turning petrobras around · turning petrobras around . disclaimer forward-looking statements: the...
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© 2017 General Electric Company - All rights reserved
Nelson Silva Chief of Strategy and Performance Officer
Turning Petrobras around
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Disclaimer
FORWARD-LOOKING STATEMENTS:
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 2016 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.
In addition, this presentation also contains certain financial measures that are not recognized under Brazilian GAAP or IFRS. These measures do not have standardized meanings and may not be comparable to similarly-titled measures provided by other companies. We are providing these measures because we use them as a measure of company performance; they should not be considered in isolation or as a substitute for other financial measures that have been disclosed in accordance with Brazilian GAAP or IFRS.
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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Petrobras HSE activities on a typical day Headcount at shipyards 38,000
Toolbox Dialogues 4,000
Work Permits 10,000
Confined Space Entry Permits 400
Interventions 1,500
Work Permits Audits 2,000
Job Safety Analysis 4,500
Distance travelled by trucks (km/day) 1,700,000
Source: Petrobras and subsidiaries
Our daily safety challenge
3
Commitment to Life Program —
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Challenging business environment —
§ Uncertainties of global economy
§ Oil industry
§ Changes in the competitive scenario: shale oil/gas
§ Portfolio optimization and adjustments to the workforce
§ Petrobras’ context
§ “Car-wash” operation
§ Challenging regulatory framework
§ High debt levels and cost of borrowing
§ Economic and political crisis in Brazil
4
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Low oil prices’ challenge continues… —
Source: Bloomberg
Oil Price (Brent -US$/bbl)
20
40
60
80
100
120
140
160
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
5
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Return on average capital employed (ROACE) x Brent US$/bbl
0
20
40
60
80
100
120
0%
5%
10%
15%
20%
25%
30%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1S16
ROACE Industry average* Brent
%
ROACE
Brent
Source: Evaluate Energy and corporate reports (Petrobras, Shell, Exxon, Chevron, BP, Statoil, ENI, ConocoPhillips, Ecopetrol and Total)
…driving down the industry’s results —
6
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The oil and gas industry is cutting both investments and costs —
Upstream Global Investments (2007-2017) (US$)
Global Industry Cost (US$/boe)
Source: IEA - World Energy Investment 2016
0
100
200
300
400
500
600
700
800
900
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
-25%
-24%
US$ Bi
0
10
20
30
40
50
60 Other Expenses Taxes Other than Income
Production Expenses Development Costs
Exploration Costs
US$
per
boe
of
prod
ucti
on
Source: IHS Markit 7
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1
4
7
2
5
8
3
6
Source: BCG
Technical standardization
Organizational rightsizing
Improved workforce efficiency
Supply-chain partnering and renegotiation
Maintenance optimization
Optimization of logistics
Greater cooperation with industry
players
Streamlining overhead, real
estate and support service costs
Eight key areas of cost savings to reboot the business model —
8
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To be an integrated energy company focused on oil and gas that evolves with society, creating high value with a unique technical capability
PETROBRAS UPDATED VISION —
9
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Main Metrics of Strategic Plan (SP) and Business and Management Plan (BMP) —
SAFETY FINANCIAL
Reduction of
36% In the Total Recordable Injury
Frequency Rate (TRIFR*)
Reduction in
LEVERAGE Net Debt/EBITDA
* TRIFR = reportable incidents per million man-hours
TO
2.5
in 2018
FROM
5.3 in 2015
TO
1.4
in 2018
FROM
2.2 in 2015
10
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EVOLUTION
Strategic Drivers —
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Investment spending by Petrobras (Capex) —
2017 Capex US$ 19.2 Billion
0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00
100.00
2015-2019 BMP 2017-2021 BMP
81% 82%
17%
17%
2%
1%
Comparison of total capex (US$ Billion)
Exploration & Production (E&P) Other segments Refining & Natural Gas (RNG)
98.4
74.1
-25%
12
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Cost reductions —
142
126
2015-2019 BMP
2017-2021 Estimates
2017-2021 BMP
-18%
53% 37%
10%
E&P RGN Demais áreas
Manageable operating costs* (US$ Billion)
153
* Manageable operating costs: lifting, refining, logistics and distribution costs, overhead and others
Refining & Natural Gas (RNG)
13
Other segments
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Partnerships and divestments create benefits —
2015-2016 2017-2018
21
13.6
Amount in US$ Billion
§ Capex and risk sharing
§ Technological exchange
§ Strengthening of corporate
governance
* Press Release Jan 2017 – US$ 19,5 + 1,5 Bi - new target
14
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CAMPOS BASIN
7 (100%)
2
Production Fields
Exploration Blocks non Operated
SANTOS BASIN
7
3
Producing Fields
Exploration Blocks
SANTOS BASIN
1 Exploration Block
SANTOS BASIN
10 Producing Fields (100%)
Cutting edge technological development
Lower finding costs
Fast production growth
Lower CAPEX
Lower lifting cost
Competitive breakeven
As the pre-salt experience demonstrates —
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Key messages —
16
§ Safety is Petrobras’ top priority
§ The industry needs to reboot its business model
§ The Brazilian business and regulatory
environment is improving
§ Petrobras is turning around
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Thank you! Nelson Silva Chief of Strategy and Performance Officer