Petrobras Invites Investors And Analyst To Participate In 3Q:18 Webcast

(Petrobras, 6.Nov.2018) — Petrobras will disclose its 2018 Third Quarter Results on Tuesday, November 6, 2018, before the opening of the market.

The company would like to invite investors and analysts for the conference call/webcast, with broadcast in Portuguese and simultaneous translation to English, as follow:

November 6, 2018 (Tuesday)

2:00 pm (Brasília)

11:00 am (New York)

4:00 pm (Londres)

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Petrobras BOD Approves Payment Of Interest On Capital

(Petrobras, 6.Nov.2018) — Petrobras announced its Board of Directors approved in a meeting held yesterday distribution of early remuneration to shareholders as Interest on Capital (IOC), as defined in art. 9, sole paragraph of its bylaws and in article 9 of Law 9.249/95.

The value to be distributed, in the amount of R$1.3 billion, corresponds to a gross amount of R$0.10/share, to be paid on December 3, 2018 proportional to each shareholder’s stake and to be provisioned in the 4Q:18 financial statements, based on shareholding positions as of November 21, 2018.

Starting from the first business day after the cut-off date (Nov. 22, 2018), shares will be traded ex-interest on capital at B3 and other stock exchanges where the company is listed.

This IOC advance will be imputed to the mandatory minimum dividend (article 53, paragraph 4, of the Bylaws) including for the purpose of payment of priority minimum dividends of preferred shares.

The amount of R$0.10/common share or preferred share related to the IOC will be subject to income tax, by applying the applicable tax rate. Income tax withholdings will not be applied to shareholders whose registered data proves to be immune or exempt, or shareholders domiciled in countries or jurisdictions for which the law establishes different treatment.

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Petrobras Reports Net Income Of R$23,677 Million In 9M-2018

(Petrobras, 6.Nov.2018) — Petrobras reported net income of R$ 23,677 million in 9M-2018, the best result since 2011 and a growth of 371% compared to the 9M-2017, determined by:

– Higher margins in the sales of oil products in Brazil and in exports, both driven by the increase in Brent and the depreciation of the Brazilian Real;
– Increase in diesel sales with expansion of market share;
– Lower general and administrative expenses, keeping the cost control discipline; and
– Reduction of interest expenses due to the decrease in indebtedness.

In September, agreements with DOJ and SEC were signed to close the investigation of the US authorities, totaling R$ 3.5 billion and reducing the risk for the company. Excluding these agreements, as well as the Class Action Agreement effects, the net profit would be R$ 10,269 million in the quarter and R$ 28,012 million in the accumulated of the year.

Adjusted EBITDA* was R$ 85,691 million, 35% higher than in 9M-2017, due to the increase in the sales margins of oil products in Brazil and exports. Adjusted EBITDA margin was 33%

Free Cash Flow * remained positive for the fourteenth consecutive quarter, reaching R$ 37,481 million in 9M-2018, same level as in the previous year, due to the increase in operating cash generation, despite the payments related to the Class Action agreement, and higher investments.

Considering the accumulated profit, the reduction of uncertainties with the Class Action agreements and with the DOJ / SEC and the financial leverage target, a higher anticipation of Interest on Shareholder’s Equity was approved, totaling R$ 0.10 per share, to preferred and common shares, adding to R$ 1,304.4 million. As a result, the anticipation totaled R $ 2,608.8 million.

Top Metrics

TRI: After a significant reduction since 2015, the TRI (total recordable injuries per million man-hours) remained at 1.06, same level as in the previous quarter. The company works for the continuous improvement of culture and safety conditions and adopts the alert limit of 1.0

Financial Leverage: Gross debt reached US$ 88,115 million, while Net debt reached US$ 72,888 million, a reduction of 19% and 14%, respectively, compared to December 2017. The liability management led to the increase in the weighted average maturity to 9 years, with average interest rate of 6.2%. The Net Debt/LTM Adjusted EBITDA* ratio decreased to 2.96 in September 2018, compared to 3.67 in 2017. Leverage* decreased to 50% in this period. Excluding the Class Action agreement, the company would present the ratio of 2.66, on a converging path to the target of 2.5.

Other highlights

– Started production through the FPSOs Cidade Campos dos Goytacazes in the field of Tartaruga Verde,P-74 in the field of Búzios and P-69 in the field of Lula (October)
– Acquisition of the Block of Sudoeste de Tartaruga Verde, in the 5th bidding round of Production Sharing Agreement promoted by the ANP
– Celebration of partnerships with Equinor for business in the offshore wind energy segment in Brazil, with Total in the renewable energy segment, with CNPC in the Comperj project and Marlim cluster and with Murphy in the Gulf of Mexico
– The company maintained its position as a net exporter, with a balance of 272 thousand bpd in 9M-2018
– Received a total of R$1.6 billion related to the second phase of the diesel subsidy program
– Adopted the complementary hedge mechanism for gasoline, allowing for less frequent price readjustments
– The company received R$1.7 billion recovered by the ”CarWash” operation
– Signed an Integrity Pact to improve transparency and corruption prevention measures
– Adopted the new Employee Carrer and Compensation Plan, to improve mobility and meritocracy
– Resumed the operation of the Paulínia refinery (Replan) with 50% of its capacity, following an accident without victims.*

Access the information about our Quarterly Results

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Argentina Announces Offshore Exploration Round 1

(Energy Analytics Institute, Aaron Simonsky, 6.Nov.2018) — Argentina’s Energy Secretariat announced a tender for exploration activities offshore the Argentine continental shelf.

The activities will expand Argentina’s exploration and exploitation potential and potentially increase hydrocarbon production in an effort to ensure domestic supply.

Exploration permits cover around 200,000 square kilometers, and represent a total of 38 blocks in the Austral Marina, West Falklands and North Argentina basins, announced Argentina’s Treasury in an official statement on its website.

Details of the tender were published in the Official Gazette through the Resolution 65/201: Offshore International Public Competition No. 1.

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Scania Announces Record Gas Bus Delivery To Bogotá

(Scania, 6.Nov.2018) — In its largest gas bus delivery ever, Scania will supply 481 Euro 6 gas buses – the cleanest and most silent buses on the market – for the renewal of Bogotá’s TransMilenio Bus Rapid Transit system.

Bogotá is replacing its earlier Euro 2 and Euro 3 buses with the latest in low-emission technology. Scania’s Euro 6 gas buses represent a huge leap in cleaner technology compared with these older-generation buses but also in relation to the more recent Euro 5 emissions standards. In operations with the new Scania gas buses, carbon emissions will be up to 20 percent lower while emissions of particulate matter will be two to three times lower. Emissions of nitrogen oxide are four to five times lower than Euro 5.

“We are very pleased with the outcome because this translates into significantly less pollution in Bogotá,” says Juan Carlos Ocampo, Scania Colombia’s Managing Director. “The reduced emissions of particulate matter, nitrogen oxide and noise will contribute to a higher quality of life for Bogotá’s residents.”

The bus network, originally established in the early 1990s, encompasses 12 lines totalling 112 kilometres, with 1.7 million passenger journeys every day. The public tender for the renewal programme has focused on six of the 12 lines and following the tendering process, the operator SI18 will now provide services for the three lines Suba, Calle 80 and Norte with 481 Scania buses. They will go into operation during the first half of 2019.

The 179 articulated Scania K320 IA 6x/2, (320 hp engines), buses have a capacity for 160 passengers and the 302 bi-articulated Scania F340 HA 8×2 (340 hp engines) have a capacity for 250 passengers. All buses will be bodybuilt by Busscar.

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Rosneft Says Venezuela’s Bill Falls To $3.1 Billion

(Reuters, 6.Nov.2018) — Rosneft was owed $3.1 billion by Venezuela as of September 30, down from $3.6 billion on June 30, Russia’s largest oil producer said on Tuesday.

It also said it owes $26.8 billion to traders under prepayment deals for its oil as of Sept. 30, down from $29.3 billion as of June 30.

(Reporting by Vladimir Soldatkin; editing by Jason Neely)

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Fitch’s Mexico Outlook Downgrade Based On Energy Policy Uncertainty

(NGI, Andrew Baker, 6.Nov.2018) — Fitch Ratings late last month revised its outlook for Mexico, citing, among other things, potential energy policies to be implemented by incoming President-Elect Andrés Manuel López Obrador.

Fitch credit analysts retained their investment grade BBB+ rating on Mexico’s sovereign debt, but lowered their long-term, foreign currency issuer default rating (IDR) outlook to negative from stable.

Fitch cited uncertainty over the future of energy policy for Petroleos Mexicanos (Pemex) by under the incoming administration, as well as cancellation of a $13 billion airport as factors that drove the decision.

“Proposals for large capital investments by state-owned oil company Pemex, whose balance sheet and standalone creditworthiness have been under pressure (resulting in Fitch revising the outlook on the company’s rating to Negative), add to the growing risk related to contingent liabilities for the sovereign,” analysts said.

López Obrador, who takes office Dec. 1, has pledged multibillion-dollar investments to upgrade existing oil refineries and to build another one, in order to ensure energy security.

Critics have argued that Pemex, the most indebted oil company in the world, is in no condition to take on a project of this magnitude and that it should instead focus on reversing a 15-year oil and gas output slide through partnerships with the private sector.

López Obrador has set a goal of boosting oil output to 2.5 million b/d in 2024 from 1.8 million b/d currently, but he has objected to bid rounds that award operating stakes in upstream acreage to international oil companies.

The president-elect said recently that he will suspend upstream bid rounds until they begin to “show results.” The next tenders are scheduled for February.

Investors were further spooked by a bill introduced in the lower congressional house by a member of López Obrador’s party to bring independent energy regulators Comisión Nacional de Hidrocarburos (CNH) and Comisión Reguladora de Energía (CRE) under the control of the executive branch. The move, some analysts said, would give an unfair advantage to Pemex and scare away private capital from Mexico’s newly liberalized energy sector.

The most cataclysmic measure taken by the president-elect so far, however, was late last month, when he affirmed plans to cancel the construction already underway of Mexico City’s international airport, in which $100 million to date has been invested.

“The decision to cancel the construction of a new airport for Mexico City sends a negative signal to investors,” Fitch analysts said.

Canceling the project has stoked fears that a similar fate could await the 107 oil and gas contracts awarded through bid rounds since the 2013 energy reform.

López Obrador has argued that the key to restoring oil and gas output is to give Pemex a bigger budget and more autonomy. Proponents of the reform, meanwhile, have countered that Pemex should take advantage of bid rounds and public-private joint-ventures to share risk and technological know-how with the private sector, particularly in areas such as unconventional and deepwater exploration and production (E&P), in which Pemex lacks experience.

Although Pemex swung to a profit of 27 billion pesos ($133 million) in the third quarter from a year-ago loss of 102 billion pesos, production continued to slide.

Local think tank Pulso Energético highlighted in a recent note that Pemex net debt stands at $14/bbl of proven reserves, up from $9.20 in 2015.

“Oil production, dominated by state-owned Pemex continued to decline in 2018, bucking expectations that it would stabilize,” Fitch analysts said. The transition team for López Obrador “has been reviewing contracts signed with private oil companies and has sent mixed signals on the energy reform, which allows private oil companies a bigger role in the industry in return for higher investment and production.”

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Argentina Switches On 70-MW Wind Park In Chubut

(Renewables Now, 6.Nov.2018) — Argentina’s Ministry of Energy and Mines announced on Monday that on November 2, the country switched on a 70-MW wind park in Chubut province.

Argentine thermal and renewable energy group Genneia SA was the developer behind the Parque Eolico Puerto Madryn I (PEM I), as it is named. The company invested USD 122 million (EUR 106.93m) in the project.

Spread in an area of 2,000 hectares, PEM I broke ground in August 2017. It is comprised of 20 V126 wind turbines supplied by Denmark’s Vestas Wind Systems A/S (CPH:VWS).

The farm should be able to generate 300,000 MWh per year, capable of meeting the annual demand of 100,000 local homes. Currently, there are 91 renewable energy projects in commercial operation or under construction that represent 3,334 MW, with an estimated investment of USD 4.75 billion, the ministry’s Undersecretariat for Renewable Energy noted.

(USD 1 = EUR 0.88)

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Five Groups May Join Eletronuclear Complete Power Plant Project

(Reuters, 6.Nov.2018) — Five groups are considering whether to partner with Brazil’s state-controlled Eletronuclear to resume construction of nuclear power plant Angra III, already partially built by the government, newspaper Valor Econômico reported on Tuesday, citing unidentified sources.

The foreign companies’ interest in the venture grew after a government agency raised the price of the energy produced at the plant to 480 reais per megawatts per hour from 250 reais, Valor reported.

The interested groups are China’s National Nuclear Corporation and State Power Investment Corporation, South Korea’s Kepco Engineering and Construction, Russia’s State Atomic Energy Corporation, known as Rosatom, and a consortium comprised of France’s Electricité de France and Japan’s Mitsubishi Heavy Industries , the paper said.

Current Brazilian President Michel Temer’s government is organizing the process, but contracts would probably be signed under the administration of President-elect Jair Bolsonaro, who will take office in January.

Eletronuclear has said it wants to resume construction in 2020, so the official rules for the choice of a partner should be published early next year, according to the paper, citing a source with knowledge of the matter.

The companies said to be interested in the venture did not immediately reply to requests for comment.

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World’s Most Indebted Oil Company Reports 20-Fold Increase In Profit

(Oilprice.com, Tsvetana Paraskova, 6.Nov.2018) — Brazilian state-run oil firm Petrobras reported on Tuesday a net income for Q3 surging more than 20 times compared to the profit for the same quarter last year on the back of higher oil prices.

Petrobras reported a consolidated net income of US$1.77 billion (6.644 billion Brazilian reais) for Q3 2018, up from just US$70 million (266 million reais) for Q3 2017. Compared to the second quarter of 2018, Petrobras’s net income dropped by 34 percent, due to higher net financial expenses and increased income tax expenses, the company said in its earnings release. In the second quarter of 2018, Petrobras had reported an even stronger surge in earnings, as net income jumped thirty-fold on the year, benefiting from the rising oil prices.

The third quarter this year was the third consecutive quarter in which Petrobras has booked a profit, it said.

Petrobras’s domestic crude oil and natural gas liquids (NGLs) production, however, dropped in the third quarter—at 1.937 million bpd, it was 6 percent lower compared to Q2 2018 and lower than the 2.134 million bpd production in Q3 2017.

The company attributed the lower production of oil, NGLs, and natural gas mostly to maintenance and the sale of a 25 percent stake in the Roncador field, partially offset by the start of production of the FPSO Cidade dos Campos dos Goytacazes in the Tartaruga Verde Field.
For the nine months January to September, Petrobras’s crude oil and NGL production in Brazil declined by 6 percent to 2.028 million bpd.

For the nine months to September, Petrobras reported a net income of US$6.3 billion (23.677 billion reais), the best result since 2011 and a 371-percent surge compared to the same period of 2017, thanks to higher oil prices, the depreciation of the Brazilian currency, higher diesel sales, and lower general and administrative expenses.

Petrobras, considered the most indebted oil company in the world, said that its net debt was US$72.888 billion at end-September, down by 14 percent compared to end-2017, and down from the US$73.662 billion net debt at end-June 2018.

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YPF Reports New Incident At Work-Over Well In Loma La Lata

(Energy Analytics Institute, Aaron Simonsky, 6.Nov.2018) — The incident involved an estimated 0.6 cubic meters of water, gas and mud, and occurred on Friday November 2, 2018 during conditioning activities at a work-over well in Loma La Lata.

The incident was immediately controlled, reported online media AdnSur.

YPF didn’t respond to emails for comments or clarification regarding the incident.

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