-vis this investment plan, and also vis-à-vis the debt or indebtedness limit the company has?

Speaker #10: Of course, considering also payment of dividends. So in this scenario with lower oil prices you are talking a lot about profitability of projects. They have to show that they are profitable to be approved.

Speaker #10: But what in which level of oil prices could we see not cancellation of progress but maybe postponing projects towards the end of the plan because of lower cash generation more in the short term.

Speaker #10: Thank you, Luis. Well, let's talk a bit about this topic. I think that the first thing is that last year I suggested our debt level so that we could have a little bit more flexibility.

Speaker #10: So we could consider this scenario that occurred: a reduction in brand prices and thus a reduction in revenue. So it's still a little limit of our debt.

Speaker #10: We can still take some investments. In the short term, meaning for this year, we have this CAPEX of $18.5 billion. We have many contracts that have already been signed.

Speaker #10: So we have scheduled that and this should happen. The flexibility will take place when we build the strategic plan for 2026-2030. There, we'll have to reevaluate some projects; actually, we will look again at all assumptions and include these assumptions on the projects to see which ones are feasible.

Speaker #10: Those who are not will be along the way, or maybe they will be postponed, or we will look for engineering alternatives. That will lead to lower CAPEX so that it's financially feasible.

Speaker #10: As our CEO said we had one project and the first time it went back so that we could rethink how our engineering would work and whether that would be more profitable alternatives because we understand that at the current price levels with this very volatile world scenario we should have some flexibility for that.

Speaker #10: Well, dividends will continue at the same levels; there are no discussions going on in terms of changes regarding the ordinary. Now, for the extraordinary, with lower revenue, we would have a harder time paying extraordinary dividends.

Speaker #10: Even though we would really like very much to have surplus cash in order to pay extraordinary dividends. But I think the probability for this year is pretty low.

Speaker #10: I would like to add, and then give the floor to Director Renata to further elaborate on that. But often we are dealing not only with the engineering of the process, but also how we contract projects.

Speaker #10: So when we look at this issue of contracting Renes, the mere change in the way we contract and publicizing the price, as well as the dilution of the lots into a larger number of lots, resulted in a saving of one billion Brazilian reals for our company.

Speaker #10: So, we had a work forbidding; we changed how these packages would be contracted and we diluted them into a larger number of packages to have more competition. With that, we could save R$1 billion. We are multiplying this effort in other words, and I'll give the floor to Renata to further elaborate on that because, after all, this is a major effort being carried out by her team.

Speaker #10: So we really have been thinking outside the box. When the CEO invited us to take these positions, she said we should do it differently, and this is what we have been doing.

Speaker #10: And one of the things we have been doing differently, which is POT, just to give you an idea, BOT enables us to change specifications during the bidding process.

Speaker #10: Because this is a conceptual concept, it's designed so you can change requirements in this conceptual design. With this initiative, and after a lot of discussions with the market, we had some restrictions in the past.

Speaker #10: But only with this move along we could reduce the weight of CI platforms between fifteen to twenty cent. That alone represents a cost reduction that is very significant.

Speaker #10: We will open these packages in September the thirtieth and we expect that with that we will really have a significant reduction in prices. And our CEO said depending on the market on the scenario depending on the demand depending on how the world is depending on geopolitics every contract has a different strategy.

Speaker #10: So that we can take the most the the best of the all our contracts. Thank you, Magda. Thank you Fernando Renata. Thank you, Luis, for your question.

Speaker #10: So, we are coming to the end of our webcast. We will close the Q&A session. If you have any additional questions, you can send them to our Investor Relations team, and we will answer them later.

Speaker #10: So I'd like to thank you all for having joined our webcast. And I'll give the floor to Fernando and to Magda. For their final remarks.

Speaker #10: Fernando Magda, the floor is yours.

Speaker #4: Well, I'd like to thank you all for joining us. I'd like to say that our team is really available if you have any further questions; we are all always at our disposal.

Speaker #4: Well, to close, I'd like to say that we are really happy because we could show what a proper, well-thought-out, and planned CAPEX can do, which was to increase production. In our view, this will really stay for a very long time with very positive prospects looking forward.

Speaker #4: And with new equipment coming in, along with new production equipment starting up, I think that our increase will be more than our decrease. In the next five years, we are really sure that this will take place.

Speaker #4: Production was better, and with that, it offset reductions in brand prices. This was very important for our earnings, allowing us to complete our decision plan as we planned.

Speaker #4: And all contracts regarding distribution will be complied with. We have contracts; there is no discussion, no argument. We will comply with all these contracts.

Speaker #4: This is a commitment we have, so thank you all very much. We are also available during this week to discuss any issues you deem necessary.

Speaker #4: Well, to close, I would like to thank you all for joining us in this webcast. Thank you all for the attention you give to Petróleo Brasileiro and Petróleo Brasileiro's businesses.

Speaker #4: I agree with Fernando and I would like to again say that we are really willing to meet everything that has been planned offering our investors be it government or private investors making sure that Petroleo Brasileiro really want to have profitable projects optimizing it projects portfolio and really making investments and projects that are as efficient as possible.

Speaker #4: We have wonderful actions from exploration and production, very attractive projects including refining and sales. We are making money; we have 24% renewable energy in Asia, expanding our market.

Speaker #4: We are making money. We are expanding production of diesel with very high levels of profitability, so you can all be reassured that Petróleo Brasileiro is making an effort and that this board is really making an effort so that we can achieve the best results possible.

Speaker #4: Thank you all very much. Our doors are open, and our investors' relationship and Eduardo Molinari are available to answer all the questions you may have. So whatever questions you have, you just ask.

Speaker #4: Thank you all very much, and have a nice day. Thank you, Magda. Thank you, Fernando. The presentation will be made available on the Investor Relations website, and soon we will also make the audio available.