Petróleo Brasileiro S.A. - Petrobras Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 13, 2025
Skip to Participants
Moderator

The links for both languages are available on our Investor Relations website. We would like to inform you that all participants are connected to the webcast in listen only mode. After our introductions, we will have a question and answer session and you'll be able to send your questions via email to petroinvestpetrobras dot com. Br. Joining us today are Magna Chembriard, Petrobras' President, who will start our session but will not remain for the Q and A due to a prior commitment Felicity Coperci, Executive Director of Corporate Affairs Claudio Schlosser, Executive Director of Logistics, Commercialization and Markets Fernando Melgarejo, Executive Director of Finance and Investor Relations and Carlo Valli, Director of Governance and Compliance Mauricio Tomasqui, Executive Director of Energy Transition and Sustainability Renata Barruzzi, Executive Director of Engineering, Technology and Innovation Silvia Dos Anjos, Executive Director of Exploration and Production and William Franca, Executive Director of Industrial Process es and Other Products.

Moderator

So to begin, I will hand over to our President, Magda Chembriard, for her initial remarks. Please go ahead, ma'am. Ladies and gentlemen, good afternoon. It's a great pleasure to join you today to talk a little bit about our performance in the first quarter of twenty twenty five. I believe that they were excellent results, but I will take this opportunity to also draw your attention to the challenging scenario that we have currently with the price of oil.

Moderator

This requires from us redoubled efforts going from $84 per barrel in the first quarter of twenty twenty four to face this first quarter of twenty twenty five with an average of $75 per barrel. And to post the results that we are posting was not an easy task. This is an arduous task that was carried forward with a lot of dedication and a lot of wisdom by the Petrobras Board and all of its technical staff. What we will have in the future challenging. This is the second quarter of twenty twenty five and oil is at $65 per barrel, a difference of about $20 versus the first quarter

Moderator

We are certain and we are committed to resolving this issue, delivering, good results and dedicating a lot of our effort in capital discipline for 2025. This challenging scenario of $65 per barrel requires and will require from us simplified projects and assurance that we will have good trading margins for our products, a significant cost reduction and a lot of cooperation between the different areas in the company so that we can have the best results possible for our business. This is what we are already addressing, and this is what all main oil companies are doing. And, of course, we have to make this effort to have better results in such a challenging scenario. Again, it's $65 per barrel.

Moderator

So in this scenario, we're going to talk about a few words that you will hear constantly such as austerity, simplification, optimization, reducing investment costs, reducing operational costs, and overhead. Our products, and we know this very well, are priced by the international market and they vary according to their prices and the exchange rate, and this is out of our control. What we know and we're certain of this is that we have the obligation to react to these fluctuations. Petrobras is absolutely aware of its obligations to react to these fluctuations. When prices go up, we have more comfort, to expand our initiatives.

Moderator

But when prices go down, it's time to tighten our belts. With that being said, this is my message to you. Please remain confident. We are addressing this, cost reduction to, in face of a challenging scenario so that we can have the best results possible for our investors, whether they are in the government or private. But also, have to highlight the excellent results that we, have had in the first quarter of twenty twenty five.

Moderator

First of all, I'd like to say that there's no future for an oil company without exploration. And I like saying that this is what we have been doing. This is what we've been bringing as a result for our company. We are constantly expanding our reserves and building up our efforts to expand the Brazilian Equatorial margins. We believe in this potential and we will carry on pursuing the opportunity to show Brazilian society and our investors that we will have relevant gains that we can seek from exploring oil and gas in the Brazilian equatorial margin.

Moderator

So in that aspect, as I mentioned, we have been very successful. We have more reserves constantly, especially with the pre salt layer. Last week, we disclosed a new discovery of the pre salt layer in the Aram Bra block. Then if everything works out, we believe that we will have advanced production for the Aram block. More pre salt with good quality oil without contaminants, but still with a challenging, rock for our project.

Moderator

But this is within our potential. This is what we know how to do. Before the second discovery in Iran, we made a new discovery in the Campos Basin in the North Brava area. We also have made discoveries in Colombia, and we had an excellent test in Colombia's offshore area. This is a block that if all works out will be responsible for supplying all of the gas consumption in Columbia, and let's hope that this will happen.

Moderator

But that's not all, ladies and gentlemen. We still have many opportunities ahead of us, whether it is in the Brazilian Eastern margin or in the Equatorial Margin. We have to remember the Pelotas Basin where we're also exploring and soon we will consider drilling wells there. As we will hear later on, we have about 50 exploratory wells to drill in the next years. And this repeats what I mentioned before.

Moderator

We're very proud of it because an oil company will not have a future without exploration. And we want a strong, long lasting company that contributes to our investors, whether they are in the government or private investors, and also contributes to Brazilian society in general. We're seeking new reserves at the same time as we work to develop the fields that have already been discovered. And you have been seeing our results. In the first quarter of twenty twenty five, our production went up 5.4% versus the previous quarter.

Moderator

This

Moderator

increase was a decisive contribution, to our financial results. Oil is our main product. And with it, especially because of it, we are generating 8,500,000,000.0 US dollars in cash with our operations. And we reached a net income of US6 billion dollars After my message, our Director, Norverez, will go into details about our financial performance, and he will draw our attention to the impact of variations in Brent oil prices and our exchange rate. And you will be reminded that in the previous quarter, the foreign exchange for the Brazilian real had a negative impact in our company's results.

Moderator

This quarter, the opposite happened. We recovered a part of those losses. The appreciation of the Brazilian real had an impact on our results again. And without these foreign exchange effects, our results would have been $4,000,000,000 which is not bad, but it was even better and the fact that it was US6 billion dollars Our results are often impacted by the price of oil and by the foreign exchange rate as happens with all oil companies. And both of these variables are out of our control.

Moderator

And that is why we are saying that right now is a moment for austerity. It's a moment in which we will have to control our costs in general. We will have to do what we still do well, which is exploring, producing oil and its byproducts and trading these byproducts and our oil with the best profit margins as we can have. But we need to do it, and this moment is propelling us in that direction. But we need to do it with capital discipline and seeking major cost reductions, the highest we can have.

Moderator

So after that message, which I think will soothe your thoughts about how much the company is spending. We are not here for that, I have to repeat. We're going to highlight our physical results for the first quarter. And as I said, they were very good and they justify the capacity that the company has.

Moderator

On February 15, FPSO admiral Temendere went into production in the Buzios field. It was the first of a series of five oil rigs that will make Buzios Field the biggest field in Brazil by far. That rig has a production capacity of 225,000 barrels of oil per day in addition to gas. As I said, it was the first of a series of five giant rigs that will comprise the facilities around the Beasios Field. On March 3, admiral Alessandro de Guzmel went into the Guzmero Field.

Moderator

Alessandro De Guzmel will also operate in the pre salt in the Santos Basin, and it was finally anchored in ten days. I need to draw your attention to these ten days, which is a record breaking period for Petrobras. It will begin its production towards the end of the second quarter of this year, the beginning of the third quarter. And with that, it will be another 180,000 barrels a day operated by Petrobras in the pre salt along with refining. We also completed the revamping of Train one of our refinery going from 80 barrels per day of refined oil to a 30,000 barrels a day in terms of processing capacity.

Moderator

So with very little investment, with the introduction of the SOX unit plus a small revamp involving maintenance, we basically doubled the capacity of Rinas Train one. It may sound simple, but it's no small feat. We're talking about 50,000 additional barrels per day in terms of processed load, 70% of this capacity generating diesel, which is our main product. As I said, this means more diesel on the market. And once we complete train two, which is undergoing a bidding process, it will be 260,000 barrels per day processed in the Northeast Of Brazil, a market that's hungry for diesel.

Moderator

I used to say that among all of the refineries, we're undertaking more efforts around diesel and s 10 diesel, which emits much less and adds more value. But especially at Reneste, all of the refineries, this has the highest conversion of crude into diesel. We're talking about a conversion of around 70%, which shows how modern and economically feasible this refinery is. And the second module of natural gas processing will go into operations in the second half. The Buenaventura complex in Itabora Y Rio De Janeiro added to the first module.

Moderator

The total processing capacity of that unit will achieve 21,000,000 cubic meters per day, increasing the supply of natural gas and also of its byproducts including liquid natural gas. We're also on the brink of inaugurating the new RDT at replan. This new unit will have the capacity to produce 63,000 barrels per day of S10 diesel. As I told you, our efforts around increasing capacity and increasing the supply and production of diesel, especially the s 10 diesel is real. These are our highest added value products.

Moderator

And as I told you, we are seeking the highest possible level of attractiveness for our investments. The s 10 diesel has a high added value in that it emits much less. It throws much less sulfur into the atmosphere. It's almost negligible. And this high added value also shows us that not only are we looking for more value, we're also looking for products with the lowest possible emissions.

Moderator

We're still on the lookout for the opportunities to decarbonize, which means that and this is what it means. And that is why in February, we sold the first bunker of a vessel fuel with four percent of renewable content in the Asian market. This is a huge achievement. We now set foot in the Asian market with a high added value product that is produced and traded by Petrobras. The product is a mixture of 76% of mineral fuel oil and 24 of biofuels produced from used cooking oil.

Moderator

And again, the mixture of these two components allows us to create a product that's highly value valued in the international market. We are developing new products also involving the low carbon market, which is extremely attractive as a market to us innovating to generate value and enabling solutions around new energies and decarbonization. In March, we signed a contract with the National Development Bank of Brazil to reforest the Amazon. In the ProForest Plus program. One of the biggest programs for acquiring carbon credits in Brazil will promote the reforestation of up to 50,000 hectares of degraded and now degraded areas in the Amazon.

Moderator

To give you one idea, this is equivalent to 50,000 football fields and to capturing 15,000,000 carbon tons, which is equivalent to what is annually emitted by around 9,000,000 gas fuel cars. This is a structuring project around the climate, but also in terms of reputation. And it is a project and initiative that sows the seed of decarbonization when right when Petrobras is planning on making money with the capture of CO2, we are confident in our 02/1950 strategic plan, not forgetting that a low Brent price brings about additional challenges and that we should review our plan generating a 2026, '2 thousand and '30 business plan considering the need for us to overcome these extremely high challenges imposed by price reductions. We'll do that by preserving our cash, reducing costs and through capital discipline. This is part of our values.

Moderator

The commitment with Brazil and with our investors, whether they're governmental or private, all of that is part of our values. And that is why we'll keep on investing and keep on focusing on more projects that are financially feasible and making money for our investors whether they're from the government or from the private market. This is what we're doing here With the highest possible dedication and strictness, we are now here to believe in the potential of Brazil knowing that if Brazil if we are doing well, Brazil will also be well. It's fundamental that we all understand this because our results depend on the optimal conditions of the Brazilian market. The Brazilian market is currently the sixth highest consuming Brazil highest consuming market of oil products in the world.

Moderator

So it is a market that should be seen for the value, for the importance it has. That's why I say that we walk hand in hand. Petrobras benefits from the, appreciation of Brazil and vice versa. It's a two way street. That is why we're committed to this path, and that is why we're committed to our planning.

Moderator

And with making expenditures that are in line with the current level of oil prices, You can rest assured that our common goal at Petrobras is to have a long lived and strong company. The workforce at Petrobras, the Board, investors and Brazilian society. Having said that, I want to thank you for your trust, our shareholders, partners, employees and you can rest assured that we are here to overcome the challenges ahead of us and to take all of the possible opportunities along the way. Thank you for your presence. And now I will give the floor to my colleagues for the presentations.

Moderator

Unfortunately, I will not be able to stay for the presentations,

Moderator

but

Moderator

I wish you a great presentation. And please analyze your purchase recommendations. We want all of you investing in Petrobras and we'll make you proud of your investments. Thank you. Thank you, Magda.

Moderator

Now we'll start the presentation about the performance of the first quarter of twenty twenty five. I'll give the floor to Fernando Milgarejo, our Financial Director. Fernando, you have the floor. Good morning. President Magda, thank you for the message.

Moderator

Want to thank you all for being here for yet another webcast. I will start by looking at the highlights of the first Q of twenty twenty five. After the presentation, both me and the other directors will be here for the Q and A session. This slide shows the financial highlights of the company with an adjusted EBITDA excluding one off events of $10,000,000,000 8 percent above the last quarter and a net income of $4,000,000,000 Our cash generation is still strong with an operational cash flow of $8,500,000 and a net cash flow of $4,500,000,000 I also want to highlight our contributions. We approved BRL 11,700,000,000.0 in dividends related to the first quarter of this year, and we paid more than fifth sixty five billion reais in taxes.

Moderator

This growth is the result of Arj's work in the well implemented strategy demonstrating Petrobras' financial solidity. Our commitment is clear to keep on generating return for our shareholders, including the Brazilian society in a responsible and consistent manner. Slide six shows the details of the EBITDA and the operational cash flow on the right hand side. Here, I want to highlight the effects of our operational performance on the result with the greater production and volumes traded. The EBITDA was $10,700,000,000 in the quarter with a growth of 8% compared to the fourth quarter of twenty twenty four.

Moderator

As I said, this was driven mainly by the increased oil sales both in the internal and the external market in addition to the increased crack spread of diesel. In terms of OCF on the right hand side, we had a growth of 4% versus the previous quarter totaling 8,500,000,000 The next slide shows that our net profit was $6,000,000,000 not considering the one off events. The result was $4,000,000,000 an increase of 31% vis a vis the previous quarter. In the table below, can see the external scenario. Part of the results reflects an increase of 28% of the diesel crack spread, the appreciation of 1% in the brand quarter by quarter and the appreciation of 7% of the real versus the end of the year dollar.

Moderator

Moving on to Slide number eight. In the first quarter of twenty twenty five, investments totaled $4,100,000,000 which represents a reduction of 29 vis a vis the last quarter of twenty twenty four. This volume of investments corroborates the message that I brought to you on our last webcast when we said that we wouldn't see the level of CapEx of the first quarter of twenty twenty four in the first quarter of twenty twenty five. You can remember that in the last quarter of last year, the CapEx was higher because of the reduction of this mismatch between the physical and financial advancement of our own units towards Buzios fields. The CapEx of the first quarter of twenty twenty five was lower than that of the fourth quarter of twenty twenty four, but it's higher if compared to the CapEx of the first quarter of last year.

Moderator

There was an increase of 34, especially as a result of the big investments and the investments in the pre salt in the Santos Basin and also the new production systems in the Buzios and Acapulco fields. Slide nine shows the investments that were performed. You can see that we are investing more but also delivering more. These are investments connected to greater physical deliveries that support a production curve and ensure the entry into production of new systems. The acceleration of CapEx towards the end of twenty twenty four allowed us to shorten the physical financial gap by 14 percentage points, reflecting our commitment with the packages and with the reduction of delay risks.

Moderator

Some of these results show the evolution of deliveries over the course of the last twelve months. I must highlight that the five rigs that were undergoing constructions in the first quarter of twenty twenty four went from 51 to 76% in terms of physical advancement. In addition to that, we also started the construction of two more rigs reaching seven units in construction this year. Our higher CapEx vis a vis that of last year reflects the higher number of owned platforms that we're building, which bring about the benefit of not having affected platforms with an impact on our debt. We also doubled the number of interconnections and wells in one year.

Moderator

It was 16 wells interconnected in the first quarter of twenty twenty five and eight in the same period of last year. It's our best result for the last eight years. We had 27 drill interventions for new wells, a growth of 13% vis a vis that of the first quarter of twenty twenty four. We are working we're drilling more and interconnecting wells and advancing towards the construction of the new units that will give support to our production curve. These are investment projects that generate value for our shareholders and will translate into profitable growth for the next few years.

Moderator

Slide 10 shows a reconciliation between CapEx, competence and the cash CapEx for the first quarter of twenty twenty five. You can see that the cash investment of the quarter was impacted by a higher CapEx in the fourth quarter of twenty twenty four?

Moderator

First of all, it's important to clarify that there is a normal lag between measurements and payments. This means that all quarters, we observe a certain level of time lag. This is absolutely normal. However, as there was a large concentration of measurements at the end of the fourth quarter of twenty twenty four, especially in December due to our efforts to recover the physical and financial gap of the new systems, a significant portion of the payments were only made in January and this impacted the cash investment of the first quarter of twenty twenty five. To illustrate this atypical effect, we detail the impact of this time lag between measurement and payment in this point graph.

Moderator

In the first quarter of twenty twenty five, around $1,000,000,000 that came out of our cash for investments were related to the measurements of the fourth quarter of twenty twenty four, while $400,000,000 were measured in the first quarter of twenty twenty five and will only come out of cash in the second quarter of twenty twenty five returning to normal. I'd like to take this opportunity to draw your attention to the part relating to IFRS 16. This amount is considered in the CapEx competence, but in the cash view, it is classified as an outflow of resources used in financing activities since it refers to leases. We now turn to Slide 11, which shows the company's debt levels. In the first quarter of twenty twenty five, we saw an increase in gross debt, mainly due to the entry of the FPSO Almirante Damandere.

Moderator

This is a chartered unit that impacts our leasing costs. It's important to emphasize that it has a capacity of 250 barrels a day, and it can ramp up still this year. And it's also important to emphasize here that that remains within the limits defined in the twenty twenty five, twenty twenty nine business plan with a debt ceiling of $75,000,000,000 In this way, we maintain an efficient and more flexible capital structure. Now let's go to Slide 12. As you can see, we remain committed to the distribution of the results generated and the financial sustainability of the company.

Moderator

With gross debt under control within the level established in the business plan and positive results, our Board of Directors approved the distribution of remuneration to shareholders for the first quarter of twenty twenty five of BRL 11,700,000,000.0, equivalent to $0.91 per share, which will be paid in two equal installments in August and September. Slide 13 shows the important contribution our activities make in terms of taxes. All in all, 65,700,000,000.0 were paid in taxes to the union, states and municipalities, including government participation. In addition, we have earmarked around 66,000,000 reais in voluntary social and environmental investments and sponsorships. There are more than 200 initiatives, including social and environmental projects and cultural sports and science technology sponsorships.

Moderator

We always make a point of bringing these values to show you how Petrobras' performance materializes in positive impacts for Brazilian society. Here we have our direct and indirect well, these are our direct covenants, but we also have indirect sponsorships. Continuing with the last slides, we've just seen how we performed in the first quarter of twenty twenty five, but our attention and certainly yours too is on the current moment and how the company is prepared for this lower bread scenario. The first thing I'd like to remind you is that Petrobras has a strategic plan and a project renewal governance that prepares the company to generate value in adverse price scenarios. Here, we see a screenshot of our business plan released last year in which we talked about our robustness even in low oil price scenarios.

Moderator

Our E and P projects need to demonstrate a positive NPV in scenarios of up to $45 per barrel. In addition to prospective breakeven Brent for our E and P portfolio is on average $28 per barrel. Our plan also has a portfolio under evaluation, which is made up of our projects subject to the condition that they do not affect the company's capital structure. In addition to proving their result, excuse me, their return in a robust scenario like all the other projects. As for our shareholder remuneration policy, the formula already ensures dividends compatible with different oil prices without compromising the company's financial sustainability.

Moderator

We therefore have confidence in our strategy and our governance. I emphasize that our long term strategy has been maintained, but that doesn't mean we aren't fully aware of and attentive to the global scenario of lower prices in our industry. So let's move on to the next slide. We are incorporating cost cutting actions and adapting the business plan to the new reality. Here on the last slide are some examples of what we're doing.

Moderator

We have three work fronts mainly. First, measures to minimize the effects of inflation by optimizing spending. Here, we're basically talking about reducing transversal corporate spending seeking to return to levels of the past. Second, actions aimed at mitigating the impact of lower prices on our free cash flow. Let me give you some examples.

Moderator

Simplifying engineering projects, we're already doing this with the, CAP projects. Reassessment of the scope of recently tendered projects that were not very attractive. Examples include the Revits, Albacora, Marlin Zu, Marlin Leste and Barracuda and Caratinga. Reduced hibernational costs for systems awaiting decommissioning. Reassessment of the cost structure of mature systems such as onshore fields.

Moderator

And finally, our portfolio, are going to prioritize projects that generate cash flow in shorter time frames. Actions on this front include greater rigidity in the inclusion of new projects in the portfolio under implementation, reprioritization of projects under implementation with higher returns in the short and medium term. And we will continue to study appropriate measures to strengthen our resilience. We will keep you informed of the developments and impacts of these actions. I will end my presentation here and thank you once again for your attention.

Moderator

I give the floor to Eduardo, who will start the question and answer session. Thank you everyone. Thank you, Fernando. We will now continue with the question and answer session. The first question was asked by Bruno Amarin from Goldman Sachs.

Moderator

Bruno, over to you. Hi, thank you. Thank you for taking my question. My first question is about capital allocation. If you can tell us a bit more about the potential processes and how that, you're buying back that refinery in Bahia, also ethanol, if you have progress to there.

Moderator

And as you've shown, most of the company's projects are resilient to oil prices or oil prices being low. So I just like to confirm if thus far you don't believe there are any changes necessary to the investment plan. And as a follow-up there, let's imagine a scenario in which oil prices go down even more. Are there specific areas in which you can, make adjustments? Whether it is by making onshore investments or investments in other areas where returns are lower than in deep waters.

Moderator

So that's a broader question about your capital allocation. Thank you. Thank you, Bruno. Fernando, if you may. Hi, Bruno.

Moderator

So about Rolam, we didn't have any changes. We still follow the same logic. So we can't look at any investments and any m and a's, but we need to have compatible returns to our investments. But for Ritalung, we don't see any news. There have not been any advances considering capital, and this is important to mention to you.

Moderator

Petrobras will celebrate its seventy second anniversary this year. And we're working on a commodity that has intrinsic volatility. And our seventy year experience has created a structure in which everything is thought out for, volatile moments. And it was not different when we built this strategic plan for 2025 to 2029. So that was taken into consideration.

Moderator

Some important things about resilience. Our breakeven is $28 per barrel. So we always work with testing and modeling at $45 per barrel. And if it doesn't pass, then the projects are not continued. So this year or at least thus far, we didn't see any changes to what we had planned with our CapEx.

Moderator

So we've maintained what we want to do without any further changes. Thank you, Fernando. Now we will receive questions from Caio Ribeiro from Bank of America. Caio? Good afternoon.

Moderator

Thank you. First of all, recently Shell mentioned that it's going to some blocks in The Caribbean where they have some participation with Ecopetrol. So since Petrobras has some presence in Caribbean offshore assets, would you be interested in assessing or even taking over this participation from Shell if Ecopetrol is seeking a new partner for these fields? Secondly, despite the adjustments to diesel prices made recently, we still see a premium on PPE per d per for diesel of about 6%, especially gasoline, which is close to 10% according to our calculations. So can you give us some color about this decision this recent decision on changing diesel prices, but not gasoline?

Moderator

And do you see a reason for new adjustments? Thank you. Thank you, Caio. I'll let Sylvia answer the first question and then Shlaus will answer the second question. Hi.

Moderator

Good afternoon, Caio. Yes. Shell is letting go of this asset. And just like this one, we're assessing others in our portfolio. So it's a constant process in which we assess opportunities to see what has the best adjustment, what provides the best returns, and the ones that are the most significant.

Moderator

And we have to say that exploration as our head always says cannot continue indefinitely. So, of course, we have to look at our full portfolio and we are assessing everything. But in Colombia, not only do we have this discovery, we're drilling two wells. One is Buenosorcu, which will hopefully give us good luck as its name implies. But, we are assessing these possibilities, but this is in our global portfolio.

Moderator

Thank you, Sylvia. Schlosser, please. Hi, Caio. Good afternoon. Thank you for that question.

Moderator

Before I talk about, your specific points, it's important to highlight that, obviously, we are trying to see movements from the international market, but the company's strategy doesn't only take into consideration international prices. And now on May 19, we will celebrate our second year after implementing the new commercial strategy, which considers all of these aspects. To answer your question, Caillou, I think there are two points that we need to clarify here and to try to address this issue of diesel and gasoline. We think each product deserves a specific look. Why am I saying that?

Moderator

Contrary to diesel, which is, going down in the international market, gasoline is going up. So inventories will probably be recomposed in The US especially where the consumption of gasoline will go up and that pressures international prices. So not only are we looking at this, but we're also seeing our own internal potential in Brazil, especially in our refining capacity for the oil that we produce and our logistics. So in diesel and gasoline, we have a broader perspective. And external volatility is

Moderator

There are extremely strong geopolitical factors putting pressure on prices. Prices of oil, spreads for products, they're all very pressured and they have a high level of volatility. To give you an example, in early April, and this was recent, because of fake news, oil went up $4 in a couple of minutes. And after that was debunked, it went down again. So the market is very volatile, and we're not transferring this volatility to the client as we did in the past.

Moderator

In the past, in previous commercial strategies, you have in us in some years, more than 90 adjustments or readjustments of fuel prices, which ensures some stability. Just to give you a comparison for diesel, we were nearly for four hundred days with stable prices. And that has a significant value for society, for our economy in general. And this is, within our strategy. We have gasoline adjustments.

Moderator

And as you mentioned, the last one was in, June 2024. So we have had stable prices for over three hundred days while the market is having a lot of, volatility. So we're looking at prices every day and we assess our logistics capacity and our infrastructure, and this helps us to keep it balanced. So I'd just like to underscore that for diesel with the market parameters and our commercial strategy, we recently had three price reductions. The first quarter was very interesting.

Moderator

We advanced in the Midwest, it grew 9.7%. We captured a very significant part of this increase in the Midwest and it represented an expansion of about 72 to 74% of the diesel market. So we have been making use of that, but we also saw some effects. The tariff wars, there was another announcement from I hope that to continue their production, and that's why we had three reductions. Just to give you an idea, they all completed 0.45¢.

Moderator

And our expectation for is that 0.39 would be reflected as a cost reduction for our consumers, but this also has not happened. In conclusion, we're looking at all of these elements to decide how we're going to apply readjustments and do our commercial strategy in the best way possible. Thank you. We will now hear from Rodolfo Anjali from JP Morgan. Go ahead, sir.

Moderator

Thank you. Good afternoon, everyone. My first question is about costs. The message from the CEO was very interesting. And adjusting the company for lower oil prices.

Moderator

And we've noticed and we've had a discussion with investors. We posted a report on the fact that lifting costs have gone up. So we like to see this focus on cutting costs. So my question is, can you give us some more color about what initiatives you are taking? What is the highest potential for cost cutting?

Moderator

And if possible, what is your ambition? What value do you expect to capture? That's my first question. The second question is, with lower price scenarios, we will obviously see companies getting more conservative about other cash use. But we would also like to know if considering capital allocation, if there's any space for, you know, in this effort of reviewing expenses and so on, if we see we'll see lower CapEx levels and maybe some extraordinary dividends throughout the year.

Moderator

Thank you.

Moderator

Thank you, Rodolfo. I'm going refer to Fernando. Hi. How are you, Rodolfo? Let's start with your second question about CapEx.

Moderator

First, I want to reiterate that the commitment our commitment is with sustainability of the company to be important to society and to adequately compensate all of our investors. So when you come across a lower brand, you have to take some measures. As we said, we are optimizing cross sectional expenditures to make up for the inflation and to go back to historical levels. This is one objective, simplifying projects. We had a project that was postponed, to undergo an engineering review and to make it more efficient and also prioritizing projects that are bringing about positive cash flows.

Moderator

Am I back? Okay. So in our investment portfolio, obviously, we've been trying to prioritize the most important projects from a financial and a strategic perspective. But before we can come up with a rationale of reducing the CapEx, we need to analyze our possibilities around reducing costs so that we can keep the CapEx at the current level and to execute the projects. Today's projects are Petrobras' future as we all know, and they'll be prioritized.

Moderator

Sylvia Renata, would you like to say anything about costs? Well, one way for us to assess the optimization of costs, we've been talking to the performance area. We could increase our operational efficiency, which is a way for us to bring down the costs of our offshore areas. And in the onshore areas, we're talking about a significant reduction of all costs so that they become profitable. So for all of our assets, they have a positive ROI and we'll keep on improving it with the optimizations and with the search for lower costs so as to produce results and to lower the costs as I said.

Moderator

Thank you, Fernando and Silvia. Now on to the next questions from Vicente Falanga from Rodesco BBI. Vicente, you have the floor. Thank you. I also have two questions.

Moderator

Well, we haven't seen some FPSOs delivering growth for quite some time now. In Aneri and Maria Cateria, there are projects that have been more or less flat for some time. Are there any difficulties being faced by these projects? Are the revamps profitable? Or is it about time that we rethought these assets and maybe resell these assets?

Moderator

And my second question is about gas and energy, which dropped expressively in this quarter as was explained in the release. Is it possible to say that the company will recover its EBITDA with the routes free ramp up? And if so, at what levels will the EBITDA stabilize after this ramp up? Thank you. Thanks, Vicente.

Moderator

I'll give the floor to Silvia. Vicente, when we deal with revamping projects, while they are mature fields and in order for them to resume their production levels, they need more water injection, more producing wells. So differently from the pre salt fields that are quick to achieve the peak, they take more time. In the case of these fields, the forecast is 2026. The same thing happens with Maria Cateria as anticipated, but our forecast is that it will only reach peak levels towards the end of the year.

Moderator

So these are areas that really require more wells, more water injection, and they take longer to produce results. This is, more or less taken into account, when it comes to developing these wells. Renata, you're right. The productivity of the pre salt wells reaches 50,000 or 60,000 barrels per day from one well only. And that's why with four wells, platform, which is different from what Sylvia said about the revamping projects.

Moderator

But I'd like to reinforce that all of these revamped projects, they are submitted to our robustness factors. One of our best projects is the Albacora, an excellent tier VPL. So we'll keep on implementing these projects. As we said before, we are looking for simplification. And once again, Raffacian Albacora, we have a topside which is one of the possibilities to measure the possibility of the project.

Moderator

It's 35,000 tons. And with other projects, we're we're looking at 60 or 70,000 tons. We're able to truly simplify Albacore after lots of conversations with the market and suggestions to simplify the project. The Albacore project is really one of our best projects on our portfolio today. Thank you.

Moderator

When it comes to gas, Vicente, a series of initiatives indicate that we'll probably see an improvement in the performance and the results of gas. The first one is a quite aggressive policy around capturing new clients in the free market. We saw significant progress in this quarter and we will keep on seeing this progress. There's also this incentive policy that was launched. A premium for increased demand, on the market that applies to distributors and the free market equally, and this also generates more revenue and more clients.

Moderator

Third important factor that shows that our results will get better is, I think you mentioned this, the full operations of the OPGN in the Bauphin Sur Complex Route 3, which will improve our product portfolio and increase will increase our competitiveness. There's two more important aspects. The first one being the auction, which is scheduled to happen. And we have nine existing plants already registered for this tender and two new plants with good expectations around, hiring these plants. And finally, the last important factor in terms of producing results is a very solid initiative involving several stakeholders around the discussion of the regulatory framework for the transportation assets or the so called the so called BRA.

Moderator

And we are now asking for the amounts paid by Petrobras and the other players to be considered equally. So our expectations for the next quarters is one of improvement. Thank you. Bruno Montanari from Morgan Stanley. You have the floor, Bruno.

Moderator

Good afternoon and thanks for answering my questions. First, about the CapEx. In terms of what we can expect for the CapEx for the next quarters of twenty twenty five, it probably makes sense to think that it was a bit higher than what we normally see in the beginning of the year. And that being the case, maybe the second and the third quarter will probably go to lower levels before it goes up again to regular levels towards the end of the year, if that's to be expected. And secondly, as the President said, the beginning of the year was very good for oil production in Brazil, maybe even above the expectations.

Moderator

So I'd like to hear from you, what was the scheduled maintenance pipeline like for, these months and which units have a scheduled maintenance have maintenance scheduled for the next few months? Just so we can understand how much of this results from predict from, maintenance and how much comes from the ramp up. Thank you. I'll give the floor to Fernando for your first question. Hi, Bruno.

Moderator

Thank you for your question. The first question about CapEx. Well, it's important to say that, there was a transfer, a carryover from the measurement that was done in December, and the first payment occurred in the first quarter of twenty twenty five. So there was this carryover effect and also some measurements that were not completed in December and that were just completed in the first quarter. And therefore, in the second quarter, we're gonna see additional payments.

Moderator

And after that period, it will normalize and we'll no longer see these extraordinary events. So it will become regular. Our guidance remains at JPY 18,500,000,000.0, of course, with FX rates adjustments. And our goal is to deliver the guidance of 18.5 as I said. Would you like to add anything?

Moderator

Hi, Bruno. The downtimes, the scheduled downtimes are essential for maintenance of the rig. And for safety purposes, we have a schedule of, scheduled maintenances for all of the rigs, and the first quarter was no different. Our downtime resulted in 245,000 barrels due to P-sixty eight, seventy FPSOs, Maricaran, the Santos Basin. So basically, we did what we had planned in terms of scheduled downtime for the first quarter.

Moderator

And, I should reiterate this, it was very good from the perspective of production and also from the perspective of new discoveries. We had three. We made two discoveries in Aram, also the North Of Brava. And if we combine the Forno Brava in the North Of Brava, basically, have a pre salt unit around the Santos, the Campos Basin, which is really a reconstruction of the Campos Basin using not only the oil that we have there in the pre salt but also in the salt area. This is very significant and very soon we'll be seeing results for the other units.

Moderator

In addition to production, these discoveries also strengthen the Campos Basin and also the Santos Basin. Thank you. Renato, would you like to add anything? Yes, please. About the CapEx, Bruno, last year, we reviewed our planning process, our CapEx planning process and how it would behave throughout the year.

Moderator

So we're pretty sure that we'll stay within the guidance 18.5% more or less 10%. And one thing that reassures us is that most of the big projects are already hired. So there won't be too many bumps along the road for this year. And our forecast is that we'll really Thank you, Renata, Silvia, Fernando. Next question from Mattelis from UBS.

Moderator

Mattelis, you have the floor. Thank you. Good afternoon. My first question is about dividends. The way our policy is set up in our accounts with oil close to or below $60 per barrel, Petrobras may be required to issue debts to pay the dividends of 45% in terms of free cash flow.

Moderator

If it comes to that, wouldn't make sense to for you to change the policy. That's my first question. And the second question is that in terms of LNG, we understand that there is restrictions in terms of the supply and the fact that the company has to depend on the LNG market. How do you see the competition in this industry given the higher costs in terms of import infrastructure? And how do you think about increasing the availability of LNG?

Moderator

Will we increase the number of refineries as the revamp plant for the next five years dates? Those are my questions. Well, you, Matteo. I'll give the floor to Fernando. Good afternoon, Matteo.

Moderator

First, I'd like to reiterate our commitment to the ordinary dividends according to the methodology, 45% over the free cash flow. And it's self adjustable because the basis as it increases, it will increase and vice versa. So it gets adjusted according to our base. And as for the debt, when we defined the strategic plan at the end of the year, we decided that we would change the size of the debt to $75,000,000,000. It was 65 before and with three main motivations.

Moderator

The first one being potential investments that we were not able to see back then and are still not able to see that would lead to an increase in the debt. And that's why we considered a debt of around 65,000,000,000 approximately. The second thing was to account for the affreightment because with the beginning of the first oil in Marigataria and Temandera, it had an impact on the worsening of the debt. So we acknowledge the debt with the first oil as expected. And with the first oil that's associated with the revenue, so it's an increase in the debt with an associated revenue, which is positive.

Moderator

And the third aspect is cash management. If there was any change in the scenario, like the Brent price, we would need to have flexibility in terms of accounting for the cash flow of the company and moving forward and facing any occasional turbulences. So nothing changes in terms of the debt size. It's still at 75. And that's why it's possible that the 65 that we said would be our goal for the entire strategic planning might see some oscillations.

Moderator

But of course, with the constant commitment on our part towards maintaining the payment of dividends. As for the extraordinary dividends, it will depend on the capacity to generate cash flow. If there is a cash flow above the adequate levels, undoubtedly, we will distribute special dividends. Thanks, Fernando. Schlaffer about the LNG please.

Moderator

Well, Matthijs about the LNG and the infrastructure. One thing we have prepared for the future is an increase in the production of LNG. Investments in refining and expansion of capacity are highly focused on diesel, but also they focus on LNG. In terms of infrastructure, the production of LNG in Brazil, the most relevant fact is for Ventura. We, have two, trains for the processing of natural gas starting up with a very significant production.

Moderator

So this infrastructure that was initiated will yield relevant production levels and the logistic aspects related to the distribution of LNG is being planned by the department. There are projects involving the investments of third parties, companies, especially in distributors, which have been doing that for quite some time, but which have not materialized yet, but they would effectively be very helpful when it comes to the supply of LNG. But the company has been increasing the production of LNG, especially given that Porvintura has the highest levels right now.

Moderator

Eduardo, if I may add to that. Before we begin, the CEO gave us an important message of austerity. So we have three major fronts that I've discussed before with you and we're going to continue with this austerity plan and we have some short term measures to see if we can make some short term reductions, but we also have some medium and long term initiatives. But this is all in our strategic plan. So it's not that we're increasing our debt.

Moderator

Thank you, Fernando and thank you, Schlosser. And now, we will receive questions from Rodrigo Ameida from Santander Bank. Go ahead. Good afternoon, everyone. Thank you for taking my question.

Moderator

I have a specific point about the Equatorial margin. I think there were some advances at this or at least it seems to have advanced looking at it from outside. So I'd just like to get an update on what we can expect and monitor for the next months with the licensing process and the exploration process in the region if you have a license approved. Still on the same topic, I'd like to ask your long term view on the equatorial margin. I know that we don't have all of the details, but I think we'll have a relevant part of the exploratory session and the plan.

Moderator

We've been talking about this for a long time. But if we start developing assets in the region, how do you believe the business plan will support these additional investments in CapEx and in developing the region? Would you be willing to share these assets with other partners to help fund these projects? Or having a portfolio recycling plan for other assets to finance the development of the Equatorial margin? Thank you.

Moderator

Thank you. I'll pass it over to Silvian Clarisi. Hi, Rodrigo. So yes, we have some expectations for the equatorial margins. We've already complied all the requirements from IBAMA.

Moderator

They have been handed to director Clarisse. We have two centers in Belen in Oyapoki awaiting IBAMA to go and see if everything is fine. We already have a probe being, closely here in Bahia. So now what we need to do is to receive approval for the probe and start drilling. In our strategic plan, we have foreseen $3,000,000,000 for the margin.

Moderator

The first well for this year is included in that. And for all of the margin, have 15 wells planned for the next five years. So once the discovery started, we are delimitating the field. So we have some margins in our budget to do this. But this will take four or five additional years for, production to begin once the field has been, marked.

Moderator

So that will be outside of this five year limit and we can reschedule our investments according to the future investment plan. However, what we need is to truly have a discovery so that we can think about, getting to work in production. But meanwhile, we don't depend only on this, we have other wells to drill here in the Southeast margin and we even have some wells planned for abroad in Colombia and also Santa Maria and Principe, where we also have some drills planned. So we are optimizing our fields, the Campos and Santos fields, improving our efficiency, adding complimentary wells, and we're making strong investments to obtain a license in the Equatorial margin. But meanwhile, other areas are being worked on, such as the Columbia well and also Sultanate And Principe and at the end of the year, South Africa as well.

Moderator

Hi, Rodrigo. That's an excellent question because it gives us the opportunity of, telling you about something. We just recently had a simulation in Petrobras with Oyapoki with over 200 people involved. We went through all the exercises responding to emergencies, rescuing and treating fauna. And across all of these exercises, our results were according to the EPAMA manuals.

Moderator

So that's very important. It demonstrates that we are ready. And Sylvia has even talked about cleaning the probe. We already have a licensed fauna. We have a license to operate from SEMA.

Moderator

And in Oia Poki, we're also bringing a contingency of equipment and trained professionals to respond to emergencies. So everything that is in our is our environmental defense systems are present in Liakok as well. Every week, we've communicated to Obama all the steps that the company has taken and we're demonstrating our readiness to have the pre operational assessment, which is one step before the license to operate. Thank you. Thank you, Clarisse.

Moderator

Thank you, Silvia. We'll now hear questions from Gabriel Baja. Gabriel, can you hear us? Hi, everyone. Can you hear me?

Moderator

Yes. Go ahead. Thank you. Thank you for taking my questions. I have two.

Moderator

The first is we recently I got a presentation from Renata about this, and this has been an important topic for the company, especially in contracting, not only services, but also projects. So in this presentation, Renata discussed vessels vessels here in Brazil. We also saw some news from Magna with some meetings she had with people in, other countries who are trying to bring investments to the country, with shipyards. So I'd like to hear from Renata how we can solve

Moderator

With oil prices being low, we also see that prices excuse me, services have also received conservative investments. So if you can give us that feedback on OTC, how we can understand this issue from your perspective? That would be an important point. And my second point is about the gas market. For a while, Brazil has had discussions about opening the, gas market, the price of gas in Brazil, and there has been a long discussion on, how to make gas prices lower in Brazil.

Moderator

So I'd like to hear your take on that. What would the company's strategy be with HavenTura and with the highest capacity for gas in a market that is not having higher demands and that still has a high price. So I just like to hear what your strategy is. You've signed some agreements in the free market with the ceramics industry. So just like to hear about your strategy in the gas market and how this will impact the company's results from now on.

Moderator

Thank you. I'll start with Director Renata. Thank you for your questions and then we'll answer the second question. Hi, Gabriel. So we have been simplifying our projects.

Moderator

I had mentioned a couple of other times talking again about the topside of the projects. This is one of the complexity measures that we have. When we have the first FPSOs installed in the pre salt layer, the weight of these top sites was not over 30,000 tons, and the ones in Bourgeaux are over 60,000 tons. So we really need to go back to basics. This is the effort we're making.

Moderator

We took a project from replicantries, and what we need to do is have minimal changes to have a very lean project. So we made this effort. We concluded this study, and we're implementing it in several projects. I've mentioned Albacora, which is simple. We've implemented many simplifications with CYAP one and two.

Moderator

The tender winners or excuse me, the tender organizers ask for some more days to organize this, but we also have to look at Subisi. In the last year, this has grown because of a lack of competition. We had basically two suppliers there and we made a strong effort with the market. We tried to find new suppliers. And in the last bid tender, we were pleasantly surprised by receiving four proposals that were far below the other ones that we had carried out.

Moderator

So this is what we have been trying to do. We're trying to find more suppliers. We went to China to try to see if we can attract partners to Brazilian shipyards. As a company and just as with any other company, we prefer to have our suppliers nearby. Geopolitical issues are on the top of mind, so we need to understand, you know, if our projects can be carried out here in Brazil.

Moderator

Of course, quality and price are factors, and we're not going to let go of that, but we want to have it in Brazil. And we're inviting partners from other companies and from other countries to join us. One example is Singapore. Citria, which is the merge of the previous capital fells with Jurong as two shipyards in Brazil. They are completely full.

Moderator

The Aracurus one had 1,800 employees and now they have 5,000 employees. In Andres Dusseys, they also have 5,000 employees and their demand is so high that they're already spreading it to other partners like Nucly, Aptismitdani. So this is about making waves in the market. So our strategy is to simplify projects so that we can attract more suppliers in order to become more competitive with our bid tender processes. Thank you, Renata.

Moderator

Director Tomasqueen will now answer. Yes, Gabriel. You're right. This is a much more competitive environment than we had in the past. In about three years with the market opening, we have had 19 suppliers in the market.

Moderator

So these are 19 potential competitors. And this creates a challenge for us. We have to find new clients. So in order to do that, we have created significant significantly aggressive strategy with pricing and this has had its results. In the last few quarters, we've talked about three buyers who have signed contracts with Petrobras and we can't give details, but we are negotiating with many others and this will be announced as the the contracts are signed.

Moderator

We have a policy because our contracts with distributors have a clause in which we can reduce the contract if a free consumer has a contract in the free market. So this has also hindered gas distributors work. So this is an environment that we're facing, but we believe we are prepared and we will continue to launch new products in order to get a better share of the market. Thank you, Thomas Quim. Let's continue with the next question from Luis Garvalho, BTG.

Moderator

Go ahead, sir. Hello. Good afternoon. Thank you for taking, my question. I also have two.

Moderator

The first is for director Renata. Referring back to one of the questions that was asked about, president Magda's initial comments on cost reduction, simplifying projects. I was trying to quantify the potential impact of the simplification process and the reduction of the topside weight. We saw PSOs that had a total cost of $2,500,000,000 and this went up to 4,000,000,000. Do you have any estimates or any expectations about the cost of these units if it will be between 2,500,000,000.0 or $3,000,000,000 or between 3,000,000,000 or $4,000,000,000?

Moderator

And how does that match the impact on the total CapEx that is projected for this plan? My second question is for Director Fernando about leverage. This quarter, we saw that the company's net leverage reached nearly 1.5 times and it was 0.8 times a year ago. Gross debt was at $65,000,000,000 and that was very close to that 75 limit. And your cash is close to your minimal or your ideal levels.

Moderator

In your presentation, you were showing your CapEx resilience at different oil levels. So my question is, what is the ideal maximum level of leverage for you, with lower oil prices considering this current context? Thank you. I'll hand it over to Renata and then Fernando will answer your second question. Hi, Luis.

Moderator

Our expectation is for platforms to be below $3,500,000,000 for rigs to be below $3,500,000,000 Of course, this depends on the complexity of each rig, but our expectation is that it will not be above 3,500,000,000.0. Thank you, Renata. Luis, thank you for those questions and Fernando will answer your second question. Go ahead, Fernando. Hi, Luis.

Moderator

First, leasing is 70% of our leverage. And leasing is most of all connected to generating revenue. So when it comes to leverage in a company that has leasing, we have to consider this point. Financial leverage is much lower, but as we've been seeing, leverage is related to the indebtedness cap that we have. No one is considering having something that is outside that indebtedness level of 75.

Moderator

Of course, as a financial manager, this is something that we keep an eye on, sustainability, cash generation, and payment capacity. So this is how we're seeing our leverage. Thank you, Fernando. Let's continue with the next question. Liliana Young from HSBC will ask the next one.

Moderator

Go ahead. Hi. Thank you for taking my question. You've talked a lot about the, investment plan execution for 2025, but I'd like to understand what cost pressures you're facing today and if there's any possibility of executing CapEx above 18,500,000,000.0 in the budget. Doctor Fernando mentioned the foreign exchange as a caveat.

Moderator

And I also have the same question for 2026. That's my first question. If you'll allow me a second question. Can you talk about the status of the investment plans in fertilizers? Are there any ongoing studies for Petrobras' growth strategy in petrochemicals?

Moderator

Have they advanced? Thank you. Thank you. Lily, Renato will answer your first question. Renato, please.

Moderator

We don't see any possibility of surpassing our CapEx guidelines. Fernando is looking at me sideways, and he is definitely demanding that we don't surpass it, especially because the prices are already defined. So there is no reason for us to have any prices above those that we forecast. For 2026, we are now planning, the next five years. So right now, we don't have those numbers yet, but we will abide by whatever is defined.

Moderator

Thank

Moderator

you.

Moderator

Liliana. Yes. Liliana. Hi, Liliana. Thank you for your question, and good afternoon, everybody.

Moderator

Both petrochemicals and fertilizers, According to our they are in our strategic planning approved by our board given that the company is an integrated energy company, and therefore, they're part of our investment portfolio and also value generation For fertilizers in May, we'll be completing the scheduled downtime of the Parnau plant. And as of the end of the month, we'll be resuming the operations of that plant. Concerning Uniteo, it was approved by our board as well as the term of settlement of outstanding amounts that was approved and along with arbitration will initiate a tender so that as of October, we'll go back to the operations of Fazfem Bahia and Sergipe, putting them back on our portfolio. The agreement provides for the return of these plants to the Petrobras assets.

Moderator

And also, I don't know if Renata wants to mention that we're now performing the you're in the middle of a tender process for the UFNTs and to initiate some storage and trading activities soon in '26 and the completion of the loading operations in 2028 or 2029. Would you like to say anything oh, I'm sorry, about petrochemicals and FN3 petrochemicals were also seeking opportunities and Preschem announced two or three weeks ago the kickoff between, the Novo Nord and Petrobras shareholders to expand the Rio hub, the Braskem Rio de Janeiro hub given that we initiated Train one and now starting Train two. So we'll be expanding it to 50% of polyethylene production capacity in Rio with the Novo Nord investments. And with a surplus of ethane in the hub, we are now assessing plant of acetic acid and that's an opportunity in terms of petrochemicals. In terms of energy transition, we've carried out a test for the production of green ethane at Recap.

Moderator

And as of July, in the Rio Grande refining plant with our partners Briska and Grupo Ultra, we'll be starting the Phase one of, to transform it into a catalytic plant producing gases for the production of naphtha. So it'll be operating only with renewables, the cracking process producing green naphtha and green ethane, which are raw materials for petrochemicals as well. So both in terms of raw materials and in the in case of plastics, we are working on opportunities and investments that are able to generate value for the company in petrochemicals, especially because this synergy and integration between refining and petrochemicals is increasingly required globally for oil producing companies, Bernardo. About EFN3, we are now in the middle of a tender process and we'll be receiving proposals in June. And I can tell you that the market is pretty excited.

Moderator

We're seeing a lot of interest in all the NAP packages that we launched and lots of questions being asked at Petronet and the collaboration room. So we're pretty excited about that project as well. Thank you, Miriam and Renata. Now there is a question from Regis Cardoza from XP. Regis, over to you.

Moderator

Thank you, Eduardo and the Board of Petrobras. I have a specific question about production. There was an important schedule in terms of some platforms going into production and some of them going into ramp up. I'd like to hear your comments about that. I know that we have a guidance for an average of '25.

Moderator

Is there any downtime still scheduled or maybe I could hear your comments about the production by December and the end of twenty twenty five given the ramp up of these rigs? And I'd also like to hear a few examples in terms of flexibilizing the investment plans to make adjustments based on the lower oil prices discussed in the beginning of the call. I was under the impression that there may be a possibility to change the scope of the top side of the rigs. Maybe I don't know if with the hired ones or the ones that haven't been hired yet in the five year plan. Can I start?

Moderator

Regis, given the production schedule, our entire production is submitted to a risk analysis that's been pretty consistent and reassuring. So last year we stayed within the range of 2.7 and for 2025 we also expect to remain within the range of 2.8. And with that, these important platforms, the ones that came from Mero and Buzios, they'll go into production with a ramp up on the second quarter and an ultimatum under A towards the end of twenty twenty five in Mero four next year. So that is strictly within our production levels. In addition to the revitalization ramp ups, so all of these scheduled downtimes are scheduled.

Moderator

And we can say that two sixty, two 70 barrels a day per year are not produced because of the downtimes and but that's already considered by our risk analysis. And also with occasional downtimes for Obama, for instance, we've been attempting to include them in our analysis to give us a bit more accuracy for the results. And, sir, we do not change any projects already in execution because that's hell for us. It generates claims and whatnot. So we don't tamper with projects in execution except it.

Moderator

If it's for security or safety purposes, we don't change any projects. We only change the projects that have not been hired yet. So we're strongly working on the projects that we're still hiring or for those that will still initiate the hiring process. And we don't see we don't forecast any changes. Like we said, our projects are resilient to a brand of 45.

Moderator

So there is no perspectives of making any changes. But in terms of simplification, well, that's our motto moving forward to simplify the projects and to attract more suppliers so as to increase the competitiveness in the tender processes. Thanks everybody for the questions. Now we have questions from George Gibret from Scotiabank. George, over to you.

Moderator

Thank you. Probably we looked at the utilization factor of refineries. It decreased in the first quarter. How can we think about normalizing the load for the next quarters? And my second question is, we saw a successful task in anticipating the production systems.

Moderator

What are the, learning points both in terms of processes and contracts that were generated? And is there any other opportunity for another production system to be anticipated to be moved forward? Thanks for your questions, George. I'll give the floor to William and Renato. William?

Moderator

Hello, George, and thank you for your question. Actually, our utilization factor was really good. It didn't go down. It may sound like a paradox, but it's not. We were able to maintain our utilization factor for the refineries at above 90% with a strong efforts from refinement and logistics and trading areas of the company.

Moderator

Even in the phase of in the phase of a downtime for revamp at Renest, which is a refinery that was went into downtime for sixty days, we stopped distillation, coking, diesel, naphtha. And we also did the revamp of distillation from a 15 to a 30,000 in addition to Astonox maintenance and given us the possibility of reaching 130,000. So it was a long downtime. But even with this downtime, with the logistic planning and the high availability of the other units, we were able to maintain the utilization factor above 90. For this year, we'll have a downtime at the Cubatown Refinery with two units, one of them coke that basically produces diesel and S10.

Moderator

And towards the end of the year, we'll have a downtime for the replan, a revamp. It will be revamped to 73,000 cubic meters day, almost 450,000 barrels per day, a big refinery. We're expanding it even further and producing more S10 and the revamp downtime as of September for distillation and amplification of the HDT unit, allowing us to produce more S10 diesel. So it's three downtimes. But due to the length and the shorter length of time, we do expect a utilization factor in some months in the range of 95%, ninety six % and an average at around 92% or 93%, which is what the strategic planning defines.

Moderator

So the reliability level of the company is still very good in terms of the international availability. Six out of 10 refineries are already on the first quarter of the solo indicator. Thanks for your question. Renata? So what have we learned?

Moderator

Okay. First, we are monitoring everything that's done at the shipyards much more closely. We discussed, for instance, which welding operations will be performed on a given day. Are we frozen? Okay.

Moderator

So that's one thing. We've been doing that at the shipyard so as to guarantee and also move deliveries forward. Each day matters in terms of moving these dates forward, and we're constantly trying to do that. So what are we doing differently after the rig is ready? Once the rig gets here, you have to anchor it.

Moderator

You have to interconnect the wells through lines. And as Magda said, Alexandre de Ciguis Mal reached record breaking anchoring levels. What we did differently was that before we received the rig, we launched the torpedo piles, which do the anchoring. Once the platform got here, they were already here, and we just needed to attach the line to the platform. So anything that we would wait in the past after the rig was delivered, we do that before the rig's been delivered because once it gets here, we have completed a lots of tests already.

Moderator

And that's been allowing us to anticipate many things. Another thing is that, for the chartered platforms, they are manned and, they say that they're hot. The systems are already connected, all of them. In our own platforms, in the past, the way we did it was we would bring them to Brazil. They would be standing at Guanabara Bay.

Moderator

The crew would come on board and start switching everything on. The machinery will would take fifteen days to start running to then go to the location. For p 38, we'll do a manned trip. It will leave Singapore already manned. Once it gets here, it will go to the location and that will give us an additional month in terms of moving production forward.

Moderator

So those are things that we've been thinking every day about what can be done differently because each day matters, as I said. Thank you, Renata. And this is the end of the Q and A session. If there are additional questions, you can send them to our Investor Relations team. I'll give the floor to Fernando for a few additional comments.

Moderator

I also want to thank everybody for participating. This is very significant for Petrobras. And our final message is that the entire company is fully aware of the volatile situation we are going through and the Brent price levels. We are committed to analyzing several scenarios to allow us to understand the possible effects on the balance sheet of the company, production, CapEx, cash flow, debts. So all of that is being taken into account very carefully to allow us to make the best possible decisions with technical base so that we can make the best possible progress in the company.

Moderator

There's also the austerity measures that in our opinion will be very productive. And this will bring about more reliability to the company. And we should never forget that we always talk about long term results. So a short term decision that disregards the long term between the expiration and the first oil, we're talking about seventy years. So it's not such a short period.

Moderator

Any decisions need to consider that. So this is the commitment of the board. We are concerned, but we're also highly optimistic about the possibility to increase production and we are confident in our resilience that's been mirrored by our strategic plans. So I wish you a great day, a great week and see you next time.

Analysts
    • Moderator
Powered by Quartr

Key Takeaways

  • Despite oil prices falling from $84 to $75/barrel year-over-year and to ~$65 in Q2 2025, Petrobras reported Q1 2025 net income of $6 billion and $8.5 billion in operational cash flow by maintaining high production and strict capital discipline.
  • Management is tackling the low-price environment with a program of austerity, simplification of engineering projects, and cuts in investment, operational and overhead costs, while refocusing on short-cycle, high-margin assets.
  • Exploration success continued with new pre-salt discoveries in the Aram-Bra and Campos Basins and a strong offshore test in Colombia, feeding a 50-well drilling campaign that underpins long-term reserve growth.
  • Refining throughput improved through the Buzios FPSO startup, record-fast anchoring of the Alessandro de Guzmão FPSO, and a 30 kbpd Train 1 revamp, positioning Northeast Brazil for >260 kbpd of S10 diesel capacity.
  • In energy transition, Petrobras sold its first 24% biofuel marine bunker in Asia and signed a deal to reforest 50 k ha of Amazon land for 15 million CO₂ credits, advancing its decarbonization and value-creation objectives.
AI Generated. May Contain Errors.
Earnings Conference Call
Petróleo Brasileiro S.A. - Petrobras Q1 2025
00:00 / 00:00

Transcript Sections