Petróleo Brasileiro S.A. - Petrobras (PBR) Q3 2024 Earnings Report, Transcript and Summary

Good afternoon, and welcome to Petrobras webcast with analysts and investors to discuss Q3 results. This will be in Portuguese with simultaneous translation into English. The links are in our IR website. [Operator Instructions] Submit your questions through petroinvest@petrobras.com.br. Joining us, Clarice Coppetti, Director for Corporate Affairs; Cláudio Schlosser, Logistics, Sales and Market Director; Fernando Melgarejo, IR Director; Mário Spinelli, Governance Director; Mauricio Tolmasquim, Director for Energy Transition and Sustainability; Renata Baruzzi, Engineering Technology and Innovation Director; Sylvia dos Anjos, Exploration and Production Director; and William Franca, Product Director and other company executives. Fernando Melgarejo, our CFO, will take over now.

Good afternoon. Thank you for attending this webcast. These are the highlights for Q3 '24. We will be available to answer questions you may have at the end of this presentation. On to Slide 3. These are our operational highlights. Starting with exploration and production. We have come a long way. Back in October, we started operation of 2 FPSO, Maria Quitéria in Jubarte field and Marechal Duque de Caxias, in the Mero field in the Santos Basin. And we've also received Almirante Tamandaré. It's now in Brazilian waters and will be operating in the Búzios field. This is going to be the first high-capacity unit, capacity of up to 225,000 barrels and 12 million of cubic feet a day. The plan is to start operations next year, but we may anticipate that these are very important deliveries for our strategic plan. In the case of Maria Quitéria, we've anticipated that operation that was scheduled for '25. This effort results in more revenue as these assets generate or reach their full capacity, which is over 500,000 barrels a day. You can also see other important highlights. Our record production in 2P reaching 3 billion barrels. In Mero, the Sepetiba FPSO reached its peak production in less than 8 months. Also contributing to the production of the quarter. In explorations, we have discovered a field in Colombia and in South Africa. We have a minor stake in the Orange Basin. On to the next slide. Operational highlights, high level of use of our 95% for the quarter. In September, we reached 97%. We did this maintaining high-value tariff -- or byproducts rather. We've had the best history level of the greenhouse effect emissions in our refining park. We've increased sales for byproducts in the Midwest and also a partnership with Vale to test low carbon products, including diesel R, with 5% renewable content. We have the natural gas production unit in Rio. We are ready to start commercial operations soon. It's very strategic to Petrobras because it will increase the offer of natural gas in Brazil. We're starting at 50% capacity. And by year's end, we'll have 2 modules in operations, reaching a 21 cubic million -- or 21 million cubic meters of gas per day. And we're back to the top 10 ranking of companies we would like to work for. After 4 years of being outside of that list. These results are very important results for those companies that want to attract and retain talent. This is an indication that we're heading the right way. On to financial results on Slide 5. We haven't had any nonrecurring items impacts in this quarter, unlike the previous quarter, as you all remember. Recurring EBITDA was $11.6 billion. Recurring net income was $5.9 billion. We've maintained generating cash, $11.3 billion, a 24% increase quarter-on-quarter. Free cash flow was $6.9 billion. Gross debt is under control at $59.1 billion within the range we established in our strategic plan. I'll be giving you more detail about these figures. And you'll see that financial debt is at its lowest level since 2008. We paid out BRL 64.4 billion in taxes, and we've approved dividends and our on capital interest at BRL 17.1 billion. So these numbers show that we've reached consistent results despite the drop in prices of Brent oil. This is the foreign scenario. Brent prices was down when compared to the previous quarter, just like the crack spread in diesel, margins were reduced. However, we managed to offset by selling more byproducts. On average, we see a devaluation of real but FX was BRL 5.45 with a positive impact in our financial numbers, a 2% appreciation of real in Q3 when compared to 11.2% depreciation of Q2 in '24. Moving on to the next slide. This has impacted EBITDA in the Q3, partially offset by more oil production in the byproducts mix and for and because of higher sales volumes domestically, adjusted EBITDA was $11.6 billion, slightly smaller than the previous quarter when we written off the one-off events. Net profit is a result of the FX impact and the fact that there are no expenses that impacted the previous quarter. On this table, we can say that our cash generation remains robust enough to support investments, financial obligations and the dividends payment. Let me point out that we are investing $4.5 billion, about 30% above previous quarter, that increase is due to scheduled payments of OLP projects, those related to the new platforms in Búzios and also investments with the start of construction work in P-84 and P-95. This increase won't change the investments provision for the rest of the year. Investments amount to $10.9 billion. On to Slide 9. Before I talk about the debt let me point out the successful mission that we conducted in August and September. We issued a 10-year bond maturity is 2035, $1 billion the lowest spread to the U.S. treasury bond since 2011. At the same time, we had a repurchase plan. The 2 operations are in line with the debt management strategy of the company helping us reduce our leverage. Financial debt was $25.8 billion, the lowest level since 2008. On to the dividends screen. We are committed to distributing the results generated and the financial sustainability. Gross debt is under control, accrued positive results the Board of Directors approved a compensation of BRL 1.32 per share. It will be paid out in 2 equal installments in February and March, a JCP or dividends will be defined by year's end. We will then have enough information so that we can have the best tax advantage possible. On to the last slide. This is the important contribution of our taxes to federal, state and local governments. This is just a portion of what Petrobras returns to society. On top of that, you have dividends paid out to the government and our strategic plans that can generate high yields that can contribute to generate value to both shareholders and society overall. Petrobras had a 14% increase when compared to the same period last year. Taxes amount to BRL 64.4 billion. In conclusion, I would like to turn it over to Eduardo so that we can get started with our Q&A session. Thank you so very much.

Thank you, Fernando. On to the Q&A now. Please ask 2 questions at most. Matheus Enfeldt from UBS asks the first question.

Congratulations on the results. My questions are more on the operational side.

I'm sorry, but we can't hear you. Can you please go back to the beginning.

Can you hear me now? Eduardo?

Yes, I can hear you now fine.

I'm sorry. I'll be focusing on the operational side. Question one, can you give us more color on the Q3 production levels? You had an expectation of better performance. Q2 had a negative impact of scheduled and unscheduled shutdowns. How much of this quarter, including pre-salt were impacted or was impacted by those shutdowns? And what's the outlook down the road? Can we expect higher production from now all the way to 2025? What is the short-term prediction? And the second question is about exploration. ANP data shows that we had the least or the lowest amount historically. So what is the company doing thinking about explorations both in Santos and Campos basins replenishing reserves given the domestic difficulties, would that make sense to acquire companies abroad? Or would it make sense to consider acquiring companies that have a portfolio already in operation? These are my questions.

Thank you, Matheus. Sylvia will take those answers.

Matheus, I'll begin with your second question. You asked about the reduction in exploration and the potential in Bacia de Santo. It's always important to remember that in 2006, we were able to achieve our self-sufficiency, which we had dreamed of for so long. And the determining factor of that is that we are now increasing production and replacing our reserves. That's our track. We see that we have our strategic plan, '27 and '28 over $7 billion in exploration. And in this research project, we have a significant oil potential that we are investing in, in 3 ways. First, you asked about Santos. Yes, we are replenishing that. We're also investing in new opportunities in the fields that we already have, and we're seeking new fields as well. And that's where the Equatorial Basin comes in, where we have the greatest volume of prospection that has ever been done, that was in 2013. It's also very similar to the Campos Basin. The Equatorial Basin is also similar in its reservoirs in many technical aspects, it's a potential that is also similar. The seismic characteristics are, again, also similar. This occurs both in Venezuela and in the more recent discoveries in Guyana and Suriname. So there is enormous potential there that we need to assess, and we can only assess it by drilling. And for that, we need a license. So that is our primary line of investments, our road map. We are investing over $3 billion of our budget into that alone. And your other question is about investments outside of Brazil. So of course, the more production occurs, the more our need to replenish those reserves. So we are looking in regions that have the greatest potential. So we invest our efforts into places where we have more established potential, and that's our basins. We have conjugate basins in Africa, offshore. And those are very similar -- what we're looking at right now is very similar to Santos in the post-salt region. Of course, always looking at economic viability and profitability for Petrobras. I also want to mention that this year, we finished our acquisition in São Tomé and Príncipe. We also had -- we accomplished an investment in another basin in Equatorial Africa, and we are currently waiting for our license in that Equatorial margin. There is a lot of potential there, but we can only find out to what extent after we drill, and that is when we will confirm whether or not our model is correct. So I think that's one of your questions. The other question is about the downtimes. Yes, in fact, this year was atypical. We had scheduled and unscheduled downtime. Scheduled ones were, especially in Santos in large-scale basins. Just to give you an idea of the scheduled downtimes, we ceased producing roughly almost 150 barrels a day -- 1,000 barrels a day. But those scheduled downtimes are important for the longevity and safety of our units. It's just like a car, you need to stop every once in a while and perform an inspection. So that's what we do. They don't occur every year, they occur in different interspersed periods. And this year, that occurred in Santos. And we also have unscheduled downtime, which occur for many different potential reasons, such as being legally mandated or because we discover something that occurred. There's also -- another reason could be worker strikes the ANP agency in Brazil also atypically ordered us to stop for a period. But again, this was all occurred within a safe margin of risk. So all in all, 2.8 million barrels, which is roughly 4%.

Thank you, Sylvia. Our next question comes from Monique from Itaú.

Congratulations on your results. I'm going to follow up on Matheus' question for Sylvia again. With regard to the unscheduled and extraordinary downtime, how would Petrobras classify the reasons behind this downtime, what were the main causes? And what has the company been doing in terms of process in order to improve and reduce these unscheduled or unexpected downtimes or mitigate them? My next question is about CapEx. We've been talking with Petrobras over the past few months about a mismatch between the physical and financial advances in regard to the road map. And you always mention that there is improvement process underway to improve the CapEx curve such that the mismatch or deviation will be reduced. And so that the plan will be more -- a better fit for reality, the reality of the projects. So my second question is, could you please comment about how the CapEx projection refinement process is proceeding? Especially with regard to the future plans.

All right. Our first question will be for Sylvia and the second will be for Renata, but please feel free.

The unscheduled stops, they occurred due to maintenance reasons that we sometimes detect or sometimes new technologies we want to implement or sometimes actual maintenance. So this year, we had several shutdowns for -- due to requirements of the ANP. Remember that during the pandemic, many of our basins and the units were not shut down at all. We extended throughout that period. So we are now working to clear out any and all requirements made by the ANP so that we can really clear the table of any pending demand so that we can guarantee the longevity of all of our units. And that's something that we've been doing primarily to ensure the integrity of all of our investments. Our ultimate goal is to tackle and clear any and all requirements made by the ANP, and we're really clearing all of them out.

Monique, I actually mentioned in an event 3 months previously about this mismatch you mentioned between physical and financial. And we did, in fact, implement improvements. And in this quarter, you can see to what extent we were able to accomplish more. And one of the reasons for that is precisely because we were able to align the physical and financial advancements. And so from here on out -- we did have a liability that we cleared out. And so from here on out, we are confident that we're going to be able to accomplish everything we plan.

Thank you, Sylvia, Renata and Monique for your questions. Our next question comes from Bruno from Goldman Sachs.

Congrats on the results. My first question is with regard to the company's cash position. You've been operating with a cash position that is far above the $8 billion that you place as a benchmark for what Petrobras would need for its stated operations. So my question is, do you have an intention to reduce that surplus cash? Is that a margin you intend to keep in your balance? And my next question about exploring reserves. There's a lot of comments made about the equatorial margin. But what about the Pelotas location? Could you give us an update on that project's current status?

Thank you, Bruno. The first question is for Fernando and about Pelotas that will go to Sylvia. Fernando?

Bruno, thanks for your question. With regard to cash that is available to the company. It's an interesting topic because when we think about projects and the need for cash flow, we look at projects from exploration to first oil with anywhere from 5 to 7 years. So we cannot look at a 3-month window which is the case for other companies with different turnarounds, but that's not us. So we have short-, medium- and long-term views and our strategic planning which includes investment indicators, cash flow indicators. How much of that is going to be net and how much of that we are going to use for our investments. And we also have our starting cash. Since we are a company that has a strong cash flow generation, it's natural that we'll have different cycles. We generate cash. It accumulates it builds up in our treasury and when we need to make investments, then we distribute that cash because we don't have any interest in holding cash surplus above what we need. That cash is dedicated to our investments. And I remind you that having surplus cash has a cost and the more surplus you have, the more that cost will be. What we have today is $8 billion, as you mentioned. And so we are currently investigating many different scenarios and alternatives looking at what flexibility we have or don't and what our mechanisms are, our methods are for working with lower cash. I personally come from the treasury department. And I always have a mind to not work with excessive cash, and we'll have an answer by November 21.

Thank you, Fernando. About the Pelotas Basin, in addition to the Equatorial margin, another region where we've invested into exploration and we acquired 29 blocks, 26 in partnership with Shell and 3 more in partnership with CNOOC, we are currently acquiring seismic data, which is necessary for all exploration. It's a gigantic region, one of the largest we've ever worked in. And we're currently working on -- part of that we've already begun and we're likely to finish acquisition next year. It's a very large region, as I mentioned. After the seismic data, then we need to interpret the seismic data, select regions, study the blocks, find out which are more favorable, what wells will be drilled and Ibama's intentions and permission for that drilling. We're currently working on the -- one of the first stages of the seismic data. And only after that, we'll be able to really study that data. But it is a very promising region. But all of these assets are part of that $7.5 billion that we've set aside for the '24 to '28 period. So we are currently at the seismic stage, and we are anxiously waiting for more. And again, we're not going to wait until the end of the year to begin interpreting the data. No, as and when the data arrives, we are interpreting them.

All right. Thank you, Sylvia, thank you, Fernando, and Bruno, for your question. Our next question is from Bruno from Morgan Stanley.

I have a follow-up with regard to the topic of cash and shareholders and another one about 2P. With regard to shareholders, if there is enough leeway for a complementary distribution, what would be the timing for that? Would that be within this fiscal year? Maybe right after presentation or after the strategic plan? And what would be the approval method specifically? Will a Board meeting be called? And how quickly can we expect that to occur? With regard to 2P, you mentioned that there is a decline phase. And so I'd like to understand whether that is occurring in line with the 10% that the company mentioned or whether pre-salt has proven to be more resilient compared to other fields such as Bacia de Campos? And what about resource allocation platforms? And where would that production move to over the next few years?

Well, the first question about the compensation for shareholders to Fernando. And then Sylvia will be talking about 2P.

Bruno, how are you doing? Well, this is what we have seen so far this year. It's only natural to make a decision about extraordinary dividends once the strategic plan is ready, taking into account short-term, midterm and long-term volumes. Of course, we'll be considering that distribution alongside the strategic plan, if we can meet the deadline, which is to be approved by November 21st. Technically, it is possible to distribute that within the same year by the end of December.

Thank you, Fernando. Over to you now, Sylvia.

2P is our beloved giant and results are better than the average there's a production decline that is below 10%, way below than those in the Campos Basin. We're now embarking on this challenge of 2P Plus. It's almost 1,000 barrels a day, but the goal is to reach the 1 million, 2P would like to compete with Búzios that is aiming at reaching 1 million next year. So 2P is being refurbished. 2P Plus would include more additional wells. We're going to review all the infrastructure to inject water and gas to revitalize those pipelines and maybe the use of another platform. We want to have the smaller decline possible. We don't want to experience what we've seen in the Campos Basin, which is a major decline, including we have the aim of maintaining the very strong reinjection on our wells, so that we can keep the production line declining as little as possible.

Thank you, Sylvia and Bruno. Gabriel from Citi is up next. Over to you, Gabriel.

I have 2 questions actually. Let me go back to the capital structure. We've been focusing on minimum cash and gross debt but we disregard leverage. It's a more pessimistic outlook for next year. But I would like to understand what you're considering in terms of capital structure. What is the size of the influence? [Technical Difficulty] isn't investing as much, but there is still a lot of things to do Equatorial margin, the Pelotas basin. Can you hear me?

We could hear the first part of your question, but we couldn't hear the second question, can you repeat that, please?

The first part is the ideal or the optimum leverage rates. So what should be the ideal point? The second question is looking at investments more directly. ANP and environmental agencies, licenses, but you had some more squeezed debt services, hiring FPSO, drilling, probes. I think this is a tighter market and Petrobras has been trying to adjust. So here's my question. How are you going to get away with this problem? The FPSO, how can you have more flexibility to hire these vessels in 2025? And what would be the impact in the budget? Would it be around $9 billion? Is this the new level of investments? These are major units, but these are higher numbers than what we've seen in the past. What would the inflation impact be?

Thank you, Gabriel, for the question. Fernando addresses the first one and then Renata.

Thank you. Cash and the ceiling for the debt is being discussed within the strategic planning cycle. We discussed in depth the company's capital structure, what would be the ideal balance between own capital and third-party capital. We've been discussing that within that strategic planning exercise. Leverage level should be appropriate to the situation of the company and our business plan, and this will be made public during that strategic planning. Many things are discussed there because this is the most important report at year's end, it can provide several answers. We want to optimize the company's capital structure and try to strike the ideal balance between own and third parties' capital. IFRS 16 will have to acknowledge that as a debt, it's a debt proxy per se, the investment flow changes, if it's our own capital, we have more intensive flows at the start, if it's third party, I can't dilute that over time, models are different. The characteristics are different and leasing is the ideal strategy we've adopted. These are good debt to have. All these things are paid out of the results, and this is being reflected in the capital structure we are considering for the 2025, 2029 cycle.

Yes, Gabriel, you're right. We have a hard time leasing these FPSOs that ended up delaying some of these projects. Here's what we did. Fernando and his team helped us approach the market to try to understand what was going on. We found out that these companies had a hard time getting credit lines. So they couldn't come up with a chartering proposal. The other issue was the payments flow, just like I said before. We actually remodeled that model to a neutral cash flow. There is no financing in either direction, companies or Petrobras. So it's a net cash flow. So we changed the chartering model. We're not hiring this type of services. For the coming platforms, we're not going to use that alternative. One of them is BOT. The CapEx comes out of Petrobras. The operation is run by our company and then -- or the company owns that asset, and then it's transferred over to Petrobras so that will help companies be part of that bidding process. We've seen significant growth in rigid EPCIs, that's what we call it rigid oil pipelines. But in the past 2, we've seen that trend, the downward trend by bringing more players to that bid. We have more companies participating, especially because of the contract adjustments we've made, payment terms. So we have 5 players for the EPCI. And we are considering Petrobras being part of the EPC. We are going to hire -- we're going to charter the vessel and the equipment separately so that we can come up with that contract and still have that alternative to do that in-house instead of going out to the market. As to prices, nickel is one of the top commodities that would impact prices of our equipment and ducts and pipelines and for all our units. Back in 2022, $48,000 was the price of a ton of nickel, today is at $16,000. So our expectation is that is that these prices are going to come down because of that commodity price. Have I addressed everything?

Yes.

Thank you, Fernando. Thank you, Gabriel. Pedro from BTG is up next.

I have 2 questions. What are the possible tax deductions in the coming quarters. This has begun to impact Q3 results. Can you give us more color as to how soon that benefit will be used? And the second question is about the investment curve. Results will be announced at the strategic planning announcement, but can you share what is the profile of implementation CapEx? Are you going to have a change in the share of the different CapEx profile when compared to this year's plan to last year's?

Thank you, Pedro. Can you address or can you field both questions, Fernando?

Yes. Let me talk about the tax authorities. For Q3, cash flow include these positive impacts, better tax -- or income tax and social contribution and USD 800 million of savings of about BRL 4.2 billion worth of savings, just by paying out those taxes because of that offset in our fiscal base. And the remainder will be used by Q1, about BRL 3 billion, USD 500 million, give or take. As to our investments now, we don't envision any major changes as far as their maturity goes, those that are currently underway, it's still a major amount even in 2025. It's coming down because you have the implementation cycle, and then there's those in prospection as those that are becoming finalized, the -- that wheel moves around. When we put out a strategic plan for last year, that was very important to better understand the maturity levels and whether we were right in using the necessary resources. So we are certain we can use more cash in that case. And as I said, I don't see any major changes when we turn from 1 year to the next. Because our vision is always long term, 4 or 5 years, all the way still we get to the first oil and even for renewable energy.

Well, next questions will come from Rodrigo from Santander.

First, I'd like to go back a little bit and talk about post-salt. And I'd like to understand the different processes. We recently had Maria Quitéria. But I'd like to understand what are the next revitalization regions for '27 and '28? How can we imagine that the company's curve is going to look like in that region, in those fields and regions? My next question is a little bit more difficult, but I'd like to get your take about the capital allocation. When we talk about CapEx and M&As, I mean, specifically the revitalization ones and M&As, such as investment in Namibia which is a project that we can see is quite advanced. So how would you balance, how would you say that your decision process is like with regard to that those organic projects and APFC?

Thank you, Rodrigo. Sylvia will take the first one and then Fernando. Sylvia, please. Actually Fernando, will go first.

Rodrigo, we'll begin with the second question with regard to CapEx and M&As. Well, our internal strategy is to not comment on specific projects. We do reply to questions in a broader sense. With regard to organic investments such as M&As or nonorganic, whether or not they are organic, they all go through the very same governance process, the same requirement for returns, all scenarios, including resiliency, they do need to generate positive VPL in order for us to move forward. That's a concept that we have here at the company. Our governance is developed in this way. It has been working. And of course, improvements are always welcome. But we do not foresee any changes in that sense. In terms of returns, we see returns on that investment. Of course, the ones that have higher risk by the book, we want higher return and vice versa. But there is also a matter of strategic alignment. Some investments generate synergies, and so they need to be looked at as part of our portfolio and not individually. And so potentially, we can have a smaller return on some investments if they have synergy and if they match well with our portfolio, and of course, assuming they are not harming the whole of the company, but if they have a future, medium or long-term strategy and synergy, that will make sense. Of course, above all, we always need to have a positive VPL, including in resiliency scenario.

Thank you, Fernando. With regard to post-salt and the Campos Basin, we want to see today a recovery. We have 4 units, new units, that we are working into replenish, renew the post-salt basin in Campos. But we're doing great work putting new production wells in place into production, and we foresee a 200,000 barrel increase in that basin. We also have a goal, that basin overall has a very low recovery level, approximately 7% but our goal is to keep the post-salt cover stable, including work in the upcoming wells. The Campos Basin is really our production model, the template that we follow. It's the benchmark that we will use for Africa, for the equatorial margin. So it's really teaching us quite a lot, and we're going to increase production to give longer life to that basin. And our aim is to keep producing for many more years at the same levels. Of course, not in the short term, but our goal is to treat this young elder, which is celebrating its 50th anniversary now, Campos Basin, and it really changed the history of Petrobras and of Brazil, and it brought us the knowledge needed to move the Santos Basin forward, and it brought us to where we are today, a global benchmark in oil production. So the Campos Basin post-salt has our utmost priority to continue to be a role model for all of our basins.

Thank you, Sylvia. Thank you, Fernando. Our next questions come from Jorge from Scotiabank.

Congratulations on your results. It's been a few months now since the recent gas decree, how did that decree change discussions with the ANP with regard to future projects? And how did it change Petrobras' outlook towards those? And secondly, given the Brazilian deficit in terms of diesel and its current imports, how did Petrobras decide on its supplies geographically and the distribution between small and large players, does Petrobras tend to concentrate its relationships or opt for more pulverized type of relationship?

Thank you, Jorge. The first question will go to Thomas, and then I think Schlosser will take that second one.

Thank you, Jorge. Well, with regard to your first question, initially, we were a little apprehensive but our read today is that it will apply to new projects and not to already approved ones. So we are currently awaiting the publication of the '25, '26 ANP regulatory paper so that we can actually begin discussions with the ANP. Right now, in gas, we are very much focused on the Senate amendment, the [ Patent ] law, which has some measures that it puts in place to reduce or to impact the Petrobras market, but our discussions have all been very positive. We've moved forward quite extensively. And we have agreements regarding protecting and preserving Petrobras' own production. And we've also resolved the issue of GNL imports. And we are now looking at the matter of importing from Bolivia and Argentina. And the contracts have already been signed with third parties. So in short, we are monitoring this agenda, and we are optimistic that it's all going to be sorted out.

Thank you, Mauricio. Mr. Schlosser? Cláudio Romeo Schlosser: Yes. I -- first, I want to clarify something. We do not have a prevalence of imported products in meeting the Brazilian market's needs. On the contrary, ever since we began our new strategic plan, we've been prioritizing Petrobras' assets, including refineries and logistic, in the sense of capturing that margin here in the country. For instance, in '24 to date, it's at 23% of internal demand for diesel A with various different players importing, including Petrobras and the main importers are the distributors. Petrobras does also work in the import market in a way that is complementary to domestic production, and we strive for resiliency in a way that is more effective. To do that, we leverage a number of strategic advantages that we currently have. This decision is based on operational planning processes, on the use of computing tools and optimization. The geographic region has many different factors. We have a whole bevy of plans for strategic stops when we need to do so in order to supply markets or client markets in one way or another. So to that end, we use a number of different computer tools. Inventory levels also have a significant impact. We have a number of different opportunities that we capture from abroad always striving for synergy between our own operations and imports and exports as well as return shipping and using regional synergy to improve our results. Now in terms of commercial relationships, we always strive for the best conditions, including logistics. So we always want to be the best option compared to other suppliers, meeting players of many different scales and sizes and fields of operations to whatever extent we can and we want to keep our operations profitable for all our assets.

Thank you, all. Our next question comes from Lilyanna from HSBC.

I have just 2. The first is about reserve. I'd like to know what can you do to ensure that the environmental license for the equatorial margin can come as soon as possible. And in the same line, thinking of more reserves, Sylvia has mentioned the revitalization of the Campos Basin. I'd like to understand, wasn't that already included in the '24, '28 plan? Sylvia, you mentioned 200,000 barrels a day of potential recovery. I'd like to understand whether that was already included in the strategic plan to be put into the curve for 2.4 billion barrels in '24 to '27? And in the same line of that reserve, do you intend to purchase assets that are already producing in the Campos region so that you yourselves can think about optimizing investments and recovering reserves? And do you have any idea of the scope or magnitude? And my second question about downstream field. How have negotiations been working in with Yara to provide fertilizers and the sales that Petrobras is going to make for the fertilizer plants?

Sure. Yes. Thank you, Lily, for your questions. First, we'll answer about reserves and then about the equatorial margin. And then William will talk about fertilizers per se.

Lilyanna, thank you for your question. Yes, we do seek reserves day by day. That is our motto almost. We always want to optimize the different fields. So the Campos field is part of that plan but we are trying to accelerate drilling of those wells as much as possible so that we can really obtain those additional 200,000. But yes, that is already included in the '24, '28 plan. And the replenishment of reserves. Also, I must mention the equatorial margin. It is truly our challenge. What we can do is try to obtain more from what we have, but the major leap forward comes with new discoveries. And as I said, the equatorial margin because of how similar they are to other basins and the positional model of the different reservoirs, the different production reservoirs, such as Campos, there is a generation capacity that is very significant and that we can only confirm by drilling. So we have an oil system there in the equatorial margin that once tested and confirmed, will yield great results. I always say that people always call it the new pre-salt, but actually, the equatorial margin is more similar to the Campos Basin.

Lilyanna, thanks for your question. In order to obtain a license Petrobras has really been sparing no effort. And I'd like to comment the latest response that Ibama gave us was not a negative. What they did send us was a number of questions to the technical team regarding the proposal that we presented in early August, which was the construction of one more base to protect fauna by Petrobras located in the Oiapoque city limits. And part of what we proposed in our license request to drill the deepwater regions in Amapá, is, in fact, a set of services. It is a physical fauna protection base, but it is integrated with a number -- a large number of different vessels, both ocean-going and riverine and a significant number of services and specialized technicians, everything specializing in fauna protection. So Petrobras and all of our technical teams have been sparing no effort in bringing to Ibama, increasingly making them more and more confident that we do have the capacity for and will obtain this license. And when we obtain this license, we have an exercise that we will perform, which is our preoperational assessment, and we're ready for that including by contracting companies that are highly specialized in this sector. So we are quite confident we're going to reply to these latest new questions. We do not, in any way, shape or form see that as a refusal.

Thank you, Clarice. Thank you, Sylvia. William?

Yes, we did a nonbinding memorandum of understanding. We're now discussing with our RTC with the area of renewables, and there are some opportunities, some interesting assets on Yara fertilizers. We're considering producing fertilizers from biomethane. Just like Fernando said, it has to be with positive NPV for the 3 scenarios. For the ANSA case in the state of Paraná, we want to resume operations in May 2025. It's run by Petrobras alone, there won't be any partnerships to resume operations there. But we do have a memorandum with Yara, and we are now discussing possible partnerships in the future.

Thank you, William. Thank you, Lily, for the questions. Over to Caio from Bank of America.

First off, Petrobras has been saying or has been talking about the possibility of internationalization of assets in Colombia and Namibia. How do prioritize these assets especially when you consider the potential of the equatorial margin, the Pelotas Basin and domestic assets? Would you be able to explore all these fronts at the same time? Or is there any of these projects that would take priority? Once it's been approved, you would turn down the others? And I have a more specific question about the gross debt $35 billion. Do you believe that it's enough for future projects? Would the company consider increase that ceiling to accommodate more investments or maybe by distributing more cash to investors or both, maybe?

Sylvia and then Fernando.

All right, Caio. Well, they're not competing projects. We can make investments in all of them, both equatorial margin and the Pelotas Basin and the investments scheduled abroad. USD 7.5 billion in exploration, $3.1 million for equatorial margin, $1.3 million to international projects. We have wells for these areas. São Tomé and Príncipe, this one in South Africa and also Colombia, Bolivia and Argentina. So it's part of our strategic planning. These are not excluding projects. So the answer is yes, we can operate in all fronts. And we do hope to do so, including our equatorial margin.

Thank you, Sylvia. Fernando?

Thank you for your question. We've been discussing that in depth in our strategic planning discussions. This is an excellent exercise to help us envision or see many things, what the company thinks about the future. And one of the things is to review the capital structure our own or third parties' and the combination of both. Everything is being discussed within the strategic planning for them. Once it's been announced, this is one of the items that will be addressed whether we're going to maintain it or not.

Thank you, Fernando, Sylvia and Caio, for your questions. Regis from XP asks the next question.

Congratulations on the results. I would like to address 3 topics: One follow-up on extraordinary dividends. I would like to better understand what the debate is. Would you be looking at the cash position in late Q3 and then make a decision based on the cash position and the cash flow that you've already realized? Or are you going to prospecting into the future? Let me put it in a different way. Would it make sense to make more than one extraordinary payment per year if you believe that once you report the full year's results for 2024, we'll have additional cash? So this is my follow -- the first follow-up question. My second question is simpler. What is the Búzios and Mero current status for 2026? I would like to understand whether you can anticipate -- there's room to anticipate or on the other hand, if there is any risk for delays given licensees or hiring labor and equipment? And finally, my question is about -- or the third question is about the Campos Basin. What are the key projects for this '25, '26 time frame?

Sylvia?

Let me still address the Campos Basin question. Again, it remains a priority to revitalize it, investments in this '24, '28 time frame is BRL 22 billion. That includes new platforms, Albacora, Barracuda-Caratinga, Jubarte, Maria Quitéria that is already there and the partnership we have with MC33 with Equinor. And that also includes 200 wells scheduled for this '24, '28 time frame. Additional production can be resumed over 200,000 barrels in the short term in the '25, '26 time frame. This is what we consider for this period.

Thank you, Sylvia. Fernando?

About extraordinary payments, I would like to make it clear that this is a dynamic decision. What is the cash flow at the start and what the capacity to generate more cash that can ensure our operations and our costs and investments and, of course, pay all our debt. We'll be considering everything, the cash position in Tzero is not the only element there. So we need -- we have to take into account short-, mid- and long-term basis. But having a background in treasury, ideally, you have a very streamlined cash and at the same time, have flexibility if you have any stress scenario, I do have alternatives to replenish that cash if needed.

Thank you, Fernando. Thank you, Regis. Conrado from Safra.

Let me talk about investments in renewables, wind and solar projects, they don't seem to be happening at the speed that we once expected. Do you agree? Or is it because time is uncertain because of the very nature of those projects? Would that change your strategy in some way? Maybe to start with greenfield projects, 100% run by Petrobras? And another question about fertilizers, about the fafens in Bahia and Sergipe. Are you still negotiating that? Are you going to adopt a tolling model by reviewing some of those conditions? Or is there room for other alternatives? So these are my questions.

Thank you, Conrado. Tolmasquim and then William will address the question about fertilizers.

Well, let me address the renewables, wind and solar. There is a very known fact. It's coming to an end now. But up until now, we had an oversupply of energy. You have way more projects than demand. Prices, therefore, came down. Some projects were reduced by the government by ANEEL and the economy is picking up again. So that price curve is coming back up again. In order to approve a project, we have to have positive NPV. You have to compensate that. So we have the CapEx. We have possible partners. We do have 4 companies still negotiating that. The projects are out there, but we have to find the ideal situation, the ideal scenario before we approve those projects. I know that those of you that monitor prices have seen that price change. About running by Petrobras 100%, I don't think we're considering that, because the Petrobras cost is somewhat higher to operate renewables, partnerships, therefore, are the way to go. We might even consider looking at projects that are already in operations that would smooth things out. So we would put the greenfield projects in the back burner. That's a possibility that is being considered as we speak.

William?

[ I'm sorry, it's Conrado ]. Thank you for your question. We've been talking with the Unigel Agro Group. We do have some possibilities that are being considered. It has to be a win-win situation. It has to make sense strategically speaking. We have 8 million tons of urea and we're not producing anything, fafen Bahia and Sergipe in those 2 units, our capacity is 1.5 million to 2 million tons of urea. We're still talking about, it has to have some economic feasibility and fit within Petrobras' strategy as far as the fertilizer strategy is concerned. So the answer is yes, we are discussing with them.

Thank you, Conrado, for your questions. Rodolfo from JPMorgan is up next.

Most of my questions actually have already been answered. So I have just one, we've been speaking with investors at length, and everyone is increasingly concerned about the price of oil. And of course, Petrobras has a very low cost, but I'd like to take the opportunity since we have the company Board and senior management here. When looking at the topic of oil stress, what does Petrobras have planned to react to a potentially more aggressive oil scenario?

Rodolfo, thank you for your question. I think some important points we need to bring here can show the resiliency of our portfolio. When we look at a negative scenario, I know resiliency is not a great word to use. But in that situation, we use $45 a barrel. And even in that case, NPV needs to be at least greater than 0. So today, at 0.75, we have a significant amount of headroom and all of our planning -- now I should mention we'd run hundreds of scenarios to investigate whether or not our plan is a good fit. And one of many of these plans include drops in the price of the dollar. But it's difficult to study any of these by themselves. Now if we look at conjugate pairs of scenarios and the drop, we are looking at a $4 billion to $5 billion a year drop in yearly operating revenue. But the world moves, the world keeps moving. There are many different factors to take into consideration for the aggregate value. But we do run those types of scenarios. And remember that our resiliency scenario is $45, and it does need to pass that test.

Thank you, Fernando. Thank you, Rodolfo. We have just 2 more questions from Vicente from Bradesco.

I have 2 questions. I'd like to go back on to the question of inflation for equipment and services. In the last couple of months -- 12 months, we looked at top side numbers and prices went up by 150%, which was quite worrying. Today, we are competing with Guyana and Namibia and Asia, there's a lot of onshore as well. Petrobras has a matter of scale and long-term loyalty with the different shipyards. So, how does that touch on the topic of CapEx and inflation, especially considering double-digit inflation at the $2 billion level? And next, I'd like to go back to Fernando and the CARF. You mentioned that there is probably 3 more billion dollars to arrive by the next quarter. Does that include payouts to go back to the partners, to the shareholders, has that been addressed in the third quarter?

Sure. We'll begin with Fernando and then Renata.

Could you repeat the question?

He asked about the CARF.

Okay. Yes. Yes, I understand. Sorry about that. Well, there are 2 effects regarding the CARF. First is reimbursing the partners. Initially, we had planned BRL 2.6 billion. Of that, I'm talking about BRL here. Of that BRL 200 million have not yet been recognized, leaving BRL 2.4 billion that have been recognized from June to September, and of those, BRL 1.9 million have already become cash that was effectively received by Petrobras in the year-to-date in the current year. And there was a reduction in income tax and social requirements in the order of BRL 4.2 billion because our fiscal basis was reduced by the value of that expense. And we imagine that in the next go around, that's going to drop by some $500 million, BRL 3 billion in Q1 '25. And just before I pass on to Rodolfo, I mentioned the revenue of every $10 in reduction, we have BRL 5 billion but that's about operating cash, okay, just a correction.

Right. All right, Vicente, there is not one single reason for that increase. It ranges from projects of ours that are more complex, and that has a lot of -- we've been doing lots of homework. We're back to drawing board, running benchmarks and critical analysis on our projects. Another reason was the cost of feedstock and inputs. The nickel went up to ridiculous levels because of the war in Ukraine. Another aspect that we've been discussing at length with the market and as I mentioned here is I've been recently inspecting our projects in Asia 2 weeks ago, and I had the chance to speak to many of our vendors, some of whom were actually not even supplying us anymore for various different reasons. And all of them, every single one with no exception, showed an interest in working with us and with partners in Brazil. And we always put that as a condition that we will not do without. We insist on our vendors working with partners in Brazil. So we have an MOU signed in that sense. We've been discussing with the market to understand what they need. We've been expanding our basis, our database of partners as well. And focusing on our products, too, that's basically we're in constant talks with the market to understand everything that's going on.

Thank you, Renata, Fernando and Vicente for your questions. And now with Vicente's questions over, we conclude our Q&A session. We would like to thank you all truly for your questions. They really enrich our discussions with investors. Today, we had over 1,000 people connected during this webcast, and everyone is all the richer for the questions you ask. If there are any additional questions, we'll be happy to answer them through our IR team, who will be at your disposal. For some final remarks, we have Fernando.

I'd just like to thank everyone on behalf of Petrobras to all of you for your commitment to joining us and with regard to your technical questions, too, and our Investor Relations team is always at your disposal if you have any questions at all, as Eduardo mentioned, we're always here and available to answer them. We would be happy to take your questions, just reach out to us. And thank you once again for joining us in another webcast.

This event is already available at the Petrobras Investor Relations site, and we will shortly make available the audio and the live replay. Thanks to all your investors. Have a great afternoon and a great weekend. See you next time. [Statements in English on this transcript were spoken by an interpreter present on the live call.]