Petróleo Brasileiro S.A. - Petrobras (PBR) 2026-08-06 Earnings Call Transcript

Good afternoon, and welcome to Petrobras' webcast with analysts and investors about our second quarter 2026 results. It's a pleasure to have you with us today. This event will be presented in Portuguese with simultaneous interpretation into English.

Good morning, everyone. It's a pleasure to be with you today to demonstrate once again Petrobras' capacity to surpass its goals and deliver impressive results to our investors, be they from the public or private sectors. We have the full Board of Petrobras with us, and I'd like to take the opportunity to greet all investors, all of the representatives of our investors, all of the executives that are in this session with us and our partners and everybody that joined us remotely for the disclosure of our second quarter 2026 results. Also, I'd like to greet everybody from the press joining us. We become increasingly prouder of our results.

Thank you, President. Good morning, everyone. Thank you for joining us for this webcast for the results of the second quarter of 2026. I also want to greet everybody that's here at the headquarters of the company. As we said, we had a quarter of record operating performance, which drove Petrobras to one of its best financial results in history, which are deeply anchored in the good operating performance.

Thank you, Magda and Fernando. We'll now start our Q&A session. I kindly ask the participants to only ask one question, so that we are able to make better use of our time. The first question comes from Bruno Montanari from Morgan Stanley.

Congratulations on the results, especially for the execution and production growth. And focusing on production, the President and Fernando already gave us an idea of by how much of the production could grow this year. But I'd like to see if it's fair to say that the plan curve in the medium and long term does not look very conservative, especially if you look at the highest peak of the curve, and it's at 2.6 million or 2.7 million barrels that you surpassed already. And in terms of CapEx and in terms of bringing Buzios' deliveries forward and the sequence of P-80 for the quarters and if there will be a ramp-up for the P-80 this year or not?

Thank you for your question, Bruno. We have to remember that we work with nonrenewable resources, producing 2.7 million barrels every day per day is a challenge. Especially because we have to face production declines. Nevertheless, these declines have been reduced. Just to give you an idea, when we took office, we were looking at a decline of 12% a year. Currently, this decline is in the range of 4% per year due to the better administration of reservoirs and the better water injection, adequate production methods, better deposit management and so on and so forth.

Hi, Bruno. Good afternoon. So we'll talk about P-80, P-82 and P-83. P-80 and P-82, the sailaway is scheduled for the third quarter of 2026 and production will start in the second quarter of 2027. What we're doing now is we're working strongly toward bringing forward the production of P-80 to the first quarter of 2027. For P-83, the sailaway is scheduled to occur in the beginning of the first quarter of 2027 with production starting on the second half of 2027. As the President said, we are constantly working toward bringing production forward. We've been doing pre-lays, prelaunching of lines and anchoring.

Thank you, Bruno, for your questions. I'm sorry.

Thank you, Bruno, for your questions. Just picking up on what the President said and also what Renata said, the forecast for production is based on a risk analysis of everything that's scheduled. We have scheduled the ramp-up for P-78 for P-79. All of that's been included in our risk analysis, and we always like to work with a leeway of more or less 4%, and we'll certainly reach the top of guidance, always seeking to surpass the past results as the President likes to say. But right now, we are considering it reasonable to maintain the maximum at 4%, reaching 2.6%. We know that there is the downtimes.

The next question comes from Monique Greco from Itau BBA.

I'd like to approach the subject of the diesel import strategy. How is the company assessing the decision to import diesel given the current price scenario vis-a-vis its pricing strategy and its commercial strategy, especially now that with the -- there is a huge volatility? But with the recent increase, we saw, again, local prices below the import parity. So I'd like to hear from you. How does that all fit in to the commercial strategy?

Hi, Monique. This is Angelica. Let's go over our production planning process again. It takes into account the commitments we enter into with our customers and the seasonal variations in demand. Also our refining activities and how much of it is available, the refining margins and the logistics structures. We consider all of that. Given that context, our policy is maintained. Our commercial strategy is maintained. Our importing decisions are still based on the criteria of competitiveness and profitability. And we have to say that we have a public policy in force that gives us support for the internal market and that leads the customer perceived prices to be lower.

Next question comes from Jorge Gabrich from Scotiabank.

Congratulations on the results, especially in terms of the volumes. I'd like to go back to one issue that was already approached before from the perspective of decline, the Petrobras' decline is quite low at 4% more or less in the pre-salt. And I'd like to understand how sustainable that is moving forward. If you think about the forecast for the next few years, how do you see this decline behaving in the next few years?

Well, George, thank you for your question. This decline, as I said, is the result of a strategy that is followed strictly along with the monitoring of the deposits. We should not forget that we have huge deposits. Just to give you an idea, the Tupi field is a field that has a contractual limit of 1,200 square kilometers. If we compare that to a giant post-salt field, which was the reality that was preceded the pre-salt, you take a line of more than 200 square kilometers in areas. So these huge fields produce a lot with high productivity, but it's huge deposits.

There is a natural decline, Jorge, and we attempt to fight against it, we work more strongly on four areas. First, 4D seismics, which better understands us -- which better allows us to better understand the reservoirs. We also do intelligent completion. Our biggest production comes from pre-salt and it's huge reservoirs at the height of the Sugarloaf. And the intelligent completion allows us to separate zones that produce water or gas, and we do an intelligent management of these areas. Another important thing is water injection. On my day one at Petrobras, the President said, we have to inject water. So Magda kept demanding that. And the biggest water injection happened.

Our next question comes from Yuri Pereira with Santander.

With the very favorable cash generation environment, both because of market circumstances and the company itself. I wanted to understand how that works versus your plan for 2026-2030, for example, thinking about the allocation of this incremental capital that's coming over throughout this year with regards to refining or maybe another ambition Petrobras has in mind?

Well, this is an ongoing discussion for us. wherever we go, any meeting we have, the question always comes up, what will we do with the additional cash flow that's coming up purely with production, unlike our usual strategic planning. So we do have a slightly larger cash flow. But it's important to remember the dividend formula where any additional cash that comes in will be distributed over the ordinary cash distribution, which is 14%. And with regards to debt, that's the priority we've been discussing. So we have also the projects we're bringing forward such as P-80 and so on and so forth. So any investment that generates returns to our stakeholders, we are bringing forward.

Our next question comes from Gabriel Barra with Citi.

I wanted to touch on something we haven't talked about yet, which is Braskem. We have been getting a lot of questions. We're seeing the company is at a very tricky time. We're seeing news about a potential legal reorganization. And Petrobras has some active input in these conversations. My question is, how do you see that from Petrobras' side? I understand there's a number of rules with governance and there's great concern about capital allocation. So maybe more discussions about a potential capital injection into Braskem. So I wanted to hear from you what is your stance on Braskem's future? It seems the company is moving toward court order reorganization.

Well, I'll start with my five cents, but then I'll turn it over to Fernando. As you know, we had very little input in terms of Braskem's bylaws. This latest change gave Petrobras more political power. So we're now -- only now moving closer to the company to look into what's going on with Braskem with a new set of eyes and to understand what the future of Braskem might be. I would like to not say a lot more about Braskem right now because they will be sharing their earnings next week. But I'd like to turn over to our Director, Fernando, to talk about this within the realm of possibility at this point.

Yes. I think we have to take a step back when it comes to Braskem to remember that we have a new shareholders' agreement as the President mentioned, where our economic capital within the company is compared to the political power and influences in the company's decisions. Now that's happened over 2 months ago. And since then, we are looking into all our options within the agreement we have with shareholders. We are in touch with their Board of Directors. So there is an injunction in place, which is in the public domain, as you mentioned. It ends on October 24.

So let's move forward with the next question, Lilyanna Yang with HSBC.

Congratulations on your results. I have a more generic question in terms of energy policy. One has to do with gas. The Brazilian government would like to lower gas prices for Brazilian consumers. And I'd like to hear from you about the role of Petrobras. Will Petrobras be able to be a part or to contribute with this process? Where, for example, will you sell the gas coming from Sergipe? And another question is in terms of new frontiers, we have the Equatorial Margin, also initiatives in Africa. Could you give us an update about your investments in Namibia, Sao Tome and Principe and other areas outside of Brazil?

Let me start and then maybe Angelica, William and Sylvia may add to my few words. Starting with gas, we have a few oil and gas projects. Our projects are usually focused on oil with an associated part touching on gas and any regulatory changes will affect our projects. Sometimes they'll be beneficial. Other times, they'll be negative. Other times, they'll be neutral. But regulatory changes everywhere in the world will have consequences when it comes to the way we structure our projects. With regards to the discussion around gas, we don't know yet how things will end up. The fact is regardless of what happens, we'll have to look at our projects in light of any regulatory change.

Thank you so much. Just adding to President Magda's comments, Petrobras' assessment of these regulatory changes have been outlined over the past few weeks. This is the Board's position, which is the mere transference of the gas molecules ownership is not going to ensure any increase in supply, which is what the market needs. And the Brazilian market is already seeing a significant opening and pulverization. And the Board members themselves have already spoken out in the last few weeks, pointing out that there are over 30 companies competing with Petrobras and over 100 free consumers. And if we add all 5 terminals privately operated, they're already bigger than Petrobras.

Yes. I just wanted to add that, as William Nozaki has already said, we are only 15.6% of the market. So the market is already open. There's nothing to say about the need for a gas release in a market where you already have 31 companies operating at this point. Over and above that, with the intention even of not passing through the volatility in Brent prices to the market, we have extended the profile of our contracts and offered alternatives to prevent price increases, which is to say Petrobras is always looking to reduce the impact of gas price volatilities in the industry, especially in Brazil.

All right. From the E&P standpoint, what we're doing is over the last few years, we have significantly increased gas exports, which were coming closer to 50 million cubic meters. So we are making more gas available, and we believe that it is only by offering more gas that we can reduce prices, also increasing gas productions in land in Urucu. And on the issue of gas, we've also discovered more gas in Colombia. And Combined, all those three discoveries exceed Colombia's needs. So it's another opportunity to export gas and supply more gas to the country.

Our next question comes from Tasso Vasconcellos with UBS.

Picking up on the last discussion, Petrobras team has been quite emphatic about the subject. The replacement of reserves with new discoveries. But moving away from this domestic scenario, in your opinion, what are the main priorities for international expansion if it really occurs? So we discussed that in the previous question, but I'd like to further understand where you see more of an upside and where the Petrobras team is interested in dedicating more time to the analysis? Now we talked about Mexico, Venezuela, Bolivia also appears to be back on the radar. So I'd like to hear your take on that.

Thank you, Tasso, for the question. We've been saying repeatedly that there is no future for an oil company without exploration and without the replacement of reserves. And along those lines, what we do is to try to reinforce our expertise, which is -- well in South America, we've been working for more than 30 years. We import and produce gas in Bolivia for more than 30 years now. We've been importing gas from Argentina for at least 2 years, reverting the route of the Bolivian gas, which in the past used to go to Argentina. And now we have Argentinian gas coming to Brazil through the same pipeline. We're also working in Colombia.

As Magda put very well, we have a competency in terms of the geology and the exploration of deep and ultra-deep waters. So when we go to these African opportunities, we are actually talking about very similar areas that we have a high amount of knowledge about. So in the African coast, in Mexico, the Equatorial margin, we are looking for turbidite reservoirs that are similar to the ones that we have at Campos Basin. So the pre-salt is quite unique and exclusive to the Santos Basin. And in Mexico, we have the salt diapirs and reservoirs and the Pemex expertise is not that high in deep and ultra-deep waters. They concentrate mostly on shallow waters.

The next question comes from Milene Clifford from JPMorgan.

I like a quick follow-up about downstream. You talked about the import strategy considering seasonality, but I'd like to hear from you how the company sees the scenario of crack spreads for the second half and the maintenance strategy for refineries in that scope. You've been running the refining farm at above 102%. And we heard about downtimes as well in the second half. So talking about the refining farm and what can we expect in terms of timing and duration of these downtimes for the second half?

Thank you for the question. The third quarter is, from a seasonal perspective, a quarter of higher diesel demand. So given that context, our operating planning takes that into account. And obviously, in this quarter, we're going to have to import and the cracking of diesel has led us to attempt to produce as much diesel as we can internally. So given that context, we have an operating planning that's done in close conjunction with refining so as to maximize the use of our refineries so as to minimize imports. In any case, imports are happening naturally with no problems whatsoever. There is no shortage of diesel in the market right now.

Thank you for the question. That's a very important question because it will allow me to clarify certain things. When we postponed the downtimes of REGAP and REPLAN, well, we have not postponed downtimes for the second half. The downtimes that are going to occur are the catalytic cracking FCC downtimes and the REGAP downtime. And the Cubatao diesel downtime was already scheduled on our there was no postponing. The only big downtime that's scheduled is the Cubatao downtime that's scheduled for August and the other ones are minor downtimes. In the specific case of the postponement of REGAP and REPLAN downtimes, we were having ongoing expansion projects.

Yes. I just wanted to reinforce or to stress what William said, remembering you of two things that we're doing. First one, we are exceeding our targets. And number two, we are replacing Petrobras' refining capacity so that we are able to produce increasingly more value-added products and less regular products. Diesel has been our flagship and the results that you're seeing with regards to diesel are a result of that effort.

Our next question comes from Rodrigo Almeida with BTG.

Well, we talked a little bit about opportunities outside of Brazil. So I wanted to go back a little bit to that and maybe talk a little bit about opportunities in Brazil and mention maybe three projects that I think would be interesting for us to discuss a little bit further. First of all, I wanted to hear from you an update on your thoughts about Tupi. There's the issue of the extension of your concession or maybe a change. So I wonder if you have any updates on that sense and what you see moving forward? And also another project that saw a lot of success in exploration and it ends next year.

Well, let me tell you that Tupi is now under negotiation. any result that we would tell you from that side would be getting ahead of ourselves. But we have been talking to government institutions in terms of moving forward there. As for Equatorial margin, we have said that before, but we continue to drill the block in FCA 49. And in addition to that well, we are also waiting for the permit for other three wells in that block. And if you remember, the license we received last year was for one firm well plus three contingent wells. Nobody looks into an area of that size to drill only one well.

Yes. As Magda said, we're moving forward with negotiations with Tupi. So we have to wait for the assessment of all the stakeholders. As for Equatorial margin, we are anxiously waiting for the drilling of this well. All our challenges have been surpassed with technology and time. We are moving fast through the learning curve so that we can come to the next wells with a lot more speed and results, but there are still 500 meters to go to reach the reservoir. And this is one that we expect will provide a lot of oil. But if not, we will have to look into the contingent wells so that we can understand what the area looks like.

Our next question comes from Vicente Falanga with Bradesco BBI.

The company has been very vocal on the media with regards to investments that obviously have been discussed already. But in addition to Africa, the Mexican Gulf and Latin America, recently, we've also read about rare metals and assessment of the Jupiter basin with the potential offshore exploration, how much do you plan to invest in that segment? I understand the rare metals sort of escape the company's main focus. So I just wanted to understand a little bit about that side.

I think I can start. Indeed, the company has been growing and improving production. We've been focusing on the company's operational side. But we've also looked at new opportunities at the same time and every potential opportunity the company may seize to generate value to its shareholders. And everything that comes out in that sense, we have been looking into. We currently have no commitment in terms of investing in what you mentioned. We have made no commitment in that sense. These are only opportunities that we've been discussing and looking into and assessing both domestically and internationally. You mentioned Mexico. There's a very positive institutional aspect that may produce benefits for us in the future.

Our next and last question will come from Caio Ribeiro with Bank of America.

I have a question about capital allocation, more specifically with regards to M&A. I wonder if you could add some color to what your priorities will look like with regards to going back to licensing and fuel or moving into ethanol or even purchasing the Mataripe refinery? If you could also talk a little bit about the timing of these decisions, when should we expect them to be made? Also the timing for assessments and where it stands today, all of that would be very helpful.

I can start and if anyone finds it necessary, you can add to my answer. Well, we remain on track with what's in our strategic planning. That's the driver of our decision-making process. Obviously, we are building and other things may add to what we're doing if we understand that could be positive for bondholders. In terms of position, we have the noncompete with Vibra, and this will be honored in full. And maybe we can discuss that later and evolve if need be. We have an ambition when it comes to distribution, which is not on the retail side, but rather on the B2B side. We have a few projects in that sense, and they have been progressing well.

Well, I can talk specifically about ethanol. The topic is moving forward. As Magda said, it's still a priority within our business plan. We understand this is a priority segment and Brazil has maturity in terms of technology and public policy, but negotiations are still ongoing. And in due time, we will be communicating any development respecting the confidentiality and the sensitive aspects involved in negotiations. But in terms of the transfer of energy, this is something we have been looking very closely into.

Yes, it's also interesting to talk about that the distribution of fuel and LPG will always be our goal and will reinforce the strategy to move closer to the market. So whenever possible, obviously, all impediments being removed, we will come back to the market with opportunities.

Thank you so much, Caio, for your question. Fernando, Angelica and Nozaki for your answer. We would like to thank everyone for joining us. This concludes our question-and-answer session, and any additional questions may be sent to our Investor Relations team. I will now hand it over to Petrobras' President, Magda Chambriard, for her closing remarks. President, please go ahead.

Well, reiterating what we said before, Petrobras' performance has been very professional and guided by capital discipline, attention to our projects and our deposits as well as our assets so as to always maximize value with operational efficiency, respect to health and safety regulations. And that's what's guided the technical Board of Petrobras and its advisory Board as well with the purpose of delivering to our bondholders, whether in the private or the public side, also guided by capital discipline. Rest assured, that will remain our policy. Thank you, and I hope to see you by delivering equally satisfying results next quarter.

Thank you, Magda. A recording of this conference will be available for replay online.