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RESULTS ANNOUNCEMENT 2Q17

Press Conference August, 10th 2017

2

Disclaimer

FORWARD-LOOKING STATEMENTS:

DISCLAIMER

The presentation may contain forward-looking statements about future events within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are not based on historical facts and are not assurances of future results. Such forward-looking statements merely reflect the Company’s current views and estimates of future economic circumstances, industry conditions, company performance and financial results. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forward-looking statements. Readers are cautioned that these statements are only projections and may differ materially from actual future results or events. Readers are referred to the documents filed by the Company with the SEC, specifically the Company’s most recent Annual Report on Form 20-F, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including, among other things, risks relating to general economic and business conditions, including crude oil and other commodity prices, refining 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.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason. Figures for 2017 on are estimates or targets.

All forward-looking statements are expressly qualified in their entirety by this cautionary statement, and you should not place reliance on any forward-looking statement contained in this presentation.

In addition, this presentation also contains certain financial measures that are not recognized under Brazilian GAAP or IFRS. These measures do not have standardized meanings and may not be comparable to similarly-titled measures provided by other companies. We are providing these measures because we use them as a measure of company performance; they should not be considered in isolation or as a substitute for other financial measures that have been disclosed in accordance with Brazilian GAAP or IFRS.

NON-SEC COMPLIANT OIL AND GAS RESERVES:

CAUTIONARY STATEMENT FOR US INVESTORS

We present certain data in this presentation, such as oil and gas resources, that we are not permitted to present in documents filed with the United States Securities and Exchange Commission (SEC) under new Subpart 1200 to Regulation S-K because such terms do not qualify as proved, probable or possible reserves under Rule 4-10(a) of Regulation S-X.

3

1H17 Highlights

Constant

improvement of

economic and

financial results

Net income of R$ 4.8 Billion in the 1H17, reversing the 1H16 loss

Operating income of R$ 29.3 Billion in the 1H17, 91% above 1H16

6% increase of adjusted EBITDA relative to 1H16, reaching R$ 44.3 Billion. Adjusted EBITDA margin was 33%

Free cash flow of R$ 22.7 Billion in the 1H17 and R$ 9.4 billion in the 2Q17, positive for 9 quarters in a

row.

Acceleration of

deleverage

process

6% decrease in net debt in BRL and 7% in USD compared to 12/31/16

Average cost of debt of 6.1% and increase of average duration to 7.88 years due to liability management

Reduction in Net Debt/adjusted EBITDA to 3.23 from 3.54 and in leverage to 53% from 55%

Safety Decrease of TRI (Total Recordable Injury Frequency Rate) reaching 1.11 in the 2Q17

4

Progress in

Efficiency

Cost reductions relative to 1H16:

12% in manageable operating costs

16% in SG&A

18% decrease in headcount since 1H16

Operating

Performance

Total production of 2,791 kboed, 3% above 1H16

Average oil and gas production in Brazil reached 2,671 kboed, 6% above 1H16

Record in operated pre-salt oil and gas production of 1,686 kboed in June

Oil products sales in Brazil reached 1,943 kbpd, a 7% reduction relative to 1H16

Petrobras has maintained a net exporting position, with a balance of 401 kbpd, given the 48% increase

in exports and 25% decrease in imports relative to 1H16

Oil exports at higher prices due to the increase in Brent and domestic oil prices

1H17 Highlights



RESULTS

—

6

Change of trajectory in the 2Q17 with lower Brent prices and depreciation of the BRL Higher Brent prices and appreciation of the BRL between semesters

3446 46 49 5054

2Q16 1Q16 1Q17 4Q16 3Q16

-7%

2Q17

Brent (US$/bbl)

4Q16

3.3

3Q16

3.2

2Q16

3.5

1Q16

3.9

+2%

2Q17

3.2

1Q17

3.1

FX Rate (R$/US$)

4052

+30%

1H17 1H16

-14%

1H17

3.2

1H16

3.7

3,21 3,31

R$/bbl 132 160 149 163 169 160 146 165

3,56 3,21 3,25 3,26 3,17 3,31 End of period

7

Operating income maintains solidity

Operating Income

Net Income Net Financial Results

Gross Income

2Q17

-8.8

1Q17

-7.8

2Q16

-6.1

-93%

2Q17

0.3

1Q17

4.4

2Q16

0.4

2Q16

7.2

+5%

2Q17

15.0

1Q17

14.3

2Q17

21.4

1Q17

23.8

2Q16

22.8

-6%

-10%

R$ Billion

+3%

1H17

45.2

1H16

43.8

+91%

1H17

29.3

1H16

15.3

1H17

-16.6

1H16

-14.8

1H17

4.8

1H16

-0.9

- Lower diesel/

- gasoline margins

- Lower export volumes

- Higher export revenues and lower

import expenses

- Higher Brent prices

- Gains with the NTS sale

- Higher sales and tax

expenses

- Gains with the NTS sale

- Lower operating expenses - Lower workforce expenses

- Lower dry holes expenses

- Lower rig idleness

8

EBITDA margin remains high, increasing in the semester

25.3

2Q16

20.5

-24%

19.1 29

37

29

-8 p.p.

2Q17 1Q17 2Q16

Adjusted EBITDA (R$ Billion)

Adjusted

EBITDA Margin (%)

+6%

1T17

44.3

1T16

41.6

2933

+4 p.p.

1T17 1T16

2Q17 x 1Q17:

- Lower oil products margins

- Lower crude oil exports volumes

- Higher sales expenses (NTS tariff)

- Higher tax expenses (adherence to

PRT/PERT)

- Provision for losses with Vitória 10.000

drillship

1H17 x 1H16:

- Higher export revenues

- Lower import expenses

- Lower operating expenses

1Q17 2Q17

9

Free cash flow for nine quarters in a row

Operating Cash Flow

Free Cash Flow

Investments 1

11,2 9,9 10,3

2Q16

+4%

1Q17 2Q17

11,0

13,4

9,4

-30%

2Q17 1Q17 2Q16

22,1 23,219,7

2Q16 1Q17

-15%

2Q17

1. Cash basis

R$ Billion

1H16

39,4

+9%

1H17

42,9

26,1

1H17

20,2

1H16

-23% 13,3

22,7

1H16

+70%

1H17

10

Reduction of expenses and workforce

Workforce

76.613

2Q16

-3%

2Q17

63.152

1Q17

65.220

General and Administrative Expenses

(R$ Billion)

-4%

2Q17

2,2

1Q17

2,3

2Q16

2,8

4,55,5

-18%

1H17 1H16

11

Reduction in debt and leverage

376,6

364,8

385,8

398,2397,8

295,3314,1

325,6332,4

2Q17 2Q16 1Q17

301,0

4Q16 3Q16

2Q16 1Q17 2Q17

Cost of debt (% a.a.) 6,3 6,2 6,1

Average duration (anos) 7,30 7,61 7,88

Leverage (%) 55 54 53

113,8115,1

118,4

122,7123,9

89,395,096,4

100,3103,6

2Q17 1Q17 4Q16 3Q16 2Q16

Net Debt

Total Debt

Net Debt

Total Debt

Debt

R$ Billion

Debt

US$ Billion

12

Active liability management resulted in an extension of maturities

US$ Billion Debt Amortization Schedule

2021

18,9

10,9

2020

12,6

15,4

2019

16,7

22,7

2018

9,3

16,2

Position as of 12/31/2015

Position as of 06/30/2017

13

Converging to the Net Debt / EBITDA target

Net Debt / EBITDA* (x)

3,233,243,54

3,93

4,30

4,81

2Q17 1Q17 4Q16 3Q16 2Q16 1Q16

* LTM adjusted EBITDA



OPERATIONAL HIGHLIGHTS

—



Produção operada

trimestral na camada

Pré-sal

Óleo ou gás? > Ver nota

de produção qual o

recorde anunciado.

Caso haja os dois,

colocar apenas óleo

Produção operada


Pré-sal



recorde anunciado.

Caso haja os dois,


High production growth in the Pre-salt and control of production decline in Campos Basin

Produção operada


Pré-sal



recorde anunciado.

Caso haja os dois,


2.524 2.671

187 120

2.711 2.791

1H16 1H17

Oil and Gas Production

(Mboe/d)

Oil & Gas:

Brazil

Oil & Gas:

Abroad

+3%

Operated Pre-Salt oil production

records

Daily: 1.42 Mbbl/d in 06/19/17

Monthly: 1.35 Mbbl/d in 06/17

6% of oil

production in

Brazil.

1.352 1.272

1H16 1H17

Oil Production

Campos Basin (MMbbl/d)

6%

In June the

operated

production in

the pre-sal

reached

51%



Upcoming production units

—

P-66 Lula Sul

Libra Pioneer Extended Well Tests

• + 2 new production wells in 2017

• Operational Efficiency of 97%

• Environmental license granted

• Waiting the connection of the 1st

well to start production in 3Q17

Cidade de Campos

dos Goytacazes Tartaruga Verde and

Tartaruga Mestiça

+

+

P-67 Lula

P66_Edicao_v29_2017-05-04_LEGENDA-INGLES_v2.wmv



Reduction of Lifting Costs in BRL

—

New threshold for Pre-salt lifting costs

<7.0 US$/boe

Produção operada


Pré-sal

Óleo ou gás? > Ver

nota de produção

qual o recorde

anunciado. Caso haja

os dois, colocar

apenas óleo

10.4 10.8

1H16 1H17

Lifting Cost US$

(Brazil e Abroad) Produção operada


Pré-sal

Óleo ou gás? > Ver

nota de produção

qual o recorde

anunciado. Caso haja

os dois, colocar

apenas óleo

37.4 34.1

1H16 1H17

Lifting Cost R$

(Brazil e Abroad)

+4% -10%



Discovery of new oil volumes in Campos Pre-salt —

RIO DE JANEIRO FORNO (ALBACORA)

• Final stages of appraisal and test

• High quality new oil field that will contribute to

the Albacora Field revitalization

BRAVA (MARLIM) • Producing through P-20 and being appraised

• Great potential to be utilized in the Marlim

revitalization project

PORAQUÊ ALTO (MARLIM SUL) • Discovery in July/2017

• Oil reservoir 45m thick

TRACAJÁ (MARLIM LESTE) • Producing since 2011 at P-53

• Studies being developed to decrease production

decline

CARIMBÉ (CARATINGA) • Producing since 2010 at P-48

• Accumulated production of 48 MMbbl

PARQUE DAS BALEIAS • First well to produce in the Pre-salt in Brazil at

Jubarte field

• Producing since 2008 with P-58 and Cidade de

Anchieta platforms

19

122 93139

237

197

202

2Q17

341

1Q17

290

2QT16

359 Oil

Oil Products

Exports of 717 kbpd of oil and oil products in 1H17, a net balance of 401 kbpd

Imports

Exports

Net balance thousand

bbl/day

160116

262

200

1H16

422

1H17

316

Oil

Oil Products

341

609487

174

170

167

2Q17

654

1Q17

779

2Q16

515

324

548

160

169

1H17

717

1H16

484

219

516

348

-63 -35

1Q17

489

-27

2Q16

156

2Q17

313

164

432

-102

1H17

401

-31

1H16

62

20

Lower oil products output aligned with lower sales volumes Demand influenced by the slowdown in the domestic economy

Oil products output

(thousand bbl/day)

Sales Volume (thousand bbl/day)* Diesel, gasoline and

jet fuel yield (%)

Participation of domestic oil in

the processed feedstock (%)

70 6969

0%

2Q17 1Q17 2Q16

811 702 721

541 539 533

757710 679

-1%

Diesel

Gasoline

Others

2Q17

1.933

1Q17

1.951

2Q16

2.109

91 95 93

-2%

2Q17 1Q17 2Q16

* Includes Downstream and BR Distribuidora sales

807 688 707

444 452 437

668 672 654

-1%

Diesel

Gasoline

Others

2Q17

1.798

1Q17

1.811

2Q16

1.919

90 94

+4%

1H17 1H16

70 69

-1%

1H17 1H16

816 698

448444

675663

-7%

1H17

1.805

1H16

1.939

804 712

553 536

726 695

-7%

1H17

1.943

1H16

2.083

21

Operating costs under control in the quarter

9,39,5

8,6

-2%

2Q17 1Q17 2Q16

Refining Costs R$/bbl (Brazil)

Refining Costs US$/bbl (Brazil)

2,93,0

2,5

-6%

2Q17 1Q17 2Q16

9,4

8,7

+8,4%

1H17 1H16

3,0

2,4

+24%

1H17 1H16

22

16 15 15

20 2228

35 35

37

+11%

2Q17

81

1Q17

73

2Q16

72

4252 54

2819

24

+11%

2Q17

81 3

1Q17

73 2

2Q16

72 2

System Gas

Downstream/Fertilizers

Thermoeletric

Non Thermoeletric

Domestic

Bolivia

LNG

Natural Gas Supply and Demand Higher domestic supply and higher demand in the quarter

Natural Gas Supply Natural Gas Demand

MMm³/day MMm³/day

4153

30

22

6

+1%

1H17

77 3

1H16

77

15 15

25 25

34 36

+1%

1H17

77

1H16

77

23

Monitoring the 2017-2021 Business and Management Plan

SAFETY

PRICES Increased frequency for gasoline and

diesel price adjustments

New LPG pricing policy

Reduction above the business plan’s

forecasts

Higher efficiency in capital allocation

CAPEX

OPEX

PARTNERSHIPS AND

DIVESTMENTS

Resumption of asset sales with the

offer of 33 oil fields in Brazil,

international distribution assets and

BR’s IPO

1.63 1.11

1.4

2016 1S17 2018

Total Recordable Injury Frequency Rate (TRI)

* Maximum Limit on 2017-2021 BMP

*

24

The Corporate Governance Program for State-Owned Companies aims to incentivize state-owned companies to improve

their corporate governance practices and structures.

The program focus on the conduct of the State as a controlling shareholder and establish the following guidelines:

(i) Implementation of a Nomination Policy for members of the Board of Directors, Fiscal Council, Executive Directors

and external members of the committees of the Board of Directors;

(ii) improvement of the information disclosed in the Reference Form, with a prior and clear definition of the public

policies and guidelines to be pursued by the State-Run Company; and

(iii) commitment by the Public Comptroller to the governance practices and care in the treatment of the information

of which it is aware.

Improvements in Corporate Governance

Petrobras received the certification in the Corporate Governance Program for State-Owned

Companies, after having completed the suitable improvements in its corporate governance, and has

complied with all the compulsory measures and obtained 56 points in the optional measures.



RESULTS ANNOUNCEMENT 2Q17

Information:

Investor Relations

+55 21 3224-1510

[email protected]

RESULTS ANNOUNCEMENT 2Q17 Clique para editar o título ... · 10/8/2017 · PARQUE DAS BALEIAS •...

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