London, December 6th, 2019 - Petrobras
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London, December 6th, 2019
Disclaimer
—
The presentation may contain forward-looking We undertake no obligation to publicly update or
statements about future events that are not revise any forward-looking statements, whether NON-SEC COMPLIANT OIL AND
based on historical facts and are not assurances as a result of new information or future events or GAS RESERVES:
of future results. Such forward-looking for any other reason. Figures for 2019 on are
statements merely reflect the Company’s current estimates or targets. Cautionary statement for us
views and estimates of future economic investors
circumstances, industry conditions, company All forward-looking statements are expressly
performance and financial results. Such terms as qualified in their entirety by this cautionary We present certain data in this
"anticipate", "believe", "expect", "forecast", statement, and you should not place reliance on presentation, such as oil and gas
"intend", "plan", "project", "seek", "should", along any forward-looking statement contained in this
resources, that we are not permitted to
with similar or analogous expressions, are used presentation.
present in documents filed with the
to identify such forward-looking statements.
In addition, this presentation also contains United States Securities and Exchange
Readers are cautioned that these statements are
only projections and may differ materially from certain financial measures that are not Commission (SEC) under new Subpart
actual future results or events. Readers are recognized under Brazilian GAAP or IFRS. These 1200 to Regulation S-K because such
referred to the documents filed by the Company measures do not have standardized meanings and terms do not qualify as proved,
with the SEC, specifically the Company’s most may not be comparable to similarly-titled probable or possible reserves under Rule
recent Annual Report on Form 20-F, which measures provided by other companies. We are
4-10(a) of Regulation S-X
identify important risk factors that could cause providing these measures because we use them
actual results to differ from those contained in as a measure of company performance; they
the forward-looking statements, including, should not be considered in isolation or as a
among other things, risks relating to general substitute for other financial measures that have
economic and business conditions, including been disclosed in accordance with Brazilian GAAP
crude oil and other commodity prices, refining or IFRS.
margins and prevailing exchange rates,
uncertainties inherent in making estimates of our
oil and gas reserves including recently discovered
oil and gas reserves, international and Brazilian
political, economic and social developments,
receipt of governmental approvals and licenses
and our ability to obtain financing.
2
Roberto Castello Branco — CEO
The first results of a new Petrobras
—
Five strategic pillars underpinning our transformational agenda
Maximize returns Reduction of Relentless Meritocracy People,
on capital cost of capital search for low environment and
employed costs safety
• Focusing on assets • Continuing the • Cost cutting and • Merit-based • People’s
in which we are deleveraging path resilience to low- variable empowerment
the natural owner price scenarios compensation • Safety culture
• Transparency and
• Pre-salt liability program
• Decarbonizing oil
production management • EVA® production
reached 60% of implementation
output
4
2019 achievements
—
~ US$ 21 billion1 ~ US$ 16 billion2 ~ US$ 13 billion ~ US$ 17 billion
Debt reduction Divestments of non- Free cash flow (9M19) Acquisition of Búzios
core assets surplus
Opening refining market Opening gas market
Agreement with CADE (anti-trust body) to sell Agreement with CADE to foster competition in
50% of refining capacity Brazilian gas market
Privatization of BR Distribuidora Credit rating upgrade
First one through capital markets in Brazil Upgrade from Moody’s and Fitch on the
stand-alone credit profile
1 Including IFRS16
2 Sales updated until 11/28/2019, including signed and closed transactions 5
Continuous search for low cost and efficiency
—
Resilience Plan launched in March 2019
• Voluntary dismissal programs
» 2,962 employees enlisted
• Revision of advertising and sponsorship expenses
» Reduction of ~US$ 40 million
• Optimization of use of office buildings
» Reduction of ~ 45,000 m2 in Brazil
» Closing of 8 offices abroad, 5 to come
• Creation of Digital Transformation and Innovation Executive Office
» Digital twin implementation in 3Q19
Note: 2019 figures
6
Improving Petrobras
—
Creation of new Executive Offices:
Empowerment of Executive Institutional Relations and Digital
Committee Transformation and Innovation
Reduction of the number of Board Improvement in flexibility and
advisory committees efficiency in organizational structure
Empowerment of people –
New shareholder remuneration policy responsibility with accountability
EVA® – recognition program
7
Key messages
—
Focus on a higher value generation for shareholders
Active portfolio
Safety as a priority
management
Debt reduction and capital
Digital transformation
discipline
Transition to low-carbon
Resilience to low oil prices
economy
9
Performance measurement for value generation 2020
—
TRI¹ ND/EBITDA2 ∆ EVA®
< 1.0 1.5x US$ 2.6 billion3
Ambition: Zero fatalities
¹TRI: Total recordable injuries
2ND/EBITDA: Net debt/LTM adjusted EBITDA (including IFRS16)|
3 EVA: Economic Value Added. 10Petrobras of the future
— Culture of Value Low Cost of Capital
EVA management system,
Sound balance sheet
Cultural transformation
Wind and Solar
R&D aimed for the long term
World-class Assets
Efficient & Low-cost Refining
Pre-salt
• Capacity of 1.1 MMbpd
• Rebuilding exploratory portfolio
• Digital twin: higher • EXP100: Exploratory risk reduction
operational efficiency • PROD1000: Development time reduction
• Augmented reality:
increased security and • Industrial automation: increased
efficiency security and efficiency
TD1 Logistics and Marketing DT1
DT • AI² applied to asset
management • Strengthen capabilities for • Future opportunities for lower-cost gas
• Digital refinery of the trading of oil, oil products,
future LPG, natural gas and LNG
• Blockchain
1 Digital transformation DT1
• Logistics 4.0 11
² Artificial IntelligenceAndrea Almeida — CFO
Finance strategies
—
Improve balance sheet through
deleveraging, lower interest
Maximize shareholder return
expense and optimization of
cash position
Increase dividend distribution
Risk reduction through
while investing in world-class
contingencies management
assets
13Bridging the gap to fair value in two years
—
~45% potential
upside
Active Cost Debt Optimized
portfolio optimization reduction working capital
management and reduction
Market Equity
cap¹ value²
2021
Minimum cash
10% reduction of costs³ US$ 60 billion
US$ 20-30 balance of US$
15% reduction of gross debt
billion 6.6 billion
corporate expenses4 target
& inventory mgnt
WACC@ 8.5%
¹ November 29th, 2019
² Equity value based on fair value calculations ROCE 10%
3 Costs and expenses without feedstock
4 In 2020 14Strong FCF generation with higher dividends
—
Petrobras’ financiability 2020-2024
US$ billion¹
188 188
Investments
76
Cash flow
generation after
taxes and judicial 158-168
34 Dividends
deposits
33 Net amortizations
Active portfolio Leases financial
26 Leases amortizations
20-30
7 12
management expenses Financial expenses
Sources Uses
All projects are NPV positive in the resilience scenario – Brent @ US$ 45 – 50/bbl2
¹ Numbers calculated with Brent @ US$ 65/bbl
2 Brent @ ~US$ 50/bbl in the 2020-2024 period and US$ 45/bbl in the long run
15Investing in high return projects
—
Capex 2020-2024 US$ billion 20
1 1
1
15
15
13 1 1 5
1 0.3
12 1
1 1
1 1 2
1 2 4
31% 1
0.2 0.3
64.3
2.3
6.1
75.7 10
11
13
US$ billion 9 9
3.0 69%
2020 2021 2022 2023 2024
E&P Corporate Corporate G&P
Refining G&P Sustaining Growth Refining E&P ToR surplus
E&P without ToR surplus
Note: ToR surplus CAPEX assumes wells construction starting in 2023 and owned platforms 16Active portfolio management
—
Selling assets in which Petrobras is not the natural owner
Divestment plan Upside in Divestment
• 50% of the refining capacity • BR Distribuidora
• Gas transportation and • Braskem
distribution
• Post-salt assets
• Onshore and shallow water assets
• Bolivian assets
• LPG distribution
• Thermal power plants
• Offshore gas pipelines
• South American assets
17Returning value to our shareholders
—
New dividend policy
Gross debt Distribution of
≤ US$ 60 60% (OCF –
billion CAPEX)
Distribution formula
Positive
D = 60% x (OCF – CAPEX¹) Gross debt Mandatory
Net > US$ 60 minimum
income billion dividends
Dividends Operating
cash flow
No dividend
Negative
distribution
• Annual calculation based on year end figures
• At least two distributions per year
• Amount to be distributed is gross of taxes
• Cash flows and gross debt in accordance with IFRS16
¹Excludes bid rounds and acquisitions
18Focus on deleveraging with higher dividends
—
US$ billion
Gross debt Dividends
Beginning of the new Beginning of the new
111 dividend policy dividend policy
88
60
3 3
2
1
2018 2019 2020 2021 2022 2023 2024 2018 2019 2020 2021 2022 2023 2024
19Oil production cash breakeven @ US$ 16/bbl in 2020
—
US$/bbl Operational costs and expenses 13
Government take 3
Revenues: Gas and others -4
Sustaining CAPEX 3
1
Spread Brent
Cash breakeven: current 16
20Cash flow resilient to low oil prices
—
FCF 20201 EBITDA 2020
US$ billion US$ billion
22.9 BRENT
US$/BBL
50 55 60 65 70
17.1 FX
3.50 25.4 28.7 32.0 35.3 38.6
11.0
3.70 26.3 29.6 32.8 36.1 39.4
3.90 27.0 30.3 33.6 36.9 40.2
0
33 40 50 60 70 4.10 27.7 31.0 34.3 37.6 40.9
BRENT
US$/BBL
1FCF = operating cash flow – total CAPEX
21
FX rate of US$ 3.9/BRLCarlos Alberto Pereira de Oliveira — Chief Exploration and Production Officer
E&P Strategies
—
Maximize portfolio value, focusing on
deep and ultra-deep waters, seeking
operational efficiencies, recovery factor
optimization and partnerships
Grow sustained by world-class oil and
gas assets in deep and ultra-deep waters
23Focus on the pre-salt
— E&P Investments
2020 - 2024
Onshore and
• Marlim
R&D
5%
Pre-salt
• Marlim Sul 59%
• Marlim Leste Post-salt ultra Exploration
• Roncador deep water 18%
• Albacora 29%
• Albacora Leste
Tartaruga Verde • Lula
64
•
• Barracuda/Caratinga • Jubarte
• SEAP • Sépia
• Atapu
US$ billion
Búzios • Mero
28% • Sapinhoá
• Itapu
Others
• Berbigão/Sururu
20%
24CAPEX dedicated to growth
—
US$ billion
Replacement
10 (complementary wells)
Growth 47 64 17 Sustaining
73% US$ billion 27%
Stoppage &
7 infrastructure
252019 was an all-time high year
—
Daily Record Monthly
Daily
production ramp-up production
production
record P-76 record
record (3.1)
(3.0) (7.7 months) (>3.0)
Greater complexity of the
new Buzios Field systems
and unplanned stoppages
1st oil
Daily P-68
production
Monthly record (3.2)
production
record
(3.0)
1st oil
P-77 2,7
2.7 2.7
Record Annual
ramp-up
1st oil
P-75 Target projected
P-67 and P-76 META average
(8.6 months)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
262020 production in line with 2019 target
—
Production
MM boed
3.0¹
(0.2) 0.1 2.7²
(0.2)
Exit production Decline Reliability, integrity New units Average production
December 2019 and safety ramp-up 2020
1 Includes divestment of Nigerian assets and Tartaruga Verde (~100 kbpd of total production)
2 +/- 2.5% 27Steady production growth
—
Oil and gas production1 Total
MM boed 3.5 production
3.3
3.1 Commercial
2.9 3.2
2.7 3.0 production
2.8 2.9
2.6 2.7
2.4 2.5
2.3
2.2
Oil production
2
2020 2021 2022 2023 2024
ATAPU MERO 1 PARQUE DAS BALEIAS BÚZIOS 6
MARLIM 1
SÉPIA MERO 2 MERO 3
BÚZIOS 5
MARLIM 2 SEAP
LULA RF
ITAPU
1 Does not consider divestments, except from Nigerian assets and Tartaruga Verde (~100 kbpd of total production)
2 2020 figures include +/- 2.5% 28Pre-salt share in total production keeps growing
—
Pre-salt production Regulatory regimes
66%
63% 1% Production
15% sharing
22%
19% Transfer
of Rights
77% 66% Concession
2020 2024 2020 2024
29Low breakeven and lifting cost reinforce the pre-salt
competitiveness
—
Lifting Cost
US$/boe
E&P Pre-salt
9.7
8.4 8.3
2.1
2.0 5.9 6.0
2.3 5.6
2.1 2.1 2.3
7.6 6.4 6.0
3.8 3.5 3.7
2020 2021 2020-2024 2020 2021 2020-2024
Lifting cost Leasing cost Lifting cost Leasing cost
Prospective Prospective
Brent de Brent de
breakeven
Equilíbrio
US$/boe
25 breakeven
Equilíbrio
US$/boe
21
Note: Pre-salt production development breakeven between US$ 35-45/bbl
30Over the last 3 years, we have invested in growing our
pre-salt exploratory portfolio
— Areas acquired between 2017 and 2019
RJ
40%
26,000
Setor SC-AP3
Sudoeste de
Tartaruga of Petrobras’ total
Verde
C-M-477
Km2 total area acquired exploratory area
Alto de Cabo Frio
Dois Irmãos
R$ 75 billion
Central
Campos
Basin
Signing bonus – Petrobras share
Setor SC-AP5
Búzios
Uirapuru
Itapu Exploratory capex
US$ billion
Três
Aram Marias 17.3
Exploration
Entorno Area Acquisition
de Sapinhoá
Santos Peroba
Basin 2.3 0.9 0.8 2.3
Areas acquired in 2017 and 2018 0.9
0.8 0.5 0.5
ToR surplus
2015 2016 2017 2018 2019* AVERAGE
6th PSC bid round 20-24
16th concession bid round
* Forecast
31ToR surplus auction supports reserve replacement
—
RJ BÚZIOS ITAPU
90% Petrobras
5% CNPC Petrobras
5% CNOOC
Campos Bonus US$ ~17 bi Bonus US$ ~0.5 bi
Basin
Profit oil 23.24% Profit oil 18.15%
US$ US$ US$
Petrobras’ cash
disbursement ~7.5 bi ~16 bi ~9 bi
Bonus ToR refund
Búzios
Regulatory regime: ToR Regulatory regime: ToR + PSC
Production: 600 kboed (daily record) • 7 additional platforms
Santos Co-participation
• 4 units under operation agreement until • Capacity ≥ 180 kbpd
Basin
• 1 platform to begin operation in 2022 Sep/2021
32Recovering Campos Basin output
—
CAPEX
Campos Basin Commercial production Operational efficiency increase
before divestments
2020-2024 kboed Complementary projects, revitalization
1000 and new projects
800 New areas acquisition
600 Extensions and new findings
20 400
200
Recovery factor increment
US$ billion Technologies to improve recovery
factor
0
2019 2020 2021 2022 2023 2024
Strategic partnerships
BASE PRODUCTION NEW WELLS – INSTALLED SYSTEMS REVITALIZATION
33Decommissioning of E&P offshore systems
—
Decommissioning costs planned
US$ 6 billion 2.3
is the estimated cost of ongoing 1.1 1.1 1.0
decommissioning projects: 18 platforms & 0.5
subsea pipelines and offshore wells
2020 2021 2022 2023 2024
2020 2021 2022 2023 2024
07 P-12 P-33 FPSO
Capixaba Oeste de Ubarana P-18
P-07 P-26 P-19
06 P-15 P-32 P-20
Cação 1, 2 and 3 P-37 P-35
05
FPSO Piranema Biquara
34Anelise Lara — Chief Refining and Natural Gas Executive Officer
Refining and Natural Gas strategies
—
Operate competitively in downstream with focus on SE operations
Be competitive in global oil and gas trading
Divest gas distribution and transportation
Optimize the thermal power portfolio
Make renewable diesel and bio-jet commercially feasible
36Investing to ensure asset integrity
—
2020-2024 CAPEX
US$ billion
• Investments on • Route 3 and natural
refining and logistics gas processing unit:
maintenance 26%
focus to enable gas
outflow from pre-
salt production
• HDTs in REPLAN,
REDUC and RPBC
8
US$ billion 74%
• HCC in REDUC to
produce high quality
• R&D investments
lubricants
in solar and wind
Refining, transportation Natural gas power
and commercialization and power
37Adding competition to downstream
—
Divestments of Benchmarking in profitability
8 refineries
1 REPLAN
2018 numbers
Binding phase
RNEST, RLAM, REPAR Solomon index
and REFAP 1st quartile in Latin America
Return on capital Net margin
Non binding phase ~15% ~13%
REGAP, REMAN,
1
LUBNOR and SIX 2 4 5 • REPLAN’s performance in
CAMPOS
Expect to move to 3 BASIN maintenance, personnel and
Remaining service costs is equivalent to
binding in 2 months
1
Pre-salt best refineries in Latin
REPLAN
SANTOS
America
2 RECAP BASIN
SP 3 RPBC • 1st quartile net cash margin
4 REVAP performance
RJ 5 REDUC
38Transforming the gas business in a competitive market
—
Petrobras will focus on gas production and marketing
Petrobras market share
Production Offloading Processing Transportation Trading Distribution Consumption
0% 0%
20% 13% 18%
42%
50% 50% 50% 50%
74%
100% 100% 95%
% Produced gas % Km gas pipelines % Processed gas % Km gas pipelines % Self consumption
in power plants,
refineries + fertilizers
Current 2020-2024
39Opportunities in renewable diesel, BioJET and low
sulphur bunker
—
Renewable diesel and BioJET fuel IMO 2020
Opportunity for co-processing of Opportunities in Asian, European and
vegetable oils US markets
• Attractiveness in a scenario of competition • Pre-salt oil has low sulphur content
with biodiesel • Refining system producing bunker to meet IMO specs
• Technologies that add value to refining assets
Bunker 0.5%
and enable routes for the transition to a low
carbon economy • 2020 potential gain (vs. 2018): ~ US$ 1 billion
• 85% of Petrobras fuel oil production is suitable to
• Subject to regulatory approval produce bunker 0.5%
Crude Oil
• 2020 potential gains (vc. 2018): + US$ 540 million
• Estimated oil exports for next 12 months: 590 kbpd
40Opportunities in the transition to a low carbon future
—
Petrobras production is the second lowest in carbon intensity in the industry
R&D for decarbonization
Actions to decarbonization
and renewables
• Closed flare deployment • CO2 capture and storage
• CO2 capture and storage • CO2 subsea separation
• Leakage and repair monitoring • Supercritical CO2 turbine
• Vapor tank recovery • Renewable diesel and bio-jet fuel
• Energy efficiency • Offshore wind and solar
• OGCI: partnership initiatives
CAPEX for decarbonization R&D CAPEX
US$ 100 million/year US$ 70 million/year
41Nicolás Simone — Chief Digital Transformation and Innovation Executive Officer
Digital Transformation strategies
—
Accelerate Petrobras through Digital Transformation and Innovation journey
Information Technology: Technology platforms boosting digital
GO DIGITAL
evolution
BE DIGITAL Digital Transformation: Agile at scale
Business process office: Optimizing and automating
LEAN
processes (Lean Petrobras)
R&D Center: Innovating for value creation, time to
INNOVATING market, growth engine and business models
PROTECT
Information and Cybersecurity: Information security
as an innovation enabler
43Digital Transformation & innovation initiatives
—
Blockchain
Augmented reality:
safety and efficiency Logistics 4.0
Digital twin: enhance
Digital
EXP100: derisking
operational efficiency Ecosystem exploration
PROD1000: time to first oil
AI based asset Digital
management refinery
High performance
computing 44Using HPC1 capacity to enhance productivity
—
Increase 10x HPC capacity in 2019-2020 Digital twin of the rocks
Buzios field nodes
survey
largest seismic
campaign in the world
Digital twin of
stationary
production unity
On average, simulation
time has decreased by 35%
(50% in some cases)
2018 2020 Future Vision
1 High Performance Computing 45Digital transformation will enable our long term
ambitions
—
Exploration
Production development
Basic design Procurement Construction
Ambition 1,000 days
Discovery 1ST Oil
Petrobras ambition Petrobras ambition
100% discovery chance factor 1st oil 1,000 days after discovery
No exploratory wells (vs our ~3,0001 days average)
46
1 Petrobras’ pre-salt averageThe largest R&D Center in Latin America
—
CENPES
Lab of the labs
Total area – 308,000 m2
147 Labs
+ 8,000 equipment
12 PostDocs, 261 PhDs and
420 MsCs
Largest R&D center in Latin
America
47The largest R&D Center in Latin America
—
One more building block in the ecosystem
Data access
Test platforms
Corporate
Co-working Innovation
Lab
Startups
Partners
48Roberto Castello Branco — CEO final remarks
Our ten sustainability commitments
—
1. Zero growth in absolute operating 6. 16% reduction in carbon intensity
emissions until 2025¹ in the refining segment by 2025
2. Zero routine flaring by 2030 7. 30% reduction in freshwater
capture in our operations with
3. 40MM tonCO2 reinjection by 2025
focus on increasing reuse by 2025
in CCUS projects
4. 32% reduction in carbon intensity
8. Zero increase in residues
generation by 2025
in the upstream segment by 2025
5. 30%-50% reduction in methane
9. 100% of Petrobras facilities with a
biodiversity action plan by 2025
emission intensity in the upstream
segment by 2025 10. Investments in environmental and
social projects
¹ Carbon commitments related to 2015 base. Other commitments based on 2018 50You can also read
