PBR - Petróleo Brasileiro S.A. - Petrobras (PBR) Q1 2024 Earnings Call Transcript

2024-05-14 18:00:04 ET

Petróleo Brasileiro S.A. - Petrobras (PBR)

Q1 2024 Earnings Conference Call

May 15, 2024 10:00 AM ET

Company Participants

Jean Paul Prates - Chief Executive Officer

Carlos Travassos - Chief Engineering, Technology, and Innovation Officer

Clarice Coppetti - Chief Corporate Affairs Officer

Claudio Romeo Schlosser - Chief Logistics, Commercialization and Markets Officer

Joelson Falcao Mendes - Chief Exploration and Production Officer

Mario Spinelli - Chief Governance and Compliance Officer

Mauricio Tolmasquim - Chief Energy Transition and Sustainability Officer

Sergio Caetano Leite - Chief Financial and Investor Relations Officer

William Franca da Silva - Chief Industrial Processes and Products Officer

Conference Call Participants

Bruno Montanari - Morgan Staley

Luiz Carvalho - UBS Bank

Pedro Soares - BTG Pactual

Gabriel Barra - Citigroup

Regis Cardoso - XP

Rodolfo Angele - JP Morgan

Presentation

Operator

Good morning, and welcome to Petrobras’ Earnings Call for analysts and investors. We’re going to discuss our results for the First Quarter of 2024. It’s a pleasure to have you here. This event will be held in Portuguese, but it is being simultaneously translated into English. You may access the links to both language webcast on our Investor Relations website. All participants will be on listen-only mode during the company’s presentation, after that we will have a questions-and-answer session. You may send us your questions via e-mail, petroinvest@petrobras.com.br.

We have with us Carlos Travassos, Executive Engineering, Technology and Innovation Director; Clarice Coppetti, Executive Director of Corporate Affairs; Claudio Schlosser, Executive Director for Logistics, Trade and Markets; Joelson Mendes, Executive Director for Production and Exploration; Mario Spinelli, Executive Director for Governance and Compliance; Mauricio Tolmasquim, Executive Director for Energy Transition and Sustainability; Sergio Caetano Leite, Executive Financial and Investor Relations Director; and William Franca, Executive Director for Processes and Products.

We will begin with a video bearing a message of our CEO, Jean Paul Prates.

Jean Paul Prates

Good morning, ladies and gentlemen. Today, we’re going to go into the financial results for the first quarter of 2024. The main message, I would like to leave you with before presenting the figures is our commitment to executing and financing our investment plan with capital discipline and generating value for shareholders and society.

We maintained consistent cash generation this quarter, which gives us security in relation to future investments including those for production growth. This quarter, and also in comparison to the previous quarter, we had a drop in oil and gas production, which was already expected because we’ve scheduled maintenance down times on platforms. Therefore, it’s a planned movement, which does not impact our production curve set out in the strategic plan.

I would like to point out that this is a short-term variation because when we compare it to the first quarter of 2023, Petrobras’ production grew by 3.7%. In other words, we have increased production in the last 12 months, and we are on a growing curve projected in our ‘24 to ‘28 strategic plan. In the E&P segment, we had an excellent performance from the FPSOs, Almirante Barroso and Búzios and P-71 and Itapu, which reached peak production at the end of last year. And, we’re increasing production from the FPSO’s Sepetiba in Mero and Anita Garibaldi in the Campos Basin.

In the second half of the year, we’re going to start operating the Marechal Duque de Caxias FPSO, which will be the third definitive production system for the Mero field with the capacity to produce up to 180,000, barrels per day and 12 million cubic meters of natural gas.

Talking about the downstream, you know the first quarter is always weaker in terms of sales volume due to seasonality. We took advantage of this period to make scheduled maintenance stoppages at the refineries. And, even with important scheduled stoppages at REPAR and REPLAN, the utilization factor of our refining park remains high, reaching 92% in this first quarter of 2024, seven percentage points above the utilization factor of a year ago.

It’s important to say that this increase in the level of refinery processing is taking place with value generation and total safety. Diesel, gasoline, and jet fuel in total production was 67% of the first quarter. We’re also keeping an eye on low carbon markets. In this quarter, we expanded our offer of more sustainable products starting to sell R5 diesel. Diesel with renewable content at RPBC, which like REPAR is already able to sell R5 diesel. We also established partnership with the second largest asphalt retailer in the country to sell CAP Pro W, a more sustainable type of asphalt.

This is a summary of our operating performance in the first quarter, which led us to a net profit of $4.8 billion adjusted EBITDA of 12.1 billion and an operating cash flow of $9.4 billion. An important highlight is our financial debt, which has been falling every quarter. We ended the first quarter with a financial debt of $27.7 billion, the lowest affordable level since 2010. We should also point out that the return to our shareholders taken into account share appreciation and dividend payments continues to be the highest in the industry over the last 12 months....

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