0001564590-19-005670.txt : 20190301 0001564590-19-005670.hdr.sgml : 20190301 20190301092428 ACCESSION NUMBER: 0001564590-19-005670 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20190228 FILED AS OF DATE: 20190301 DATE AS OF CHANGE: 20190301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETROBRAS - PETROLEO BRASILEIRO SA CENTRAL INDEX KEY: 0001119639 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 000000000 STATE OF INCORPORATION: D5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15106 FILM NUMBER: 19646947 BUSINESS ADDRESS: STREET 1: AVENIDA REPUBLICA DO CHILE 65 CITY: RIO DE JANERIO RJ BR STATE: D5 ZIP: 20035-900 BUSINESS PHONE: 55-21-534-4477 MAIL ADDRESS: STREET 1: AVENIDA REPUBLICA DO CHILE 65 CITY: RIO DE JANERIO RJ BR STATE: D5 ZIP: 20035-900 FORMER COMPANY: FORMER CONFORMED NAME: BRAZILIAN PETROLEUM CORP DATE OF NAME CHANGE: 20000717 6-K 1 pbr-6k_20190228.htm 6-K pbr-6k_20190228.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

 

 

FORM 6-K

 

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the

Securities Exchange Act of 1934

 

For the month of February, 2019

 

Commission File Number 1-15106

 

 

 

 

 

PETRÓLEO BRASILEIRO S.A. - PETROBRAS

(Exact name of registrant as specified in its charter)



Brazilian Petroleum Corporation - PETROBRAS

(Translation of Registrant's name into English)



Avenida República do Chile, 65 
20031-912 - Rio de Janeiro, RJ
Federative Republic of Brazil

(Address of principal executive office)


Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. 

 

Form 20-F ___X___ Form 40-F _______

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes _______ No___X____

 

 

 


`

FINANCIAL REPORT

2018 RESULTS

 

 

 

Message from the President

Rio de Janeiro, February 27, 2019

 

The agreements with the US Securities and Exchange Commission (SEC) and the US Department of Justice (DoJ) and the sale on January 30, 2019 of the Pasadena refinery - whose acquisition had become a symbol of corruption in Brazil - marks the end of a painful cycle for Petrobras, its shareholders, employees and Brazilian society, in which the company was the victim of prolonged looting perpetrated by a criminal organization.

Petrobras' performance over the past year was undoubtedly the best in many years, which includes achieving some historical records, involving free cash flow and adjusted EBITDA, and the interruption of four years of losses. An effective liability management process has extended the average debt maturity from 7.14 years in 2015 to 9.14 years in 2018, which helps to mitigate refinancing risks. In February 2019 our market capitalization surpassed US$ 100 billion, which puts us back in the position of the largest company in Latin America.

We are celebrating the good results of 2018, but we can not limit ourselves to the internal vision, the comparison with ourselves even in previous years. Broadening our horizon for the global oil industry we humbly acknowledge that we are far short of the desirable. We can not be satisfied with the current situation, with much to do and many challenges to overcome. Nonconformity forces us to focus on five strategic pillars.

We have to substantially improve the allocation of capital by focusing on the assets in which we are the natural owner and promoting healthy capital competition among our investment projects. A company operates at a loss until it manages to remunerate the capital employed in its operations, which we have not been able to do yet. Our proven oil and gas reserves reached 9.6 billion barrels of oil equivalent (boe), according to the SEC criteria. This implies a recovery of 125% of the volume produced (excluding the effect of fields divestments) and a ratio of proven reserves / production of 11.1 years. The important thing to note is that most of these reserves originate from world-class assets such as the pre-salt, the frontier of oil exploration in the world where Petrobras is the undisputed leader and natural owner. Focusing on these assets, low cost, high quality and productivity and long life, represents enormous potential for value creation over time. In the oil industry the exploration of world-class assets is one of the keys to a company's success.

The generation of economic profit requires greater agility in the decision-making process, which is being pursued in 2019 with the indispensable care to the high standards of corporate governance and the strict compliance standards implemented in Petrobras in recent years. In this context, it is worth mentioning that, for example, delays in project execution are generally the largest source of reduction of rates of return.

With the help of innovations we are developing initiatives to shorten the time interval between the beginning of the exploratory activity and the first oil and also the duration of the ramp-up phase of the E&P projects, which will contribute to the increase of their return rates. We must constantly seek the investment grade rating and the reduction of the cost of capital through financial deleveraging and transparent relationship with the global financial markets. The exposure of cash flow to the cyclical volatility of oil prices requires its producers to have low leverage. Our gross debt decreased significantly from US$ 126.3 billion in 2015 to US$ 84.4 billion at the end of 2018, but is still high compared to the current cash generation capacity: gross debt / operating cash flow of 3.2x and gross debt / Adjusted EBITDA of 2.7x. We will act simultaneously on the numerator and the denominator of these fractions: reduce the debt and work for the growth of the cash flow through increase of production and cost cuts.

In the same way we must permanently seek low costs, a basic condition in any company for the generation of value regardless of the economic cycle and most important still in the oil industry, typically with high exposure to the cycles of global economic activity. Digital transformation, employing massive digitization, data analytics, and artificial intelligence is essential for generating efficiency gains and lower costs.

Respecting people and the environment and preserving the safety of our operations should be a golden rule. Oil and gas exploration and production activity is exposed to a wide range of risks, including operational risks that once materialized have enormous potential for destruction of value and even threaten the survival of a company. We work tirelessly to minimize them and at the same time strengthen our ability to respond to any negative events.

The rate of recordable injury rate reached 1.01 accidents per million man-hours, with a decrease of 6.5% over 2017. Despite the progress in this indicator, the occurrence of six fatalities saddens and embarrasses us. The loss of human life, whatever its explanation, is unacceptable. Our permanent goal is zero fatalities.

The objective of maximizing value for shareholders can under no circumstances dispense with attention to the safety of people and operations and the preservation of the environment nor result in underestimation of risks for which goals are achieved.

We believe that our transformational change agenda is capable of creating considerable value for shareholders and for Brazil in the future. We can say then that the best days of Petrobras are still ahead of us.


1

 

 

 


`

2018 Highlights

 

Free cash flow reached a record of R$ 54.6 billion, 2018 being the fourth consecutive year of positive free cash flow after many years of negative values.

 

Record adjusted EBITDA of R$ 114.9 billion, an increase of 50% over 2017.

 

Net income of R$ 25.8 billion, R$ 1.98 per share, the first in a series of annual losses since 2014.

 

This result, which includes negative effects of R$ 10 billion in special items, was also influenced by the significant increase in average prices (Brent) of 31%, the depreciation of the real vis-à-vis the US dollar of 14%, reduction of interest paid due to the decline of debt (R$ 1.1 billion) and the accounting gain derived from the regularization of credits against Eletrobrás (R$ 5.3 billion).

 

Total compensation to shareholders will be R$ 7.1 billion, of which R$ 0.2535 per common share and R$ 0.9225 per preferred share.

 

Our gross debt decreased significantly, from US$ 126.3 billion in 2015 to US$ 84.4 billion at the end of 2018.

 

Looking to make the company's capital allocation more efficient, the availability of cash, which was already US$ 25 billion in the past and reached US$ 15 billion in 2018, is expected to converge to around US$ 10 billion together with revolving credit lines.

 

Investments were made in operations maintenance and production growth in the amount of US$ 12 billion against US$ 13.6 billion in 2017. At the same time, disinvestments provided cash inflows of US$ 5.8 billion.

 

Oil and gas production reached 2.63 million barrels of oil equivalent per day (Mboed), 2.53 Mboed in Brazil and 101 thousand boed in other countries, 5% lower than in 2017.

 

Production in the pre-salt layer accounted for 45% of total oil and gas, post-salt deep water and ultra deep water 39%, shallow water 5% and land fields 11% versus 40%, 43%, 6% and 11%, respectively, in 2017.

 

Our production has been practically stagnant during the last five years, which is due to several factors, such as the absence of exploratory auctions in Brazil for five years (2008-2013), systematic delays in the development of partly associated with projects that had rigid demands of local content and the natural decline of mature onshore and shallow water fields.

 

The average lifting cost in Brazil was US$ 10.90 per barrel, a reduction of 3.3% compared to 2017.

 

The average lifting cost tends to decline as the pre-salt fields, costing around US$ 7 / boe, continue to increase their share in Petrobras' total production, initiatives to increase productivity and cost cuts have more success.

 

Four new production systems started production, three in the pre-salt in the Santos Basin (P-74, P-75 and P-69) and one in the Campos Basin (FPSO Cidade de Campos dos Goytacazes).

 

In February 2019 two production systems - P-67 and P-76 - began to produce in the pre-salt in the Santos Basin.

Highlights of the 4Q18

 

Net income was R$ 2.1 billion, reflecting the reduction in Brent and margins in the sales of oil products and the occurrence of special items, which totaled R$ 6.3 billion, such as an agreement with ANP related to the Parque das Baleias, impairment and losses with contingencies. On the other hand, there was a growth of 6% in production and 45% in oil exports. Adjusted EBITDA was R$ 29.2 billion and Free Cash Flow R$ 17.1 billion. If special items were excluded, net income would be R$ 8 billion and adjusted EBITDA R$ 31 billion.


2

 

 

 


`

Top Goals

We have met our security metrics and exceeded our financial metrics. The net debt to Adjusted EBITDA * ratio decreased to 2.34, lower than the target of 2.5 established for 2018, and net debt * reached $69.4 billion, a reduction of 18% over 2017. In addition, the active management of debt made it possible to lengthen the average term to 9.14 years, with an average rate of 6.1%.

 

2017

2018

TARGET 2018

Net Debt / Adjusted EBITDA

3.67

2.34

2.5

TRI

1.08

1.01

1.0*

*alert threshold

 

 

 

 

Perspectives **

In 2019, we projected an increase in oil and natural gas production to 2.8 million boed, with 2.3 million bpd of oil in Brazil. This growth will be made possible by the ramp-up of the newly installed platforms and the start-up of the P-77 and P-68. We will continue to divest and reduce financial leverage, maintaining capital discipline and optimizing portfolio, debt and cash management.

 

 

 

 

 

 

 

* See definitions of Free Cash Flow, Adjusted EBITDA and Net Debt in the Glossary and their reconciliations in the Liquidity and Capital Resources sections, Reconciliation of Adjusted EBITDA and Net Indebtedness.

Consolidated accounting information audited by independent auditors in accordance with international accounting standards (IFRS).

** These presentations may contain forward-looking statements. Such forward-looking statements only reflect expectations of the Company's managers regarding future economic conditions, as well as the Company's performance, financial performance and results, among others. The terms "anticipates", "believes", "expects", "predicts", "intends", "plans", "projects", "objective", "should", and similar terms, which evidently involve risks and uncertainties that may or may not be anticipated by the Company and therefore are not guarantees of future results of the Company and therefore, the future results of the Company's operations may differ from current expectations and the reader should not rely exclusively The Company does not undertake to update the presentations and forecasts in the light of new information or future developments, and the values reported for 2018 onwards are estimates or targets. BR GAAP or IFRS. These indicators do not have standardized meanings and may not be comparable to indicators with a similar description used by or We provide these indicators because we use them as measures of company performance; they should not be considered in isolation or as a substitute for other financial metrics that have been disclosed in accordance with BR GAAP or IFRS. Notice to US Investors-The SEC only allows oil and gas companies to include in their filed reports proven reserves that the Company has proven by production or conclusive training tests that are economically and legally feasible under current economic and operating conditions. We have used some terms in this presentation, such as findings, that SEC guidelines prohibit us from using in our archived reports.

 

 

 

 

3

 

 

 


`

 

 

 

 

 

2014

2015

2016

2017

2018

Oil Production

k boed

2,669

2,787

2,790

2,767

2,628

Revenue

R$ billion

337.3

321.6

282.6

283.7

349.8

Gross Profit

R$ billion

80.4

98.6

90

91.6

124.5

Net Income

R$ billion

-21.6

-34.8

-14.8

-0.4

25.8

Adjusted EBITDA

R$ billion

59.9

76.8

88.7

76.6

114.9

CAPEX

R$ billion

81.8

70.8

48.1

42.4

41.2

Free Cash Flow

R$ billion

-23

44.2

41.6

44.1

54.6

Gross Debt

R$ billion

351

493

385.8

361.5

326.9

Gross Debt/OCF

R$/R$

5.64

5.69

4.30

4.18

3.41

Gross Debt/Adjusted EBITDA

R$/R$

5.86

6.42

4.35

4.72

2.85

Adjusted EBITDA/boe (E&P)

US$/boe

35.0

14.7

15.4

20.2

29.5

 

 

 

 

 

*See definition of Adjusted EBITDA, Gross Margin, Total capital expenditures and investments in glossary and the respective reconciliation in Reconciliation of Adjusted EBITDA.

 

4

 

 

 


* Table 01 - Main Items and Consolidated Economic Indicators

 

R$ million

 

Jan-Dec

 

 

 

 

 

2018

2017

2018 x 2017 (%)

4Q-2018

3Q-2018

4Q18 X 3Q18 (%)

4Q-2017

Sales revenues

349,836

283,695

23

92,720

98,260

(6)

76,512

Gross profit

124,543

91,595

36

31,503

34,644

(9)

25,203

Operating expenses

(61,586)

(55,971)

(10)

(20,046)

(17,625)

(14)

(26,617)

Operating income (loss)

62,957

35,624

77

11,457

17,019

(33)

(1,414)

Net finance income (expense)

(21,100)

(31,599)

33

(5,366)

(5,841)

8

(7,598)

Consolidated net income (loss) attributable to the shareholders of Petrobras

25,779

(446)

5880

2,102

6,644

(68)

(5,477)

Basic and diluted earnings (losses) per share attributable to the shareholders of Petrobras

1.98

(0.03)

6700

0.16

0.51

(69)

(0.42)

Market capitalization (Parent Company)

316,093

216,045

46

316,093

298,477

6

216,045

Adjusted EBITDA*

114,852

76,557

50

29,160

29,856

(2)

12,986

Adjusted EBITDA margin* (%)

33

27

6

31

30

1

17

Gross margin* (%)

36

32

4

34

35

(1)

33

Operating margin* (%)

18

13

5

12

17

(5)

(2)

Net margin* (%)

7

7

2

7

(5)

(7)

 

 

 

 

 

 

 

 

Total capital expenditures and investments*

49,370

48,220

2

12,659

15,454

(18)

14,790

Exploration & Production

42,528

39,650

7

10,270

13,565

(24)

12,802

Refining, Transportation and Marketing

4,103

4,093

1,427

1,155

24

1,104

Gas & Power

1,607

3,602

(55)

581

435

34

574

Distribution

500

345

45

177

129

37

116

Biofuel

61

112

(46)

2

29

(93)

62

Corporate

571

418

37

202

141

43

132

 

 

 

 

 

 

 

 

Average commercial selling rate for U.S. dollar

3.65

3.19

14

3.81

3.95

(4)

3.25

Period-end commercial selling rate for U.S. dollar

3.87

3.31

17

3.87

4.00

(3)

3.31

Variation of the period-end commercial selling rate for U.S. dollar (%)

17.1

1.5

16

(3.2)

3.8

(7)

4.4

Domestic basic oil products price (R$/bbl)

299.70

226.37

32

312.35

330.33

(5)

246.29

Brent crude (R$/bbl)

260.18

173.30

50

257.70

298.22

(14)

199.48

Brent crude (US$/bbl)

71.04

54.27

31

67.76

75.27

(10)

61.39

Domestic Sales Price

 

 

 

 

 

 

 

Crude oil (U.S. dollars/bbl) 

66.66

50.48

32

66.71

70.14

(5)

55.82

Natural gas (U.S. dollars/bbl) 

42.87

37.82

13

49.45

42.30

17

38.72

International Sales price

 

 

 

 

 

 

 

Crude oil (U.S. dollars/bbl) 

66.13

47.16

40

68.55

68.72

54.04

Natural gas (U.S. dollars/bbl) 

24.34

20.79

17

23.11

22.73

2

22.23

Total sales volume (Mbbl/d)**

 

 

 

 

 

 

 

Diesel

784

717

9

814

884

(8)

692

Gasoline

459

521

(12)

460

433

6

501

Fuel oil

45

61

(26)

41

54

(24)

68

Naphtha

97

134

(28)

96

102

(6)

113

LPG

231

235

(2)

228

241

(5)

230

Jet fuel

108

101

7

111

111

105

Others

163

171

(5)

153

169

(9)

176

Total oil products

1,887

1,940

(3)

1,903

1,994

(5)

1,885

Ethanol, nitrogen fertilizers, renewables and other products

71

112

(37)

80

77

4

121

Natural gas

345

361

(4)

322

367

(12)

386

Total domestic market

2,303

2,413

(5)

2,305

2,438

(5)

2,392

Crude oil, oil products and others exports

608

672

(10)

644

512

26

550

International sales

236

242

(2)

225

231

(3)

246

Total international market

844

914

(8)

869

743

17

796

Total

3,147

3,327

(5)

3,174

3,181

3,188

 

 

* See definition of Adjusted EBITDA, Adjusted EBITDA Margin, Gross Margin, Total capital expenditures and investments, Operating Margin and Net Margin in glossary and the respective reconciliation in Reconciliation of Adjusted EBITDA.

** Operational data are not audited by the independent auditor

 

5

 

 

 


Results 2018 x 2017*:

Sales revenue increased by 23% to R$ 349,836 million, reflecting higher domestic oil products prices, mainly diesel, gasoline and exports, accompanied by a 31% increase in the Brent price and a depreciation of 14% of the real. In spite of the higher volume of diesel sales, there was a drop in the domestic sales volume of oil products by 3% and exports by 10% due to lower production of oil.

There was an increase in selling expenses, mainly due to the payment of tariffs for the use of gas pipelines, higher expenses with government participation, imports and special itens. There was also a reduction of general and administrative expenses.

Adjusted EBITDA reached R$ 114,852 million, an increase of 50%, because of higher margins in domestic and export sales, in line with the increase in Brent and the reduction in operating expenses. The Adjusted EBITDA margin increased significantly, from 27% to 33%.

Special items amounted to R$ 10,034 million, including:

(a) gains from agreements signed with the electric sector (R$ 5,259 million),

(b) positive results with dismantling of areas (R$ 2,365 million), due to a longer date of abandonment

(c) impairment losses (R$ 7,583 million), with emphasis on oil and gas production fields in Brazil and abroad and Transpetro ships (see Appendix 5)

(d) losses with contingencies (R$ 7,415 million), mainly due to the agreement with ANP regarding the unification of Parque das Baleias and Vantage arbitrage, and

(e) negative exchange rate effect on contingencies (R$ 1,646 million).

Net income in 2018 was R$ 25,779 million, equivalent to R$ 1.98 per share, reflecting the higher operating income and the improvement in the financial result, due to lower interest expenses, as a result of lower indebtedness and higher financial income due to gains from the renegotiation of debts of the electric sector.

Excluding the impact of special items, net income would be R$ 35,974 million and Adjusted EBITDA of R$ 122,002 million.

Free cash flow of R$ 54,600 billion was 24% higher than in 2017, reflecting the 11% increase in operating cash generation and maintaining the same level of investments as the previous year.

Investments totaled R$ 41,246 million, lower than estimated for the year due to delays in activities related to the construction of platforms, which led to the postponement in a few months of start-up and delays in drilling and completion of wells in mature fields and reconciling with the schedule of improvement of the plataforms.

The divestments resulted in a cash inflow of R$ 20,218 million, especially the partnership projects with Equinor in the Roncador field, Total in Lapa and Iara and Murphy in the Gulf of Mexico.

Petrobras reached the net debt target, of US $ 69,378 million at the end of 2018, and exceeded the net debt / adjusted EBITDA metric, reaching 2.34, below the target of 2.5.

 

 

 

 

 


 

* Additional information about operating results of 2018 x 2017, see item 6.

6

 

 

 


Results 4Q-2018 x 3Q-2018**:

Sales revenue was R$ 92,720 million, 6% lower, reflecting lower domestic and export prices, in line with the 10% reduction in Brent and the 4% appreciation of the Real, as well as lower price of energy sales. In terms of volumes, the 6% growth in oil production in Brazil contributed to the 45% increase in oil exports, offsetting the 5% drop in oil products sales in the country.

Despite the 4% reduction in costs, the higher share of imported oil products in the sales mix and the creation of inventories at higher costs contributed to the reduction of the gross margin. There was also a greater impairment of assets.

Operating Income reached R$ 11,457 million, 33% lower and Adjusted EBITDA R$ 29,160 million with 31% margin.

Special items amounted to R$ 6,336 million, of which:

(a) gains from agreements signed with the electric sector (R$ 3,191 million),

(b) reversal of expected credit losses related to the electric sector (R$ 2,502 million),

(c) positive results with dismantling of areas (R$ 2,366 million), due to late abandonment.

(d) losses with contingencies (R$ 4,990 million) mainly due to the agreement with ANP regarding the unification of Parque das Baleias and Vantage arbitrage, and

(e) impairment losses (R$ 6,432 million), with emphasis on oil and gas production fields in Brazil and abroad and Transpetro ships (see Appendix 5)

Net income in 4Q-2018 was R$ 2,102 million, down 68%, due to lower margins in oil products sales and the impact of special items.

Excluding the impact of special items, net income would be R$ 8,035 million billion and Adjusted EBITDA of R$ 31,020 million.

Free Cash Flow of R$ 17,119 million was 2 times higher than 3Q-2018, reflecting the improvement in cash generation due to the receipt of the diesel subsidy program and the payment of the Class Action Agreement in 3Q-2018, together with the reduction of investments in the period, which totaled R$ 8,989 million.

 

 

 

 

 

** Additional information about operating results of 4Q-2018 x 3Q-2018, see item 7.

 

 

7

 

 

 


Table 02 - Exploration & Production Main Indicators

 

R$ million

 

Jan-Dec

 

 

 

 

 

2018

2017

2018 x 2017 (%)

4Q-2018

3Q-2018

4Q18 X 3Q18 (%)

4Q-2017

Sales revenues

191,546

134,737

42

50,775

51,813

(2)

37,154

Brazil

187,165

131,732

42

49,686

50,306

(1)

36,244

Abroad

4,381

3,005

46

1,089

1,507

(28)

910

Gross profit

85,947

45,515

89

24,838

23,654

5

13,213

Brazil

83,355

44,352

88

23,924

22,813

5

12,755

Abroad

2,592

1,163

123

914

841

9

458

Operating expenses

(19,463)

(11,969)

(63)

(11,659)

(5,357)

(118)

(3,019)

Brazil

(12,553)

(9,817)

(28)

(7,214)

(3,168)

(128)

(2,235)

Abroad

(6,910)

(2,152)

(221)

(4,445)

(2,189)

(103)

(784)

Operating income (loss)

66,484

33,546

98

13,179

18,297

(28)

10,194

Brazil

70,803

34,535

105

16,711

19,645

(15)

10,520

Abroad

(4,319)

(989)

(337)

(3,532)

(1,348)

(162)

(326)

Net income (loss) attributable to the shareholders of Petrobras

44,196

22,453

97

8,734

12,334

(29)

6,828

Brazil

46,730

22,678

106

11,029

12,966

(15)

6,870

Abroad

(2,534)

(225)

(1026)

(2,295)

(632)

(263)

(42)

Adjusted EBITDA of the segment*

103,206

65,302

58

25,754

27,937

(8)

17,867

Brazil

103,720

64,734

60

28,000

27,372

2

17,525

Abroad

(514)

568

(190)

(2,246)

565

(498)

342

EBITDA margin of the segment (%)*

54

48

5

51

54

(3)

48

 

 

 

 

 

 

 

 

Capital expenditures of the segment

42,528

39,650

7

10,270

13,565

(24)

12,802

 

 

 

 

 

 

 

 

Average Brent crude (R$/bbl)

260.18

173.30

50

257.70

298.22

(14)

199.48

Average Brent crude (US$/bbl)

71.04

54.27

31

67.76

75.27

(10)

61.39

 

 

 

 

 

 

 

 

Sales price - Brazil

 

 

 

 

 

 

 

Crude oil (US$/bbl)

66.66

50.48

32

66.71

70.14

(5)

55.82

Sales price - Abroad

 

 

 

 

 

 

 

Crude oil (US$/bbl)

66.13

47.16

40

68.55

68.72

54.04

Natural gas (US$/bbl)

24.34

20.79

17

23.11

22.73

2

22.23

 

 

 

 

 

 

 

 

Crude oil and NGL production  (Mbbl/d)**

2,099

2,217

(5)

2,115

2,014

5

2,201

Brazil

2,035

2,154

(6)

2,055

1,937

6

2,140

Abroad

44

41

6

40

56

(29)

40

Non-consolidated production abroad

21

22

(6)

20

21

(4)

21

Natural gas production (Mbbl/d)**

528

550

(4)

544

500

9

536

Brazil

492

501

(2)

511

462

11

496

Abroad

36

49

(26)

33

38

(12)

40

Total production

2,628

2,767

(5)

2,659

2,514

6

2,737

 

 

 

 

 

 

 

 

Lifting cost - Brazil (US$/barrel)

 

 

 

 

 

 

 

excluding production taxes

10.90

11.27

(3)

10.24

11.17

(8)

11.28

including production taxes

24.39

20.48

19

23.77

25.84

(8)

22.02

 

 

 

 

 

 

 

 

Lifting cost - Brazil (R$/barrel)

 

 

 

 

 

 

 

excluding production taxes

39.39

35.72

10

38.27

43.48

(12)

36.42

including production taxes

89.08

65.20

37

87.18

100.99

(14)

71.88

 

 

 

 

 

 

 

 

Lifting cost – Abroad without production taxes (US$/barrel)

5.30

5.51

(4)

5.18

5.22

(1)

7.01

 

 

 

 

 

 

 

 

Production taxes - Brazil

39,794

25,168

58

9,970

10,943

(9)

7,563

Royalties

17,923

12,555

43

4,658

4,900

(5)

3,636

Special participation charges

21,685

12,429

74

5,264

5,995

(12)

3,882

Retention of areas

186

184

1

48

48

45

Production taxes - Abroad

71

73

(3)

13

22

(41)

14

 

*

 

* See definition of Adjusted EBITDA and Adjusted EBITDA Margin in Glossary and reconciliation in Reconciliation of Consolidated Adjusted EBITDA Statement by Segment.

8

 

 

 


EXPLORATION & PRODUCTION

2018 x 2017

The production of oil, NGL and natural gas was 2,628 thousand barrels of oil equivalent per day (boed), 5% below the previous year, mainly due to disinvestments in the fields of Lapa and Roncador, at the end of the Early Production Systems of Tartaruga Verde and Itapu and the natural decline of production. As a highlight, four new systems went into operation throughout the year: P-74, FPSO City of Campos dos Goytacazes, P-69 and P-75.

Government participation costs increased because of higher oil prices in the international market and increased production in fields with high special participation rates. The lifting cost per barrel with no government participation in Brazil, in US dollars, decreased by 4%, mainly due to lower expenses with interventions in wells.

Operating income increased primarily as a result of higher Brent prices and the reversal of area dismantling expenses, which were partially offset by higher government holding costs, asset impairment losses and judicial contingencies.

Adjusted EBITDA reached a strong performance in 2018, resulting in R$ 103,206 million, 58% higher and margin of 54%.

 

4Q-2018 x 3Q-2018

The production of oil, NGL and natural gas increased by 6%, mainly due to the higher volume in the new units, the interconnection of wells in the P-74 and FPSO Cidade de Campos dos Goytacazes, as well as the start- 69 and P-75.

There was an 11% reduction in the lifting cost, mainly due to lower expenses with well interventions and the impact of increased production. In addition, there was a reduction in government participation expenses because of the drop in international oil prices.

Despite the increase in production and the reversal of abandonment expenses, operating income reduced due to lower Brent prices and appreciation of the real, greater impairment and recognition of judicial contingencies, mainly the agreement to unify the Parque das Baleias and the arbitration brought by Vantage.

Adjusted EBITDA reached R$ 25,754 million, a reduction of 8% and a margin of 51%.

 

9

 

 

 


*Table 03 - Refining, Transportation and Marketing Main Indicators

 

R$ million

 

Jan-Dec

 

 

 

 

 

2018

2017

2018 x 2017 (%)

4Q-2018

3Q-2018

4Q18 X 3Q18 (%)

4Q-2017

Sales revenues

269,138

214,067

26

72,089

76,289

(6)

56,221

Brazil (includes trading operations abroad)

278,634

219,594

27

74,328

79,113

(6)

58,025

Abroad

11,139

6,690

67

2,662

3,121

(15)

2,350

Eliminations

(20,635)

(12,217)

(69)

(4,901)

(5,945)

18

(4,154)

Gross profit

23,202

29,598

(22)

157

7,688

(98)

9,300

Brazil

23,427

29,490

(21)

608

7,601

(92)

9,166

Abroad

(225)

108

(308)

(451)

87

(618)

134

Operating expenses

(12,677)

(11,548)

(10)

(5,257)

(3,099)

(70)

(4,727)

Brazil

(12,500)

(11,180)

(12)

(5,134)

(3,087)

(66)

(4,476)

Abroad

(177)

(368)

52

(123)

(12)

(925)

(251)

Operating income (loss)

10,525

18,050

(42)

(5,100)

4,589

(211)

4,573

Brazil

10,927

18,310

(40)

(4,526)

4,514

(200)

4,689

Abroad

(402)

(260)

(55)

(574)

75

(865)

(116)

Net income (loss) attributable to the shareholders of Petrobras

8,405

13,510

(38)

(3,320)

3,410

(197)

3,337

Brazil

8,670

13,681

(37)

(2,942)

3,361

(188)

3,413

Abroad

(265)

(171)

(55)

(378)

49

(871)

(76)

Adjusted EBITDA of the segment*

20,331

28,592

(29)

(1,062)

6,690

(116)

8,785

Brazil

20,436

28,432

(28)

(628)

6,558

(110)

8,624

Abroad

(105)

160

(166)

(434)

132

(429)

161

EBITDA margin of the segment (%)*

8

13

(6)

(1)

9

(10)

16

 

 

 

 

 

 

 

 

Capital expenditures of the segment

4,103

4,093

1,427

1,155

24

1,104

 

 

 

 

 

 

 

 

Domestic basic oil products price (R$/bbl)

299.70

226.37

32

312.35

330.33

(5)

246.29

 

 

 

 

 

 

 

 

Imports (Mbbl/d)**

349

308

13

424

439

(3)

263

Crude oil import

154

127

21

147

207

(29)

141

Diesel import

59

12

392

94

91

3

3

Gasoline import

19

11

73

49

17

188

10

Other oil product import

117

158

(26)

134

124

8

109

Exports (Mbbl/d)**

606

669

(9)

640

511

25

550

Crude oil export

428

512

(16)

468

322

45

398

Oil product export

178

157

13

172

189

(9)

152

Exports (imports), net

 

257

361

(29)

216

72

200

287

Refining Operations - Brazil (Mbbl/d)**

 

 

 

 

 

 

 

Oil products output

1,764

1,800

(2)

1,736

1,801

(4)

1,795

Reference feedstock 

2,176

2,176

2,176

2,176

2,176

Refining plants utilization factor (%) 

76

77

(1)

75

78

(3)

77

Processed feedstock  (excluding NGL)

1,664

1,685

(1)

1,642

1,693

(3)

1,683

Processed feedstock

1,715

1,736

(1)

1,685

1,743

(3)

1,739

Domestic crude oil as % of total processed feedstock

 

91

93

(2)

90

88

2

92

Refining Operations - Abroad (Mbbl/d)**

 

 

 

 

 

 

 

Total processed feedstock

108

94

15

103

108

(5)

115

Oil products output

107

94

14

106

109

(3)

113

Reference feedstock 

100

100

100

100

100

Refining plants utilization factor (%) 

 

100

88

12

96

100

(4)

109

Refining cost - Brazil

 

 

 

 

 

 

 

Refining cost (US$/barrel)

2.51

2.90

(13)

2.49

2.27

10

2.76

Refining cost  (R$/barrel)

9.12

9.26

(2)

9.44

8.95

5

8.98

 

 

 

 

 

 

 

 

Refining cost - Abroad (US$/barrel)

4.60

4.41

4

4.76

4.64

3

3.92

 

 

 

 

 

 

 

 

Sales volume (includes sales to BR Distribuidora and third-parties)**

 

 

 

 

 

 

 

Diesel

731

645

13

782

843

(7)

597

Gasoline

402

453

(11)

405

387

5

433

Fuel oil

46

67

(31)

42

58

(27)

77

Naphtha

97

134

(28)

96

102

(6)

113

LPG

231

236

(2)

227

242

(6)

230

Jet fuel

123

114

7

124

126

(1)

119

Others

179

187

(4)

171

183

(6)

193

Total domestic oil products (mbbl/d)

1,808

1,835

(1)

1,848

1,941

(5)

1,761

 

 

* See definition of Adjusted EBITDA and Adjusted EBITDA Margin in Glossary and reconciliation in Reconciliation of Consolidated Adjusted EBITDA Statement by Segment.

** Operational data are not audited by the independent auditor.

10

 

 

 


REFINING, TRANSPORTATION AND MARKETING

 

2018 x 2017

There was an increase in diesel sales (+13%), and a reduction in gasoline sales due to the greater competitiveness of hydrated ethanol, hence oil products sales was stable. Following the demand, the production of oil products was at the same level of the previous year, reaching 1,764 thousand barrels per day, particularly with a higher production of diesel (3%).

There was a reduction in the net exports of petroleum due to the lower production and greater participation of imported petroleum in the processed cargo. Net exports of oil products increased due to reduced imports of naphtha to Braskem and increased gasoline exports, partially offset by higher imports of diesel and jet fuel.

Operating income reduced due to the lower oil products margin, mainly gasoline, diesel and LPG, and higher selling expenses, partially offset by the lower cost of inventories formed at lower prices and lower impairment.

The implementation of cost optimization measures resulted in a reduction in the refining unit cost.

Adjusted EBITDA reached R$ 20,331 million, with a reduction of 29% and a margin of 8%.

 

4Q-2018 x 3Q-2018

Oil products production was 1,736 thousand barrels per day, down 4% from the previous quarter, mainly due to the accident at the Paulínia Refinery (Replan).

Sales volume decreased 5% due to seasonality in diesel consumption in 3Q-2018, lower fuel oil demand for thermoelectric plants and lower LPG demand due to lower economic activity. These factors were partially offset by higher gasoline sales in the period due to seasonal growth.

The net exports of oil increased due to higher production and lower oil processing. The increase in oil products net imports was mainly due to higher imports of gasoline and naphtha and lower exports of fuel oil.

The refining cost was impacted by the lower processed load.

The operating loss reflects the lower margins of sale due to the realization of inventories formed at higher prices. There was also a higher share of imported oil products in the domestic market, mainly diesel and gasoline, higher tax expenses and impairment related mainly to Transpetro's ships.

Adjusted EBITDA showed a negative result of R$ 1,062 million.

 

11

 

 

 


Table 04 - Gas & Power Main Indicators

 

R$ million

 

Jan-Dec

 

 

 

 

 

2018

2017

2018 x 2017 (%)

4Q-2018

3Q-2018

4Q18 X 3Q18 (%)

4Q-2017

Sales revenues

45,028

39,549

14

11,914

13,518

(12)

11,456

Brazil

44,803

39,410

14

11,868

13,416

(12)

11,420

Abroad

225

139

62

46

102

(55)

36

Gross profit

11,740

11,431

3

3,371

2,248

50

3,562

Brazil

11,693

11,396

3

3,355

2,220

51

3,542

Abroad

47

35

34

16

28

(43)

20

Operating expenses

(8,989)

(2,158)

(317)

(682)

(3,589)

81

(3,804)

Brazil

(8,943)

(1,998)

(348)

(668)

(3,578)

81

(3,688)

Abroad

(46)

(160)

71

(14)

(11)

(27)

(116)

Operating income (loss)

2,751

9,273

(70)

2,689

(1,341)

301

(242)

Brazil

2,750

9,398

(71)

2,687

(1,357)

298

(146)

Abroad

1

(125)

101

2

16

(88)

(96)

Net income (loss) attributable to the shareholders of Petrobras

1,709

6,113

(72)

1,765

(808)

318

(176)

Brazil

1,694

6,096

(72)

1,751

(853)

305

(135)

Abroad

15

17

(12)

14

45

(69)

(41)

Adjusted EBITDA of the segment*

5,830

6,485

(10)

3,891

(674)

677

1757

Brazil

5,823

6,476

(10)

3,886

(690)

663

1,743

Abroad

7

9

-

5

16

(69)

14

EBITDA margin of the segment (%)*

13

16

(3)

33

(5)

38

15

 

 

 

 

 

 

 

 

Capital expenditures of the segment

1,607

3,602

(55)

581

435

34

574

 

 

 

 

 

 

 

 

Physical and financial indicators - Brazil**

 

 

 

 

 

 

 

Electricity sales (Free contracting market - ACL) - average MW

832

788

6

785

754

4

776

Electricity sales (Regulated contracting market - ACR) - average MW

2,788

3,058

(9)

2,788

2,788

3,058

Generation of electricity - average MW

2,205

3,165

(30)

1,230

3,371

(64)

3,863

Electricity price in the spot market - Differences settlement price (PLD) - R$/MWh

282

320

(12)

157

495

(68)

398

Avaliability of Brazilian natural gas (Mbbl/d)

307

338

(9)

322

265

22

346

LNG imports (Mbbl/d)

43

32

34

10

117

(91)

43

Natural gas imports (Mbbl/d)***

139

151

(8)

121

152

(20)

162

 

*

 

 

 

 

* See definition of Adjusted EBITDA and Adjusted EBITDA Margin in Glossary and reconciliation in Reconciliation of Consolidated Adjusted EBITDA Statement by Segment.

** Considers LNG imported regassified in the period, since the 2Q-2018. Until 1Q-2018, considered the LNG imports, regardless of its regasification during the period.

 

12

 

 

 


GAS & POWER

 

2018 x 2017

Natural gas sales to the non-thermoelectric market increased due to the improvement in industrial activity, while sales to the thermoelectric market fell with regard to energy, the highest volume of sales in the Free Contracting Environment resulted from opportunities for new sales in the short-term market.

The reduction of PLD is a reflection of the higher affluence at the beginning of the rainy period. Due to this favorable hydrological scenario, power generation was lower than the previous year.

Despite the positive effect of higher margins on gas sales, operating income was reduced because of higher sales expenses with the payment of tariffs for the use of gas pipelines in the southeast grid. The increase in operating expenses is due to the gain from the sale of the NTS in 2017.

Adjusted EBITDA reached R$ 5,830 million, with a 10% reduction and a margin of 13%.

 

4Q-2018 x 3Q-2018

The reduction in natural gas sales is due to the impact of the seasonality of the industrial market in the non-thermoelectric segment and the decrease in the thermoelectric dispatch due to the higher affluence at the beginning of the rainy period in the 4Q-2018.

Operating income reflects the higher gas margins due to the combination of lower thermoelectric demand and return of Mexilhão production, increasing the availability of domestic gas, reducing the import of Bolivian gas and LNG. In addition, the reversal of expected credit losses also contributed to the result.

Adjusted EBITDA reached R$ 3,891 million, with a margin of 33%.

 

13

 

 

 


Table 05 - Distribution Main Indicators

 

R$ million

 

Jan-Dec

 

 

 

 

 

2018

2017

2018 x 2017 (%)

4Q-2018

3Q-2018

4Q18 X 3Q18 (%)

4Q-2017

Sales revenues

102,013

88,050

16

26,312

27,611

(5)

24,136

Brazil

96,613

83,674

15

24,885

26,166

(5)

22,973

Abroad

5,400

4,376

23

1,427

1,445

(1)

1,163

Gross profit

6,103

6,599

(8)

1,578

1,581

1,862

Brazil

5,717

6,231

(8)

1,473

1,486

(1)

1,770

Abroad

386

368

5

105

95

11

92

Operating expenses

(3,396)

(4,047)

16

(1,199)

(64)

(1773)

(1,145)

Brazil

(3,147)

(3,811)

17

(1,134)

(6)

(18800)

(1,054)

Abroad

(249)

(236)

(6)

(65)

(58)

(12)

(91)

Operating income (loss)

2,707

2,552

6

379

1,517

(75)

717

Brazil

2,570

2,420

6

338

1,481

(77)

716

Abroad

137

132

4

41

36

14

1

Net income (loss) attributable to the shareholders of Petrobras

1,290

1,663

(22)

185

712

(74)

452

Brazil

1,207

1,568

(23)

158

696

(77)

443

Abroad

83

95

(13)

27

16

69

9

Adjusted EBITDA of the segment*

3,142

3,065

3

497

1607

(69)

881

Brazil

2,974

2,906

2

453

1,568

(71)

866

Abroad

168

159

6

44

39

13

15

EBITDA margin of the segment (%)*

3

3

2

6

(3)

4

 

 

 

 

 

 

 

 

Capital expenditures of the segment

500

345

45

177

129

37

116

 

 

 

 

 

 

 

 

Sales Volumes - Brazil (Mbbl/d)**

 

 

 

 

 

 

 

Diesel

300

296

1

296

323

(8)

291

Gasoline

161

186

(14)

159

151

5

179

Fuel oil

35

52

(34)

29

47

(39)

61

Jet fuel

53

52

2

51

54

(7)

53

Others

77

85

(9)

76

79

(5)

85

Total domestic oil products

626

671

(7)

609

655

(7)

669

 

*

 

* See definition of Adjusted EBITDA and Adjusted EBITDA Margin in Glossary and reconciliation in Reconciliation of Consolidated Adjusted EBITDA Statement by Segment.

14

 

 

 


DISTRIBUTION

 

2018 x 2017

The increase in operating income reflects the reversal of losses due to the Settlement Agreement signed with the State of Mato Grosso, partially offset by the reduction in average selling margins and volumes sold. These same factors explain the Adjusted EBITDA.

 

4Q-2018 x 3Q-2018

The reduction in operating income reflects the reversal of losses from lawsuits in 3Q-2018 and the lower sales volume, partially offset by the increase in average selling margins.

 

15

 

 

 


Liquidity and Capital Resources

Table 06 - Liquidity and Capital Resources

 

R$ million

 

Jan-Dec

 

 

 

 

2018

2017

4Q-2018

3Q-2018

4Q-2017

Adjusted cash and cash equivalents* at the beginning of period

80,731

71,664

60,967

69,596

80,175

Government bonds and time deposits with maturities of more than 3 months at the beginning of period

(6,237)

(2,556)

(4,164)

(4,060)

(5,744)

Cash and cash equivalents at the beginning of period

74,494

69,108

56,803

65,536

74,431

Net cash provided by (used in) operating activities

95,846

86,467

26,108

21,925

19,567

Net cash provided by (used in) investing activities

(18,752)

(35,218)

(5,521)

(13,897)

(12,308)

Capital expenditures, investments in investees and dividends received

(41,246)

(42,403)

(8,989)

(13,810)

(12,959)

     Proceeds from disposal of assets (divestment)

20,218

9,907

3,335

3

449

     Investments in marketable securities

2,276

(2,722)

133

(90)

202

(=) Net cash provided by operating and investing activities

77,094

51,249

20,587

8,028

7,259

Net financings

(103,460)

(50,919)

(20,787)

(17,867)

(14,975)

     Proceeds from long-term financing

38,023

86,467

7,397

3,395

14,385

     Repayments

(141,483)

(137,386)

(28,184)

(21,262)

(29,360)

Dividends paid to non- controlling interest

(3,046)

(538)

(1,220)

(923)

(59)

Acquisition of non-controlling interest

430

69

311

142

263

Effect of exchange rate changes on cash and cash equivalents

8,342

619

(1,840)

1,887

2,669

Cash and cash equivalents at the end of period

53,854

74,494

53,854

56,803

74,494

Government bonds and time deposits with maturities of more than 3 months at the end of period

4,198

6,237

4,198

4,164

6,237

Adjusted cash and cash equivalents* at the end of period

58,052

80,731

58,052

60,967

80,731

Reconciliation of Free Cash Flow

 

 

 

 

 

Net cash provided by (used in) operating activities

95,846

86,467

26,108

21,925

19,567

Capital expenditures, investments in investees and dividends received

(41,246)

(42,403)

(8,989)

(13,810)

(12,959)

Free cash flow*

54,600

44,064

17,119

8,115

6,608

 

At December 31, 2018, the balance of cash and cash equivalents was R$ 53,854 million and adjusted cash and cash equivalents totaled R$ 58,052 million, observing the methodology for establishing minimum cash level and access to revolving credit facilities. Funds provided by operating activities of R$ 95,846 million, funding of R$ 38,023 million and receipts from the sale of assets of R$ 20,218 million were allocated to prepayments of debts, interest and principal payments due in the period and the financing of investments in the business areas. It should be noted that the disinvestments below planned, affected by judicial decisions.

Operating cash generation was R$ 95,846 million, 11% higher than 2017, due to the increase in oil export margins and the sale of oil products in the domestic market, partially offset by lower sales volumes and the payment of two portions of the Class Action settlement agreement. Investments in the company's businesses totaled R$ 41,246 million in 2018, 87% of which were invested in exploration and production. These same factors resulted in positive Free Cash Flow for the fifteenth consecutive quarter, R$ 54,600 million in 2018 and R$ 17,119 million in 4Q-2018, an increase of 24% and 111%, respectively.

At December 31, 2018, the company raised R$ 38,023 million, of which: (i) funding in the national and international banking market, maturing between 4.5 years and 6.5 years, in the total amount of R$ 26,227 million; (ii) offer of securities in the international capital market (Global Notes) maturing in 2029, in the amount of R$ 6,359 million, (US$ 1,962 million); and (iii) funding of R$ 3,774 million, in financing with export credit agencies.

In addition, the Company prepaid several loans and financing, of which: (i) the repurchase and / or redemption of R$ 49,719 million, (US$ 13,943 million) of securities in the international capital market, with the payment of a net premium to holders of securities that delivered their securities in the transaction in the amount of R$ 1,015 million; (ii) the prepayment of R$ 55,116 million of loans in the domestic and international banking market; and (iii) prepayment of R$ 4,932 million of financing from the BNDES.

Principal and interest amortizations in 2018 were R$ 120,524 million and R$ 20,959 million, respectively, and amounted to R$ 141,483 million, and the nominal (cash vision) flow of principal and interest on financing, by maturity, is presented in millions of reais:

Table 07 - Nominal cash flow including principal and interest payments

 

 

Consolidated

Maturity

2019

2020

2021

2022

2023

2024 and thereafter

12.31.2018

12.31.2017

Principal

9,329

15,768

27,696

40,457

46,954

190,235

330,439

365,632

Interest

19,189

18,750

17,723

16,073

13,623

113,646

199,004

200,887

Total

28,518

34,518

45,419

56,530

60,577

303,881

529,443

566,519

*

 

* See reconciliation of Adjusted Cash and Cash Equivalents in Net debt and definition of Adjusted Cash and Cash Equivalents and Free Cash Flow in glossary.

16

 

 

 


Consolidated debt

 

In 2018, gross debt in reais decreased 10%, mainly as a result of debt repayment. Net debt decreased by 4% and the average maturity of debt was 9.14 years (8.62 years as of December 31, 2017). The average rate of funding increased from 6.1% in 2017 to 6.2%.

 

Short-term and long-term indebtedness includes Financial Leases in the amount of R$ 89 million and R$ 626 million, respectively (R$ 84 million and R$ 675 million at December 31, 2017).

 

The net debt to Adjusted EBITDA * ratio decreased from 3.67 in 2017 to 2.25 in 2018, mainly due to cash from divestments and positive free cash flow.

 

Table 08 - Consolidated debt in reais

 

R$ million

 

12.31.2018

12.31.2017

    Δ%

Current debt

 

14,296

23,244

(38)

Non-current debt

312,580

338,239

(8)

Total

326,876

361,483

(10)

  Cash and cash equivalents

53,854

74,494

(28)

  Government securities and time deposits (maturity of more than 3 months)

4,198

6,237

(33)

Adjusted cash and cash equivalents*

58,052

80,731

(28)

Net debt*

268,824

280,752

(4)

Net debt/(net debt+shareholders' equity) - Leverage

49%

51%

(2)

Total net liabilities*

802,421

750,784

7

(Net third parties capital / total net liabilities)

65%

64%

1

Net debt/Adjusted EBITDA ratio*

2.34

3.67

(36)

Average interest rate (% p.a.)

6.1

6.1

Net debt/Operating Cash Flow ratio*

2.85

3.32

(14)

 

Table 09 - Consolidated debt in dollar

 

U.S.$ million

 

12.31.2018

12.31.2017

    Δ%

 

 

 

 

 Current debt 

3,690

7,026

(47)

Non-current debt

80,670

102,249

(21)

Total

84,360

109,275

(23)

Net Debt

69,378

84,871

(18)

Weighted average maturity of outstanding debt (years)

9.14

8.62

0.52

*

Table 10 - Consolidated debt by rate, currency and maturity

 

R$ million

 

12.31.2018

12.31.2017

    Δ%

Summarized information on financing

 

 

 

By rate

 

 

 

Floating rate debt

162,348

176,943

(8)

Fixed rate debt

163,813

183,781

(11)

Total

326,161

360,724

(10)

 

 

 

 

By currency

 

 

 

Brazilian Real

62,025

71,129

(13)

US Dollars

241,886

263,614

(8)

Euro

13,631

17,773

(23)

Other currencies

8,619

8,208

5

Total

326,161

360,724

(10)

 

 

 

 

By maturity

 

 

 

Up to 1 year

14,207

23,160

(39)

From 1 to 2 years

15,193

21,423

(29)

From 2 to 3 years

27,170

31,896

(15)

From 3 to 4 years

39,978

42,168

(5)

From 4 to 5 years

46,305

59,594

(22)

5 years on

183,308

182,483

Total

326,161

360,724

(10)

 


 

* See definition of Adjusted Cash and Cash Equivalents, Net Debt, Total Net Liabilities, Adjusted EBITDA, OCF and Leverage in glossary and reconciliation in Reconciliation of LTM Adjusted EBITDA and LTM OCF.

17

 

 

 


 

 

 

 

The IASB issued IFRS 16 - Leases (IFRS 16), which became effective as of January 1, 2019 and contains principles for the identification, recognition, measurement and disclosure of market leases.

With the adoption of IFRS 16, the company no longer recognizes operating costs and expenses arising from operating leases, and recognizes in its income statement: (i) the effects of the depreciation of the rights to use leased assets; and (ii) the financial expenses and the exchange variation determined based on the financial liabilities of the lease agreements. As a result, an increase of approximately R$ 110 billion in Fixed Assets and in Financing and 0.5x in the Adjusted Net Debt / Adjusted EBITDA ratio is expected. "

18

 

 

 


ADDITIONAL INFORMATION

 

 

1.

Reconciliation of Adjusted EBITDA

Our Adjusted EBITDA is a performance measure computed by using the EBITDA (net income before net finance income (expense), income taxes, depreciation, depletion and amortization). Petrobras presents the EBITDA according to Instrução CVM nº 527 of October 4, 2012, adjusted by items not considered as part of Company’s primary business, which include results in equity-accounted investments, results from disposal and write-offs of assets, impairment, cumulative foreign exchange adjustments reclassified to the income statement and foreign exchange gains or losses on material provisions for legal proceedings.

In calculating Adjusted EBITDA, we adjusted our EBITDA for the periods of 2018 by adding foreign exchange gains and losses resulting from provisions for legal proceedings denominated in foreign currencies. Legal provisions in foreign currencies primarily consist of Petrobras’s portion of the class action settlement provision created in December 2017. The foreign exchange gains or losses on legal provisions are presented in other income and expenses for accounting purposes but management does not consider them to be part of the Company’s primary business, as well as they are substantially similar to the foreign exchange effects presented within net finance income. No adjustments have been made to the comparative measures presented as amounts were not significant in these periods.

The LTM Adjusted EBITDA reflects the sum of the last twelve months of Adjusted EBITDA and represents an alternative measure to our net cash provided by operating activities. This measure is used to calculate the metric Net Debt/LTM Adjusted EBITDA, which is established in the Business Plan 2019-2023, to support management’s assessment of liquidity and leverage.

EBITDA, Adjusted EBITDA and LTM Adjusted EBITDA are not defined in the International Financial Reporting Standards – IFRS. Our calculation may not be comparable to the calculation of Adjusted EBITDA by other companies and it should not be considered as a substitute for any measure calculated in accordance with IFRS. These measures must be considered in conjunction with other measures and indicators for a better understanding of the Company's operational performance and financial conditions.

Table 11 - Reconciliation of Adjusted EBITDA

 

R$ million

 

Jan-Dec

 

 

 

 

 

2018

2017

2018 x 2017 (%)

4Q-2018

3Q-2018

4Q18 X 3Q18 (%)

4Q-2017

Net income (loss)

26,698

377

6,982

2,978

6,904

(57)

(5,372)

Net finance income (expense)

21,100

31,599

(33)

5,366

5,841

(8)

7,598

Income taxes

17,078

5,797

195

3,236

5,249

(38)

(3,156)

Depreciation, depletion and amortization

43,646

42,478

3

10,926

10,700

2

10,445

EBITDA

108,522

80,251

35

22,506

28,694

(22)

9,515

Share of earnings in equity-accounted investments

(1,919)

(2,149)

11

(123)

(975)

87

(484)

Impairment losses / (reversals)

7,689

3,862

99

6,307

1,501

320

3,511

Realization of cumulative translation adjustment

116

(100)

-

-

Gains/ losses on disposal/ write-offs of non-current assets

(1,086)

(5,523)

80

787

250

215

444

Foreign exchange gains or losses on material provisions for legal proceedings

1,646

(317)

386

(182)

Adjusted EBITDA

114,852

76,557

50

29,160

29,856

(2)

12,986

Income Tax

(17,078)

(5,797)

(195)

(3,236)

(5,249)

38

3,156

Allowance of impairment of other receivables

324

2,271

(86)

(3,121)

1,962

(259)

238

Change in Accounts receivables

(4,631)

(3,140)

(47)

5,013

(4,610)

209

(664)

Change in inventory

(7,206)

(1,130)

(538)

2,461

(3,141)

178

(2,107)

Change in suppliers

3,343

(160)

2,189

(2,634)

4,931

(153)

66

Change in deferred income tax, social contribution

2,787

1,451

92

1,227

398

208

(3,249)

Change in tax and contributions

(1,389)

6,911

(115)

(3,969)

5

(79,480)

1,821

Other assets and liabilities

4,844

9,504

(32)

1,207

(2,227)

154

7,320

Funds generated by operating activities (OCF)

95,846

86,467

11

26,108

21,925

19

19,567

 

 

 

 

 

 

 

 

Adjusted EBITDA margin (%)

33

27

6

31

30

1

17

 


19

 

 

 


ADDITIONAL INFORMATION

*

 

 

2.

Impact of our Cash Flow Hedge policy

 

Table 12 - Impact of our Cash Flow Hedge policy

 

R$ million

 

Jan-Dec