Petroleo Brasileiro S.A. Petrobras ADS

Good afternoon and welcome to Petrobras webcast with analysts and investors to discuss Q3 results. This will be in Portuguese with simultaneous translation into English. The links are in our IR website. All participants will be in a listen-only mode. We'll have a Q&A session. Submit your questions to PetroInvest at Petrobras.com.br. Joining us, Clarice Copete, Director for Corporate Affairs, Paul Schlosser, Logistics, Sales, and Market, Director, Fernando Gareja, IR, Director, Mario Spinelli, Governance Director, Mauricio Tomaschi. Director for Energy Transition and Sustainability, Renata Baruzzi. Engineering Technology Innovation Director, Silvia dos Anjos. Exploration and Production Director and William Franca Product Director. And other company executives. Fernando Melgarejo, our CEO of CFO will take over now. Good afternoon. Thank you for attending this webcast. These are the highlights for Q3 24. We will be available to answer questions you may have at the end of this presentation. On to slide three. These are our operational highlights. Starting with exploration and production, we have come a long way. Back in October, we started Operation 2, FPSO Maria Quitere in Chobarte Field, and Marshal Duque de Caxias in the Merrill Field in the Santos Basin. And we've also received Almirante Tamadaré. It's now in Brazilian waters and will be operated in In the Búzios field, this is going to be the first high-capacity unit, capacity of up to 225,000 barrels and 12 million cubic feet a day. The plan is to start operations next year, but we may anticipate that these are very important deliveries for our strategic plan. In the case of Maria Quitéria, We've anticipated that operation that was scheduled for 2025. This effort results in more revenue as these assets generate or reach their full capacity, which is over 500,000 barrels a day. You can also see other important highlights. Our record production in 2P reaching 3 billion barrels. barrels. In Merrill, the Sepitiba FPSO reached its peak production in less than eight months, also contributing to the production of the quarter. In Explorations, we have discovered a field in Colombia and in South Africa. We have a minor stake in the Orange Basin. On to the next slide. Operational highlights. High level of use of our 95% for the quarter. In September, we reached 97%. We did this maintaining high value byproducts. We've had the best history level of the greenhouse effect emissions in our refining park. We've increased sales for byproducts in the Midwest, and also a partnership with Bali to test low-carbon products, including diesel R with 5% renewable content. We have the natural gas production unit in Rio. We're ready to start commercial operations soon. It's very strategic to Petrobras because it will increase the offer of natural gas in Brazil. We're starting at 50% capacity, and by year's end, we'll have two modules in operations, reaching 21 million cubic meters of gas per day. And we're back to the top 10 ranking of companies we would like to work for. After four years of being outside of that list, these results are very important results for those companies that want to attract and retain talent. This is an indication that we're heading the right way. On to financial results on slide five. We haven't had any non-recurring items impacts in this quarter, unlike the previous quarter, as you all remember. Recurring items. EBITDA was $11.6 billion. Recurring net income was $5.9 billion. We've maintained generating cash, $11.3 billion, a 24% increase quarter on quarter. Free cash flow was $6.9 billion. Gross debt is under control at $59.1 billion within the range we established in our strategic plan. I'll be giving you more detail about these figures, and you'll see that financial debt is at its lowest level since 2008. We paid out $64.4 billion in taxes, and we've approved dividends and our own capital interest at $17.1 billion. So these numbers show that we've reached consistent results despite financial the dropping prices of Brent oil. This is the foreign scenario. Brent prices was down when compared to the previous quarter, just like the crack spread in diesel. Margins were reduced. However, we managed to offset by selling more byproducts. On average, we see a devaluation of real, but FX was 5.45 reals. with a positive impact in our financial numbers. A 2% appreciation of real in Q3 when compared to 11.2 depreciation of Q2 in 24. Moving on to the next slide. This has impacted EBITDA in the Q3. partially offset by more oil production in the byproducts mix, and because of higher sales volumes domestically. Adjusted EBITDA was $11.6 billion, slightly smaller than the previous quarter when we written off the one-off events. Net profit is a result of the FX market. impact, and the fact that there are no expenses that impacted the previous quarter. On this table, we can say that our cash generation remains robust enough to support investments, financial obligations, and the dividends payment. Let me point out that we are investing $4.5 billion, about 30% above previous quarter. That Increase is due to scheduled payments of OLP projects, those related to the new platforms and buzios, and also investments with the start of construction work in P84 and P95. This increase won't change the investments provision for the rest of the year. Investments amount to $10.9 billion. On to slide nine. Before I talk about the debt, let me point out the successful emission that we conducted in August and September. We issued a 10-year bond. Maturity is $1 billion, the lowest spread ever. to the U.S. Treasury bond since 2011. At the same time, we had a repurchase plan. The two operations are in line with the debt management strategy of the company, helping us reduce our leverage. Financial debt was 25.8 billion, the lowest level since 2008. On to the dividends screen. We are committed to distributing the results generated and the financial sustainability. GrowthStat is under control. Accrued positive results. The Board of Directors approved a compensation of 1.32 reals per share. It will pay it out in two equal installments in February and March at JCP or dividends. will be defined by year's end. We will then have enough information so that we can have the best tax advantage possible. On to the last slide. This is the important contribution of our taxes to federal, state, and local governments. This is just a portion of what Petrobras returns to society. On top of that, you have dividends paid out to the government and our strategic plans that can generate high yields that can contribute to generate value to both shareholders and society overall. Petrobras had a 14% increase when compared to the same period of last year. Taxes amount to 64.4 billion reals. In conclusion... I would like to turn it over to Eduardo so that we can get started with our Q&A session. Thank you so very much. Thank you, Fernando. On to the Q&A now. Please ask two questions at most. Matheus Impel from UBS asks the first question. Good afternoon. Thank you for taking my questions and congratulations on the results. My questions are more on the operational side. I'm sorry, but we can't hear you. Can you please go back to the beginning? Can you hear me now, Eduardo? Yes, I can hear you now. Fine. I'm sorry. I'll be focusing on the operational side. Question one, can you give us more color on the Q3 production levels? You had an expectation of better performance. Q2 had a negative impact of scheduled and unscheduled shutdowns. How much of this quarter? including pre-salt, were impacted or was impacted by those shutdowns? And what's the outlook down the road? Can we expect higher production from now all the way to 2025? What is the short-term prediction? And the second question is about exploration. ANP data shows that we had the least or the lowest amount So what is the company doing? Thinking about explorations both in Santos and Campos basins. Replenishing reserves given the domestic difficulties. Would that make sense to acquire companies abroad? Or would it make sense to consider acquiring companies that have a portfolio already in operation? These are my questions. Thank you.

Thank you, Matheus. Silvia will take those answers. Hi, Matheus. I'll begin with your second question. You asked about the reduction in exploration and the potential in Basia de Santos. It's always important to remember that in 2006, we were able to achieve our self-sufficiency, which we had dreamed of for so long. And the determining factor of that is that we are now increasing production and replacing our reserves. That's our track. We see that we have our strategic plan, 27 and 28, over $7 billion in exploration. And in this research project, we have a significant oil potential that we are investing in in three ways. First, you asked about Santos. Yes, we are replenishing that. We're also investing in new opportunities in the fields that we already have, and we're seeking new fields as well. And that's where the equatorial basin comes in, where we have the greatest volume of prospection that has ever been done. That was in 2013. It's also very similar to the Campos Basin. The Equatorial Basin is also similar in its reservoirs in many technical aspects. It's a potential that is also similar. The seismic characteristics are, again, also similar. This occurs both in Venezuela and in the more recent discoveries in Guyana and Suriname. So there's enormous potential there that we need to assess. And we can only assess it by drilling. And for that, we need a license. So that is our primary line of investments, our roadmap. We are investing over $3 billion of our budget into that alone. And your other question is about investments outside of Brazil. So, of course, the more production occurs, the more our need to replenish those reserves. So we are looking in regions that have the greatest potential. So we invest our efforts into places where we have more established potential, and that's our basins. We have conjugate basins in Africa offshore, and those are very similar situations. what we're looking at right now is very similar to Santos in the post-salt region. Of course, always looking at economic viability and profitability for Petrobras. I also want to mention that this year we finished our acquisition in Saint-Thomas and Principe. We also had, we accomplished an investment in another basin in Equatorial Africa. and we are currently waiting for our license in that equatorial margin. There is a lot of potential there, but we can only find out to what extent after we drill, and that is when we will confirm whether or not our model is correct. So I think that's one of your questions. The other question is about the down times. Yes, In fact, this year was atypical. We had scheduled and unscheduled downtime. Scheduled ones were especially in Santos in large-scale basins. Just to give you an idea of the scheduled downtimes, we ceased producing roughly almost 150 barrels a day, 1,000 barrels a day, But those scheduled downtimes are important for the longevity and safety of our units. It's just like a car. You need to stop every once in a while and perform an inspection. So that's what we do. They don't occur every year. They occur in different interspersed periods. And this year, that occurred in Santo. And we also have unscheduled downtime, which occur regularly. for many different potential reasons, such as being legally mandated or because we discover something that occurred. There's also another reason could be worker strikes. The ANP agency in Brazil also atypically ordered us to stop for a period, but again, This was all occurred within a safe margin of risk. So all in all, 2.8 million barrels, which is roughly 4%. All right, thank you, Sylvia. Our next question comes from Monique from Itaewoo. Hello, everyone. Good afternoon. Thanks for taking my questions, and congratulations. on your results. I'm going to follow up on Matos's question for Sylvia again. With regard to the unscheduled and extraordinary downtime, how would Petrobras classify the reasons behind this downtime? What were the main causes? And what has the company been doing in terms of process in order to improve and reduce these unscheduled or unexpected downtimes or mitigate them. My next question is about CapEx. We've been talking with Petrobras over the past few months about a mismatch between the physical and financial advances in regard to the roadmap. And you always mention that there is a improvement process underway to improve the CapEx curve such that the mismatch or deviation will be reduced and so that the plan will be a better fit for reality, the reality of the projects. So my second question is, could you please comment about how the CapEx projection refinement process is proceeding, especially with regard to the future plans? Thank you. All right, our first question will be for Sylvia and the second will be for Renata, but please feel free. The unscheduled stops, they occur due to maintenance reasons that we sometimes detect or sometimes new technologies we want to implement or sometimes actual maintenance. So this year we had several shutdowns for due to requirements of the A&P. Remember that during the pandemic, many of our basins and units were not shut down at all. We extended throughout that period. So we are now working to clear out any and all requirements made by the A&P so that we can really clear the table of any pending demands so that we can guarantee the longevity of all of our units. And that's something that we've been doing primarily to ensure the integrity of all of our investments. Our ultimate goal is to tackle and clear any and all requirements made by the ANP, and we're really clearing all of them out. Hi, Monique. I actually mentioned in an event three months previously about this mismatch you mentioned between physical and financial. And we did, in fact, implement improvements. And in this quarter, you can see to what extent we were able to accomplish more. And one of the reasons for that is precisely because we were able to align the physical and financial advancements. And so from here on out, we did have a liability that we cleared out. And so from here on out, we are confident that we're going to be able to accomplish everything we plan. Thank you, Sylvia, Renato, and Monique for your questions. Our next question comes from Bruno from Goldman Sachs. Bruno? Thank you, good afternoon, and congrats on the results. My first question is with regard to the company's cash position. You've been operating... with a cash position that is far above the $8 billion that you place as a benchmark for what Petrobras would need for its stated operations. So my question is, do you have an intention to reduce that surplus cash? Is that a margin you intend to keep in your balance? And my next question about exploring reserves, There's a lot of comments made about the equatorial margin, but what about the Pilatas location? Could you give us an update on that project's current status? Thank you, Bruno. The first question is for Fernando, and about Pilatas, that will go to Silvia. Fernando? Hi, Bruno. Thanks for your question. With regard to cash, that is available to the company. It's an interesting topic because when we think about projects and the need for cash flow, we look at projects from exploration to first oil with anywhere from five to seven years. So we cannot look at a three-month window, which is the case for other companies with different turnarounds, but that's not us. So we have short, medium, and long-term views. And our strategic planning, which includes investment indicators, cash flow indicators, how much of that is going to be net, and how much of that we are going to use for our investments. And we also have our starting cash. Since today, We are a company that has a strong cash flow generation. It's natural that we'll have different cycles. We generate cash. It accumulates. It builds up in our treasury. And when we need to make investments, then we distribute that cash because we don't have any interest in holding cash surplus above what we need. That cash is dedicated to our investments. And I remind you that having surplus cash has a cost. And the more surplus you have, the more that cost will be. What we have today is $8 billion, as you mentioned. And so we are currently investigating many different scenarios and alternatives, looking at what flexibility we have or don't, and what our mechanisms are, our methods are for working with lower cash. I personally come from the Treasury Department. And I always have a mind to not work with excessive cash. And we'll have an answer by November 21st. Thank you, Fernando. About the Pilatas Basin, in addition to the Equatorial Margin, another region where we've invested into exploration and we acquired 29 blocks of 26 in partnership with Shell, and three more in partnership with CNU. We are currently acquiring seismic data, which is necessary for all exploration. It's a gigantic region, one of the largest we've ever worked in, and we're currently working on part of that. We've already begun, and we're likely to finish acquisition next year. It's a very large region, as I mentioned. After the seismic data, Then we need to interpret the seismic data, select regions, study the blocks, find out which are more favorable, what wells will be drilled, and IBAMA's intentions and permission for that drilling. We're currently working on one of the first stages, the seismic data, and only after that will we be able to really study that data. But it is a very promising region. But all of these assets are part of that $7.5 billion that we've set aside for the 24 to 28 period. So we are currently at the seismic stage, and we are anxiously waiting for more. And, again, we're not going to wait until the end of the year to begin interpreting the data. No. As and when the data arrives, we are interpreting them. All right, thank you, Silvia. Thank you, Hernando and Bruno for your questions. Our next question is from Bruno from Morgan Stanley. Good afternoon, folks. Thanks for taking my question. I have a follow-up with regard to the topic of cash and shareholders and another one about 2P. With regard to shareholders, If there is enough leeway for a complementary distribution, what would be the timing for that? Would that be within this fiscal year, maybe right after presentation or after the strategic plan? And what would be the approval method specifically? Will a board meeting be called today? And how quickly can we expect that to occur? With regard to Tupi, you mentioned that there is a decline phase. And so I'd like to understand whether that is occurring in line with the 10% that the company mentioned, or whether Pre-Salt has proven to be more resilient compared to other fields, such as Bacillus Campus. And what about resource allocation platforms, and where would that production move to over the next few years?

Well, the first question about the compensation for shareholders to Fernando, and then Silvia will be talking about 2P. Hi, Bruno. How are you doing? Oh, this is what we have seen so far this year. It's only natural to make a decision about extraordinary dividends once the strategic plan is ready, taking into account short-term, mid-term, and long-term volumes. Of course, we'll be considering that distribution alongside the strategic plan if we can. meet the deadline, which is to approve by November 21st. Technically, it is possible to distribute that within the same year by the end of December. Thank you, Fernando. Over to you now, Sylvia. 2P is our beloved giant, and results are better than the average. There's a production decline that is below 10%. way below than those in the Campos Basin. We're now embarking on this challenge of 2P+. It's almost 1,000 barrels a day, but the goal is to reach the 1 million. 2P would like to compete with Uzius that is aiming at reaching a million next year. So, 2P is being refurbished. 2P plus would include more additional wells. We're going to review all the infrastructure to inject water and gas to revitalize those pipelines and maybe the use of another platform. We want to have the smaller decline possible. We don't want to experience what we've seen in the compost basin, which is a major decline, including we have the aim of maintaining the very strong re-injection on our oils so that we can keep the production line declining as little as possible. Thank you, Sylvia and Bruno. Gabrielle from Citi is up next. Over to you, Gabrielle. Hello, Eduardo. Thank you for taking my question. I have two questions, actually. Let me go back to the capital structure. We've been focusing on minimum cash and gross debt, but we disregard leverage. There's a more pessimistic outlook for next year, but I would like to understand what you're considering in terms of capital structure.

What is the size of the influence? This meeting is being recorded.

Investing as much, but there's still a lot of things to do. Equatorial margin, the Pelotas Basin. Can you hear me? We could hear the first part of your question, but we couldn't hear the second question. Can you repeat that, please? The first part is the ideal or the optimum leverage rates. So what should be the ideal point? The second question is looking at investments more directly. Okay. ANP and environmental agencies, licenses, but you had some more squeeze debt services, hiring FBSO, drilling, probes. I think this is a tighter market, and Petrobras has been trying to adjust. So here's my question. How are you going to get away with this problem? FBSO? How can you have more flexibility to hire these vessels in 2025? And what would be the impact of the budget? Would it be around $9 billion? Is this the new level of investments? These are major units, but these are higher numbers than what we've seen in the past. What would the inflation impact be? Thank you, Gabriel, for the question. Fernando addresses the first one and then Renato. Thank you. Cash and the ceiling for the debt is being discussed within the strategic planning cycle. We discuss in depth the company's capital structure, what would be the ideal balance between own capital and third-party capital. We've been discussing that within that strategic planning exercise. Leverage levels should be appropriate to the situation of the company and our business plan. And this will be made public during that strategic planning. Many things are discussed there because this is the most important report at year's end. It can provide several answers. We want to optimize the company's capital structure and try to strike the ideal balance between own and third parties' capital. IFRS 16 will have to acknowledge that as a debt. It's a debt proxy per se. The investment flow changes. If it's our own capital, we have more intensive flows at the start. If it's third-party, I can dilute that over time. Models are different. The characteristics are different. And leasing is the ideal strategy we've adopted. These are good debt to have. All these things are paid out. out of the results. And this is being reflected in the capital structure we are considering for the 2025-2029 cycle. Yes, Gabriel, you're right. We have a hard time leasing these FDSOs that ended up delaying some of these projects. Here's what we did. Fernando and his team helped us approached the market to try to understand what was going on. We found out that these companies had a hard time getting credit lines. So they couldn't come up with a chartering proposal. The other issue was the payments flow, just like I said before. We actually remodeled that model to a neutral cash flow. There's no financing in either direction, companies or Petrobras. So it's a net cash flow. So we changed the chartering model. We're not hiring this type of services for the coming platforms. We're not going to use that alternative. One of them is POT. The CapEx comes out of Petrobras. The operation is run by a company, and then the company owns that asset, and then it's transferred over to Petrobras. So that will help companies be part of that bidding process. We've seen significant growth in rigid EPCIs. That's what we call it, rigid pipelines. But in the past two, we've seen that trend, that downward trend, by bringing in more players to that bid. We have more companies participating, especially because of the contract adjustments we've made, payment terms. So we have five players for the PCI. And we are considering... Petrobras being part of the NAPC, we are going to hire, we're going to charter the vessel and the equipment separately so that we can come up with that contract and still have that alternative to do that in-house instead of going out to the market. As to prices, nickel is one of the top commodities that would impact prices of our equipment and and ducts and pipelines and for all our units. Back in 2022, $48,000 was the price of a ton of nickel. Today it's at $16,000. So our expectation is that these prices are going to come down because of that commodity price. Have I addressed everything? Yes. Thank you, Fernando. Thank you, Gabrielle. Pedro from BTG is up next. Pedro, over to you. Hello. Good afternoon. I have two questions. What are the possible tax deductions in the coming quarters? This has begun to impact Q3 results. Can you give us more color as to how soon that benefit will be used? And the second question is about the investments curve. Results will be announced at the strategic planning announcement, but can you share what is the profile of implementation CapEx? Are you going to have a change in the share of the different CapEx profile when compared to this year's plan to last year's? Thank you, Pedro. Can you address or can you field both questions, Fernando? Yes. Let me talk about the tax authorities. For Q3 cash flow, include these positive impacts. Better tax or income tax. and social contribution, and 800 million U.S. dollars of savings, about 4.2 billion worth of savings, just by paying out those taxes because of that offset in our fiscal pace. And the remainder will be used by Q1, about 3 billion riyals. 500 million U.S., give or take. As to our investments now, we don't envision any major changes as far as their maturity goes. Those that are currently underway, it's still a major amount. even in 2025, it's coming down because you have the implementation cycle, then there's those in prospection. As those that are becoming finalized, that wheel moves around. When we put out strategic plan for last year, that was very important to better understand the maturity levels and whether we were right. in using the necessary resources. So we are certain we can use more cash in that case. And as I said, I don't see any major changes when we turn from one year to the next because our vision is always long-term, four or five years, all the way until we get to the first oil and even for renewable energy. So it's not a very distant timeframe. Well, next question will come from Rodrigo from Santander. Rodrigo, good afternoon.

Hi, good afternoon. First, I'd like to go back a little bit and talk about post-salt. And I'd like to understand the different processes. We recently had maricateria. But I'd like to understand what are the next revitalization regions for 27 and 28? How can we imagine that the company's curve is going to look like in that region, in those fields and regions? My next question is a little bit more difficult, but I'd like to get your take about the capital vocation. When we talk about CapEx and SMNAs, I mean specifically the revitalization ones, and MNAs, such as investment in Namibia, which is a project that we can see is quite advanced. So how would you balance, how would you say that your decision process is like with regard to those organic projects and APIC? Thank you, Rodrigo. Silvia will take the first one and then Fernando. Silvia, please. Actually, Fernando will go first. Hi, Rodrigo. We'll begin with the second question with regard to CapEx and M&As. Well, our internal strategy is to not comment on specific projects. We do reply to questions in a broader sense. With regard to organic investments such as M&As or non-organic, whether or not they are organic, they all go through the very same governance process, the same requirement for returns. All scenarios, including resiliency, they do need to generate positive VPL in order for us to move forward. That's a concept that we have here at the company. Our governance is developed in this way it has been working and of course improvements are always welcome but we do not foresee any changes in that sense in terms of return we see returns of on that investment of course the ones that have higher risk by the book we want higher return and vice versa but there is also a matter of strategic alignment some investments generate synergies. And so they need to be looked at as part of a portfolio and not individually. And so potentially, we can have a smaller return on some investments if they have synergy and if they mesh well with our portfolio. And of course, assuming they are not harming the whole of the company. But if they have a future medium or long-term strategy and synergy, that will make sense. Of course, above all, we always need to have a positive VPL, including in resiliency scenarios. Thank you, Fernando. With regard to post-salt and the compost basin, we want to see today a recovery. We have four units, new units, that we are working in to replenish, renew the post-salt basin in compost. But we're doing great work putting new production wells in place, into production, and we foresee a 200,000 barrel increase in that basin. We also have a goal, that basin overall has a very low recovery rate, approximately 7%. But our goal is to keep the post-salt cover stable, including work in the upcoming wells. The compost basin is really our production model, the template that we follow. It's the benchmark that we will use for Africa, for the equatorial margin. So it's really... teaching us quite a lot, and we're going to increase production to give longer life to that basin. And our aim is to keep producing for many more years at the same levels. Of course, not in the short term, but our goal is to treat this young elder, which is celebrating its 50th anniversary now, Campos Basin, and it really changed the history of Petrobras and of Brazil, and it brought us the knowledge needed to move the Santos Basin forward, and it brought us to where we are today, a global benchmark in oil production. So the compost basin post-salt has our utmost priority to continue to be a role model for all of our basins. Thank you, Sylvia. Thank you, Fernando. Our next questions come from George from Scotiabank. Hello. Congratulations on your results. and thanks for taking my questions. It's been a few months now since the recent gas decree. How did that decree change discussions with the ANP with regard to future projects, and how did it change Petrobras' outlook towards those? And secondly, given the Brazilian deficit in terms of diesel and its current imports, How did Petrobras decide on its supplies geographically and the distribution between small and large players? Does Petrobras tend to concentrate its relationships or opt for a more pulverized type of relationship? Thank you, George. The first question will go to Thomas, and then I think Schlosser will take that second one. Thank you. Thank you, Georgie. Well, with regard to your first question, initially we were a little apprehensive, but our read today is that it will apply to new projects and not to already approved ones. So we are currently awaiting the publication of the 2526 ANP regulatory paper. so that we can actually begin discussions with the ANP. Right now in GAST, we are very much focused on the Senate amendment, the Petain Law, which has some measures that it puts in place to reduce or to impact the petrobras market. But our discussions have all been very positive. we've moved forward quite extensively and we have agreements regarding protecting and preserving Petrobras' own production. And we've also resolved the issue of GNL imports. And we're now looking at the matter of importing from Bolivia and Argentina and the contracts that have already been signed with third parties. So in short, we are monitoring this agenda and we are optimistic that it's all going to be sorted out. Thank you. Thank you. Thank you, Mauricio. Mr. Schlosser? Yes. First, I want to clarify something We do not have a prevalence of imported products in meeting the Brazilian market's needs. On the contrary, ever since we began our new strategic plan, we've been prioritizing Petrobras' assets, including refineries and logistics, in the sense of capturing that margin here in the country. For instance, in 24 to date, it's at 23%. of internal demand for diesel A with various different players importing, including Petrobras. And the main importers are the distributors. Petrobras does also work in the import market in a way that is complementary to domestic production. And we strive for resiliency in a way that is more effective. To do that, we leverage a number of strategic advantages that we currently have. This decision is based on operational planning processes, on the use of computing tools and optimization. The geographic region has many different factors. We have a whole bevy of plans for strategic stops when we need to do so in order to supply markets or client markets in one way or another. So to that end, we use a number of different computer tools. Inventory levels also have a significant impact. We have a number of different opportunities that we capture from abroad, always striving for synergy between our own operations and imports and exports, as well as return shipping, and using regional synergy to improve our results. Now in terms of commercial relationships, we always strive for the best conditions, including logistics. So we always want to be the best option compared to other suppliers, meeting players of many different scales and sizes and fields of operations to whatever extent We can, and we want to keep our operations profitable for all our assets. Thank you. Thank you all. Our next question comes from Liliana from HSBC. Lily? Hi, can you hear me? Yes, perfectly. All right. Thanks for taking my questions. I have just two. The first is about reserves. I'd like to know, what can you do to ensure that the environmental license for the equatorial margin can come as soon as possible? And in the same line, thinking of more reserves, Sylvia has mentioned the revitalization of the Campos Basin. I'd like to understand, wasn't that already included in the 2428 plan? Sylvia, you mentioned 200,000 barrels a day. of potential recovery, I'd like to understand whether that was already included in the strategic plan to be put into the curve for 2.4 billion barrels in 24 to 27. And in the same line of that reserve, do you intend to purchase assets that are already producing in the compost region so that you yourselves can think about optimizing investments and recovering reserves? And do you have any idea of the scope or magnitude? And my second question about downstream field, how have negotiations been working with Yara to provide fertilizers and the sales that Petrobras is going to make for the fertilizer plants? Sure, yes. Thank you Lily for your questions. First we'll answer about reserves and then about the equatorial margin. And then William will talk about fertilizers per se. Hi Liliana, thank you for your question. Yes, we do seek reserves day by day. That is our motto almost. we always want to optimize the different fields. So the campus field is part of that plan, but we are trying to accelerate drilling of those wells as much as possible so that we can really obtain those additional 200,000. But yes, that is already included in the 2428 plan. And the replenishment of reserves. Also, I must mention the equatorial margin. It is truly our challenge. What we can do is try to obtain more from what we have, but the major leap forward comes with new discoveries. And as I said, the equatorial margin, because of how similar they are to other basins, and the depositional model of the different reservoirs, the different production reservoirs such as composts, There is a generation capacity that is very significant and that we can only confirm by drilling. So we have an oil system there in the equatorial margin that once tested and confirmed will yield great results. I always say that people always call it the new pre-salt, but actually the equatorial margin is more similar to the compost basin. Hello, good afternoon, everyone. Good afternoon, Liliana. Thank you for your question. In order to obtain a license, Petrobras has really been sparing no effort. And I'd like to comment that the latest response that Obama gave us was not a negative. What they did send us was a number of questions. to the technical team regarding the proposal that we presented in early August, which was the construction of one more base to protect fauna by Petrobras located in the Ayapoque city limits. And part of what we proposed in our license request to drill the deep water regions in Amapá is in fact a set of services It is a physical fauna protection base, but it is integrated with a large number of different vessels, both ocean-going and riverine, and a significant number of services and specialized technicians, everything specializing in fauna protection. So Petrobras and all of our technical teams have been sparing no effort in bringing to Obama, increasingly making them more and more confident that we do have the capacity for and will obtain this license. And when we obtain this license, we have an exercise that we will perform, which is our pre-operational assessment, and we're ready for that, including by contracting companies that are highly specialized in this sector. So we are quite confident we're going to reply to these latest new questions. We do not in any way, shape, or form see that as a refusal. Thank you, Clarice. Thank you, Sylvia. William?

Yes, we did a non-binding memorandum of understanding. We're now discussing with our RTC with the area of renewables. And there are some opportunities, some interesting assets on Ayara fertilizers. We're considering producing fertilizers from biomethane. Because like Fernando said, it has to be with positive NPV for the three scenarios. For the ANZA case in the state of Parana, we want to resume operations in May 2025. It's run by Petrobras alone. There won't be any partnerships to resume operations there. But we do have a memorandum. with Yara, and we're now discussing possible partnerships in the future. Thank you, William. Thank you, Lily, for the questions. Over to Caio from Bank of America. You have the floor, Caio. Good afternoon. Thank you for taking my question. First off, Petrobras has been saying or has been talking about the possibility of internationalization of, you know, assets in Colombia and Namibia. How to prioritize these assets, especially when you consider the potential of the equatorial margin, the Pilatus Basin, and domestic assets? Would you be able to explore all these fronts at the same time? Or is there any of these projects that would take priority? Once it's been approved, you would turn down the others. And I have a more specific question about the gross debt, $35 billion. Do you believe that it's enough for future projects? Would the company consider... increase that ceiling to accommodate more investments, or maybe by distributing more cash to investors, or both, maybe. Sylvia and then Fernando. All right, Caio. Well, they're not competing projects. We can make investments in all of them, both Equatorial Margin and the Pelotas Spacing, and the investments scheduled abroad. 7.5 billion U.S. in exploration, 3.1 for equatorial margin, 1.3 to international projects. We have wells for these areas, Santo Memphis, this one in South Africa, and also Colombia, Bolivia, and Argentina. So it's part of our strategic planning. These are not excluding projects. So the answer is yes, we can operate in all fronts, and we do hope to do so, including our equatorial margin. Thank you, Sylvia. Fernando, thank you for your question. We've been discussing that in depth in our strategic planning discussions. This is an excellent exercise to help us envision or see many things, what the company thinks about the future. And one of the things is to review the capital structure, our own or third parties, and the combination of both. Everything is being discussed within the strategic planning forum. Once it's been announced, this is one of the items that will be addressed, whether we're going to maintain it or not. Thank you, Fernando, Silvia, and Caio for your questions. Regis from XP asks the next question. Thank you, Eduardo. Thank you for taking my question. And congratulations on the results. I would like to address three topics. One follow-up on extraordinary dividends. I would like to better understand what the debate is. Would you be looking at the cash position in late Q3 and then make a decision based on the cash position and the cash flow that you've already realized, or are you going to prospecting into the future? Let me put it in a different way. Would it make sense to make more than one extraordinary payment per year If you believe that once you report the full year's results for 2024, we had additional cash. So this is my follow-up, the first follow-up question. My second question is simpler. What is the bull's-nose and marrow current status of for 2026, I would like to understand whether you can anticipate, there's room to anticipate, or on the other hand, if there is any risk for delays given licenses or hiring labor and equipment. And finally, my question is about, or the third question is about the Campos Basin. What are the key projects for this 25, 26 timeframe. Sylvia, let me still address the compost spacing question. Again, it remains a priority to revitalize it. Investments in this 24, 28 timeframe is $22 billion. That includes new platforms, Abacor, Barracuda, Cartiga, Jubarty, Maria Quitaria, that is already there, and the partnership we have with MC33, with Ekinor. And that also includes 200 wells scheduled for this 24-28 timeframe. Additional production. can be resumed over 200,000 barrels in the short term, in the 25-26 time frame. This is what we consider for this period. Thank you, Sylvia. Fernando, about extraordinary payments, I would like to make it clear that this is a dynamic decision. What is the cash flow at the start And what the capacity to generate more cash that can ensure our operations and our costs and investments. And of course, pay all our debt. We'll be considering everything. The cash position in T0 is not the only element there. So we need We have to take into account short, mid, and long-term basis. But having a background in treasury, ideally you have a very streamlined cash and at the same time have flexibility. If you have any stress scenario, I do have alternatives to replenish that cash if needed. Thank you, Fernando. Thank you, Regis. Conrado from Safra, over to you. Good afternoon. Thank you for taking my questions. Let me talk about investments in renewables, wind and solar projects. They don't seem to be happening at the speed that we once expected. Do you agree? Or is it because time is uncertain because of the very nature of those projects? Would that change your strategy in some way? Maybe to start with greenfield projects 100% run by Petrobras? And another question about fertilizers, about the FAPENs in Bahia. And Sergipe, are you still negotiating that? Are you going to adopt the tolling model by reviewing some of those conditions, or is there room for other alternatives? So these are my questions. Thank you, Conrado Tomaskin. And then William will address the question about fertilizers. Well, let me address the renewables, wind and solar. There's a very known fact. It's coming to an end now. But up until now, we had an oversupply of energy. You have way more projects than demand. Prices, therefore, came down. Some projects were reduced by the government, by ANIL, and the economy is picking up again. So that price curve is coming back up again. In order to approve a project, we have to have positive NPV. You have to compensate that. So we have the CapEx. We have possible partners. We do have four companies still negotiating that. The projects are out there, but we have to find the ideal situation, the ideal scenario before we approve those projects. I know that those of you that monitor prices, have seen that price change. About running by Petrobras 100%, I don't think we're considering that because the Petrobras cost is somewhat higher to operate renewables. Partnerships, therefore, are the way to go. We might even consider looking at projects that are already in operations. that would smooth things out. So we would put the Greenfield projects in the back burner. That's a possibility that is being considered as we speak. William. Oh, I'm sorry. It's Conrado. Thank you for your question. We've been talking with the Nigel group. We do have some possibilities that are being considered. It has to be a win-win situation. It has to make sense, strategically speaking. We have 8 million tons of urea, and we're not producing anything. Pathen Bahia and Sergipe, in those two units, our capacity is 1.5 to 2 million tons of urea. We're still talking about it has to have some economic feasibility and fit within Petrobras' strategy as far as the fertilizer strategy is concerned. So the answer is yes, we're discussing with them. Thank you, Comrado, for your questions. Rodolfo from J.P. Morgan is up next. Over to you, Rodolfo.

Hi, folks. Most of my questions actually have already been answered. So I have just one. We've been speaking with investors at length, and everyone is increasingly concerned about the price of oil. And, of course, Petrobras has a very low cost, but I'd like to take the opportunity, since we have the company board and senior management here, When looking at the topic of oil stress, what does Petrobras have planned to react to a potentially more aggressive oil scenario? Thank you. Rodolfo? Hi. Hi, Rodolfo. Thank you for your question. I think some important points we need to bring here. can show the resiliency of our portfolio. When we look at a negative scenario, I know resiliency is not a great word to use, but in that situation, we use $45 a barrel, and even in that case, NPV needs to be at least greater than zero. So today at 0.75, we have a significant amount of headroom, And all of our planning, now I should mention we run hundreds of scenarios to investigate whether or not our plan is a good fit. And many of these plans include drops in the price of the dollar. But it's difficult to study any of these by themselves. Now, if we look at... conjugate pairs of scenarios and the drop, we are looking at a $4 to $5 billion a year drop in yearly operating revenue. But the world moves, the world keeps moving. There are many different factors to take into consideration for the aggregate value. But we do run those types of scenarios. And remember that our resiliency scenario is 45, and it does need to pass that test. Thank you, Fernando. Thank you, Rodolfo. We have just two more questions from Vicente from Bradesco. Hi, Vicente. Hi, Eduardo. Thanks to everyone. I have two questions. I'd like to go back on to the question of inflation for equipment and services. In the last couple of months, 12 months, we looked at topside numbers and prices went up by 150%, which was quite worrying. Today, we are competing with Guyana and Namibia and Asia. There's a lot of onshore as well. Petrobras has a matter of scale. and long-term loyalty with the different shipyards. So how does that touch on the topic of capex and inflation, especially considering double-digit inflation at the $2 billion level? And next, I'd like to go back to Fernando and the CARF. You mentioned that there is probably three more billion to arrive by the next quarter. Does that include payouts to go back to the partners, to the shareholders? Has that been addressed in the third quarter? Sure. We'll begin with Fernando and then Renata. Could you repeat the question? He asked about the CARF. Okay, yes. Yes, I understand. Sorry about that. Well, there are two effects regarding the CARF. First is reimbursing the partners. Initially, we had planned $2.6 billion of that. I'm talking about BRL here. Of that, 200 million have not yet been recognized, leaving 2.4 billion reals that have been recognized from June to September. And of those, 1.9 have already become cash that was effectively received by Petrobras in the year to date, in the current year. And there was a reduction in income tax and social requirements in the order of 4.2 because our fiscal basis was reduced by the value of that expense. And we imagine that in the next go-around, that's going to drop by some $500 million, $3 billion in Q1-25. And just before I pass on to Rodolfo, I mentioned the revenue of every $10 in reduction, we have five billion, but that's about operating cash. Okay, just a correction. Right, all right, Vicente. There is not one single reason for that increase. It ranges from projects of ours that are more complex and that has a lot of, we've been doing lots of homework We're back to the drawing board, running benchmarks and critical analyses on our projects. Another reason was the cost of seed stock and inputs. Nickel went up to ridiculous levels because of the war in Ukraine. Another aspect that we've been discussing at length with the market, and as I mentioned here, is I've been recently inspecting our projects in Asia two weeks ago, And I had the chance to speak to many of our vendors, some of whom were actually not even supplying us anymore for various different reasons. And all of them, every single one with no exception, showed an interest in working with us and with partners in Brazil. And we always put that as a condition that we will not do without. We insist on our vendors working with partners in Brazil. So we have an MOU signed in that sense. We've been discussing with the market to understand what they need. We've been expanding our basis, our database of partners as well, and focusing on our projects too. That's basically it. We're in constant talks with the market to understand everything that's going on. Thank you, Renata, Fernando, and Vicente for your questions. And now with Vicente's questions over, we conclude our Q&A session. We would like to thank you all truly for your questions. They really enrich our discussions with investors. Today we had over 1,000 people connected during this webcast, and everyone is all the richer for the questions you ask. If there are any additional questions, we'll be happy to answer them through our IR team who will be at your disposal. For some final remarks, we have Fernando. I'd just like to thank everyone on behalf of Petrobras to all of you for your commitment to joining us and with regard to your technical questions too. And our investor relations team is always at your disposal. If you have any questions at all, as Eduardo mentioned, We're always here and available to answer them. We would be happy to take your questions. Just reach out to us. And thank you once again for joining us in another webcast. This event is already available at the Petrobras Investor Relations site. And we will shortly... make available the audio and the live replay thanks to all your investors have a great afternoon and a great weekend see you next time