Petrobras : Financial Perfomance 2Q22 (US$)

Petrobras financial performance in 2Q22

Rio de Janeiro, July 28, 2022 - Once again we delivered solid quarterly results. According to our CFO, Rodrigo Araujo Alves, "Second quarter results show the resilience and strength of the Company, which is able to generate sustainable results, following its trajectory of value creation. In line with our commitment to distribute our results, we approved a shareholder remuneration of R$ 6.73 per common and preferred share. In addition, we collected a total of BRL 77 billion in taxes and government take in the second quarter, which amounted to around BRL 147 billion in the year, an increase of 92% compared to the first half of last year".

Main achievements:

• Recurring EBITDA of US$ 20.2 billion (+34% vs 1Q22) and free cash flow of US$ 12.8 billion (+61% vs 1Q22), mainly reflecting the appreciation of Brent prices in the period, better results with oil products and natural gas sales and lower volumes of LNG imports.
• Recurring net income of US$ 9.1 billion (+9% vs 1Q22) due to the factors described above, partially offset by the negative financial result because of the depreciation of the BRL.
• Gross debt of US$ 53.6 billion (-9% vs 1Q22), mainly due to debt prepayments and amortizations.
• CAPEX of US$ 3.1 billion in 2Q22 (+74% vs 1Q22),, including US$ 892 million signature bonus related to the Sépia and Atapu fields.
• Beginning of the coparticipation agreement for the Sepia and Atapu fields, in which Petrobras will be the operator in partnership with other companies. Cash inflow from this agreement amounted to US$ 5,2 billion in 2Q22.
• Start-upof FPSO Guanabara in 04/30/22, the first definitive system in Mero field.
• Cash inflows from divestments of US$ 1.6 billion in 2Q22. We highlight the signing of the LUBNOR sale agreement on June 15th. On July 11, we concluded the sale of our 51% Gaspetro for R$ 2.1 billion.
• On June 27, we relaunched the sale processes of the Abreu e Lima Refinery (RNEST), Presidente Getúlio Vargas Refinery (REPAR) and Alberto Pasqualini Refinery (REFAP), in line with the company's portfolio management and capital allocation strategy.
• In July, we signed the first credit line with sustainability commitments (Sustainability-Linked Loan) in the amount of US$ 1.25 billion, maturing in July 2027.

This report may contain forward-looking statements. Such forward-looking statements only reflect expectations of the Company's managers regarding future economic conditions, as well as the Company's performance, financial performance and results, among others. The terms "anticipates", "believes", "expects", "predicts", "intends", "plans", "projects", "objective", "should", and similar terms, which evidently involve risks and uncertainties that may or may not be anticipated by the Company and therefore are not guarantees of future results of the Company's operations that may differ from current expectations. The readers should not rely exclusively on any forward-looking statement contained herein. The Company does not undertake any responsibility to update the presentations and forecasts in the light of new information or its future developments, and the figures reported for 2Q22 onwards are estimates or targets. These indicators do not have standardized meanings and may not be comparable to indicators with a similar description used by others. We provide these indicators because we use them as measures of company performance; they should not be considered in isolation or as a substitute for other financial metrics that have been disclosed in accordance with BR GAAP or IFRS. See definitions of Free Cash Flow, Adjusted EBITDA and Net Indebtedness in the Glossary and their reconciliations in the Liquidity and Capital Resources sections, Reconciliation of Adjusted EBITDA and Net Indebtedness. Consolidated accounting information audited by independent auditors in accordance with international accounting standards (IFRS).

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Main items

Table 1 - Main items

																	Variation (%)
	US$ million		2Q22			1Q22			2Q21			1H22			1H21		2Q22 /		2Q22 /		1H22 /
											1Q22		2Q21		1H21
	Sales revenues	34,703		27,189		20,982	61,892		36,680	27.6		65.4		68.7
	Gross profit	19,463		14,410		10,824	33,873		18,831	35.1		79.8		79.9
	Operating expenses	94		(2,142)		(1,929)	(2,048)		(3,961)		−		−	(48.3)
	Consolidated net income (loss) attributable		11,010			8,605			8,121			19,615			8,301		27.9			35.6			136.3
	to the shareholders of Petrobras
	Recurring consolidated net income (loss)
	attributable to the shareholders of	9,101		8,373		7,717	17,474		7,941	8.7		17.9		120.0
	Petrobras *
	Net cash provided by operating activities	14,496		10,308		10,823	24,804		18,067	40.6		33.9		37.3
	Free cash flow	12,799		7,932		9,338	20,731		14,932	61.4		37.1		38.8
	Adjusted EBITDA	19,943		14,961		11,750	34,904		20,656	33.3		69.7		69.0
	Recurring adjusted EBITDA *	20,159	15,061		11,394	35,220		20,077	33.8		76.9		75.4
	Gross debt (US$ million)	53,577		58,554		63,685	53,577		63,685	(8.5)	(15.9)		(15.9)
	Net debt (US$ million)	34,435		40,072		53,262	34,435		53,262	(14.1)		(35.3)		(35.3)
	Net debt/LTM Adjusted EBITDA ratio	0.60		0.81		1.49	0.60		1.49	(25.9)		(59.7)		(59.7)
	Average commercial selling rate for U.S.	4.92		5.23		5.30	5.08		5.38	(5.9)	(7.2)		(5.6)
	dollar
	Brent crude (US$/bbl)	113.78		101.40		68.83	107.59		64.86	12.2		65.3		65.9
	Domestic basic oil by-products price	135.20		104.62		76.05	120.04		70.17	29.2		77.8		71.1
	(US$/bbl)
	TRI (total recordable injuries per million		-			-			-			0.52			0.56		-			-			(7.1)
	men-hour frequency rate)
	ROCE (Return on Capital Employed)	12.8%		9.9%		5.1%	12.8%		5.1%		2.9 p.p.		7.7 p.p.	7.7 p.p.

• See reconciliation of Recurring net income and Adjusted EBITDA in the Special Items section.

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Consolidated results

Net revenues

Table 2 - Net revenues by products

	US$ million		2Q22			1Q22			2Q21			1H22			1H21
	Diesel		10,681		7,483	6,069		18,164	10,647
	Gasoline	4,309		3,725	2,743		8,034	4,765
	Liquefied petroleum gas (LPG)		1,437			1,186			1,120			2,623			2,036
	Jet fuel	1,400		991	401	2,391	827
	Naphtha		724			611			362			1,335			693
	Fuel oil (including bunker fuel)	352		366	388	718	723
	Other oil products	1,615		1,274	1,005		2,889	1,883
	Subtotal Oil Products	20,518	15,636	12,088		36,154	21,574
	Natural gas		1,961			1,723			1,333			3,684			2,370
	Crude oil	2,682		1,761		−	4,443	53
	Renewables and nitrogen products	95	66	9	161	22
	Revenues from non-exercised rights	170		104	94	274	161
	Electricity		109			293			591			402			1,134
	Services, agency and others	307	238	170	545	331
	Total domestic market		25,842			19,821			14,285			45,663			25,645
	Exports	8,189	6,735	6,359		14,924	10,496
	Crude oil		5,593			4,812			4,711			10,405			7,512
	Fuel oil (including bunker fuel)	2,276	1,885	1,254		4,161	2,455
	Other oil products and other products	320	38	394	358	529
	Sales abroad (*)	672	633	338	1,305	539

Variation (%)

	2Q22 /			2Q22 /			1H22 /
	1Q22			2Q21			1H21
42.7	76.0		70.6
15.7	57.1		68.6
	21.2			28.3			28.8
41.3	249.1		189.1
	18.5			100.0			92.6
(3.8)	(9.3)		(0.7)
26.8	60.7		53.4
31.2	69.7		67.6
	13.8			47.1			55.4
52.3		−	8283.0
43.9	955.6		631.8
63.5	80.9		70.2
	(62.8)			(81.6)			(64.6)
29.0	80.6		64.7
	30.4			80.9			78.1
21.6	28.8		42.2
	16.2			18.7			38.5
20.7	81.5		69.5
742.1	(18.8)		(32.3)
6.2	98.8		142.1

Total foreign market	8,861	7,368	6,697	16,229	11,035		20.3	32.3	47.1
Total	34,703	27,189	20,982	61,892	36,680	27.6	65.4	68.7

(*) Sales revenues from operations outside of Brazil, including trading and excluding exports.

In 2Q22, sales revenues grew 28% compared to 1Q22, mainly due to the 12% increase in Brent prices, higher oil and oil products sales volumes and higher oil products and natural gas prices, amid the recovery in global demand for oil and oil products after the critical period of the COVID-19 pandemic and the impacts in supply by the war in Ukraine. Revenues from oil products in the domestic market were 31% higher than in 1Q22, with higher revenues from all products except fuel oil, due to a drop in volume, mainly because there were no deliveries for thermoelectric generation in 2Q22. Oil revenues in the domestic market increased 52% due to higher sales to Acelen.

On the other hand, there was a drop in revenues from electricity, given the lower thermoelectric dispatch with the continued recovery in hydrological conditions in 2Q22.

In terms of the breakdown of revenues in the domestic market, diesel and gasoline continued to be the main products, together accounting for 73% of oil products domestic sales in 2Q22.

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Graph 1 - Oil products sales revenues 2Q22 - domestic market

Fuel Oil 2%	Other 8%
Naphtha 4%
Jet Fuel 7%
LPG 7%
	Diesel 52%
Gasoline 21%

A relevant change in petroleum flows was observed in 1H22, stemming from the war in Ukraine. Russian exports, which previously supplied Europe, were diverted to Asian markets, mainly India and China. The constant search for global opportunities and the development of new customers that Petrobras has been implementing over the years were decisive for the company to also change the flow of its exports, taking advantage of new arbitrage and maximizing the generation of value in its sales.

In 2Q22, we had the following distribution of export destinations by volume:

Table 3 - Destination of oil exports

Country		2Q22		1Q22		2Q21
China		15%		38%		45%
Europe	39%	28%	22%
Latam		24%		17%		7%
USA	8%	11%	9%
Caribbean		2%		2%		3%
Asia (Ex China)	12%	4%	14%

Cost of goods sold

Table 4 - Destination of exports of oil products

Country	2Q22	1Q22	1Q21
Singapore	55%	59%	55%
USA	26%	28%	18%
Others	19%	13%	27%

Table 5 - Cost of goods sold

																	Variation (%)
	US$ million		2Q22			1Q22			2Q21			1S22			1S21		2Q22 /		2Q22 /		1S22 /
											1Q22		2Q21		1S21
	Acquisitions	(5,405)	(4,628)		(3,597)	(10,033)		(5,934)		16.8		50.3		69.1
	Crude oil imports	(2,618)		(1,684)		(1,620)	(4,302)		(2,571)		55.5		61.6		67.3
	Oil products imports	(1,810)	(1,355)		(1,304)	(3,165)		(1,967)		33.6		38.8		60.9
	Natural gas imports	(977)	(1,589)		(673)	(2,566)		(1,396)		(38.5)		45.2		83.8
	Production	(8,956)	(7,485)		(6,145)	(16,441)		(11,121)		19.7		45.7		47.8
	Crude oil	(7,537)		(6,161)		(4,941)	(13,698)		(8,877)		22.3		52.5		54.3
	Production taxes	(4,134)	(3,173)		(2,499)	(7,307)		(4,123)		30.3		65.4		77.2
	Other costs	(3,403)		(2,988)		(2,442)	(6,391)		(4,754)		13.9		39.4		34.4
	Oil products	(641)	(624)		(706)	(1,265)		(1,302)		2.7		(9.2)		(2.8)
	Natural gas	(778)	(700)		(498)	(1,478)		(942)	11.1		56.2		56.9
	Production taxes	(261)	(232)		(153)	(493)		(274)		12.5		70.6		79.9
	Other costs	(517)	(468)		(345)	(985)		(668)	10.5		49.9		47.5
	Services, electricity, operations abroad and	(879)			(666)			(416)			(1,545)			(794)		32.0			111.3			94.6
	others
	Total	(15,240)	(12,779)		(10,158)	(28,019)		(17,849)	19.3		50.0		57.0

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