Petrobras Financial Performance in 3Q22 [PDF Downloads]

(Petrobras, 3.Nov.2022) — The message from Petrobras CFO Rodrigo Araujo Alves about the company’s third quarter of 2022 results.

Dear shareholders and investors,

Once again, I am pleased to share with you the excellent results achieved by Petrobras in the third quarter of 2022. The numbers make clear the value that a company can generate for society and shareholders by making the right choices. Guided by this commitment, we advanced significantly in the procurement of critical facilities to enable the sustained and profitable growth in oil and gas production, focused on the pre-salt. We signed contracts for three new FPSOs (P80, P-82 and P-83) for the Búzios field, the largest in our portfolio and which will account for about 1/3 of our production in 2026. As a result, only one of the fifteen platforms included in our 2022-2026 Strategic Plan remains to be contracted. The relevance of these contracts is demonstrated by the fact that, in the absence of this additional capacity, we would not be able to exploit our reserves efficiently and profitably, forsaking the economic benefits. Therefore, we are increasing the levels of confidence in achieving the goals of our plan, which is even more important in a scenario of rising costs and challenges in global supply chains.

From the financial point of view, we brought our cash position to a level more compatible with the financial needs of the company, considering that besides cash balances of US$ 6.8 billion, we have access to revolving credit facilities, resulting in additional liquidity to the company should stress scenarios eventually materialize. We managed to keep the company’s capital structure at extremely healthy levels. It is worth highlighting the issuance of R$ 3bn in commercial notes in September, and the signing of a credit line with sustainability commitments in July, in the amount of US$ 1.25bn. The relevance of ESG in our business decisions is also reflected in the approval of the first thirteen projects amounting to US$ 76mn to be incorporated in the decarbonization fund. We estimate that these projects can mitigate 1.05 million tCO2e per year. The decarbonization fund was created in the 2022-26 Strategic Plan, with US$ 248mn allocated to develop solutions, studies and implementation of projects to mitigate our carbon emissions.

Our operational cash generation alongside low debt level and solid liquidity perspectives allowed us to return to society and shareholders dividends of R$ 3.35 per common and preferred share in the third quarter of 2022, totaling R$ 13.80 per common and preferred share in 2022. It is important to highlight that Brazilian society receives about 37% of this total, the largest single portion, in addition to benefiting from tax payments, amounting to R$ 73bn in the third quarter and reaching the record for the first nine months of the year of R$ 222bn, an amount already surpassing the total collected in 2021 (R$ 203 bn). It is worth noting that our shares went up 1,436%1 relative to its lowest level in the previous decade, Additionally, R$ 20.91 in shareholder remuneration was declared or paid out in this time span, including the amount approved in 3Q22. In this period, The Federal Government2 received R$ 113.8bn in cumulative dividends. The fact that on 21 October 2022 Petrobras reached a record market value in reais of R$ 521bn – reflecting the company’s strategic choices and management – should also not be underestimated since it results in higher wealth for society. We cannot fail to emphasize that our operating cash flow is directly related to management efficiency, our strategic decisions and our exposure and alignment to Brent prices. In a business characterized by longterm projects, that require relevant capital expenditures and investments in state-of-the-art technologies, and that depend on highly trained and motivated professionals, it is impossible to be successful if we deviate from the rationality of market prices. Moreover, it is worth remembering that not only our production taxes are referenced to international prices: our expenditures and investments also correlate to them to the extent that our industry’s inflation reflects pricing contexts and our exploratory risk – a key element in deepwater and ultra-deepwater exploration – is also quantified premised on market prices.

Additional to these considerations is the fact that, obviously, we must respect the existing legal framework, represented by laws such as the corporate act, the state-owned company act and the oil law, besides the company’s governance – recently strengthened on the matter of pricing policy, through the formalization of pricing guidelines by our BoD, which establishes a set of criteria and procedures for the approval of capital expenditures, with personal liabilities to the executives involved in the decisions.

Furthermore, Petrobras is not alone in the fuel market: nowadays we have in Brazil a dynamic that encompasses private refining capacity and importers that are necessary to meet oil products demand, which exceeds Brazilian production capacity. Without market prices, there is a risk of shortage of products, with obvious negative consequences for society as a whole. Finally, it is also worth considering another aspect of our strategy that generates social benefits. Petrobras continuously manages its portfolio of assets, holding only to the most accretive to the company. The ones eventually divested foster a positive economic dynamic not only by diversifying market agents but also because the buyers increase investments, jobs generation and income for society. I conclude by reiterating our deep conviction that we are building a Petrobras which is more solid, more resilient and healthier and is able to invest, generate jobs, pay taxes, and return value to society and its shareholders.

Rodrigo Araujo Alves