Webcast ingles final
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1 November 16th, 2010 Results Announcement 3 nd Quarter 2010 (IFRS) Conference Call / Webcast Almir Guilherme Barbassa CFO and Investor Relations Officer
Transcript of Webcast ingles final
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November 16th, 2010
Results Announcement3nd Quarter 2010
(IFRS)
Conference Call / WebcastAlmir Guilherme BarbassaCFO and Investor Relations Officer
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DISCLAIMER
FORWARD-LOOKING STATEMENTS:
DISCLAIMER
The presentation may contain forward-looking statements about future events within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are not based on historical facts and are not assurances of future results. Such forward-looking statements merely reflect the Company’s current views and estimates of future economic circumstances, industry conditions, company performance and financial results. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forward-looking statements. Readers are cautioned that these statements are only projections and may differ materially from actual future results or events. Readers are referred to the documents filed by the Company with the SEC, specifically the Company’s most recent Annual Report on Form 20-F, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including, among other things, risks relating to general economic and business conditions, including crude oil and other commodity prices, refining margins and prevailing exchange rates, uncertainties inherent in making estimates of our oil and gas reserves including recently discovered oil and gas reserves, international and Brazilian political, economic and social developments, receipt of governmental approvals and licenses and our ability to obtain financing.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason. Figures for 2010 on are estimates or targets.
All forward-looking statements are expressly qualified in their entirety by this cautionary statement, and you should not place reliance on any forward-looking statement contained in this presentation.
NON-SEC COMPLIANT OIL AND GAS RESERVES:
CAUTIONARY STATEMENT FOR US INVESTORS
We present certain data in this presentation, such as oil and gas resources, that we are not permitted to present in documents filed with the United States Securities and Exchange Commission (SEC) under new Subpart 1200 to Regulation S-K because such terms do not qualify as proved, probable or possible reserves under Rule 4-10(a) of Regulation S-X.
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o Net income (R$ 24,588 million) increased 10% in 9M10 vs. 9M09. In the 3Q10, net income reached R$ 8,566 million;
o Total investments of R$ 56,500 million YTD 2010, 11% higher than 9M09;
o Public offering resulted in a capital increase of R$ 120 billion;
o Acquired rights to produce 5 billion boe in new pre-salt areas not yet licensed;
o Reduced leverage ratios:
o Net Leverage decreased from 34% to 16%
o Net Debt/EBITDA from 1.52X to 0.94X
HIGHLIGHTS
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FPSO Cidade de Angra dos Reis
o Start-up of the first commercial FPSO in Tupi:
o Estimated 2011 average production: 50 thous. bpd
o Peak production forecasted for 2012
OPERATING HIGHLIGHTS
o New exploratory frontier in ultra deepwater at Sergipe-Alagoas basin with light oil;
o Inauguration of the diesel hydrotreatment and coke units as part of the
modernization of Revap , which is responsible for 15% of the feedstock processed in
Brazil.
o Record thermoelectric generation in September (6,252 MW average) and of natural
gas sales in 3Q10 (360 thous. boed).
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OIL AND NATURAL GAS PRODUCTION 9M10 VS 9M09:Increase in domestic and international markets
1,963
316
1,995
327 Natural Gas
Oil and LNG
9M099M10
+2%2,279 2,322
2,279
234
2,322
246 International
National
9M09 9M10
2,513 2,568+2%
o Production growth of 2% in the year due to:
- Increase in the production of FPSO´s Cidade de Vitória, Cidade de Santos, EspíritoSanto and Frade and contribution of extended well tests (Tiro and Tupi);
- Higher demand for natural gas in the domestic market. Production achieved record in September;
o Comparing 3Q10 vs 2Q10, reduction of 1% due to maintenance stoppages during August of P-33 and P-35.
National ProductionTotal Production (Thous. bpd)
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UTB: 15 th.bpdMXL.: 1Q11
18 th. bpd
17 th. bpd
26 th. bpd
58 th. bpd
51 th. bpd
3Q10
15 th. bpd30 th. bpdSS-11 (TLD de Tiro)
28.2 th. bpd35 th. bpdFPSO Espírito Santo
Parque das Conchas (1)
17 th. bpd30 th. bpdFPSO Frade (2)
Main units
-35 th. bpd and
25 million m3/d
FPSO Cidade de Santos (Uruguá-Tambaú) and
Mexilhão
60.9 th. bpd100 th. bpdFPSO Cidade de Vitória
(Golfinho)
9.7 th. bpd100 th. bpdFPSO Capixaba
Cachalote e Baleia Franca
2Q10CapacityProjects
Dec/201030 th. bpdGuará EWT
Oct/2010100 th. bpdFPSO Cidade de Angra dos Reis (Tupi)
New Units
Dec/2010180 th. bpdP-57 (Jubarte)
Jul/2011100 th. bpdP-56 (Marlim Sul)
Start-upCapacityProjetcs
Total: 185 th. bpd
NEW PRODUCTION UNITS:Continued increase in capacity
(1) Projects in partnership, capacity and production refers to Petrobras share (35%)(2) Projects in partnership, capacity and production refers to Petrobras share (30%);
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MacunaímaMacunaMacunaíímama
Libra
Petrobras
ANPo Acquisition of the rights to produce 5 billion boe in specific areas of the pre-salt that are not under concession;
o Start up of FPSO Cidade de Angra dos Reis in Tupi;
o 5 new wells to be concluded in 2010, totaling 16 wells this year;
o Two additional rigs still to arrive in 2010, increasing pre-salt operating fleet to ten;
o Guará EWT scheduled to start up by the end of November (FPSO already in Brazil);
o Tupi NE EWT scheduled to start up in 1Q11 (FPSO Cidade de São Vicente).
Tupi NETupiTupi NENE
TupiSudoeste
TupiTupiSudoesteSudoeste
Tupi OesteTupiTupi OesteOesteCarioca
NECarioca Carioca
NENE
Tupi SulTupiTupi SulSul
Piloto de Tupi IG1PilotoPiloto de de TupiTupi IG1IG1
Under Concession
Transfer of Rights
Santos Basin
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PRE-SALT UPDATEWells**:
** Drilling or completion or test.
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• New buildings in Comperj and Abreu e Lima in progress
• Pre-operation of Polyester Yarn Unit (Suape Petrochemic)
• Contracting of basic engineering - Premium I (Maranhão) and II (Ceará)
DOWNSTREAM UPDATES
• Investments of US$ 2.5 billion:
• Coke Unit (55%): higher added value products
• Capacity: 5,000 m³/day (3,000 m³/d additional domestic crude oil processing)
• Yield: Diesel (55%), LPG (5%), Naphtha (10%), Coke (20%) and Feed Cracker Unit (10%).
• Hydrotreatment of diesel (45%): Diesel S-50
• Increase in production capacity:- LPG - 21 thous. bpd
- Nafta - 42 thous. bpd
- Diesel - 23 thous. bpd
Revap – Reduction of future needs for Imports
New Refineries - Updates
Abreu e Lima
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1.90.2
0.9
29%
25%
46%
HSE IT R&D
Petrobras Investments in HSE, IT and R&D (2010‐14)
US$ 11.4 Billion
INVESTING IN TECHNOLOGY LEADERSHIP
Petrobras´s partnerships with 120 universities and research centers has created one of the greatest concentrations of energy research in the world
Expansion of CENPES makes it one of the largest research center in the world
In the Technological Park of the Rio de Janeiro Federal University, four R&D centers for major equipment and services suppliers is currently under construction :
Others companies are schedule to come to Brazil to develop technological centers:
•TenarisConfab
• Vallourec & Mannesman
•Weatherford
•Wellstream
• FMC Technologies
• Usiminas
• Schlumberger
• Baker Hughes
• Cameron• General Electric• Halliburton • IBM• Technip
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3Q084Q081Q092Q093Q09 4Q09 1Q10 2Q10 3Q10
115
55 4459 68 75 76 78 77
101
4832
49 64 70 73 7472
20
40
60
80
100
120
Petrobras Oil Price Brent
AVERAGE REALIZATION PRICE:Stable price in the domestic market
o Average Realization Price remains stable.
o In the comparison 3Q10/2Q10, the gap between ARP USA and ARP Petrobras increased, due to lower oil prices, Real strengthening and price stability in Brazil.
US$/bbl
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
20
70
120
170
220
ARP USA
ARP Petrobras
R$/bbl
Avg.3Q10
Avg.3Q09
144.47132.87
152.34 158.17
Avg.2Q10
152.64
158.60
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137.2140.2
134.5129.7
127.7
Brent (in R$)
16.84
24.78
16.51
26.53
16.95
26.87
17.54
26.37
18.46
24.26
3Q09 4Q09 1Q10 2Q10 3TQ10
Lifting Cost Gov.Part.
76.2 78.3 76.974.6
68.3
Brent (in US$)
9.02
13.84
9.51
15.23
9.40
14.33
9.79
14.71
10.60
14.07
3Q09 4Q09 1Q10 2Q10 3Q10
Lifting Cost Gov.Part.
DOMESTIC LIFTING COST:Increase explained by collective bargain and stoppages for maintenance
R$/barrel
41.62 43.04 43.82
US$/barrel
43.9122,86
24,74 23,73 24,5042.7224,67
Comparing 3Q10/2Q10:
o Collective Bargain Agreement (CBA), expenses with materials (equipments for platform maintenance) and 1% decrease in production increased lifting costs;
o Lower government take due to decrease in international oil price (4%);
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DOMESTIC OIL PRODUCTS :Significant sales growth in the domestic market
Domestic SalesThous. bpd
769
327
222
507
802
374
221
501
859
379
230
565
Others
LPG
Gasoline
Diesel
2,0331,898
+11%
1,825
3Q09
3Q102Q10
o Oil product sales in the domestic market grew 11% versus year earlier.- Diesel (increase of 12%): growing economic activity and improved grain harvest;- Gasoline (increase of 16%): substitution with ethanol due to higher ethanol prices;- Other: (increase of 9%): largely from jet fuel, asphalt sales, and LPG
o Refinery output increased quarter over quarter as a result of restart of Replan
755
338134
640
702
334134
637
740
342128
634
Refinery Output-1%
3Q09
3Q102Q10
1,8441,8071,867
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NG Pipelines
Fertilizer
Thermo Power Plant
LNG Terminals
GAS & ENERGYInvestments consolidation
Infrastructure Flexibility Power Generation
Aver
age
MW
Gas to Petrobras
Gas to others
Power Generation in Brazil+224% (3Q10 vs. 2Q10)
G&E Investments fully responded to higher demand
292
360
244
3Q09 3Q102Q10
Natural Gas sales (Th. boed)+23% (3Q10 vs. 2Q10)
0
1000
2000
3000
4000
5000
6000
7000
Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10
Brazil: 6,252 MW
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12,303
1,108(580) (270)
(1,888)
10,673
o Higher Operating Revenue due to higher product sales volume in Brazilian market, met largely by imports;
o Average inventory accounting increased COGS by R$ 580 million versus prior quarter;
o Increased operating expenses due primarily to non-recurrent items in 3rd Quarter: Collective Bargaining Agreement (CBA) 2010/2011, terminating Barracuda financial structure, and Incentives Progam for employees to purchase shares in the Public Offering.
(R$ Million)
OPERATING INCOME 3Q10 vs 2Q10
2Q10Operating Income
Operat. Net
Revenue
Other COGS
Operating Expenses
3Q10Operating Income
- CBA 2010/2011: R$ 634 million- Barracuda: R$ 486 million- Employees incentives: R$ 92 million
Inventory Effect
(COGS)
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8,295 (1,630)
2,598460 (634)
(523)8,566
NET INCOME 3Q10 vs 2Q10
*(1) Operating profit before financial income and participation in investments
(R$ Million)
o Higher financial results (R$2,598 million), due to q/q 6% valuation of Real on net debt;
o Equity income and Minority Interest also a consequence of Real strengthening;
o Increase in tax expenses as a consequence of higher operating income;
o Lower operating income offset by financial results, leading to 3% increase in net income.
2Q10Net Income
Financial Result
TaxesEquityIncome
OperatingIncome
3Q10Net Income
Minority Interest and
Employees Part.
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11,572 (930)
125
1,095 (506)(1,081)
10,275
EXPLORATION & PRODUCTION 3Q10 vs 2Q10Operating Income
(R$ Million)
Cost Effecton COGS
Volume Effect on COGS
Operating Expenses
3Q10Operating Income
2Q10Operating Income
Volume Effect on Revenue
Price Effect on Revenues
Reduction in operating income due to:
o Lower sales prices in the domestic market for oil and natural gas (oil: -2%; NG: -25%, in US$/bbl);
o Higher volumes reflect sales from inventory during 3Q.
o Higher operating expenses reflect CBA (R$ 225 Million), Barracuda project structure(R$ 486 Million)
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244 (925)
2,497
474 (365)
(211)1,714
DOWNSTREAM 3Q10 vs 2Q10Operating Income
(R$ Million)
Cost Effecton COGS
Volume Effect on COGS
Operating Expenses
3Q10Operating Income
2Q10Operating Income
Volume Effect on Revenue
Price Effect on Revenues
o Higher sales volumes from increasing domestic demand;
o Lower cost of goods sold due to lower oil acquisition/transfer prices in the 3Q10 and higher oil product import costs in the 2Q10, explain positive effect on cost;
o Positive effect on COGS due to lower acquisition/transfer prices and oil product import costs;
o Operating expenses higher because of CBA 2010/11 (R$ 136 Million).
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Inte
rnati
on
al
Dis
trib
uti
on
3Q10R$ 437 million
2Q10R$ 600 million
VS.
FPSO Campo de Akpo
35 %
27 %
META DE ENDIVIDAMENTO:Oferta Pública de Ações melhora indicadores da Cia.
Gas
& P
ow
er
3Q10R$ 264 million
2Q10R$ 522 million
VS. 49 %
o Higher exploratory costs;
o Higher write-off of dry or economically unviable wells in Angola, Nigeria, the USA and Argentina.
o Increase of 10% on sales volume;
o Benefited from non-occurrence of expenses from the settlement of ICMS tax debits, as occurred in the previous quarter.
o Natural Gas: Lower margins due to sales to volumes;
o Energy: Lower result in energy commercialization due to increase in spot price (PLD) offset by higher thermoeletric generation;
o Non-recurring write-offs reduced operating income: ICMS Tax (-R$90 million); GTL Pilot Plant (-R$ 50 million), CBA 2010/2011 (-R$ 30 million), lower thermoeletric idleness (+R$45 million).
GAS & POWER, INTERNATIONAL and DISTRIBUITION (3Q10 vs 2Q10)
Operating Results :
Operating Results: 3Q10R$ 526 million
2QT10R$ 390 million
VS.
Operating Results:
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Investiments 9M10 R$ 56.5 billion
5,6
6,1
24,710,1
0,05
1,3
1,1
3,8
Investiments 9M09R$ 50.7 billion
6.5
0.4
5.5
4.5
10.6
23.2
3.7
0.54.4
24.1
20.6
3.4 E&P
Downstream
Gas & Power
International
RTC
Others
Investments in Downstream for 9M10: R$ 20,582 million
INVESTMENTS 9M10 vs 9M09:
19%
13%
27%
2%
12%
27%
Quality/Sulfer Content
Conversion
New Units
Fleet Expansion
Investments in Braskem
Plangas, Maintenance,infrastructure,HSEand others
•Quality improvements (sulfur removal);
•Maintenance, HSE, operating efficiencies logistics;
•Expansion of refining capacity.
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R$ 120.2 Billion: Public Offering
R$ 115.1 billion: 3Q10
R$ 5.2 Billion: 4Q10 Cash
R$ 67.8 Billion: LFTs
R$ 47.2 Billion:Cash
R$ 74.8 Billionto acquire rights
to 5 billion barrels
R$ 67.8 B: LFTs
R$ 7.0 Billion: Cash
R$ 10.7 Billion: LFTs*
R$ 29.5 Billion: Cash
*Government securities with a maturity greater than 90 days.
34%Net Debt / Net Capitalization
1.52X
94.2
24.2
06/30/2010R$ Billion
Cash and Cash Equivalents(Adjusted by LFT)
Net Debt
Net Debt/Ebitda 0.94X
16%
57.1
58.0
09/30/2010
Before Public Offering After Public Offering
PUBLIC OFFERING RECONCILIATION
R$ 45.5 BillionRetained as cashand equivalents
Gre
enSh
oe
