Petroleo Brasileiro S.A. Petrobras ADS

They had no crews, so we changed this procedure. So now they have a crew. They go straight to their location or their sites, and that also anticipates production and operation of more oil, again, to benefit our investors, government or private sector investors. That's another improved procedure that ultimately means more oil in the tanks, in our tanks. We also had more natural gas supply offered to the market. We increased our gas production by 15% to the market. And this was a result of our Route 3 reaching the state of Rio de Janeiro, in the Boa Ventura complex. And this also means that in addition to Route 3, there has been a lot of effort put into processing this gas in a gas processing unit in the Boa Ventura complex, in the Itaburayi hub. Ladies and gentlemen, we are really happy to have All this good news to you. These deliveries are under our control. We're totally in control of them. So we are delivering them. We're improving on them. And you can rest assured that in our daily work, that means continuous improvement. And this is done. When the company realizes that there's a challenging scenario, geopolitical challenges that are ahead of us when we consider the price of our final product, crude oil and gas. As I said, these factors are not controlled. The price of crude oil is not under our control. However, mitigating effects of these price variations, this is indeed under our control. So we are responding by increasing production with also increased production and also a very strong perspective in cost reduction. In the second quarter, you know, the second quarter was impacted by a falling oil price that was around 68 U.S. dollars per barrel. That was 10 percent down as compared to last year, last semester. And we responded by increasing our production by 5 percent. oil price falls in our balance sheets. We are now working hard and you can rest assured that we're doing this to make our projects increasingly more competitive in this scenario of uncertainty and in this scenario of price falls of our final product. And the major product is crude oil. You will see that we will have more earnings in our next business plan that will be presented by the end of the year. So we are analyzing all possibilities of simplifying and optimizing our projects to reduce costs and also to increase efficiency gains.

Having said that, I'd like to repeat what I mentioned in the previous webcast and what I have been saying since the beginning of my speech today. We are absolutely committed to looking for the best possible results for our investors and for the Brazilian society as a whole. We will generate value even in challenging times. scenarios in terms of oil prices. Our projects will be profitable and valuable for the portfolio of our company. We will dedicate to the things we do best, which is to explore and produce oil and gas and its products, selling these products efficiently and with quality. always reconciling all these efforts, considering our needs to provide a fair energy transition. Thank you very much for joining us. And now we will proceed to the presentation of our CFO, Fernando Melgarejo, who will talk about the financial results of our company. Fernando, the floor is yours. Good morning, everyone. Good morning to those who are listening to us. And I'd like also to greet everyone from the Spaniel. Thank you for joining us for another Petrobras earnings webcast. And I'll begin by presenting the key figures for the second quarter of 2025. Well, Magna has already highlighted in her opening remarks the remarkable growth in our production this quarter. On this slide, you can see that while brand prices declined by 10% quarter over quarter, going from from 60.7% to 75%, we had an increase of 5% with new production systems and improved operational efficiency across our fields. As our CEO mentioned, the first half of the year, we already reached the midpoint of our 2025 production target, which is 2.3 million barrels per day. Commercial gas production also grew significantly. Petrobras increased its gas supply significantly to the market by 15%, mainly due to the progress of the Rhoda III pipeline and the Boa Ventura gas processing unit. When considering total production, we reached a new record of 4.2 million barrels of oil equivalent per day. This increased production volume in quarter two was key to delivering financial results in line with the previous quarter. It was only made possible through consistent complex execution and strong engagement from our workforce. And our complex has been discussed in many situations. If it would be productive, it would have an impact on our production. And this is being presented now. Let's move on to slide six. Our operational, slide six. So we reported net income, excluding one of events of 4.2 1 billion US dollars and EBITDA also excluded one of events of 10.2 billion US dollars. These figures are on par with the previous quarter when brand prices were 10% higher. In other words, our strong operation results offset external factors which were beyond our control. For example, the price of the commodities. Efficient management of our commercial strategy also positively contributed to the results. we implemented three diesel price reductions in the quarter two and one gasoline price reduction during the period, maintaining competitive margins and profitable operations and also the company's share. Operating cash flow was 7.5 billion US dollars. Here, we saw a decline compared to the previous quarter, mainly due to known events such as PIS, COFINS, tech credit related to last year's tax transaction, which had positively impacted quarter one, 25 results, but was not the case for this quarter. Additionally, the payment of variable remuneration, which had a higher rent, which is the basis to payment to government shareholders and payment of variable remuneration. which usually impacts company cash flow in the quarter two after the shareholders meeting. All events that will not happen in the next quarter. Additionally, in quarter two, we had higher selling expenses, mainly due to increased crude oil export volumes because of our production. Slide seven, here we present our debt history. you can see that both financial debt and chartering remain under control and that over 60% of total indebtedness relates to leases of platforms, vessels, and rigs, which, according to accounting standards, must be recognized as debt. It is important to remember that this lease portion refers to assets generated production and, consequently, revenue for the company. When we consider commissioned this year the FSOs Alexandre de Gouman and Almirante Tamandaré, both chartered platforms, we had to record lease liabilities as debt. These two platforms added 3.7 billion to our debt this year, but on the other hand, we added 207,000 barrels per day of production capacity for our company. Considering other vessels and amortizations, leases added approximately 5 billion US dollars to our debt in the first half of 2025. So these leases are associated with more capacity, more production, and therefore they add revenue to our company. Well, regarding financial debt, this quarter we highlight a successful public offering of the ventures, totaling 3 billion Brazilian reals. It was successful with high demand and allowed us to raise funds at the local market, something we hadn't done for eight years, with competitive costs in line with our liabilities management strategy. Slide eight, we're going to talk about CapEx. We invested 4.4 billion US dollars in quarter two, which added to the first quarter leads to 18.5 billion US dollars for this year. We are, according to our plan, of our guidance, which is 18.5 for the year. We have a firm commitment to the market to execute what we planned, accelerating value, generating deliveries, and anticipating revenue. Due to these efforts, we started production from the FPSO Alexandre de Guzmão, starting over two months ahead of schedule. As our CEO has already mentioned, the Almirante da Mandaré, a huge platform, began operating in February, has already reached 200,000 barrels with only four producing wells. Soon we will reach peak of production. In 2025, we have already connected more wells than in the entire previous years. 48 wells, including 30 producing and 18 injecting wells. In the same period last year, we had 31, 12 producers and 19 injectors. This is therefore a complex that is very much focused on production. Let's now proceed to slide number nine. Petrobras investment has been bringing benefits to the company, its shareholders and society. We are talking here about more production and consequently more operational cash flow. And we are now an important exporter of commodities, contributing to Brazil's trade balance. It's not just investment in new projects, we are improving efficiency, adjusting our maintenance schedules and managing reservoirs efficiently. All this contributes to the production curve growth. Our CEO mentioned in her opening remarks production in July, which exceeded the previous quarter. We are talking here about an increase of 380,000 barrels per day only in seven months. With this trend and ongoing efforts, we expect average oil and gas production in 2025 to be at the upper end of the target range, representing about 100,000 barrels per day above the midpoint. At a price of 70 US dollars, in US dollars, we will have an additional 2.5 billion US dollars revenue. And this... Current plan production curve carries less risks today than when the plan was approved. In other words, for the same confidence level, we would have a higher curve today. Slide number 10. We have talked about CapEx production, and now we will talk about dividends. I want to remind you of the strength of our shareholders' remuneration policy. The formula ensures dividends align with different oil prices without compromising the company's financial robustness. Accordingly, we apply the formula set forth in our policy and we will distribute 45% of a free cash flow from quarter two. Therefore, the board approved a distribution of 8.7 billion Brazilian Reals, equivalent to 0.67 per share to be paid in two equal installments in November and December this year. Well, this concludes my presentation and I thank you all again for your attention. So along with the other directors, I'm available to answer your questions. Now I hand over to Eduardo who will then continue with the Q&A session. Thank you, Fernando. Thank you, Magda. So let's start with the Q&A session. Can you hear us? You can proceed with the question. Good morning. Thank you very much for the call. So I will align Capex results with what you mentioned yesterday, so that you work with natural gas distribution. As CEO mentioned, Petrobras has been focusing CapEx, particularly on upstream delivering operational results. We'd like to understand what we can expect in terms of new investments in the next few years and how this is integrated to the business plan, including strategy from the board and timing for this operation.

Thank you for the question.