Petróleo Brasileiro S.A. - Petrobras (PBR) Q4 2024 Earnings Report, Transcript and Summary

Good morning, everyone. Welcome to Petrobras' Full Year 2024 Earnings Presentation for analyst and investors. We apologize with the technical issues we've had. We were able to overcome them and we will now begin. This event will be presented in Portuguese with simultaneous translation into English. The links for both languages are available on our Investor Relations website. [Operator Instructions] And you'll be able to send your questions via e-mail to petroinvest@petrobras.com.br. Joining us today are Petrobras' President, Magda Chambriard; Executive Director of Corporate Affairs, Clarice Coppetti; Executive Director of Logistics Commercialization End Markets, Claudio Schlosser; Executive Director of Finance and Investor Relations, Fernando Melgarejo; Executive Director of Governance & Compliance, Mario Spinelli; Executive Director of Energy Transition and Sustainability, Mauricio Tolmasquim; Executive Director of Engineering, Technology and Innovation, Renata Baruzzi; Executive Director of Exploration and Production, Sylvia dos Anjos; and Executive Director of Industrial Processes and Other Products William Franca. To begin, I'll now hand over to our President, Magda Chambriard for her initial remarks. Please, Magda, you may proceed.

Ladies and gentlemen, good afternoon. It is a great pleasure to join you today to talk a little bit about our performance in 2024 and to also place ourselves at your service and to answer any questions you may have about said performance. As Eduardo well said, we have the entire executive board here with us as well as a few directors and executives who are all open to this discussion about our results. I'd like to thank everyone for joining us and especially our investors who are watching us right now. I'm happy to be here. And it is very important to have all of you connected with us today. It is always a great joy to be able to join events like this, where we can show you our vision and tell you face-to-face or looking into your eyes where the company is and where we stand about its performance. I start by telling you that 2024 was a very positive year for Petrobras. We also believe that 2025 will be even better. In 2024, we generated over BRL 200 million in cash and paid over BRL 102 billion in dividends. All of that took place in a more challenging environment with Brent and diesel crack prices lower. But even so, our investments went up by 31% to $16 billion and also reduced our full debt to the lowest level since 2008. This is no surprise to using as it's already been reported, but we saw a loss of BRL 17 billion in Q4. That's something you've probably read in newspaper headlines today. But we'd like to tell you that it is very important to understand that this loss involves no flaw in the company's cash situation. This was the result of an exclusively accounting event, which is the variation in exchange rate and its impact on Petrobras' debt as well as the debts of Petrobras' subsidiaries. This BRL 59 billion in transactions in 2024, affect our accounting results, but lead -- in no way does it lead to outplace by the company. We've lowered our debt level and paid dividends throughout the year. We paid about BRL 102 billion in -- Petrobras is strong and extremely healthy in financial terms. In operational terms, and with regard to cash generation, we continue to move forward. About 10 days ago, we began the operation of an FPSO, Almirante Tamandare in the Buzios field. These operations brought capacity for 225 barrels of oil a day. We must say, that this is the largest deepwater operations field in the world and that this 225 barrels a day FPSO is the first of four large rigs that will come into operation and will help this field produce about 200 million barrels a day by 2030. This is a production and production potential that's unprecedented that no other country shows or has shown. And while it may take some time for this field to reach its full potential, we've already managed to see 800,000 barrels a day in Buzios. Thanks to the start of operations in the FPSO, which started earlier, and I mean Almirante FPSO, as I mentioned earlier. This is Petrobras' most productive field. Before that, the most productive 1 would produce 150,000 barrels a day. So we're close to 2P now with 800,000. And Buzios, this will probably jump to be soon to 1.5 billion and even 2 billion barrels a day by 2030. It's a Hess asset. And again, the largest deepwater oil field in the world. This is excellent news, even better when we see wells with production potential of as high as 70,000 barrels of oil a day. A single well in this field platform whose production we opened earlier has been to produce more than many oil fields around the world, 1,000 barrels of oil a day, as I said. Later this quarter, we should reach 1,000 -- we expect this well to exceed the production of many others in the world and for it to produce alone over 2 million barrels a day becoming the productive production field that Petrobras runs. Needless to say, Buzios is an invaluable asset for us, which is why I'd like to take this opportunity to speak a little bit more about our investments in 2024. Our investment, which came to $16.6 billion, slightly higher than what we established in our guidance was a recovery of our investments that we had planned for 2025 in our organizational strategy and which we fully executed in 2024, anticipating the options in a platform such as this one, just to give you an idea of what this means. This means an increase in present net value for this platform by about $2.2 billion in a 3-year period. So this is already solved, and we do not expect to see the same level of CapEx in the first quarter of 2025. And it is very important that this is clear to everyone. This investment was due to the anticipation of plant investments and also of high potential -- a high potential oil operation. Also important, these investments that we pushed from 2025 to 2024 in Buzios, where again to start operations in the most productive deepwater oil rig in the world, meaning more oil in a field that's highly -- with high potential and with also high financial return, something that's absolutely unquestionable. We understand how the market may be frustrated with the near-term results, but we'd like to remind you that making advanced investments such as what we did in Buzios is what any investor might ever want. Increased production and a highly production -- in a highly productive field is money in your pockets quicker. So ultimately, what we're offering you is oil more quickly. If possible, we would have advanced all the Buzios related CapEx to today. And all of you would be very happy because we would start producing its full potential by tomorrow. And most likely, you would be able to rely on production levels of about 2 million barrels a day in a single field. This adds value to Petrobras. But unfortunately, we cannot advance the investment that much. We did what was possible to us. And if in the future, we can advance something that will bring as much profit or even more. Rest assured, this is what Petrobras will do. We will always try to advance investments in order to derive value for the company. And whenever that happens, what we are advancing is cash generation with new oil coming in, meaning we are making any investors pipe dream come true. That's what we're focusing on. We are focusing on bringing abductions, investments and value earlier. And this is something we did deliberately. Other example was FPSO Maria Quiteria whose operations, which was expected to take place later in the Campos Basin. This is a platform that was expected to start operating in 2025, and we were able to make it, so that operations started in October 2024. Again, it was advanced cash spending that was made deliberately. And it must be said that, this was the result of a great effort by our team, which was accomplished thanks to the very well fine-tuned directories or secretariats in the country -- in the company. We also set new records in our presale project, which now accounts for 80% of all of Petrobras' production. These are world-class assets, which are highly productive and which currently, as I said, account for 80% of the company's full output. We started operating FPSO Marshal Duque de Caxias in the Mero field in addition to Maria Quiteria in the Jubarte field that expanded our production capacity. Our production peaked in FPSO Sepetiba, also in the Mero field. Another very positive piece of news was the increase in our reserves in 2024. To give you an idea, over the course of 2024, we produced 900 million barrels of oil. And we also replenished 1.2 billion barrels to our reserves. Meaning, we produced 900 million and also replenished our inventory showing that, our reserves are a priority for us. We faced the production challenge, we produced a type of energy that's non-renewable, which is to say production of this is expected to decline, and we've been able to show greater production and a larger reserve. Replenishing our reserves is absolutely critical for Petrobras to remain important and relevant, both in Brazil and the world over the next few decades. So we understand as paramount to responsibly explore the equatorial Shore, which is an area we understand to be of high potential as well as other borders in Brazil, such as the Pelotas Basin in the southern side of Brazil. We are currently conducting exploratory results in that basin and also interpreting the seismic science, and we expect this basin, which already shows similarities to the Namibia basin might also provide us a fruitful future, when it comes to oil production. Our actions took place not only in production and exploration and also not only in engineering. In refining, we also reported major breakthroughs. Our gasoline and S10 diesel also deserve a highlight. Bear in mind that S10 diesel is our most profitable product. And we set record breaking production in S10 diesel production. Our refineries operated with the highest operating factor in the last 10 years. And 70% of deep water oil reached its highest percentage in total produced mill. And as you know, years ago, our most important production came from the Campos Basin, and this was heavy oil. So to reach 70% of deepwater oil share in the processed load in 2024, meaning a lighter oil. All this goes to show is how much work our teams have accomplished to change the level of processing of this oil to deliver as much value as possible to you as a result of our most valuable asset, which is our deepwater prospecting and exploration. We also started operations at PGN, the natural gas production in the state of Rio de Janeiro as well as the sulfur unit in the Pernambuco unit, which we call RNEST. Many accomplishments and breakthroughs have come throughout the year. And because we do not have a lot of time, we just like, just wanted to offer you a summary of what we've accomplished. But once again, we are here at your service and available to answer any question you might have. Our operations, ladies and gentlemen, rest assured it is absolutely profitable. Petrobras has had an operating cash generation which is unprecedented for 2024. We are talking about no more, no less than BRL 204 billion in operating cash generation. And as I have mentioned in the beginning of my speech, we had a reduction in our financial debt, which is now BRL 23 billion. In other words, we generated our operating cash flow to the tune of BRL 204 billion. We paid off BRL 270 billion in taxes, and we concluded a year with a lower financial debt, the lowest level we've seen in the last 10 years. So we have reached our lowest point in the debt since 2008 and that means, ladies and gentlemen, that we have generated enough resources to invest, compensate our shareholders, meet our obligations, and we did all of that with a debt level that is well under control, which makes for an excellent financial health for the company. I underscore that the accounting loss of the fourth quarter does not reflect operating soundness or the financial health of Petrobras. But rather, it is the effect of the exchange rate variation and that of Petrobras with its own subsidiary companies abroad. Just to give you an idea of what that means and how that translates into an accounting amount, it was an impact of BRL 59 billion which results, once again, this does not have any impact on our cash flow, but rather this is an effect of Petrobras' debt with its subsidiaries abroad. And again, this is not to say, it's very important to underscore and understand this fact. This negative value of the variation did not come from the company's cash and furthermore, that is to say that as the dollar scales back, part of this amount will be a profit in the first quarter of 2025. In some years, this variation is positive and other years, this variation is negative. This year and throughout 2024, this variation was negative to the tune of BRL 59 billion. For example, if we were to do a simulation for the first quarter of 2025, closing at the current exchange rate of BRL 570 all the way to BRL 585 per USD, that exchange variation would give us instantly, a positive result in the order of $2 billion in the first quarter of 2025. In BRL, north of BRL 11 billion and that's only coming from the exchange rate variation and the accounting profit. And again, without any impact on our cash flow. At the end of the day, we have some opposite effects that come to a balance economically, and that is because the exchange variation between the net results of the Brazilian holding has an impact on the profit -- a negative impact in this case for 2025. However, at the same time, this comes in positively into our net worth. One theoretical example. If we were to exclude this exchange variation from different exclusive events, as well as the tax transaction from the second semester and by the way, I do parenthesis here, that decision, by the way, was recognized as a very positive one. In this case, the Petrobras profit in 2024 would have been $19.4 billion. So from that perspective, it's worthwhile to have this calculation in mind. Now I will discuss a little bit about the company's future. I already mentioned the Buzios field. So let's get into Petrobras' future. When we come out to talk about the results of 2025, we will be looking at a company that is producing more. We are planning an increase of 100,000 barrels per day for 2025. And by the way, we remind you that we are working with non-renewable power sources and the trend is a downward trend. And what we are presenting to you, ladies and gentlemen, is that even though we are facing some declining trends, we intend to announce to all of you by the end of 2025 that will have an increase in production in the order of 100,000 barrels of oil per day. We will have three new producing units that are going fully operational throughout the year. And once again, ladies and gentlemen, this is an effect -- this is a time that is very challenging. But Petrobras is adamant and ready to face up to the challenges and turn it into positive results. The revamp of the Train 1 from the refinery of Pernambuco and the new HDT, those will be fully operational by the end of this year, which also means more diesel out in the market and it means something extra as a matter of fact. It means more S10 diesel in the market, which is our most prized position, our most high value-added product. We are also returning to the fertilizer business with the operation of Enza, which is estimated for 2025, and we will also resume the works of UFN3, which is the fertilizer unit of the Midwest of Brazil. We are expanding our fleet by acquiring four range vessels and eight additional vessels for coasting. For those that are not familiar with range vessels, these are vessels that pick up fuel in the south of Rio and take it all the way north to the Igua support to replenish our vessel fleet, our supporting vessels and we are also expanding that with an additional eight vessels for coastal navigation. And I will tell you why, because on Route 3, we will produce more GLP and this GLP will actually be distributed throughout the Brazilian coast with these vessels. So once again, all of that operation will be carried out to distribute this production, which finds itself in a growing trend. We are growing this production more and more. And again, these are major opportunities for the national industry. These are vessels that are going to be financed by the Merchant Navy and they are going to be operational. So it's noteworthy to mention that, this enlargement of our fleet is all of our governance procedures, all of our economic analysis. So all of that is a positive prospect in all three scenarios and analysis that we ran and this is a very promising and optimistic scenario. Now once again, when it comes to the local content in this fleet, which will be our own fleet, we are talking about a major contribution from the federal government when it comes to the local -- which may reach as high as 65% of supply from the national industry, it's worthy to say that, this cost will not be paid for by Brazil. This will be paid rather by the federal government via some financing structures at a reduced cost from the Merchant Navy fund and also a new legislation in Brazil, which is drafted by the federal government. It's a procedure related to the accelerated depreciation, which is enabled as of 2024, thanks to the efforts of the federal government. And once again, with the support of the federal government, these developments may reach as high as 65% local content, generating jobs and expanding the participation of the Brazilian industry in the naval and offshore industries. And to us, this is rather positive because besides having assets that compete on the international level, for the costs of replenishment, we also have some suppliers that are close to us, and those are meeting all of our demands in a timely fashion. Therefore, when you consider all of our projects to expand our fleet and to increase the number of vessels we own, we expect to generate 44,000 new jobs. These are going to be very positive hiring processes that are going to increase our ability to respond swiftly to our needs and to distribute fuel throughout the country. And with that, we are going to be less financially exposed from a Petrobras perspective, to charters and freights. We have our Financial Director, our CFO, to our side, he's going to tell you that in a second, but what our finance department has said is that, reducing freight is in line with a better possibility to manage our company debt, freights, our debts and managing our debt is one of the priorities as our CFO will be happy to inform you later on. Again, we are related as well with Petrobras going back to the Dow Jones Index of sustainability, which is one of the most important indexes in the world, we are recognized as a company thanks to our efforts in the environmental, social and governance areas. We have stacked prices and awards in the area of governance, we have garnered achievement awards in the environmental and social sites as well. Petrobras is one of the nine global energy businesses that are qualified between the over 50 companies that work in this sector and that have been assessed for the certification. We recognize the multiplying effect of Petrobras activity in Brazilian society. In 2024, our investment sustained 250,000 jobs and they accounted for 5% of the investment in Brazil. Our activities have generated 31% of all the primary energy consumed in Brazil. We paid for BRL 260 billion in taxes and other government expenses, as I have mentioned before. And we paid BRL 102.6 billion in dividends, as I mentioned before. We had BRL 37.9 billion that were paid to the union and to the National Bank for Development. We also dedicated over BRL 1 billion in social environmental investment. This is a voluntary and mandatory efforts. We also did sponsorships and donations with this amount. And we have numerous impactful programs, such as our income program, which will offer 11,000 positions in professional training for the energy sector, developing skills that are essential to our industry. Ladies and gentlemen, I would like to make other parenthesis at this point because we are already observing the results of Petrobras activities. We do have a shortage of labor in Brazil, boiler operators, welders and other professionals. This is an issue. And Petrobras has gotten involved in numerous programs along with the industry agency in Brazil to train numerous professionals and these trainings, they comprehend a great deal of our income and autonomy program. You have people that are registered. These are folks that are eligible for the income assistance. So in this sense, that is to say that what the company is doing is we are adding labor to the market. We are qualifying our labor in the country. And at the same time, we are alleviating Brazilian society from a heavy burden. So it's a win-win situation. It's good for Petrobras because we have qualified labor to work in our operations, and we mitigate risks, therefore, and we are also meeting the demands of society at large in a timely fashion. We are working on our strategic plan, which is our guidance for 2025 and for the year 2025, all the way to 2029. It's also important to say this is a concrete plan. We move on looking for ethanol projects, bioethanol and low-carbon hydrogen in addition to other decarbonization initiatives. It's also important to say that all of these projects are based on the same governance criteria and the same profitability analysis criteria as any other project for the company. They must be profitable in every scenario from the brightest to the gloomiest just as any other project this company embraces. And in closing, I'd like to say we are absolutely determined to continue to derive value for society and our shareholders, whether they are on the private sector or the public sector. We'll continue to invest in profitable projects with capital discipline and innovation. Together, we'll continue to write a successful story for our company. And we would very much like to have all of you beside us. I'd like to once again thank everyone for joining us and turn it over to our CFO, Fernando Melgarejo, who will dive a little bit deeper into our financials.

Good afternoon, everyone. Thank you all for joining another Petrobras earnings webcast. We'll start by giving you the main highlights for the company's 2024 performance. After this presentation, myself and all our other directors will be available to answer any questions you might have during our Q&A. So let's begin with Slide 5. Talking about the main items in our financial results. The first point I'd like to highlight is our strong cash generation with an operational cash flow of $38 billion for the year. This is as large as the GDP of many large states in the country. Many of our states do not have a GDP as large as our operational cash flow. Our financial debt decreased to $23.2 billion, the lowest level since 2008. These indicators demonstrate Petrobras' financial health. I'd also like to highlight our investments, which came to $16.6 billion in 2024. All of this has been mentioned already by our President. And this accounted for a 31% increase over 2023, which we will discuss in further detail later on. Our adjusted EBITDA was $40.4 and billion net income was $7.5 billion for the year. Now moving on to Slide 6. Despite our strong cash generation, our net income in 2024 was lower than in the previous year. Now why was that? First of all, it's important to understand that Petrobras' results were impacted by an accounting only item. That being the foreign exchange variation, impact in debt between Petrobras and its subsidiaries abroad. This $10.9 billion impact, which you see on the chart, does not involve any cash outflow as our President has mentioned, and actually involves no actual disbursement. It's purely an accounting impact. The second most significant impact came from external factors, the depreciation of Brent crude and the diesel crack spread. These are external market conditions that affect all companies in the industry, both domestically and overseas. Lastly, the tech settlement agreement, which we recognized in Q2 was actually a highly positive measure for Petrobras. It was thanks to this agreement that Petrobras resolved billion dollar disputes that pose significant uncertainty for the company's cash flow. We also included the impact of oil production in the chart so you can see that the lower production volume had minimal effect. The other items I mentioned were the key factors affecting Petrobras' accounting results, and mostly because of the foreign exchange situation. Now what we conclude from the chart is that excluding these specific impacts, Petrobras' net income would have been $19.4 billion. Now if we were to look at it from a quarter-over-quarter perspective, excluding the exchange effect, which was -- we would have had $5.5 billion and the minus $18.2 billion would have been $13 billion, a positive $13 billion. Now on Slide 7, we will explain in more detail the items that have the greatest impact on our results, starting with the foreign exchange variation. At the end of Q4, exchange rate was BRL 6.19 per USD, 28% depreciation of the Brazilian real. This conversion is applied to debt between Petrobras and its foreign subsidiaries. These are intercompany transactions, which are very common among global corporations like Petrobras. In other words, these are funds circulating internally within the company. This exchange rate effect enters Petrobras Holdings net income and negatively impacted our profits in 2024. At the same time, it positively impacted our equity. These opposing effects ultimately balance each other out economically. According to current accounting standards, 1 of these variations is recorded in earnings and can be either positive or negative. In 2023, as you all remember, it was positive. Now it's been negative. In Q2, we also discussed this at length. And again, had the U.S. dollar had been around $5.75 right now ending the quarter at that level. To our Q1 2025 results, we would add about $2 billion incrementally to the expected results to the tune of BRL 11 billion. This is just for everyone to understand that this is an absolutely accounting effect, which has no impact on the company's cash situation. Now on to Slide 8, let's discuss the external factors that affected us in 2024. Brent crude declined by 2%, as you can see in the chart, and diesel crack spread dropped by nearly 40%. The decline in diesel prices was influenced by global economic uncertainties and lower demand in the Northern Hemisphere. It is important to emphasize that, this scenario affected all companies in the sector, as I said earlier, and not only Petrobras. This is an issue that's specific to the oil and gas industry. On Slide 9, reinforcing what we mentioned before, the tech settlement agreement was a onetime event in Q2, which impacted the company's earnings positively and eliminated legal disputes to the tune of BRL 45 billion. And if you remember at the time, when we reported this agreement, the company reported a 3% increase in its stock. Now on to Slide 10, let's discuss our debt management, which to us has been highly successful and also well regarded by the market. At the end of 2024, our financial debt was the lowest since 2008. As you can see on the chart, our financial debt was $23.2 billion. Most of it coming from our allocation, which is precisely connected to cash-generating assets. We still have a very positive allocation, and we continue to lengthen our debt maturity and shortening our spread. And as we talked about the market, and so I mentioned our Latin Finance Award which also came with the issue of bonds, all of which impacted 2024. Now on Slide 11, let's talk a little bit about CapEx, which is probably a point we must discuss at length. Some items already having been advanced by our President. It's important to say that this was $16.6 billion higher than our guidance, and it represented no additional cost for the company. This was a recovery in our physical investment gap, which were expected by 2025, and which were advanced to 2024. Now the gap was absolutely bridged for the year, which is to say we do not expect the Q4 2024 investment to be the same, as what we expect in 2025. Another important point here is -- these investments that we moved from 2025 to 2024 were in Buzios as our President has already said. And because of that, the best EP asset in the world, as the President also said, this is extremely positive because it also means more oil sooner and more oil means higher revenue. If possible, we would actually make all our investments in Buzios earlier and start producing in all our FPSOs tomorrow. Now the company gains in lower risks and potential increase in these events. This line of incentives is decisive for our new production systems to go into operation. And that's what we're focusing on. Executing our investment plan and a single portfolio, which will allow us to be profitable in our production. Another thing that may come up is whether the CapEx time line will be altered and the answer is an adamant no. It remains what we have in our strategic plan. That's what we'll be followed. Our forecast for our CapEx in 2025 through 2029 remains because we have major projects, which involve uncertainties, which are mitigated by the process we adopted so far. And within our CapEx, we also included a 10% more or less -- a 10% variation either up or down. On Slide 10, we are still committed to our disbursements and compensation for our stakeholders. As you remember, our result was mostly impacted by results that have no impact on our cash flow. So we paid using our reserves and capital compensation as well as profit reduction. Our reserves are an accounting feature to pay dividends, but the payment of dividends is still based on the same decision-making process. Cash flow investment level, the company's capital structure and most importantly, its financial situation. Now on behalf of time for questions, I will not be presenting on the following slides, our President has already addressed every issue. But I'd like to wrap up by saying something. 2024 was a year where we had a $90 billion CapEx dividend to the tune of BRL 102 billion, an extremely healthy level. We paid BRL 270 billion in Texas and lowered our debt by about BRL 11 billion. What this means is the company's fundamentals are absolutely sound and they make us confident in our results in 2025, which we expect to be significant and sustainable preserving the company's status as 1 that derives value to society and its shareholders. I will now turn it over to Eduardo, who will mediate our question-and-answer session.

Thank you, Fernando. Thank you, Ms. Bresnan. Now we're going to have our Q&A session.

Hello. Good afternoon, everyone. President executives. Thank you so much for the opportunity of asking a few questions. Now I would like to focus my question on the investment side. Can you hear me?

Yes.

Right. So once again, I would like to focus on the investment because I think that's the main discussion. Dr. Marcus, do you have any emphasis on that higher adherence of the planned versus executed CapEx in '25 to '29. We understand the methodology changes such as the leasing aspect. And it is quite clear in your initial speech, that this anticipation, this advancement that you are doing now has a positive LTP. Perhaps what is not clear to me, and maybe you can shed some light on it and some of the questions that I received are in that line is that we do not see an additional effort or some other variables for us to understand this positive NTV in the project. So would that be an anticipation on the production curve as well or a reduction of the future CapEx which is not clear in the numbers. So my first question, if you can shed some light on which units will be advanced and for when we can see the first oil? And if you can give us some detail on what was the process of that decision.

Now let me answer 1 at a time, if I may. Right. So before you move on to your second question, Luiz, I would like to answer the first one, if I may, because that's a really important question. And I want to word it correctly. As you may remember, when we took on Petrobras, we did a reassessment of our '24/'28 strategic plan. And we realized that there was a non realization of the CapEx, so to say, for '24, '28, which had an impact on the CapEx and what we said was, well, instead of BRL 18.5 billion, which was estimated for the year, we are going to spend 14.5 tops, and that became new guidance at that point. Here's what happened from then on. What happened was these were investments that were focused mainly on Buzios, and that was the result of a lot of effort between the different departments. Our engineering, our finance department worked quite closely. And with that, we were able to advance these investments, we were able to go back to that level of 16.5%. So again, these were investments that were absolutely considered in the strategic plan for 2024 to 2028. As a matter of fact, they were on the table, and we're a little drastic in our expectation for the execution when we first got to the company because we were looking at 14.5%. But the fact is, Almirante Tamandare came to Brazil in 2024 and not in 2025. At FPSO, Maria Quiteria, started production and concluded in the third quarter, actually late in the third quarter of 2024 as opposed to 2025. And thanks to that, Buzios is now reaching 800,000 barrels a day. We connected the very first well of Almirante Tamandare which is a gigantic one. It's a sequence of 4 wells that will be active in Buzios besides the other ones. But the fact is that these wells are producing, they are producing at around 30,000 to 40,000, and the ramp-up is still taking place. And our aim is to reach its full potential, which is 70,000 barrels per day, which was estimated to happen later down the road, but we are anticipating that. This is already a reality, right? One other matter, which is important, is FPSO Maria Quiteria which is installed in the Jubarte field -- in the south of the country, like I said, that platform was supposed to go operational in 2025, and it did go in operation in the fourth quarter of 2024. Once again, giving us some new oil. New oil in Buzios and new oil in Parque das Baleias as well. Furthermore, that combination of our physical CapEx with our budgeted CapEx. This is having an effect, which is invaluable for the company, which is to mitigate any type of misalignment that might have an impact on the conclusion and on the start of the operation of P-78, which is another giant platform for the Buzios field. So what we have here is a platform that should come to Brazil in July that rig is going to start navigating at around July, it should be maybe 3 months until it gets here. And afterwards, that rig will be placed in position so it can start its commissioning efforts. And so yes, it's all of that. All of that is involved and it's a part of this rearrangement, shall we say, of our CapEx. And once again, as opposed to extra CapEx, we had a CapEx that was a little below that 18.5% that we had estimated previously, but it was actually a positive surprise because while we thought that we would be able to invest 14.5%, we managed to get to 16.55 in investment. And again, this is everything that an oil company can aspire to in our eyes because this means that we are advancing production in the most significant assets to do that in the assets that how can I put it -- in the asset that is of the highest value and the most productive. So I would say that the Buzios field is really a dream field for any country and for any oil company. And we had a good fortune of having found that well and be able to develop it. And we are developing it in the most timely fashion possible. This is the effort that Petrobras is focused on right now. I hope I have answered your question. If you want to ask your second 1 maybe we can dive into this topic if you desire.

Yes, absolutely. Can you hear me okay? Good. So it is absolutely clear. My second question is with regards to the new projects. Recently, we noticed a significant increase in the cost of these new units, units that used to cost $2 billion to $2.5 billion or now at $4 billion to $4.5 billion. Now that could be explained maybe by the inflation of the industry. Obviously, the ability of those new units, just like you said, goes to 200-some thousand barrels, which is very much superior to the other ones, but some of the suppliers are talking about higher complexity with gases to outlook. So if you can maybe give us some color in terms of the economic rationale of that change? And what does that mean?

I'll hand it over to Renata. She is the -- our executive engineer, and this is under her umbrella. So I believe Dr. Renata is the best person to answer that.

Good afternoon, Luiz. As you all said, we did see a very sharp increase in prices, not only in Brazil but around the world, especially after the Ukraine war. We saw a sharp increase in prices 1 of the raw materials for our platforms is shot up and price and also complexity has also increased. In the case of these platforms, these rigs and Buzios that are being produced in Singapore, they do not have gas imports. So I don't know where the information came from that had become more complex to import it. But we are doing our homework internally regardless of those rumors of mitigating and streamlining our projects as best we can. Those rigs involve capacity of 225,000 barrels, the 4 last ones, both in Buzios, Itapu and Sepia. These are units which will bring high returns to Petrobras. So we're really trying to make those deadlines. I just wanted to add something to the previous question which is in 2024, we realized part or we accomplished part of what we expected to accomplish in 2025. Now why is that? We were able to shorten the financial risk. We saw that some of our subsidiaries were facing challenges because of the gap that we were seeing there. So what we did was to protect the deadline for delivery of these rigs so that we would have them within the time frame that we had established. But this was the result of great effort by our team to really allow us to realize and deliver the expected oil results that we had planned for.

Luiz, this is Fernando. I just wanted to add also. There is no new project in addition to those we reported in 2024 and for the period between 2025 and '29. There's been no increase in their value. The contracts are still the same. What happened was a shift in time of these projects, but there's no new project in the pipeline, as mentioned before, I mean, we heard there were rumors that there could be more projects, but the projects we're talking about are all in our strategic plan.

Let's now move on to the questions by Jorge Gabrich from Scotiabank. We can't hear you. Can you hear us? Well, let's move on to Bruno Montanari from Morgan Stanley's question.

I just wanted to follow up on what's been said by -- to answering Luiz questions. When we run all the numbers, considering the anticipated CapEx in 2024, would it make sense to think that your production curve over the next 4 years could maybe move closer to its upper band and maybe the deadline, thinking about the near term in the lower bar when we think about maybe CapEx at 10%. That would be my follow-up. And if you'd like, you can first answer that, and I'll come back with my other question.

Yes, that's exactly right. We will continue to follow our production guidance and investment guidance. But as Renata mentioned, we understood we needed to protect that investment and protect the project from any delay caused by the challenges that other players had been talking about and pointing us to. So I believe that this movement has everything to do with that. This will ensure our deliveries and most importantly, in addition to everything else, ensure our delivery is at a lower risk.

Thank you, Madam President. Well, my other question, I'd like to focus on your production in 2025. Over the course of 2024, there seem to have been several impacts from maintenance. And now that we have the final results for 2024, can you pinpoint the impacts of those maintenance shutdowns? And what do you expect for 2025 seeing that what we had in 2024 in those terms are not expected to place in 2025. And I'd also like to add maybe or ask maybe Renata to talk about this change reported by some outlets in your strategy. So what adjustments are you doing to try to engage your investors a little bit more and assure the integrity of your delivery in every unit moving forward?

Well, I'd like to start by telling you that the difference between our production in 2024 to all other years were not just for scheduled maintenance, but rather also because of our scheduled maintenance days. In the first half of the year, we had an impact that was caused, which was the stoppage at Ibama so the authority to continue -- the licenses to continue posting actually stopped. Just to give you an idea, because of the effect of that in the first quarter of 2024, we had an impact of about 208 barrels a day for a very long time, in fact. This strike at the agency, Ibama also had an impact from a standard operation, which also impacted our production. So in addition to scheduled maintenance stoppages, which we need to do. Not only do we have to do them, but they also mitigate significant risks. They are part of our operation. But in -- not only did we have to deal with a larger number of them, we also had to deal with the lack of licenses and be sluggish in progress, both because of the Ibama strike and because of the national oil industry strike as well. I will also turn over to Sylvia and with AIP and later to Renata add to your -- to the answer to your question.

Good afternoon, adding to what President Magda said, we did have scheduled maintenance stoppages, which are common, which you saw a larger number of them. And also facing the effects of the post COVID period and the required technical reviews, which piled up during this period. So in 2024, what we did was try to recover, which we actually accomplished was reduce the number of these mandatory reviews, which A&T, the auditing agency that we deal with orders is to do. We also saw three rigs with maintenance shutdowns of over 100 days. But most of them have been resolved. What I tell most people is when production stops, we can recover that, but the annual average remains the same. Now regardless of these shutdowns, our risk analysis model actually incorporated that and we did a huge effort to make up for them. Also the Ibama issue as our President said, we were affected, especially in the Mero Field, which is a large field. Just to give you an idea, any 45,000 barrel well we had many of them stopped, but every 1 of them causes the average impact of 20,000 barrels a year. And this is just due to the slower pace of licenses to operate these wells. So what we wanted to underscore is the constant need, as you well said, we are growing our platforms and rigs and we have to be very careful because as these grow to stop a 100,000 barrel a day is 1 thing, but a 200,000 barrel a day is another lease completely. So we are deploying our best efforts to make the next shutdowns as spares as possible. But we will have an increase in production. We will continue to see maintenance shutdowns in every new platform that haven't yet had their mandatory stoppages in the Mero field, for example, we have all 3 rigs that still need maintenance. And the average is reached 2.8 which is the expected production through the end of the year regardless of every maintenance shutdown, which we do to increase efficiency and ensure that these rigs continue producing for a long time.

Yes. I just wanted to add saying that these shutdowns are actually incorporated by our production expectations. So when we talk about the strategic planning, and point to an expected output level. Those figures already include our expectation for maintenance shutdowns along the way. Go ahead.

we had several impacts in the Santos Basin. We also look at management to eliminate that pass, we also hired 4 maintenance maritime units for these platforms. We'll have 2 more, all of that to ensure that there's maintenance and we prevent interruptions. That's what we plan to do.

Jorge. Well, there really was a huge challenge for us to increase the competitiveness of our IPCI. In the past, we actually had one or two bidders only for every call for tenders, but we talked to the market and understood the issues that were limiting the involvement of other players. We conducted a roadshow overseas to try to bring in new companies. We held events here in Brazil with many of our suppliers. We explain our plan and listen to them. So we also adjusted a few of our contracts to allow more players to participate. And alongside all of that, actually, just a side note, in our last call, we had four bidders interested in the auction -- I mean, four companies brought their tender offers. So this was a wonderful result for us when we compare to previous processes. In addition to that, and we always try to have a backup plan, we are looking into hiring a what we call PLV so that Petrobras itself will operate so we would purchase our fixed pipelines. We would have our own boat and we would have our own launch regardless of any EPCI contracts. So these are things we are looking into. We have sound -- have the markets readout to understand. So it's not just 1 step that we're taking. We're taking several steps to really increase our competitiveness and lower the size of our contracts.

Thank you, Renata, Sylvia and Magda. We will now hear the questions from Gabriel Barra with Citi. Gabriel?

A couple of questions here. I'll ask the first one and then we can get to the second one. But the first 1 is that we've been discussing about the margins of Petrobras. Just like you mentioned before, you mentioned how important it is to maintain the company production. And of course, it's really important to focus on the equatorial margin in that regard. We've seen a lot of discussion with regards to the environmental agency, Ibama, in the region. So what I would like to hear from you first is with regards to the equatorial margin. What are the discussions like? And what about the licenses this year? As the licenses come out, what would be the impact of the CapEx and in the long run, what are some of the main challenges considering that conceptually, what we know about oil and gas in Brazil, a great deal is concentrated in the Southeast -- the entire oil and gas industry. So what would be the major challenge in that region moving forward to develop the equatorial margin? That's the first question.

Thank you for your question. I will respond, and I will hand it over to Clarice and Sylvia so that they can chime in about the equatorial margin as well. In terms of the equatorial margin, what we have is an exploration expectation to drill a pioneer well, so that we can confirm the potential in that area. Of course, 1 well is never enough. So we do have a few wells that we are looking in the state of Amapa, in deepwaters. We also have something in our strategic planning in the order of a little more than 30 wells to be drilled in the fifth year to explore the equatorial margin that goes from the state of Amapa, all the way to the Brazilian state of Rio Grande do Norte. So what we have at hand is the request to a license to drill the first well in the coast of the state of Amapa over 500 kilometers of the Marago Island, which is close to the -- where the Amazon outflows in the ocean. The environmental agency has had many comments about this license. The environmental agency considers that ridge to be extremely sensitive, and we do understand that we are absolutely ready in a position to deal with that sensitive aspect. Our Director, Clarice, is going to explain you more. But what we have in terms of precautions for the drilling activities in ultra-deepwaters is, we believe we can say that there is no precedence in the world for that. We have numerous equipment. We have different methods, and we have putting edge techniques that Clarice will explain to you a little more. But again, what we have is a strong commitment with the environmental agency to deliver yet another fauna rehabilitation center should there be any adverse event. That center, our Director, Clarice came from it. I think she was there yesterday or the day before, she was overseeing the activities, she went there to supervise the works that are being done. She did not introduce herself as the director or the person in charge for that area because she really wanted to get a feel for what was happening in the field. Our commitment to Ibama is to deliver that by late March. The construction is on the deadline, and we believe this will be the last demand from the environmental agency because all the other ones were met, and we met those demands in a timely fashion. Once again, as far as the equatorial margin, we have a new frontier, and we have a strong necessity to replenish our reserves, and you know that we are taking up our production until roughly 2030 or 2032. And from then on, as a company that produces nonrenewable energy we have to replenish reserves and that reserve replenishment goes through the exploration of new frontiers, mainly the equatorial margin being one of them there are many other basins out there. And personally, I do believe strongly on the potential of the Pos Amazonas Basin. What happens is that people believe that we are going to have a negative impact on Pos Amazonas, but we are talking about a distance of over 500 kilometers from Fos do Amazonas, which is roughly twice the distance from the pre-salt to the Copacabana Beach in Rio de Janeiro. So that is to say that we are absolutely confident. We are doing some monitoring. We are keeping a close watch for potential spills. We have centers for rehabilitation of fauna and flora. We have all sorts of equipment. As a matter of fact, we have one of those cappings that were used in the Gulf of Mexico in that BP incident, one of those pieces of equipment is here in Brazil and it's in Petrobras's possession, and I believe that we have -- there are maybe four or five pieces of equipment like that around the world. One of them is here. So that's what we are offering to Ibama. In our eyes, this is settled. There is nothing else to demand. I've been in this industry for 45 years and never have I ever seen an effort of this magnitude to be able to mitigate any sort of impact. So we are going to advance and move forward in the region of Pelotas Rio Grande do Sul. The Pelotas Basin has a geological aspect that is very specific, which Clarice will explain. It's similar to the Namibia Basin. Namibia is considered to be the new Guyana in terms of the possibilities. There is a lot of potential in Namibia, especially in its deep waters in the sense that all of that is definitely on our radar as far as our strategic planning. If you ask me how much this will cost all of that amount and all of that, shall we say, all of that exploratory activity is completely considered here. It's completely within the guidelines of our 2025/2029 strategic planning. So Director of Clarice is now going to explain and shed some light about what we are doing in the field as far as the environmental license for the equitorial margin and more specifically, that spot in the coast of Amapa.

Absolutely, Mrs. President. Just like Madam President said, we have structured a emergency response plan in the state of Amapa, which is unprecedented around the world and in the industry. What comprises this emergency plan is the following. First, we are building this center for fauna on rehabilitation that Madam President said. This is actually a center that has a surgery room as a matter of fact, besides all the other necessary structure that is part of the Ibama manuals. Along with this rehabilitation center, we are also structuring and developing our center for environmental defense besides having the equipment, this center also has some barriers to make sure that we can work on the sand, on the main roads as well as offshore. And also, we have a whole string of necessary equipment. So here's what we put together for that region. We have some aircraft. We actually have 3 helicopters in that region. We're going to have 2 additional vessels that are going to be on standby to work offshore. As a matter of fact, they will work closely to the area where we'll do the first study, the first exploratory campaign and 4 additional vessels that will be on standby to cater to any environmental and fauna demand close to the coast. So this is an extremely robust structure. All the reform, all the preparation of the Apati airport. All of that was done by Petrobras itself. As a matter of fact, it is possible that, that municipality received something that not a lot of municipalities have, which is night planes, planes that operate during the night. So this is also part of our emergency response plan. Here's something else that is important to mention. We have this company that is working with us, which is a company of the utmost quality in Brazil. We are contracting over 100 professionals between technicians, biologists and vets. So everything, every resource that Petrobras can throw at this project, should there be an incident or an accident, I mean, there has never been a readiness like this one. We are investing to the tune of BRL 150 million, and that goes into all of those resources that I mentioned. And now what is going to happen is this. We are constantly in communication. We have technical meetings with the environmental agency. We are waiting for an opinion on the project that we just presented. The final stage of the project, which is that basin in the state of Amapa, and that is going to be combined with our Belland base. All of that is going to be serviced in that region right there. So as we get the green light for this project, we will be able to move on to the next stage, which will be to do all the preoperational assessment this is a necessary condition, and this is a part of all the manuals. It's part of all the procedures of the environmental agency in Brazil. And from then on, Petrobras would be, of course, in a position to start its exploratory campaign. And I would like to point something out, which is a very important issue as well. The probe, the NS42, which is put together by our engineering department to do the drilling. Well, that's 1 of the most cutting-edge, state-of-the-art probes that we have today for that specific area for that type of operation. And we have a possibility also to receive from Ibama an authorization to do the cleaning of that probe, of that rig here in the Southeast to make sure that, that rig can navigate all the way to the state of Amapa so that we can conduct our studies that have been on the table for a long time.

Right, Gabriel if I may. About the importance of the equatorial margin for us. We started our discoveries here in Brazil in the Campos Basin and the Santos spacing. We started with the carbonates and what we are expecting in this major frontier, which is the equatorial margin, is some similar systems in what we have in the basin of Santos, which is a system that we see also in Guyana, in Suriname and also in Ghana. As a matter of fact, we acquired these blocks in 2013 first when there was the discovery in Ghana. The geology is similar. So we put it all together. And so there are a lot of similarities there are some similar generators that we see in Venezuela and other areas of similar nature. So why should we tackle this area? Well, because there is a significant oil potential there. There is a potential, which is only discovered after you drill the well. So the oil system is pointing to that direction. And so the first step is a well that we are drilling. But we have six blocks, and we are estimating a number of 8 wells like President said, you cannot just do one well and call it a day. If we find oil in the first well, great. If it's not in the first one, it's going to be in the second or the third one because we're going to do a proper exploratory evaluation and we're going to really undertake these efforts that we've been waiting to do for a long time. And I just want to make very clear that we are very confident. We have all the guarantees as far as the technical department, all the equipment, all the safeguards we have supporting vessels, and it's really important that geologically, we are assured that the ocean currents in that region, they run parallel to the coast. So this is actually the greatest guarantee that should there be any issues, should there be any oil spill, that oil is not going to go to the coast. It's not going to reach our mangrove. It's not going to reach our shallow waters. One other aspect. This is not the first time we are drilling this well. That margin of Amapa has had more than 100 wells drilled in the shallow waters that deepwater format, we already drilled over 3,000 wells in that format. Right now, we are drilling 10 or 11 wells throughout that margin on the eastern side, no issues at all. So the drilling of that well will just be business as usual. There will be no issues at all. And I can tell you folks that there is no conflict with the environmental aspect as far as the emissions and the climate because our emissions in Brazil are quite low. I mean fossil fuels accounts for only 1%. So we can naturally do that. Our emissions are quite low. So there is no conflict between taking care of the environment and drilling oil wells. This is a company that invests heavily on the environment. We protect the whales, the dolphins. We protect our manatees. So that puts us in a nice position. That gives us a guarantee that, that oil, that well drilling will not impact the environment, and it will ensure energy security to our country and a great quality of life for the people of that region.

You had another question, Gabriel?

Yes, if I could quickly ask a second question. I just wanted to go back to the CapEx issue. Renata touched on something that really stood out to me, which was you could maybe capitalize more and see less chartering even to make the most of your ships and your drill. So I just wanted to follow up on that to understand if I saw this correctly. So moving forward, could we expect the company to capitalize a little bit more on its SRVs and drills and so on and so forth and invest less in chartering? Is that what we should expect moving forward when it comes to the company's investment.

Did I understand it correctly? No, I don't think you understood it correctly. We thought of chartering a ULV not in purchasing one. Our drills are all chartered at this point, and we do not plan to change that model. 1 change we made recently, which was actually included in the company's plan was our FPSOs. The company adopts a standard within the company, which is we assess the market liquidity in the market, our debt situation and competitive situation in the market before we establish what will be the model we'll adopt to higher in FPSO. So it might be a leasing. It might be what we have just done so far, which is a built operation and transfer. So for FPSO, we have these options. And now for support vessels, launch vessels and drills. Our model is still chartering.

Unfortunately, because of the issues we faced earlier, we will now have our last question. So Monique from BBA, can you hear us?

Hi Eduardo, yes, I can hear you. Can you hear me?

Yes, we hear you.

Perfect. I'd like to insist a little bit on the CapEx issue, which might be the most important issue of the day. It's still not total to me the connection between anticipating these additional $2 billion and advancing your production in the Buzios area. My question is this additional $2 billion in Q4, is this connected with the anticipation in Almirante Tamandare, which is already concluded? Or is that connected to a potential anticipation with the project in Buzios 8 to 11? And that's the case what's the magnitude of that anticipation? Could we think about new dates for the projects Buzios 8 through 11 and could maybe be the case that, that led to the situation that Magda mentioned earlier in the call?

Hi, Monique. Well, as I explained, when we took over the Board alongside President Magda and Director, Sylvia, we saw that all projects -- virtually all projects were delayed. And what we did was really a herculean effort to recover, especially P78 and P79, which are the first projects that will be delivered in the Buzios area. So that's one. Now number 2 is President Magda says is every drop counts. And for me, the saying is every day count. So we've been working with different strategies to maybe get production one day earlier. So whether it is thinking of a man mission to our FPSO to maybe going in person to the field as opposed to bringing it to Guanabara, the Guanabara Bay and people may say, oh, I saw no vessels in the Guanabara Bay for so long. And you really won't see because we really want to make more time, make the best use of our time, and that's what we're doing.

I just wanted to make sure if I understood, Renata. So in fact, what you're calling anticipation is actually maintenance of the deadlines or the time frame that was in your original plan, yes, it really is to anticipate. It's not just prevent delays, but also trying to anticipate the start of production.

Yes, I just wanted to remind you, Monique, that a lot of this effort -- and Almirante Tamandare came to Brazil late last year when it was expected to come in this year. So we anticipated the start of operations in Almirante Tamandare but also, we also advanced because of those efforts, the operations in Maria Quiteria, which was also expected to start operating in early 2025, but actually started operations early in Q4 2024. In addition to our efforts to mitigate delays at P-68 and P-69 as mentioned by Renata. So there's actually both things. There's the mitigation of delays and there's also anticipation as well.

With that, we conclude our question-and-answer session. If you have any additional question or through relay shipment we'll be more than happy to assist you. I'd like to thank everyone for joining us for this event. And I'd like to say that the presentation for this event is already available at our website, and the audio for this webcast should be made available for replay.