pbrarmf2q16uss_6k.htm - Generated by SEC Publisher for SEC Filing

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934

For the month of August, 2016

Commission File Number 1-15106



PETRÓLEO BRASILEIRO S.A. - PETROBRAS
(Exact name of registrant as specified in its charter)



Brazilian Petroleum Corporation - PETROBRAS
(Translation of Registrant's name into English)



Avenida República do Chile, 65
20031-912 - Rio de Janeiro, RJ
Federative Republic of Brazil
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. 

Form 20-F ___X___ Form 40-F _______

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes _______ No___X____

 


 
 

 

 

  Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

 

FIRST HALF OF 2016 RESULTS

Derived from interim financial information reviewed by independent auditors, stated in millions of U.S. dollars, prepared in accordance with International Financial Reporting Standards - IFRS issued by the International Accounting Standards Board - IASB.

Rio de Janeiro – August 11, 2016

 

Main financial highlights 2Q-2016 x 1Q-2016

·  Net income attributable to the shareholders of Petrobras of US$ 106 million, compared to net loss attributable to the shareholders of Petrobras of US$ 318 million in the 1Q-2016, as a result of:

§ A decrease of 22% in net finance expenses;

§ An 7% increase of crude oil and natural gas total production;

§ Higher revenues with an increase of 14% in crude oil and oil products exports and lower costs related to natural gas imports;

§ Expenses related to the new Voluntary Separation Incentive Plan (PIDV); and

§ Impairment losses related to Comperj assets.

·  The higher cash provided by operating activities and the decrease of capital expenditures and investments resulted in a positive free cash flow* for the fifth consecutive quarter of US$ 3,073 million in the 2Q-2016, 4 times higher when compared to 1Q-2016.

·  Adjusted EBITDA* of US$ 5,789 million in the 2Q-2016, a 7% increase compared to the 1Q-2016.

·  Gross indebtedness decreased 2% in U.S. dollars, from US$ 126,262 million on December 31, 2015 to US$ 123,922 million on June 30, 2016 (a US$ 2,340 million decrease). Net debt* increased 3% from US$ 100,425 million on December 31, 2015 to US$ 103,556 million on June 30, 2016.

·  The ratio between net debt and the Last Twelve Months (LTM) Adjusted EBITDA* increased from 4.41 as of December 31, 2015 to 5.18 as of June 30, 2016 and the leverage decreased from 60% to 55% in the same period.

·  The issuing of global notes totaling US$ 6.75 billion and the tender offer of US$ 6.3 billion generated the increase of average maturity of outstanding debt from 7.14 years as of December 31, 2015 to 7.30 years as of June 30, 2016.

Main operating highlights 2Q-2016 x 1Q-2016

·  Total crude oil and natural gas production was 2,804 thousand barrels of oil equivalent per day (boed), an increase of 7% compared to the 1Q-2016.

·  Domestic oil products output decreased 2% to 1,919 thousand barrels per day (bpd) and the domestic sales increased 3% to 2,109 thousand bpd.

·  Crude oil and oil products exports increased 14% to 515 thousand bpd and average Brent price increased 34% to US$/bbl 45.57.

·  Reduction of 55% in LNG imports due to higher domestic gas supply and lower thermoelectric demand.

 

 

 

 

 

 


* See definitions of Free cash flow, Adjusted EBITDA, LTM Adjusted EBITDA and Net Debt in glossary and the respective reconciliations in Liquidity and Capital Resources and Reconciliation of Adjusted EBITDA, Debt and LTM Adjusted EBITDA.

 

 

1


 
 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

www.petrobras.com.br/ir

 

Contacts:

PETRÓLEO BRASILEIRO S.A. – PETROBRAS

Investor Relations Department

E-mail: petroinvest@petrobras.com.br / acionistas@petrobras.com.br

Av. República do Chile, 65 – 1002  – 20031-912 – Rio de Janeiro, RJ

Phone: 55 (21) 3324- 1510 / 9947 I 0800-282-1540

 

 

 

 

 

 

 

 

 

 

                                     

 

 

BM&F BOVESPA: PETR3, PETR4

NYSE: PBR, PBRA

BCBA: APBR, APBRA

LATIBEX: XPBR, XPBRA

 

This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties. The forward-looking statements, which address the Company’s expected business and financial performance, among other matters, contain words such as “believe,” “expect,” “estimate,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. There is no assurance that the expected events, trends or results will actually occur. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason.

 

 The Company’s actual results could differ materially from those expressed or forecast in any forward-looking statements as a result of a variety of assumptions and factors. These factors include, but are not limited to, the following: (i) failure to comply with laws or regulations, including fraudulent activity, corruption, and bribery; (ii) the outcome of ongoing corruption investigations and any new facts or information that may arise in relation to the “Lava Jato Operation”; (iii) the effectiveness of the Company’s risk management policies and procedures, including operational risk; and (iv) litigation, such as class actions or proceedings brought by governmental and regulatory agencies.  A description of other factors can be found in the Company’s Annual Report on Form 20-F for the year ended December 31, 2015, and the Company’s other filings with the U.S. Securities and Exchange Commission.

 

 

2


 
 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

Main Items and Consolidated Economic Indicators

 

US$ million

 

First half of

 

 

 

 

 

2016

2015

2016 x 2015 (%)

2Q-2016

1Q-2016

2Q16 X 1Q16 (%)

2Q-2015

Sales revenues

38,309

51,988

(26)

20,320

17,989

13

26,021

Gross profit

11,875

16,147

(26)

6,502

5,373

21

8,320

Operating income (loss)

4,132

7,619

(46)

2,048

2,084

(2)

3,078

Net finance income (expense)

(3,950)

(3,932)

(1,727)

(2,223)

22

(1,969)

Consolidated net income (loss) attributable to the shareholders of Petrobras

(212)

2,033

(110)

106

(318)

133

171

Basic and diluted earnings (losses) per share

(0.02)

0.16

(113)

(0.02)

(100)

0.02

Adjusted EBITDA *

11,183

13,951

(20)

5,789

5,394

7

6,435

 

 

 

 

 

 

 

 

Gross margin (%)

31

31

32

30

2

32

Operating margin (%)

11

15

(4)

10

12

(2)

12

Net margin (%)

(1)

4

(5)

1

(2)

3

1

 

 

 

 

 

 

 

 

Total capital expenditures and investments

7,814

12,201

(36)

3,827

3,987

(4)

5,968

Exploration & Production

6,922

10,085

(31)

3,400

3,522

(3)

4,900

Refining, Transportation and Marketing

478

1,358

(65)

235

243

(3)

685

Gas & Power

177

483

(63)

102

75

36

254

Distribution

60

127

(53)

35

25

40

61

Biofuel

84

13

546

15

69

(78)

11

Corporate

93

135

(31)

40

53

(25)

57

 

 

 

 

 

 

 

 

Average commercial selling rate for U.S. dollar (R$/U.S.$)

3.70

2.97

25

3.51

3.90

(10)

3.07

Period-end commercial selling rate for U.S. dollar (R$/U.S.$)

3.21

3.10

3

3.21

3.56

(10)

3.10

Variation of the period-end commercial selling rate for U.S. dollar (%)

(17.8)

16.8

(35)

(9.8)

(8.9)

(1)

(3.3)

Selic interest rate - average (%)

14.15

12.67

1

14.15

14.15

13.14

 

 

 

 

 

 

 

 

Domestic basic oil products price (U.S.$/bbl)

62.38

75.34

(17)

65.19

59.52

10

72.91

Brent crude (U.S.$/bbl)

39.73

57.95

(31)

45.57

33.89

34

61.92

 

 

 

 

 

 

 

 

Domestic Sales price

 

 

 

 

 

 

 

Crude oil (U.S.$/bbl)

34.54

47.78

(28)

39.86

28.88

38

52.14

Natural gas (U.S.$/bbl)

30.07

40.05

(25)

29.90

30.22

(1)

39.29

 

 

 

 

 

 

 

 

International Sales price

 

 

 

 

 

 

 

Crude oil (U.S.$/bbl)

44.37

59.51

(25)

47.24

41.59

14

60.52

Natural gas (U.S.$/bbl)

22.45

22.53

21.74

23.27

(7)

22.66

 

 

 

 

 

 

 

 

Total sales volume (Mbbl/d)

 

 

 

 

 

 

 

Diesel

804

915

(12)

811

798

2

923

Gasoline

553

555

541

564

(4)

537

Fuel oil

72

111

(35)

64

80

(20)

103

Naphtha

142

146

(3)

172

111

55

168

LPG

227

229

(1)

236

218

8

236

Jet fuel

102

110

(7)

97

107

(9)

107

Others

183

173

6

188

178

6

176

Total oil products

2,083

2,239

(7)

2,109

2,056

3

2,250

Ethanol, nitrogen fertilizers, renewables and other products

111

117

(5)

111

111

119

Natural gas

338

448

(25)

316

360

(12)

448

Total domestic market

2,532

2,804

(10)

2,536

2,527

2,817

Crude oil, oil products and others exports

494

497

(1)

532

455

17

594

International sales

473

505

(6)

488

457

7

493

Total international market

967

1,002

(3)

1,020

912

12

1,087

Total

3,499

3,806

(8)

3,556

3,439

3

3,904

*


* See definition of Adjusted EBITDA in glossary and the respective reconciliation in Reconciliation of Adjusted EBITDA.

3


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

1H-2016 x 1H-2015 Results* :

Virtually all revenues and expenses of our Brazilian operations are denominated and payable in Brazilian Reais. When the Brazilian Real depreciates relative to the U.S. dollar, as it did in the 1H-2016 (a 25% depreciation), revenues and expenses decrease when translated into U.S. dollars. The depreciation of the Brazilian Real against the U.S. dollar affects the line items discussed below in different ways.

Gross Profit

Gross profit decreased by 26% to US$ 11,875 million in the 1H-2016 when compared to the 1H-2015, mainly due to the effect of foreign exchange translation (depreciation of the Brazilian Real against the U.S. dollar). Excluding this effect, gross profit decreased by 9% when expressed in Brazilian Reais, due to lower sales revenues, as a result of a 7% reduction of domestic oil products sales, partially offset by higher diesel and gasoline margins. The decreased sales revenues was also due to lower crude oil and oil products export prices, to lower power generation, decreased electricity prices and the lower domestic natural gas sales volume.

 

In the 1H-2016, the Company experienced lower import costs and decreased production taxes in Brazil due to lower crude oil prices and decreased sales. However, higher depreciation expenses occurred as a result of a decrease in reserves estimates (mainly due to lower crude oil prices), which were partially offset by a lower carrying amount of assets that were impacted by impairment losses that were taken in 2015.

Operating income

Operating income was US$ 4,132 million in the 1H-2016, a 46% decrease when compared to the 1H-2015. Excluding the effect of foreign exchange translation, operating income decreased 32% in Brazilian Reais resulting from decreased gross profit, higher idleness expenses related to drilling rigs, higher expenses with legal proceedings, expenses associated with the new Voluntary Separation Incentive Plan and with the return of exploratory blocks. In addition, the 1H-2015 was impacted by the reversal of impairment charge related to trade receivables from companies in the electricity sector.

 

These effects were partially offset by lower tax expenses.

Net finance expense

Net finance expense was US$ 3,950 million in the 1H-2016, compared to a net finance expense of US$ 3,932 million in the 1H-2015, remaining relatively flat. Excluding the effect of foreign exchange translation, net finance expense increased in Brazilian Reais due to higher interest expenses as a result of higher debt and the effect of the depreciation of Brazilian Real against the U.S. dollar.

Net income (loss) attributable to the shareholders of Petrobras

Net loss attributable to the shareholders of Petrobras of US$ 212 million in the 1H-2016, compared to a net income of US$ 2,033 million in the 1H-2015, mainly due to lower operating income and to the effect of foreign exchange variation over the debt of structured companies in U.S. dollars, registered in net income attributable to non-controlling interests.

Adjusted EBITDA and Free Cash Flow **

Adjusted EBITDA was US$ 11,183 million in the 1H-2016, a 20% decrease compared to the 1H-2015. The Adjusted EBITDA Margin reached 29% in the 1H-2016. The decrease of capital expenditures and investments resulted in a positive free cash flow of US$ 3,683 million in the 1H-2016. This result represents an important effort to deleverage the Company.

 


* Additional information about operating results of 1H-2016 x 1H-2015, see item 4.

** See definitions of Free cash flow and Adjusted EBITDA in glossary and the respective reconciliations in Liquidity and Capital Resources and Reconciliation of Adjusted EBITDA.

 

 

4


 
 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

 

 

RESULT BY BUSINESS SEGMENT

 

 

 

EXPLORATION & PRODUCTION

 

 

Gross Profit

 

(1H-2016 x 1H-2015): The decrease in gross profit in the 1H-2016 was generated by decreased Brent prices and by lower crude oil and NGL production in Brazil and abroad. In addition, gross profit was impacted by higher depreciation costs, partially offset by lower production taxes.

 

Operating income

 

(1H-2016 x 1H-2015): The decrease in operating income was due to lower gross profit. Excluding the effect of foreign exchange translation (25% depreciation of the Brazilian Real against the U.S. dollar), operating expenses were higher as a result of increased idleness expenses related to drilling rigs, to the expenses related to legal proceedings, to the new Voluntary Separation Incentive Plan and to higher expenses mainly due to the return of exploratory blocks.

 

Operating Performance

 

Production

 

(1H-2016 x 1H-2015): Domestic crude oil and NGL production decreased by 3% mainly due to higher realization of scheduled stoppages, mainly in P-48, P-53, FPSO Cid. Paraty and  P-18 platforms.  However, there were start-up and ramp-up of new systems, mainly FPSO Cid. Itaguaí (Lula – Iracema Norte area), FPSO Cid. Maricá (Lula Alto) and P-58 (Parque das Baleias).

Natural gas production remained relatively flat because the scheduled stoppages mentioned above were mainly offset by increased gas production of P-58 (Parque das Baleias) and by the production start-up of FPSO Cid. Maricá (Lula Alto).

Crude oil and NGL production abroad decreased 12% mainly as a result of the sale/return of fields in Argentina, and of the scheduled stoppage of Akpo field in Nigeria.

Gas production abroad increased 11% due to the production ramp-up in the Hadrian South field in the United States.

 

Lifting Cost

 

(1H-2016 x 1H-2015): Lifting cost in U.S. dollar decreased due to lower expenses with well intervention and with engineering and submarine maintenance, in addition to the higher share of pre-salt production, which has a lower unit cost.

In addition, production taxes decreased as a result of lower crude oil price.

Lifting cost decreased abroad due to the sale of the Austral Basin fields in Argentina, with higher operating costs, and to higher production in the United States, with lower costs. 

 

 

5


 
 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

 

Exploration & Production Main Indicators

 

US$ million

 

First half of

 

2016

2015

2016 x 2015 (%)

Sales revenues

14,495

20,306

(29)

Brazil

13,710

19,337

(29)

Abroad

785

969

(19)

Gross profit

3,012

6,515

(54)

Brazil

2,754

6,176

(55)

Abroad

258

339

(24)

Operating expenses

(2,384)

(1,733)

(38)

Brazil

(2,173)

(1,699)

(28)

Abroad

(211)

(34)

(521)

Operating income (loss)

628

4,782

(87)

Brazil

582

4,478

(87)

Abroad

46

304

(85)

Net income (Loss) attributable to the shareholders of Petrobras

463

3,115

(85)

Brazil

448

2,817

(84)

Abroad

15

298

(95)

Adjusted EBITDA of the segment *

5,730

8,830

(35)

Brazil

5,438

8,229

(34)

Abroad

292

601

(51)

Capital expenditures of the segment

6,922

10,085

(31)

 

 

 

 

Average Brent crude (US$/bbl)

39.73

57.95

(31)

 

 

 

 

Sales price - Brazil

 

 

 

Crude oil (US$/bbl)

34.54

47.78

(28)

Sales price - Abroad

 

 

 

Crude oil (US$/bbl)

44.37

59.51

(25)

Natural gas (US$/bbl)

22.45

22.53

 

 

 

 

Crude oil and NGL production (Mbbl/d)

2,145

2,231

(4)

Brazil

2,056

2,130

(3)

Abroad

63

70

(10)

Non-consolidated production abroad

26

31

(16)

Natural gas production (Mbbl/d)

565

553

2

Brazil

467

465

Abroad

98

88

11

Total production

2,710

2,784

(3)

 

 

 

 

Lifting cost - Brazil (US$/barrel)

 

 

 

excluding production taxes

10.75

12.99

(17)

including production taxes

15.47

21.00

(26)

 

 

 

 

Lifting cost – abroad without production taxes (US$/barrel)

5.56

8.00

(31)

 

 

 

 

Production taxes - Brazil

1,820

3,379

(46)

Royalties

1,193

1,891

(37)

Special participation charges

603

1,460

(59)

Rental of areas

24

28

(14)

Production taxes - Abroad

140

151

(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

*


* See reconciliation in Reconciliation of Consolidated Adjusted EBITDA Statement by Segment.

 

 

6


 
 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg 

 

 

 

 

 

 

 

REFINING, TRANSPORTATION AND MARKETING

 

 

Gross Profit

 

(1H-2016 x 1H-2015): Gross profit remained flat in the period, mainly due to the effects of foreign translation (25% depreciation of the Brazilian Real against the U.S. dollar). Excluding these effects, gross profit increased due to a decrease in crude oil purchase/transfer costs, following lower Brent prices, the lower share of crude oil imports on feedstock processing and the decreased share of oil products imports in our sales mix. These effects were partially offset by lower crude oil exports and by lower economic activity in Brazil that decreased domestic oil products sales.

Operating Income

 

(1H-2016 x 1H-2015): Operating income remained relatively flat in the period, mainly due to the effects of foreign translation (25% depreciation of the Brazilian Real against the U.S. dollar). Excluding these effects, operating income increased in Brazilian Reais due to higher gross profit, partially offset by impairment of Comperj assets due to a reassessment of this project.

Operating Performance

 

Imports and Exports of Crude Oil and Oil Products

 

(1H-2016 x 1H-2015): Improved balance of crude oil exports (imports) net, due to lower imports, as a result of decreased volume processed and a higher share of domestic crude oil on feedstock processed. These effects were partially offset by decreased export volume available, following lower production.

The decreased deficit of oil products exports (imports), net was due to lower need of diesel import as a result of lower economic activity.

 

Refining Operations

 

(1H-2016 x 1H-2015): Daily feedstock processed was 5% lower, due to scheduled stoppages, mainly in distillation plants of REPLAN and REVAP, partially offset by higher production of RNEST, as a result of operating improvements made.

Refining Cost

 

(1H-2016 x 1H-2015): Refining cost, as measured in US$/barrel, decreased by 14%. As measured in R$/barrel, refining cost increased by 7% mainly reflecting higher employee compensation costs attributable to the 2015/2016 Collective Bargaining Agreement, along with a decrease in feedstock processed.

 

 

7


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

 

Refining, Transportation and Marketing Main Indicators

 

US$ million

 

First half of

 

2016

2015

2016 x 2015 (%)

Sales revenues

29,517

39,737

(26)

Brazil (includes trading operations abroad)

29,601

38,540

(23)

Abroad

1,680

2,323

(28)

Eliminations

(1,764)

(1,126)

(57)

Gross profit

7,589

7,589

Brazil

7,538

7,421

2

Abroad

51

168

(70)

Operating expenses

(1,702)

(1,712)

1

Brazil

(1,642)

(1,627)

(1)

Abroad

(60)

(85)

29

Operating income (loss)

5,888

5,877

Brazil

5,896

5,795

2

Abroad

(8)

82

(110)

Net income (loss) attributable to the shareholders of Petrobras

4,094

4,039

1

Brazil

4,102

3,972

3

Abroad

(8)

67

(112)

Adjusted EBITDA of the segment *

7,249

7,240

Brazil

7,227

7,127

1

Abroad

22

113

(81)

Capital expenditures of the segment

478

1,358

(65)

Domestic basic oil products price (US$/bbl)

62.38

75.34

(17)

Imports (Mbbl/d)

422

621

(32)

Crude oil import

160

291

(45)

Diesel import

23

119

(81)

Gasoline import

46

38

21

Other oil product import

193

173

12

Exports (Mbbl/d)

484

496

(2)

Crude oil export

324

344

(6)

Oil product export

160

152

5

Exports (imports), net

62

(125)

150

Refining Operations - Brazil (Mbbl/d)

 

 

 

Output of oil products

1,939

2,031

(5)

Reference feedstock 

2,176

2,176

Refining plants utilization factor (%) 

84

89

(6)

Feedstock processed (excluding NGL)

1,828

1,936

(6)

Feedstock processed

1,869

1,977

(5)

Domestic crude oil as % of total feedstock processed

90

86

5

 

 

 

 

Refining Operations - Abroad (Mbbl/d)

 

 

 

Total feedstock processed

138

131

5

Output of oil products

141

147

(4)

Reference feedstock 

230

230

Refining plants utilization factor (%) 

56

55

2

Refining cost - Brazil

 

 

 

Refining cost (US$/barrel)

2.37

2.74

(14)

Refining cost - Abroad (US$/barrel)

4.00

4.00

Sales volume (includes sales to BR Distribuidora and third-parties)

 

 

 

Diesel

766

880

(13)

Gasoline

500

500

Fuel oil

68

100

(32)

Naphtha

142

146

(3)

LPG

227

229

(1)

Jet fuel

117

127

(8)

Others

200

206

(3)

Total domestic oil products (Mbbl/d)

2,020

2,188

(8)

 

 

* See reconciliation in Reconciliation of Consolidated Adjusted EBITDA Statement by Segment.

8


 
 

 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

GAS & POWER

 

 

 

Gross Profit

 

(1H-2016 x 1H-2015): Gross profit decreased 15% in the 1H-2016 when compared to the 1H-2015, mainly due to the effects of foreign translation (25% depreciation of the Brazilian Real against the U.S. dollar). Excluding these effects, gross profit increased 5% in Brazilian Reais, due to lower acquisition costs, mainly because of the reduction of natural gas and LNG imports. This effect was partially offset by lower natural gas sales to the thermoelectric sector and by decreased electricity generation due to the improvement of hydrological conditions in Brazil.

 

Operating income

 

(1H-2016 x 1H-2015): Operating income decreased 11% in the 1H-2016 when compared to the 1H-2015, mainly due to the effect of foreign translation (25% depreciation of the Brazilian Real against the U.S. dollar). Excluding these effects, operating income increased 14% in Brazilian Reais due to higher gross profit and also to lower operating expenses. The 1H-2015 was mainly impacted by expenses from tax contingencies and impairment, partially offset by the reversal of impairment of trade receivables from companies in the electricity sector.

 

Operating Performance

 

Physical and Financial Indicators

 

(1H-2016 x 1H-2015): Electricity sales to the Brazilian free contracting market (Ambiente de Contratação Livre – ACL) were 5% lower, attributable to the termination of agreements.

 

Decreased electricity sales volumes to the Brazilian regulated market (Ambiente de Contratação Regulada – ACR) was due to the termination of agreement representing 205 average MW, which occurred at Electricity Auction of 1H-2015.

 

The decreased electricity generation and lower electricity prices in the spot market (PLD) were due to improved hydrological conditions.

 

LNG imports decreased by 56% and natural gas imports from Bolivia were 10% lower, reflecting a decrease in thermoelectric demand.

 

9


 
 

 

       

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

Gas & Power Main Indicators

 

US$ million

 

First half of

 

2016

2015

2016 x 2015 (%)

Sales revenues

4,613

7,288

(37)

Brazil

4,300

7,045

(39)

Abroad

313

243

29

Gross profit

1,080

1,268

(15)

Brazil

1,030

1,232

(16)

Abroad

50

36

39

Operating expenses

(543)

(662)

18

Brazil

(531)

(650)

18

Abroad

(12)

(12)

Operating income (loss)

537

606

(11)

Brazil

498

582

(14)

Abroad

39

24

63

Net income (Loss) attributable to the shareholders of Petrobras

350

424

(17)

Brazil

288

382

(25)

Abroad

62

42

48

Adjusted EBITDA of the segment *

931

1,285

(28)

Brazil

885

1,251

(29)

Abroad

46

34

35

 

 

 

 

Capital expenditures of the segment

177

483

(63)

 

 

 

 

Physical and financial indicators

 

 

 

Electricity sales (Free contracting market - ACL) - average MW

864

907

(5)

Electricity sales (Regulated contracting market - ACR) - average MW

3,172

3,263

(3)

Generation of electricity - average MW

2,224

5,048

(56)

Electricity price in the spot market - Differences settlement price (PLD) - US$/MWh

20

127

(84)

Imports of LNG (Mbbl/d)

54

122

(56)

Imports of natural gas (Mbbl/d)

184

204

(10)

 

 

 

* See reconciliation in Reconciliation of Consolidated Adjusted EBITDA Statement by Segment.

10


 
 

 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

 

DISTRIBUTION

 

 

 

Gross Profit

 

(1H-2016 x 1H-2015): Gross profit decreased 29% in the 1H-2016 when compared to the 1H-2015. Excluding foreign translation effects (25% depreciation of the Brazilian Real against the U.S. dollar), gross profit decreased 11% in Brazilian Reais due to lower sales volumes in Brazil, caused by the lower economic activity which impacted industrial customers, in which the market share of BR Distribuidora is higher than its competitors. These effects were partially offset by improved results abroad, due to higher gross margin as a result of increased mix of sales products in Paraguay.

 

Operating income

 

(1H-2016 x 1H-2015): Operating income in Brazil decreased as a result of higher losses with tax contingencies, partially offset by improved result abroad.  

 

Operating Performance

 

Market Share - Brazil

 

(1H-2016 x 1H-2015): Decreased market share was the result of lower sales to the thermoelectric sector and lower economic activity that mainly impacted industrial customers, in which the share of BR Distribuidora is higher than its competitors. In addition, the lower market share is a result of a shift in our sales policy to prioritize higher margins instead of sales volumes.

 

 

11


 
 

 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

Distribution Main Indicators

 

US$ million

 

First half of

 

2016

2015

2016 x 2015 (%)

Sales revenues

13,353

18,271

(27)

Brazil

11,632

16,106

(28)

Abroad

1,721

2,165

(21)

Gross profit

1,010

1,427

(29)

Brazil

824

1,222

(33)

Abroad

186

205

(9)

Operating expenses

(947)

(992)

5

Brazil

(816)

(838)

3

Abroad

(131)

(154)

15

Operating income (loss)

63

435

(86)

Brazil

7

383

(98)

Abroad

56

52

8

Net Income (Loss) attributable to the shareholders of Petrobras

46

293

(84)

Brazil

(8)

247

(103)

Abroad

54

46

17

Adjusted EBITDA of the segment *

142

530

(73)

Brazil

68

459

(85)

Abroad

74

71

4

 

 

 

 

Capital expenditures of the segment

60

127

(53)

 

 

 

 

Market share - Brazil

31.7%

35.8%

(4)

 

 

 

 

Sales Volumes - Brazil (Mbbl/d)

 

 

 

Diesel

314

382

(18)

Gasoline

191

205

(7)

Fuel oil

57

98

(42)

Jet fuel

50

57

(12)

Others

97

96

1

Total domestic oil products

709

838

(15)

 

 

 

* See reconciliation in Reconciliation of Consolidated Adjusted EBITDA Statement by Segment.

12


 
 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

Liquidity and Capital Resources

 

U.S.$ million

 

First half of

 

 

 

 

2016

2015

2Q-2016

1Q-2016

2Q-2015

Adjusted cash and cash equivalents* at the beginning of period

25,837

25,957

22,626

25,837

21,254

Government bonds and time deposits with maturities of more than 3 months at the beginning of period

(779)

(9,302)

(771)

(779)

(10,515)

Cash and cash equivalents at the beginning of period

25,058

16,655

21,855

25,058

10,739

Net cash provided by (used in) operating activities

10,679

13,189

6,251

4,428

7,450

Net cash provided by (used in) investing activities

(6,779)

(5,740)

(3,066)

(3,713)

1,710

Capital expenditures and investments in investees

(6,996)

(11,758)

(3,178)

(3,818)

(5,583)

Proceeds from disposal of assets (divestment)

4

211

1

3

31

Investments in marketable securities

213

5,807

111

102

7,262

(=) Net cash flow

3,900

7,449

3,185

715

9,160

Net financings

(10,059)

2,547

(5,582)

(4,477)

6,147

Proceeds from long-term financing

9,100

12,285

7,255

1,845

10,981

Repayments

(19,159)

(9,738)

(12,837)

(6,322)

(4,834)

Acquisition of non-controlling interest

49

173

12

37

35

Effect of exchange rate changes on cash and cash equivalents

661

(663)

139

522

80

Cash and cash equivalents at the end of period 

19,609

26,161

19,609

21,855

26,161

Government bonds and time deposits with maturities of more than 3 months at the end of period

757

3,375

757

771

3,375

Adjusted cash and cash equivalents* at the end of period

20,366

29,536

20,366

22,626

29,536

 

 

 

 

 

 

Reconciliation of Free cash flow

 

 

 

 

 

Net cash provided by (used in) operating activities

10,679

13,189

6,251

4,428

7,450

Capital expenditures and investments in operating segments

(6,996)

(11,758)

(3,178)

(3,818)

(5,583)

Free cash flow*

3,683

1,431

3,073

610

1,867

 

As of June 30, 2016, the balance of cash and cash equivalents was US$ 19,609 million and the balance of adjusted cash and cash equivalents for the same period was US$ 20,366 million. Our principal uses of funds in the 1H-2016 were for repayment of long-term financing (and interest payments) and for capital expenditures. We partially met these requirements with cash provided by operating activities of US$ 10,679 million and with proceeds from long-term financing of US$ 9,100 million. The balance of adjusted cash and cash equivalents was negatively impacted in the 1H-2016 by foreign exchange rate variation applied to our foreign financial investments.

Net cash provided by operating activities of US$ 10,679 million was mainly generated by higher diesel and gasoline margins, lower production taxes in Brazil and lower crude oil, oil products and natural gas imports costs, along with a higher share of domestic crude oil on feedstock processing. These effects were partially offset by lower crude oil and oil product exports prices and decreased sales volume in Brazil due to lower economic activity.

Capital expenditures and investments in investees were US$ 6,996 million in the 1H-2016 (89% in E&P business segment), a 41% decrease when compared to the 1H-2015.

Free cash flow* was positive, amounting US$ 3,683 million in the 1H-2016, for the fifth consecutive quarter.

From January to June 2016, the Company issued global notes in international capital markets totaling US$ 6.75 billion, with maturities of 5 and 10 years, and the proceeds of those notes offerings were used to tender for US$ 6.3 billion of Petrobras’s existing global notes. In addition, the Company entered into a sale and leaseback operation with the Industrial and Commercial Bank of China (ICBC) in the amount of US$ 1 billion. The average maturity of outstanding debt was 7.30 years as of June 30, 2016 (7.14  years as of December 31, 2015). It is important to mention the issuing of US$ 3 billion for tender offer at the same amount in July 2016.

Repayments of interest and principal were US$ 19,159 million in the 1H-2016 and the nominal cash flow (cash view), including principal and interest payments, by maturity, is set out in US$ million as follows:

 

Maturity

2016

2017

2018

2019

2020

2021 and thereafter

Balance at June 30, 2016

Balance at December 31, 2015

Principal

5,176

8,146

14,312

23,539

16,656

57,636

125,465

127,354

Interest

3,681

6,991

6,607

5,645

4,260

34,166

61,349

59,038

Total

8,857

15,137

20,919

29,184

20,916

91,802

186,814

186,392

 

*


* See reconciliation of adjusted cash and cash equivalents in Net Debt and definitions of adjusted cash and cash equivalents and free cash flow in glossary.

 

 

13


 
 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

Consolidated debt

As of June 30, 2016, the gross debt in U.S. dollars decreased 2% and the net debt in U.S. dollars was 3% higher when compared to December 31, 2015.

Current debt and non-current debt include finance lease obligations of US$ 25 million and US$ 98 million on June 30, 2016, respectively (US$ 19 million and US$ 78 million on December 31, 2015).

 

 

U.S.$ million

 

 

 

 

 

06.30.2016

12.31.2015

Δ%

Current debt

11,376

14,702

(23)

Non-current debt

112,546

111,560

1

Total

123,922

126,262

(2)

Cash and cash equivalents

19,609

25,058

(22)

Government securities and time deposits (maturity of more than 3 months)

757

779

(3)

Adjusted cash and cash equivalents *

20,366

25,837

(21)

Net debt *

103,556

100,425

3

Net debt/(net debt+shareholders' equity)

55%

60%

(5)

Total net liabilities *

234,585

204,684

15

(Net third parties capital / total net liabilities)

63%

68%

(5)

Net debt/LTM Adjusted EBITDA ratio *

5.18

4.41

17

Average maturity of outstanding debt (years)

7.30

7.14

0.16

 

 

 

US$ million

 

 

 

 

 

06.30.2016

12.31.2015

Δ%

Summarized information on financing

 

 

 

Floating rate or fixed rate

 

 

 

Floating rate debt

61,953

62,307

(1)

Fixed rate debt

61,842

63,858

(3)

Total

123,795

126,165

(2)

 

 

 

 

Currency

 

 

 

Reais

24,676

20,555

20

US Dollars

88,903

93,567

(5)

Euro

7,203

8,685

(17)

Other currencies

3,013

3,358

(10)

Total

123,795

126,165

(2)

 

 

 

 

By maturity

 

 

 

2016

6,741

14,683

(54)

2017

8,043

11,397

(29)

2018

14,129

16,091

(12)

2019

23,350

22,596

3

2020

16,441

15,537

6

2021 years on

55,091

45,861

20

Total

123,795

126,165

(2)

**


* See definition of adjusted cash and cash equivalents, net debt, total net liabilities and LTM Adjusted EBITDA in glossary and reconciliation in Reconciliation of Adjusted EBITDA.

 

 

14


 
 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

ADDITIONAL INFORMATION

 

1.     Reconciliation of Adjusted EBITDA

 

Adjusted EBITDA is not a measure defined in the International Financial Reporting Standards – IFRS. Our calculation may not be comparable to the calculation of Adjusted EBITDA by other companies and it should not be considered as a substitute for any measure calculated in accordance with IFRS. The Company reports its Adjusted EBITDA to give additional information about its profitability and must be considered in conjunction with other measures and indicators for a better understanding of the Company's financial performance. The Adjusted EBITDA is also a component of the Net debt / LTM adjusted EBITDA ratio, which is a metric included in the Company’s Business and Management Plan.

For interim financial periods, the Company calculates the last twelve months adjusted EBITDA (LTM Adjusted EBITDA), consistently with market best practices.

Adjusted EBITDA

 

U.S.$ million

 

First half of

 

 

 

 

 

2016

2015

2016 x 2015 (%)

2Q-2016

1Q-2016

2Q16 X 1Q16 (%)

2Q-2015

 

 

 

 

 

 

 

 

Net income (loss)

160

1,876

(91)

257

(97)

(365)

294

Net finance income (expense)

3,950

3,932

1,727

2,223

(22)

1,969

Income taxes

234

1,926

(88)

177

57

211

870

Depreciation, depletion and amortization

6,639

5,913

12

3,404

3,235

5

2,939

EBITDA

10,983

13,647

(20)

5,565

5,418

3

6,072

Share of earnings in equity-accounted investments

(212)

(115)

84

(113)

(99)

14

(55)

Impairment losses / (reversals)

412

419

(2)

337

75

348

418

Adjusted EBITDA

11,183

13,951

(20)

5,789

5,394

7

6,435

Adjusted EBITDA margin (%)

29

27

2

28

30

(2)

25

 

 

 

 

 

 

 

 

 

 

LTM Adjusted EBITDA

 

 

US$ million

 

Last twelve months until

 

2016

2015

Net income (loss)

(10,327)

(8,611)

Net finance income (expense)

8,459

8,441

Income taxes

(2,829)

(1,137)

Depreciation, depletion and amortization

12,317

11,591

EBITDA

7,620

10,284

Share of earnings in equity-accounted investments

80

177

Impairment losses / (reversals)

12,292

12,299

Adjusted EBITDA

19,992

22,760

 

 

15


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

 

 

ADDITIONAL INFORMATION

 

2.     Impact of our Cash Flow Hedge policy

 

US$ million

 

First half of

 

 

 

 

 

2016

2015

2016 x 2015 (%)

2Q-2016

1Q-2016

2Q16 X 1Q16 (%)

2Q-2015

Total inflation indexation and foreign exchange variation

12,125

(8,653)

240

6,631

5,494

21

1,873

Deferred Foreign Exchange Variation recognized in Shareholders' Equity

(11,746)

8,143

(244)

(6,116)

(5,630)

(9)

(1,741)

Reclassification from Shareholders’ Equity to the Statement of Income

(1,453)

(779)

-87

(711)

(742)

4

(491)

Net Inflation indexation and foreign exchange variation

(1,074)

(1,289)

17

(196)

(878)

78

(359)

 

The decreased reclassification of foreign exchange variation expenses from the Shareholders’ Equity to the Statement of Income was mainly due to the fact that the 1Q-2016 was impacted by planned exports that were no longer expected to occur or did not occur, mainly due to the decrease in crude oil prices. Decreased planned export volumes were no longer expected to occur or did not occur in the 2Q-2016.

 

Additional hedging relationships may be revoked or additional reclassification adjustments from equity to the Statement of Income may occur as a result of changes in forecast export prices and export volumes following a review in the Company’s business plan. Based on a sensitivity analysis considering a US$ 10/barrel decrease in average Brent prices stress scenario, when compared to the Brent price projections in our most recent update of the 2015-2019 Business and Management Plan (Plano de Negócios e Gestão – PNG), a US$ 302 million reclassification adjustment from Shareholders’ Equity to the statement of income would occur.

 

The expected annual realization of the foreign exchange variation balance in shareholders’ equity, on June 30, 2016, is set out below:

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

2016

2017

2018

2019

2020

2021

2022

2023

2024 to

2027

Total

Expected

realization

(1,967)

(4,460)

(4,612)

(3,087)

(2,237)

(1,857)

(2,136)

(961)

3,778

(17,539)

 

 

16


 
 

 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

 

 

ADDITIONAL INFORMATION

 

3.     Special Items

 

US$ million

First half of

 

 

 

 

 

2016

2015

 

Items of Income Statement

2Q-2016

1Q-2016

2Q-2015

 

 

 

 

 

 

 

(283)

394

Impairment of trade receivables from companies in the isolated electricity system

Selling expenses

(144)

(139)

(15)

(238)

(96)

(Losses)/Gains on legal proceedings

Other income (expenses)

(162)

(76)

84

(412)

(473)

Impairment of assets and investments

Several

(337)

(75)

(472)

(13)

(169)

State Tax Amnesty Program / PRORELIT

Several

(13)

(169)

(1,423)

Tax Recoverable Program - REFIS

Several

(1,423)

(348)

Voluntary Separation Incentive Plan – PIDV

Other income (expenses)

(348)

23

51

Amounts recovered - "overpayments incorrectly capitalized"

Other income (expenses)

23

51

187

Gains (losses) on Disposal of Assets

Other income (expenses)

25

(1,271)

(1,529)

Total

 

(968)

(303)

(1,919)

 

 

 

 

 

 

 

Impact of the impairment of assets and investments on the Company´s Income Statement:

 

 

 

 

 

 

 

(412)

(419)

Impairment

 

(337)

(75)

(418)

(54)

Share of earnings in equity-accounted investments

 

(54)

(412)

(473)

Impairment of assets and investments

 

(337)

(75)

(472)

 

 

 

 

 

 

 

Impact of the effects of State Tax Amnesty Program and of Program of Reduction of Tax Litigation (PRORELIT) on the Company’s Income Statement:

 

 

 

 

 

 

 

(11)

(144)

Tax expenses

 

(11)

(144)

(2)

(25)

Interest expenses

 

(2)

(25)

(13)

(169)

State Tax Amnesty Program / PRORELIT

 

(13)

(169)

 

 

 

 

 

 

 

Impact of the Company’s decision to adhere to the Tax Recoverable Program - REFIS on its Income Statement:

 

 

 

 

 

 

 

(1,000)

Tax expenses

 

(1,000)

(423)

Interest expenses

 

(423)

(1,423)

Tax Recoverable Program - REFIS

 

(1,423)

 

These special items are related to the Company’s businesses and based on management’s judgement have been highlighted and are presented as additional information to provide a better understanding of the Company’s performance. These items are presented when relevant and do not necessarily occur in all periods.

 

 

17


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

 

ADDITIONAL INFORMATION

 

4. Results of Operations of 1H-2016 compared to 1H-2015:

Virtually all revenues and expenses of our Brazilian operations are denominated and payable in Brazilian Reais. When the Brazilian Real depreciates relative to the U.S. dollar, as it did in the 1H-2016 (a 25% depreciation), revenues and expenses decrease when translated into U.S. dollars. Nevertheless, the depreciation of the Brazilian Real against the U.S. dollar affects the line items discussed below in different ways.

Sales revenues were US$ 38,309 million in the 1H-2016, a 26% decrease (US$ 13,679 million) when compared to US$ 51,988 million in the 1H-2015. Excluding the effects of foreign exchange translation, sales revenues decreased by 8% when expressed in Reais, due to:

·       Decreased domestic sales for oil products (7%), reflecting lower economic activity in Brazil and decreased diesel and fuel oil consumption for thermoelectric generation;

·       Decreased electricity generation and prices due to improved hydrological conditions and decreased domestic natural gas sales volumes; and

·       Lower crude oil and oil product export prices as a result of lower international crude oil prices.

 

These effects were partially offset by higher margins of diesel and gasoline.

Cost of sales were US$ 26,434 million in the 1H-2016, a 26% decrease (US$ 9,407 million) compared to US$ 35,841 million in the 1H-2015. Excluding the effects of foreign exchange translation, cost of sales decreased by 8% when expressed in Reais, due to lower crude oil, oil products and natural gas import costs, as well as lower production taxes in Brazil. These effects were partially offset by higher depreciation expenses as a result of a decrease in estimated reserves (based on the unit of production method), partially offset by lower carrying amounts of assets impacted by the impairment losses recognized in 2015.

Selling expenses were US$ 2,010 million in the 1H-2016, an 8% increase (US$ 143 million) compared to US$ 1,867 million in the 1H-2015. Excluding the effects of foreign exchange translation, selling expenses increased by 33% in the period, mainly due to the reversal of impairment of trade receivables from companies in the electricity sector in the 1Q-2015 (US$ 452 million) and higher freight expenses in 2016, following the depreciation of the Brazilian Real against the U.S. dollar.

Exploration costs were US$ 761 million in the 1H-2016, a 5% decrease (US$ 44 million) compared to US$ 805 million in the 1H-2015. Excluding the effects of foreign exchange translation, exploration costs increased by 16% in the period, mainly generated by return of exploratory blocks due to their economic viability.

Other taxes were US$ 266 million in the 1H-2016, a 83% decrease (US$ 1,286 million) compared to US$ 1,552 million in the 1H-2015 mainly due to the burden of tax on financial operations (Imposto sobre Operações Financeiras - IOF) applicable to intercompany loans made by Petrobras to foreign subsidiaries and to the VAT tax (Imposto sobre a Circulação de Mercadorias e Serviços) on the acquisition of natural gas recognized in the 1H-2015.

Other income and expenses, net were US$ 2,945 million in the 1H-2016, a 43% increase (US$ 883 million) when compared to US$ 2,062 million in the 1H-2015.  Excluding the effects of foreign exchange translation, other income and expenses, net increased by 76% in the period, mainly due to:

·       Higher unscheduled stoppages and pre-operating expenses, mainly with drilling rigs idleness (US$ 527 million);

·       Higher expenses related to legal proceedings contingencies, mainly in connection with labor and civil lawsuits (US$ 440 million); and

·       Expenses with the new Voluntary Separation Incentive Plan (US$ 346 million).

 

Net finance expense was US$ 3,950 million in the 1H-2016, remaining relatively flat compared to US$ 3,932 million in the 1H-2015, due to the depreciation of the Brazilian Real against the U.S. dollar. Excluding the effect of foreign exchange translation, net finance expense increased 26% in Brazilian Reais due to:

 

·       Higher interest expenses due to higher debt and to the effect of the depreciation of the average Brazilian Real against the U.S. dollar;

·       Foreign exchange gains generated by the impact of an 17.8% appreciation of the Brazilian Real against the U.S. dollar on the Company’s net debt in the 1H-2016, compared to foreign exchange losses generated by the impact of a 16.8% depreciation in the 1H-2015;

·       The higher reclassification of cumulative foreign exchange variation from shareholders’ equity to net income due to occurred exports designated for cash flow hedge accounting, and to a portion of future exports that were previously designated but were no longer expected to occur or did not occur;

·       Foreign exchange losses caused by the impact of a 1.4% depreciation of the U.S. dollar against the Euro on the Company’s net debt in the 1H-2016, compared to foreign exchange gains caused by the impact of an 8.2% appreciation in the 1H-2015; and

·       Foreign exchange gains caused by the impact of an 10.7% appreciation of the U.S. dollar against the Pound Sterling on the Company’s net debt in the 1H-2016, compared to foreign exchange losses caused by the impact of a 0.9% depreciation in the 1H-2015.

 

Share of earnings in equity-accounted investments were US$ 212 million in the 1H-2016, a 84% increase (US$ 97  million) when compared to US$ 115 million in the 1H-2015.  Excluding the effects of foreign exchange translation (25% depreciation of the Brazilian Real against the U.S. dollar), share of earnings in equity-accounted investments increased by 130% in the period, mainly due to impairment  losses in investee companies of Exploration and Production and Biofuels segments in the 1H-2015, as a result of decreased crude oil prices and higher discount rates, due to an increase in Brazil’s risk premium resulting from a credit risk downgrade (losing its investment grade status).

Income taxes (corporate income tax and social contribution) were US$ 234 million in the 1H-2016, a 88% decrease (US$ 1,692 million) compared to US$ 1,926 million in the 1H-2015, mainly due to lower taxable income before income taxes and decreased corporate income tax and social contribution tax expenses in Brazil over income earned abroad.

Loss related to non-controlling interests of US$ 372 million in the 1H-2016 (a US$ 157 million gain in the 1H-2015), mainly reflecting the impact of foreign exchange variation on debt of structured entities in U.S. dollars in the period.

 

 

18


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

FINANCIAL STATEMENTS

Income Statement - Consolidated

 

U.S.$ million

 

First half of

 

 

 

 

2016

2015

2Q-2016

1Q-2016

2Q-2015

Sales revenues

38,309

51,988

20,320

17,989

26,021

Cost of sales

(26,434)

(35,841)

(13,818)

(12,616)

(17,701)

Gross profit

11,875

16,147

6,502

5,373

8,320

Selling expenses

(2,010)

(1,867)

(1,051)

(959)

(1,265)

General and administrative expenses

(1,488)

(1,846)

(810)

(678)

(900)

Exploration costs

(761)

(805)

(468)

(293)

(462)

Research and development expenses

(273)

(396)

(144)

(129)

(199)

Other taxes

(266)

(1,552)

(127)

(139)

(1,289)

Other income and expenses, net

(2,945)

(2,062)

(1,854)

(1,091)

(1,127)

 

(7,743)

(8,528)

(4,454)

(3,289)

(5,242)

Operating income (loss)

4,132

7,619

2,048

2,084

3,078

Finance income

445

456

218

227

200

Finance expenses

(3,321)

(3,099)

(1,749)

(1,572)

(1,810)

Foreign exchange and inflation indexation charges

(1,074)

(1,289)

(196)

(878)

(359)

Net finance income (expense)

(3,950)

(3,932)

(1,727)

(2,223)

(1,969)

Share of earnings in equity-accounted investments

212

115

113

99

55

Income (loss) before income taxes

394

3,802

434

(40)

1,164

Income taxes

(234)

(1,926)

(177)

(57)

(870)

Net income (loss)

160

1,876

257

(97)

294

Net income (loss) attributable to:

 

 

 

 

 

Shareholders of Petrobras

(212)

2,033

106

(318)

171

Non-controlling interests

372

(157)

151

221

123

 

160

1,876

257

(97)

294

 

 

19


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

FINANCIAL STATEMENTS

Statement of Financial Position – Consolidated

ASSETS

U.S.$ million

 

06.30.2016

12.31.2015

 

 

 

Current assets

41,321

43,428

Cash and cash equivalents

19,609

25,058

Marketable securities

757

780

Trade and other receivables, net

5,311

5,803

Inventories

8,882

7,441

Recoverable taxes

2,893

2,748

Assets classified as held for sale

2,162

152

Other current assets

1,707

1,446

Non-current assets

213,630

187,093

Long-term receivables

18,654

19,177

Trade and other receivables, net

4,043

3,669

Marketable securities

97

88

Judicial deposits

3,431

2,499

Deferred taxes

2,938

6,016

Other tax assets

3,406

2,821

Advances to suppliers

1,600

1,638

Other non-current assets

3,139

2,446

Investments

4,078

3,527

Property, plant and equipment

187,291

161,297

Intangible assets

3,607

3,092

Total assets

254,951

230,521

 

 

 

LIABILITIES

U.S.$ million

 

06.30.2016

12.31.2015

Current liabilities

26,071

28,573

Trade payables

5,558

6,373

Current debt

11,376

14,702

Taxes payable

3,386

3,470

Employee compensation (payroll, profit-sharing and related charges)

1,895

1,302

Pension and medical benefits

798

655

Liabilities associated with assets classified as held for sale

1,045

125

Other current liabilities

2,013

1,946

Non-current liabilities

143,113

135,893

Non-current debt

112,546

111,560

Deferred taxes

244

232

Pension and medical benefits

15,652

12,195

Provision for decommissioning costs

10,975

9,150

Provisions for legal proceedings

3,248

2,247

Other non-current liabilities

448

509

Shareholders' equity

85,767

66,055

Share capital (net of share issuance costs) 

107,101

107,101

Profit reserves and others

(22,548)

(41,865)

Non-controlling interests

1,214

819

Total liabilities and shareholders' equity

254,951

230,521

 

 

 

 

 

20


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

FINANCIAL STATEMENTS

Statement of Cash Flows – Consolidated

 

US$ million

 

First half of

 

 

 

 

2016

2015

2Q-2016

1Q-2016

2Q-2015

Net income (loss)

160

1,876

257

(97)

294

(+) Adjustments for:

10,519

11,313

5,994

4,525

7,156

Depreciation, depletion and amortization

6,639

5,913

3,404

3,235

2,939

Foreign exchange and inflation indexation and finance charges

3,903

4,013

1,665

2,238

1,815

Share of earnings in equity-accounted investments

(212)

(115)

(113)

(99)

(55)

Allowance for impairment of trade receivables

338

(12)

209

129

289

(Gains) / losses on disposal / write-offs of non-current assets, returned areas and cancelled projects

65

(71)

39

26

70

Deferred income taxes, net

(728)

1,289

(367)

(361)

575

Exploration expenditures written-off

499

555

351

148

354

Impairment of property, plant and equipment

412

421

337

75

420

Inventory write-down to net realizable value

322

20

21

301

(81)

Pension and medical benefits (actuarial expense)

1,088

1,136

575

513

548

Judicial deposits

(355)

(643)

(257)

(98)

(490)

Inventories

(561)

(889)

(133)

(428)

(531)

Trade and other receivables, net

746

(110)

(171)

917

(135)

Trade payables

(1,306)

(854)

(341)

(965)

(59)

Pension and medical benefits

(338)

(375)

(226)

(112)

(230)

Taxes payable

13

2,356

581

(568)

2,026

Income tax and social contribution paid

(157)

(398)

(88)

(69)

(181)

Other assets and liabilities

151

(923)

508

(357)

(118)

(=) Net cash provided by (used in) operating activities

10,679

13,189

6,251

4,428

7,450

(-) Net cash provided by (used in) investing activities

(6,779)

(5,740)

(3,066)

(3,713)

1,710

Capital expenditures and investments in investees

(6,996)

(11,758)

(3,178)

(3,818)

(5,583)

Proceeds from disposal of assets (divestment)

4

211

1

3

31

Divestments (investments) in marketable securities

213

5,807

111

102

7,262

(=) Net cash flow

3,900

7,449

3,185

715

9,160

(-) Net cash provided by (used in) financing activities

(10,010)

2,720

(5,570)

(4,440)

6,182

Proceeds from long-term financing

9,100

12,285

7,255

1,845

10,981

Repayment of principal

(15,510)

(6,530)

(11,137)

(4,373)

(3,582)

Repayment of interest

(3,649)

(3,208)

(1,700)

(1,949)

(1,252)

Acquisition of non-controlling interest

49

173

12

37

35

Effect of exchange rate changes on cash and cash equivalents

661

(663)

139

522

80

(=) Net increase (decrease) in cash and cash equivalents in the period

(5,449)

9,506

(2,246)

(3,203)

15,422

Cash and cash equivalents at the beginning of period

25,058

16,655

21,855

25,058

10,739

Cash and cash equivalents at the end of period

19,609

26,161

19,609

21,855

26,161

 

 

 

 

 

 

 

 

21


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

SEGMENT INFORMATION

Consolidated Income Statement by Segment – 1H-2016

 

U.S.$ million

 

 

 

 

 

 

 

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

CORP.

ELIMIN.

TOTAL

Sales revenues

14,495

29,517

4,613

120

13,353

(23,789)

38,309

Intersegments

13,772

8,556

1,143

115

203

(23,789)

Third parties

723

20,961

3,470

5

13,150

38,309

Cost of sales

(11,483)

(21,928)

(3,533)

(133)

(12,343)

22,986

(26,434)

Gross profit

3,012

7,589

1,080

(13)

1,010

(803)

11,875

Expenses

(2,384)

(1,702)

(543)

(38)

(947)

(2,183)

54

(7,743)

Selling expenses

(79)

(901)

(410)

(1)

(663)

(14)

58

(2,010)

General and administrative expenses

(175)

(194)

(103)

(12)

(119)

(885)

(1,488)

Exploration costs

(761)

(761)

Research and development expenses

(119)

(27)

(8)

(1)

(118)

(273)

Other taxes

(33)

(35)

(106)

(2)

(23)

(67)

(266)

Other income and expenses, net

(1,217)

(545)

84

(22)

(142)

(1,099)

(4)

(2,945)

Operating income (loss)

628

5,887

537

(51)

63

(2,183)

(749)

4,132

Net finance income (expense)

(3,950)

(3,950)

Share of earnings in equity-accounted investments

4

149

56

(2)

5

212

Income (loss) before income taxes

632

6,036

593

(53)

68

(6,133)

(749)

394

Income taxes

(212)

(2,001)

(182)

17

(22)

1,912

254

(234)

Net income (loss)

420

4,035

411

(36)

46

(4,221)

(495)

160

Net income (loss) attributable to:

 

 

 

 

 

 

 

 

Shareholders of Petrobras

463

4,094

350

(36)

46

(4,634)

(495)

(212)

Non-controlling interests

(43)

(59)

61

413

372

 

420

4,035

411

(36)

46

(4,221)

(495)

160

 

 

 

 

 

 

 

 

 

Consolidated Income Statement by Segment – 1H-2015

 

U.S.$ million

 

 

 

 

 

 

 

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

CORP.

ELIMIN.

TOTAL

Sales revenues

20,306

39,737

7,288

103

18,271

(33,717)

51,988

Intersegments

19,577

12,603

1,127

98

312

(33,717)

Third parties

729

27,134

6,161

5

17,959

51,988

Cost of sales

(13,791)

(32,148)

(6,020)

(114)

(16,844)

33,076

(35,841)

Gross profit

6,515

7,589

1,268

(11)

1,427

(641)

16,147

Expenses

(1,733)

(1,712)

(662)

(27)

(992)

(3,517)

115

(8,528)

Selling expenses

(124)

(1,023)

(16)

(2)

(839)

20

117

(1,867)

General and administrative expenses

(218)

(214)

(128)

(17)

(147)

(1,121)

(1)

(1,846)

Exploration costs

(805)

(805)

Research and development expenses

(153)

(64)

(41)

(6)

(132)

(396)

Other taxes

(48)

(85)

(285)

(20)

(1,114)

(1,552)

Other income and expenses, net

(385)

(326)

(192)

(2)

14

(1,170)

(1)

(2,062)

 

 

 

 

 

 

 

 

 

Operating income (loss)

4,782

5,877

606

(38)

435

(3,517)

(526)

7,619

Net finance income (expense)

(3,932)

(3,932)

Share of earnings in equity-accounted investments

(32)

160

74

(91)

5

(1)

115

Income (loss) before income taxes

4,750

6,037

680

(129)

440

(7,450)

(526)

3,802

Income taxes

(1,628)

(1,998)

(206)

13

(147)

1,862

178

(1,926)

Net income (loss)

3,122

4,039

474

(116)

293

(5,588)

(348)

1,876

Net income (loss) attributable to:

 

 

 

 

 

 

 

 

Shareholders of Petrobras

3,115

4,039

424

(116)

293

(5,374)

(348)

2,033

Non-controlling interests

7

50

(214)

(157)

 

3,122

4,039

474

(116)

293

(5,588)

(348)

1,876

 

 

 

 

 

 

 

 

 

 

 

22


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

Other Income (Expenses) by Segment – 1H-2016

 

 

U.S.$ million

 

 

 

 

 

 

 

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

CORP.

ELIMIN.

TOTAL

Unscheduled stoppages and pre-operating expenses

(1,067)

(37)

(24)

(2)

(1,130)

(Losses)/gains on legal, administrative and arbitral proceedings

(185)

(43)

(10)

(187)

(275)

(700)

Pension and medical benefits

(670)

(670)

Impairment

(91)

(321)

(412)

Voluntary Separation Incentive Plan - PIDV

(160)

(76)

(15)

2

(97)

(346)

Institutional relations and cultural projects

(3)

(2)

(8)

(103)

(116)

Gains / (losses) on disposal/write-offs of assets; returned areas and cancelled projects

(20)

(41)

(11)

2

5

(65)

Operating expenses with thermoeletric plants

(56)

(56)

Health, safety and environment

(8)

(9)

(3)

(1)

(21)

(42)

Losses on fines

(7)

(15)

(18)

(40)

Reimbursement of unduly capitalized expenses

23

23

Government grants

3

15

56

3

77

Ship/Take or Pay Agreements with Gas Distributors

1

101

102

(Expenditures)/reimbursements from operations in E&P partnerships

302

302

Others

18

(16)

46

(25)

50

59

(4)

128

 

(1,217)

(545)

84

(22)

(142)

(1,099)

(4)

(2,945)

 

 

 

 

 

 

 

 

 

 

Other Income (Expenses) by Segment – 1H-2015

 

 

U.S.$ million

 

 

 

 

 

 

 

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

CORP.

ELIMIN.

TOTAL

Unscheduled stoppages and pre-operating expenses

(410)

(134)

(55)

(4)

(603)

(Losses)/gains on legal, administrative and arbitral proceedings

(39)

(65)

4

(16)

(144)

(260)

Pension and medical benefits

(638)

(638)

Impairment

(110)

(119)

(190)

(419)

Voluntary Separation Incentive Plan - PIDV

(8)

(5)

(12)

(1)

(1)

(27)

Institutional relations and cultural projects

(13)

(12)

(1)

(28)

(189)

(243)

Gains / (losses) on disposal/write-offs of assets; returned areas and cancelled projects

(22)

87

5

3

(2)

71

Operating expenses with thermoeletric plants

(68)

(68)

Health, safety and environment

(12)

(9)

(3)

(27)

(51)

Losses on fines

(5)

(96)

(1)

(149)

(251)

Reimbursement of unduly capitalized expenses

51

51

Government grants

3

1

2

6

Ship/Take or Pay Agreements with Gas Distributors

(8)

101

93

(Expenditures)/reimbursements from operations in E&P partnerships

160

160

Others

79

26

28

(1)

55

(69)

(1)

117

 

(385)

(326)

(192)

(2)

14

(1,170)

(1)

(2,062)

 

 

 

 

 

 

 

 

 

 

 

23


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

Consolidated Assets by Segment – 06.30.2016

 

U.S.$ million

 

 

 

 

 

 

 

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

CORP.

ELIMIN.

TOTAL

Total assets

143,760

54,961

21,186

712

6,287

33,613

(5,568)

254,951

 

 

 

 

 

 

 

 

 

Current assets

6,037

11,176

1,674

56

2,695

24,792

(5,109)

41,321

Non-current assets

137,723

43,785

19,512

656

3,592

8,821

(459)

213,630

Long-term receivables

7,563

3,144

1,181

4

1,119

6,051

(408)

18,654

Investments

1,532

1,481

480

541

37

7

4,078

Property, plant and equipment

126,063

38,951

17,515

111

2,194

2,508

(51)

187,291

Operating assets

92,227

34,330

15,578

99

1,866

2,053

(51)

146,102

Assets under construction

33,836

4,621

1,937

12

328

455

41,189

Intangible assets

2,565

209

336

242

255

3,607

 

 

 

 

 

 

 

 

 

Consolidated Assets by Segment – 12.31.2015

 

U.S.$ million

 

 

 

 

 

 

 

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

CORP.

ELIMIN.

TOTAL

Total assets

123,796

45,492

19,469

482

5,271

39,455

(3,444)

230,521

 

 

 

 

 

 

 

 

 

Current assets

3,639

9,027

2,663

45

2,299

28,866

(3,111)

43,428

Non-current assets

120,157

36,465

16,806

437

2,972

10,589

(333)

187,093

Long-term receivables

6,467

2,384

1,358

3

859

8,398

(292)

19,177

Investments

1,807

879

456

343

34

8

3,527

Property, plant and equipment

109,724

33,032

14,674

91

1,868

1,949

(41)

161,297

Operating assets

79,585

28,803

12,193

81

1,581

1,485

(41)

123,687

Assets under construction

30,139

4,229

2,481

10

287

464

37,610

Intangible assets

2,159

170

318

211

234

3,092

 

 

 

 

 

 

 

 

 

 

 

24


 
 

 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

Reconciliation of Consolidated Adjusted EBITDA Statement by Segment – 1H-2016

 

U.S.$ million

 

 

 

 

 

 

 

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

CORP.

ELIMIN.

TOTAL

Net income (loss)

420

4,035

411

(36)

46

(4,221)

(495)

160

Net finance income (expense)

3,950

3,950

Income taxes

212

2,001

182

(17)

22

(1,912)

(254)

234

Depreciation, depletion and amortization

5,011

1,041

394

4

79

111

6,639

EBITDA

5,643

7,077

987

(49)

147

(2,072)

(749)

10,983

Share of earnings in equity-accounted investments

(4)

(149)

(56)

2

(5)

(212)

Impairment losses / (reversals)

91

321

412

Adjusted EBITDA *

5,730

7,249

931

(47)

142

(2,072)

(749)

11,183

 

 

 

 

 

 

 

 

 

 

 Reconciliation of Consolidated Adjusted EBITDA Statement by Segment – 1H-2015

*

 

U.S.$ million

 

 

 

 

 

 

 

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

CORP.

ELIMIN.

TOTAL

Net income (loss)

3,122

4,039

474

(116)

293

(5,588)

(348)

1,876

Net finance income (expense)

3,932

3,932

Income taxes

1,628

1,998

206

(13)

147

(1,862)

(178)

1,926

Depreciation, depletion and amortization

3,938

1,244

489

5

95

142

5,913

EBITDA

8,688

7,281

1,169

(124)

535

(3,376)

(526)

13,647

Share of earnings in equity-accounted investments

32

(160)

(74)

91

(5)

1

(115)

Impairment losses / (reversals)

110

119

190

419

Adjusted EBITDA *

8,830

7,240

1,285

(33)

530

(3,375)

(526)

13,951

 

 

 

 

 

 

 

 

 

 


* See definition of Adjusted EBITDA in glossary.

 

 

25


 
 

 

 

Network:Clientes:PETROBRAS:CONTRATO:relatorios_financeiros:07_Layouts:Aprovados:RMF2:imagens:07_PET_apresentacao_relatorios_rm.jpg

 

Glossary

 

ACL - Ambiente de Contratação Livre (Free contracting market) in the electricity system.

ACR - Ambiente de Contratação Regulada (Regulated contracting market) in the electricity system.

ANP - Brazilian National Petroleum, Natural Gas and Biofuels Agency.

Reference feedstock or installed capacity of primary processing - Maximum sustainable feedstock processing reached at the distillation units at the end of each period, respecting the project limits of equipment and the safety, environment and product quality requirements. It is lower than the authorized capacity set by ANP (including temporary authorizations) and by environmental protection agencies.

Feedstock processed (excluding NGL) - Daily volume of crude oil processed in the Company´s refineries in Brazil and is factored into the calculation of the Refining Plants Utilization Factor.

Feedstock processed – Brazil - Daily volume of crude oil and NGL processed.

Adjusted cash and cash equivalents - Sum of cash and cash equivalents, government bonds and time deposits from highly rated financial institutions abroad with maturities of more than 3 months from the date of acquisition, considering the expected realization of those financial investments in the short-term. This measure is not defined under the International Financial Reporting Standards – IFRS and should not be considered in isolation or as a substitute for cash and cash equivalents computed in accordance with IFRS. It may not be comparable to adjusted cash and cash equivalents of other companies, however management believes that it is an appropriate supplemental measure that helps investors assess our liquidity and supports leverage management.

 

Adjusted EBITDA – Net income plus net finance income (expense); income taxes; depreciation, depletion and amortization; share of earnings in equity-accounted investments; and impairment. Adjusted EBITDA is not a measure defined by IFRS and it is possible that it may not be comparable to similar measures reported by other companies.

Net debt – Gross debt less adjusted cash and cash equivalents. Net debt is not a measure defined in the International Standards - IFRS and should not be considered in isolation or as a substitute for total long-term debt calculated in accordance with IFRS. Our calculation of net debt may not be comparable to the calculation of net debt by other companies. Management believes that net debt is an appropriate supplemental measure that helps investors assess our liquidity and supports leverage management.

Consolidated Structured Entities - Entities that have been designated so that voting or similar rights are not the determining factor that decides who controls the entity. Petrobras has no share of earnings in investments in certain structured entities that are consolidated in the financial statements, but the control is determined by the power it has over its relevant operating activities. As there are no interests, the result came from certain consolidated structured entities is attributable to non-controlling interests in the income statement, and it is not considered on net income attributable to shareholders of Petrobras.

Refining plants utilization factor (%) - Feedstock processed (excluding NGL) divided by the reference feedstock.

Free cash flow - Net cash provided by operating activities less capital expenditures and investments in operating segments. Free cash flow is not defined under the International Financial Reporting Standards – IFRS and should not be considered in isolation or as a substitute for cash and cash equivalents calculated in accordance with IFRS. It may not be comparable to free cash flow of other companies, however management believes that it is an appropriate supplemental measure that helps investors assess our liquidity and supports leverage management.

 

 

LPG - Liquified crude oil gas.

LNG - Liquified natural gas.

Operating indicators - Indicators used for businesses management and are not reviewed by independent auditor.

NGL - Natural gas liquids.

Lifting Cost - Crude oil and natural gas lifting cost indicator.

LTM Adjusted EBITDA – Sum of the last 12 months (Last Twelve Months) of Adjusted EBITDA.

Basic and diluted earnings (losses) per share - Calculated based on the weighted average number of shares.

Operating margin - Calculated based on operating income (loss) excluding write-offs of overpayments incorrectly capitalized.

 

Adjusted EBITDA margin - Adjusted EBITDA divided by sales revenues.

Market share - Relation between Distribution sales and total market. Beginning in 2015, our market share excludes sales made to wholesalers. Market share for prior periods was revised pursuant to the changes made ​​by the Brazilian National Petroleum, Natural Gas and Biofuels Agency (ANP) and by the Brazilian Wholesalers and Fuel Traders Syndicate (Sindicom). Prior periods are presented based on the new methodology.

Total liabilities net - Total liability less adjusted cash and cash equivalents.

PLD (differences settlement price) - Electricity price in the spot market. Weekly weighed prices per output level (light, medium and heavy), number of hours and related market capacity.

Domestic crude oil sales price - Average between the prices of exports and the internal transfer prices from Exploration & Production to Refining, Transportation and Marketing.

Domestic natural gas production - Natural gas production in Brazil less LNG plus gas reinjection.

Jet fuel – Aviation fuel.

Net Income by Business Segment - Company’s segment results. Petrobras is an integrated energy company and most of the crude oil and natural gas production from the Exploration & Production segment is transferred to other business segments of the Company. Our results by business segment include transactions carried out with third parties, transactions between companies of Petrobras’s Group and transfers between Petrobras’s business segments that are calculated using internal prices defined through methodologies based on market parameters. On April 28, 2016, the Extraordinary General Meeting approved the statutory adjustments according to the new organizational structure of the company and its new management and governance model, to align the organization to the new reality of the oil and gas sector and prioritize profitability and capital discipline. The new management model does not provide for the discontinuance of the Company's business, but involves unification activities.

On June 30, 2016, the presentation related to the business segment information reflects the top management assessment related to the performance and the business resources allocation. Due to the adjustments occurred in corporate structure and governance and management model, this presentation may be reevaluated in order to enhance the business management analysis.

 

 


 

 

26

 


SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 12, 2016
PETRÓLEO BRASILEIRO S.A--PETROBRAS
By:
/S/  Ivan de Souza Monteiro

 
Ivan de Souza Monteiro
Chief Financial Officer and Investor Relations Officer
 
 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act) that are not based on historical facts and are not assurances of future results.  These forward-looking statements are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results o f operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. 
All forward-looking statements are expressly qualified in their entirety by this cautionary statement, and you should not place reliance on any forward-looking statement contained in this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason.