pbrarmfifrs2q15us_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, 2015

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____

 


 
 

 

 

FIRST HALF OF 2015 RESULTS

 

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 6, 2015

 

Net income was US$ 2,033 million in the 1H-2015, 55% lower than in the 1H-2014.

Operating income was US$ 7,745 million in the 1H-2015, 8% higher than in the 1H-2014.

Adjusted EBITDA was US$ 13,951 million in the 1H-2015, 4% higher than in the 1H-2014.

US$ million

 

 

 

 

 

 

 

 

Jan-Jun

 

 

2015

2014

2015 x 2014 (%)

 

2Q-2015

1Q-2015

2Q15 X 1Q15 (%)

2Q-2014

 

 

 

 

 

 

 

 

2,033

4,505

(55)

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

171

1,862

(91)

2,225

7,745

7,172

8

Operating income

3,087

4,658

(34)

3,969

13,951

13,355

4

Adjusted EBITDA

6,435

7,516

(14)

7,287

 

Net income was US$ 2,033 million in the 1H-2015, 55% lower than in the 1H-2014 due to higher net finance expenses and to the recognition of tax expenses with respect to the tax on financial operations (Imposto sobre Operações Financeiras - IOF), partially offset by a higher operating income (8%), resulting from higher margins in sales of oil products in the domestic market and increased crude oil export volumes driven by a 9% increase in domestic crude oil production, despite the decrease in domestic demand for oil products.

Key events in the 1H-2015:

·       Higher domestic crude oil and NGL production (9%, 183 thousand barrels/day);

·       Higher crude oil export volumes (107%, 178 thousand barrels/day);

·       Lower domestic demand for oil products (7%, 168 thousand barrels/day);

·       Lower import and production taxes costs;

·       Reversal of an allowance for impairment of receivables from companies in the northern Brazil isolated electricity system in March 2015 (US$ 452 million);

·       Higher net finance expense, amounting to US$ 3,932 million, mainly due to foreign exchange variation losses and to higher interest expense, attributable to an increase in the Company’s debt and a decrease in the level of capitalized borrowing costs; and

·       Brazilian income taxes on income of companies incorporated abroad (US$ 357 million).

Key events in the 2Q-2015:

·       Lower domestic crude oil and NGL production (2%, 38 thousand barrels/day);

·       Higher crude oil export volumes (44%, 124 thousand barrels/day);

·       Domestic oil product production increased (7%, 134 thousand barrels/day) and feedstock processed was higher (6%, 109 thousand barrels/day), maintaining an 86% share of domestic oil used for feedstock processing;

·       The Company received US$ 84 million related to insurance proceeds with respect to an incident in Chinook field (U.S.) in 2011;

·       The Company received US$ 51 million related to amounts recovered by the Brazilian Public Prosecutor’s Office in the context of the “Lava Jato” (Car Wash) Investigation;

·       The Company recognized tax expenses of US$ 1,280 million (including interest paid and after taxes) with respect to the tax on financial operations (Imposto sobre Operações Financeiras - IOF); and

·       Impairment losses of US$ 418 million were recognized with respect to Gas & Power, Refining, Transportation and Marketing and Exploration and Production assets, attributable to projects removed from the 2015-19 Business and Management Plan investment portfolio.

 

 

 

 

 

 

 

 

 

1


 
 

 

 

FINANCIAL AND OPERATING HIGHLIGHTS

Main Items and Consolidated Economic Indicators

US$ million

Jan-Jun

 

 

2015

2014

2015 x 2014 (%)

Results and investments

2Q-2015

1Q-2015

2Q15 X 1Q15 (%)

2Q-2014

51,988

71,404

(27)

Sales revenues

26,021

25,967

36,910

16,147

16,546

(2)

Gross profit

8,320

7,827

6

8,440

7,745

7,172

8

Net income (loss) before finance income (expense), share of earnings in equity-accounted investments, profit sharing and income taxes

3,087

4,658

(34)

3,969

(3,932)

(495)

(694)

Net finance income (expense)

(1,969)

(1,963)

(422)

2,033

4,505

(55)

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

171

1,862

(91)

2,225

0.16

0.35

(54)

Basic and diluted earnings (losses) per share 1

0.02

0.14

(86)

0.18

13,951

13,355

4

Adjusted EBITDA – U.S.$ million 2

6,435

7,516

(14)

7,287

 

 

 

 

 

 

 

 

31

23

8

Gross margin (%) 3

32

30

2

23

15

10

5

Operating margin (%) 3

12

18

(6)

11

4

6

(2)

Net margin (%) 3

1

7

(6)

6

 

 

 

 

 

 

 

 

12,201

18,090

(33)

Capital expenditures and investments

5,968

6,233

(4)

9,382

 

 

 

 

 

 

 

 

US$ million

Jan-Jun

 

 

2015

2014

2015 x 2014 (%)

Net income (loss) before finance income (expense), share of earnings in equity-accounted investments, profit sharing and income taxes

2Q-2015

1Q-2015

2Q15 X 1Q15 (%)

2Q-2014

5,860

(5,793)

201

. Refining, Transportation and Marketing

2,595

3,265

(21)

(2,653)

4,504

14,255

(68)

. Exploration & Production

2,798

1,706

64

7,384

599

627

(4)

. Gas & Power

(135)

734

(118)

359

398

652

(39)

. Distribution

100

298

(66)

332

373

485

(23)

. International

233

140

66

293

(35)

(60)

42

. Biofuel

(21)

(14)

(50)

(32)

(3,415)

(2,639)

(29)

. Corporate

(1,944)

(1,471)

(32)

(1,209)

 

 

 

 

 

 

 

 

US$ million

Jan-Jun

 

 

2015

2014

2015 x 2014 (%)

Financial and economic indicators

2Q-2015

1Q-2015

2Q15 X 1Q15 (%)

2Q-2014

75.34

98.72

(24)

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

72.91

77.80

(6)

101.08

57.95

108.93

(47)

Brent crude (U.S.$/bbl)

61.92

53.97

15

109.63

 

 

 

 

 

 

 

 

 

 

 

Domestic Sales price

 

 

 

 

47.78

98.53

(52)

. Crude oil (U.S.$/bbl) 4

52.14

43.40

20

99.02

40.05

48.49

(17)

. Natural gas (U.S.$/bbl)

39.29

40.76

(4)

49.58

 

 

 

 

 

 

 

 

2.97

2.30

29

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

3.07

2.87

7

2.23

3.10

2.20

41

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

3.10

3.21

(3)

2.20

16.80

(6.00)

23

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

(3.30)

20.80

(24)

(2.70)

12.67

10.65

2

Selic interest rate - average (%)

13.14

12.19

1

10.89

 


Net income (loss) per share calculated based on the weighted average number of shares.

2 Adjusted EBITDA equals 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. It should not be considered as a substitute for income before taxes, finance income (expense), profit sharing and share of earnings in equity-accounted investments or as a better measure of liquidity than cash flow provided by operations, both of which are calculated in accordance with IFRS. The Company reports its Adjusted EBITDA to give additional information about its ability to pay debt, carry out investments and cover working capital needs.  See Consolidated Adjusted EBITDA by Business Segment and a reconciliation of Adjusted EBITDA to net income on page 21.

3 Gross margin equals sales revenues less cost of sales divided by sales revenues; Operating margin equals net income (loss) before finance income (expense), share of earnings in equity-accounted investments, profit sharing and income taxes divided by sales revenues; Net margin equals consolidated net income (loss) attributable to the shareholders of Petrobras divided by sales revenues.

4 Average between the prices of exports and the internal transfer prices from Exploration & Production to Refining, Transportation and Marketing.

 

2


 
 

 

 

 

FINANCIAL AND OPERATING HIGHLIGHTS

RESULTS OF OPERATIONS - 1H-2015 compared to the 1H-2014:

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 during the first half of 2015 (a 29% 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.

Gross Profit

Gross profit decreased by 2% (US$ 399 million) in the 1H-2015 compared to the 1H-2014, mainly due to:

Ø  A 27% decrease in sales revenues (US$ 51,988 million in the 1H-2015 compared to US$ 71,404 million in the 1H-2014), resulting from:

·          Lower crude oil and oil product export prices and a decrease in the average price of oil products sold in the domestic market, resulting from a decrease in international crude oil and oil product prices (Brent decreased by 47%). Higher diesel and gasoline prices, following a price increase in November 2014, partially offset those effects; and

·          Decreased domestic oil product demand (7%), mainly diesel (6%), gasoline (9%) and naphtha (14%), reflecting lower economic activity in Brazil.

Those effects were partially offset by a higher crude oil export volume (107%) due to an increase in domestic crude oil production and lower feedstock processed by our domestic refineries.

Sales revenues were 6% lower when expressed in Brazilian Reais. Foreign currency translation effects (depreciation of the Brazilian Real against the U.S. dollar) reduced sales revenues when expressed in U.S. dollars.

Ø  A 35% decrease in cost of sales (US$ 35,841 million in the 1H-2015 compared to US$ 54,858 million in the 1H-2014), due to:

·          Lower crude oil and oil product import costs, as well as lower production taxes attributable to a decrease in Brent prices, partially offset by higher crude oil production costs (in Brazilian Reais); and

·          Decreased domestic oil product sales volumes, lower share of crude oil imports on feedstock processing and a lower share of oil product imports in the sales mix.

Cost of sales was 16% lower when expressed in Brazilian Reais. Foreign currency translation effects (depreciation of the Brazilian Real against the U.S. dollar) reduced cost of sales expressed in U.S. dollars.

Net income before finance expense, share of earnings in equity-accounted investments, profit sharing and income taxes

Net income before finance expense, share of earnings in equity-accounted investments, profit sharing and income taxes was US$ 7,745 million in the 1H-2015, US$ 573 million higher compared to US$ 7,172 million in the 1H-2014 (an 8% increase), resulting from:

·            The impact, in the 1H-2014, of the Company’s Voluntary Separation Incentive Plan - PIDV (US$ 1,005 million);

·            Reversal of an allowance for impairment of trade receivables from companies in the northern Brazil isolated electricity system in March 2015 (US$ 452 million);

·            Lower write-offs of dry and/or subcommercial wells (US$ 562 million); and

·            Receipt by the Company of US$ 51 million related to amounts recovered by the Brazilian Public Prosecutor’s Office in the context of the “Lava Jato” (Car Wash) Investigation.

Those effects were partially offset by:

·            A lower gross profit;

·            US$ 1,000 million tax expenses, with respect to the tax on financial operations (Imposto sobre Operações Financeiras - IOF) applicable to intercompany loans made by Petrobras to foreign subsidiaries, as set out in note 20.1 to the Company’s interim financial statements for the 2Q-2015;

·          Impairment losses of US$ 419 million were recognized with respect to Gas & Power, Refining, Transportation and Marketing and Exploration and Production assets, attributable to projects removed from the 2015-19 Business and Management Plan investment portfolio;

·          Higher pension and medical benefits expenses (retirees) attributable to the Company’s interim valuation review of its pension and medical benefits carried out in 2014 (US$ 157 million); and

·            Lower gains on disposal of assets, net of write-offs of assets (US$ 256 million).

Net finance expense

Net finance expense was US$ 3,932 million in the 1H-2015, US$ 3,437 million higher than in the 1H-2014 (US$ 495 million), resulting from:

·            Foreign exchange variation losses (US$ 1,773 million), mainly due to the impact of a 16.8% depreciation of the Brazilian Real against the U.S. dollar on the Company’s net debt (compared to a 6.0% appreciation in the 1H-2014), partially offset by our cash flow hedge; and

·            Higher interest expenses due to: i) an increase in the Company’s debt; ii) a decrease in the level of capitalized borrowing costs, attributable to a lower balance of assets under construction (US$ 963 million), reflecting the relevant projects concluded during 2014 and the write-offs and impairment losses recognized in December 2014; and iii) the recognition of interest expenses with respect to the tax on financial operations (Imposto sobre Operações Financeiras - IOF) applicable to intercompany loans made by Petrobras to foreign subsidiaries (US$ 423 million).

Those effects were partially offset by a foreign exchange variation gain due to the impact of an 8.2% appreciation of the U.S. dollar against the Euro on the Company’s debt in Euro (compared to a 0.6% appreciation in the 1H-2014).

Net income attributable to the shareholders of Petrobras

Net income attributable to the shareholders of Petrobras was US$ 2,033 million in the 1H-2015, compared to US$ 4,505 million in the 1H-2014. This 55% decrease (US$ 2,472 million) results from a lower gross profit, higher net finance expense, tax expenses, with respect to the tax on financial operations (IOF) and an increase in income taxes due to the US$ 357 million impact of Brazilian income taxes on income of companies incorporated abroad (as set out in note 20.3.1 to the Company’s interim financial statements for the 2Q-2015).

 

3


 
 

 

 

FINANCIAL AND OPERATING HIGHLIGHTS

NET INCOME BY BUSINESS SEGMENT

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 transfer prices defined through methodologies based on market parameters.

EXPLORATION & PRODUCTION

 

U.S.$ million

 

Jan-Jun

 

2015

2014

2015 x 2014 (%)

 

 

 

 

Net Income Attributable to the Shareholders of Petrobras

2,897

9,346

(69)

 

 

 

 

Net income was US$ 2,897 million in Jan-Jun/2015, a 69% decrease when compared to Jan-Jun/2014 (US$ 9,346 million), mainly due to a decrease in crude oil sales/transfer prices attributable to a 47% decrease in international crude oil prices, partially offset by an increase in crude oil production, a decrease in production taxes, lower write-offs of dry and/or subcommercial wells and by the negative impact of the Company’s Voluntary Separation Incentive Plan (PIDV) in 2014 (which was not recurrent in 1H-2015).

The spread between the average domestic oil price (sale/transfer) and the average Brent price decreased from US$10.40/bbl in Jan-Jun/2014 to U.S.$ 10.17/bbl in Jan-Jun/2015.

 

Jan-Jun

Exploration & Production - Brazil (Mbbl/d) (*)

2015

2014

2015 x 2014 (%)

 

 

 

 

Crude oil and NGLs 5

2,130

1,947

9

Natural gas 6

465

406

15

Total

2,595

2,353

10

 

 

 

 

Crude oil and NGL production increased by 9% in the 1H-2015 compared to the 1H-2014 due to the production start-up of FPSOs Cidade de Mangaratiba (Iracema Sul area), Cidade de Ilhabela (Sapinhoá) and P-61 (Papa-Terra), along with the ramp-up of P-55 and P-62 (both in Roncador field), P-58 (Parque das Baleias), and of FPSOs Cidade de Paraty (Lula NE) and Cidade de São Paulo (Sapinhoá). This increase was partially offset by a natural decline of post-salt layer producing fields.

The 15% increase in natural gas production is attributable to the production start-up of FPSOs Cidade de Mangaratiba (Iracema Sul area), Cidade de Ilhabela (Sapinhoá) and P-61 (Papa-Terra) and to the higher productivity of P-55, P-62 (both in Roncador), P-58 (Parque das Baleias) and Mexilhão platforms, as well as FPSOs Cidade de Paraty (Lula NE), Cidade de São Paulo (Sapinhoá), Cidade de Santos (Uruguá-Tambaú) and Cidade de Angra dos Reis (Lula). This increase was partially offset by the natural decline of post-salt layer fields.

 

 

 


(*) Not reviewed by independent auditor.

5 NGL – Natural Gas Liquids.

6 Does not include LNG. Includes gas reinjection.

 

4


 
 

 

 

FINANCIAL AND OPERATING HIGHLIGHTS

 

 

Jan-Jun

Lifting Cost 7 - Brazil (*)

2015

2014

2015 x 2014 (%)

 

 

 

 

U.S.$/barrel:

 

 

 

Excluding production taxes

12.99

14.36

(10)

Including production taxes

21.00

32.79

(36)

 

 

 

 

 Lifting Cost - Excluding production taxes

Lifting cost excluding production taxes was 10% lower in Jan-Jun/2015 compared to Jan-Jun/2014, due to an increase in crude oil production, partially offset by higher well intervention expenses and higher engineering and subsea maintenance costs in the Campos and Espírito Santo basins, along with the production start-up of the FPSO Cidade de Ilhabela (Sapinhoá), which has higher costs per unit produced during the start-up period.

Lifting Cost - Including production taxes

Lifting cost including production taxes was 36% lower in Jan-Jun/2015 compared to Jan-Jun/2014, mainly resulting from a decrease in production taxes due to lower average reference price for domestic crude oil in U.S. dollars (a 51% decrease, attributable to lower international crude oil prices).

 

 

 


(*) Not reviewed by independent auditor.

7 Crude oil and natural gas lifting cost.

 

5


 
 

 

 

FINANCIAL AND OPERATING HIGHLIGHTS

 REFINING, TRANSPORTATION AND MARKETING

 

U.S.$ million

 

Jan-Jun

 

2015

2014

2015 x 2014 (%)

 

 

 

 

Net Income Attributable to the Shareholders of Petrobras

3,988

(3,776)

206

 

 

 

 

The US$ 3,988 million net income in Jan-Jun/2015 compared to a US$ 3,776 million loss in Jan-Jun/2014 is attributable to a decrease in crude oil acquisition/transfer costs resulting from lower international crude oil prices, to diesel (5%) and gasoline (3%) price increases in November 2014, to a lower share of crude oil imports on feedstock processing and to a lower share of oil product imports in our sales mix.

 

 

Jan-Jun

Imports and Exports of Crude Oil and Oil Products (Mbbl/d) (*)

2015

2014

2015 x 2014 (%)

 

 

 

 

Crude oil imports

291

447

(35)

Oil product imports

330

415

(20)

Imports of crude oil and oil products

621

862

(28)

Crude oil exports 8

344

166

107

Oil product exports

152

170

(11)

Exports of crude oil and oil products

496

336

48

Exports (imports) net of crude oil and oil products

(125)

(526)

76

Other exports

1

3

(67)

 

 

 

 

Crude oil exports were higher and crude oil imports were lower due to an increase in crude oil production and a decrease in feedstock processed in the Company’s domestic refineries.

Oil product imports decreased, resulting from lower domestic demand.

Oil product exports decreased due to a decrease in fuel oil production.

 

 

 

 

 

 


(*) Not reviewed by independent auditor.

8 It includes crude oil export volumes made both by our Refining, Transportation and Marketing segment and by our Exploration & Production segment.

 

6


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

 

Jan-Jun

Refining Operations (Mbbl/d) (*)

2015

2014

2015 x 2014 (%)

 

 

 

 

Output of oil products

2,031

2,152

(6)

Reference feedstock 9

2,176

2,102

4

Refining plants utilization factor (%) 10

89

97

(8)

Feedstock processed (excluding NGL) - Brazil 11

1,936

2,041

(5)

Feedstock processed - Brazil 12

1,977

2,080

(5)

Domestic crude oil as % of total feedstock processed

86

82

4

 

 

 

 

 

Daily feedstock processed was 5% lower, due to a scheduled stoppage in the distillation unit of Landulpho Alves Refinery (RLAM), partially offset by the production start-up of RNEST in November 2014.

 

 

Jan-Jun

Refining Cost - Brazil (*)

2015

2014

2015 x 2014 (%)

 

 

 

 

Refining cost (U.S.$/barrel)

2.74

2.85

(4)

 

 

 

 

 

 

Refining cost, in US$/barrel, decreased by 4% in Jan-Jun 2015 when compared to Jan-Jun 2014. Excluding foreign currency translation effects, refining cost, in R$/barrel, increased by 24%, mainly due to higher employee compensation costs attributable to the 2014 Collective Bargaining Agreement and to a decrease in feedstock processed due to a scheduled stoppage in RLAM in the 1Q-2015.

 


(*) Not reviewed by independent auditor.

9 Reference feedstock or Installed capacity of primary processing considers the 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.

10 Refining plants utilization factor is the feedstock processed (excluding NGL) divided by the reference feedstock.

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

12 Feedstock processed - Brazil includes crude oil and NGL processing.

 

7


 
 

 

 

FINANCIAL AND OPERATING HIGHLIGHTS

GAS & POWER

 

U.S.$ million

 

Jan-Jun

 

2015

2014

2015 x 2014 (%)

 

 

 

 

Net Income Attributable to the Shareholders of Petrobras

400

533

(25)

 

 

 

 

Net income was US$ 400 million in Jan-Jun/2015, a 25% decrease when compared to Jan-Jun/2014 (US$ 533 million), due to: i) a decrease in electricity sales margins due to a 55% decrease in electricity spot prices; ii) an impairment loss recognized in a Nitrogen Fertilizers Plant (Unidade de Fertilizantes Nitrogenados V  UFN V); iii) the recognition of tax expense related to deferred VAT on natural gas purchases (US$ 180 million); iv) a reversal of VAT credits from natural gas transportation activities in the State of Amazonas (US$ 116 million); and v) a gain on disposal of the Company’s interest in Brasil PCH S/A in 2014 (US$ 274 million), which was not recurrent in 2015.

Those factors were partially offset by: i) an increase in natural gas sales margins driven by higher natural gas sales prices and lower LNG and natural gas import costs; ii) an increase in natural gas sales volumes; and iii) reversal of an allowance for impairment of receivables from companies in the northern Brazil isolated electricity system.

 

Jan-Jun

Physical and Financial Indicators (*)

2015

2014

2015 x 2014 (%)

 

 

 

 

Electricity sales (Free contracting market - ACL) 13 - average MW

907

1,204

(25)

Electricity sales (Regulated contracting market - ACR) 14 - average MW

3,263

2,193

49

Generation of electricity - average MW

5,048

4,405

15

Imports of LNG (Mbbl/d)

122

135

(10)

Imports of natural gas (Mbbl/d)

204

205

Electricity price in the spot market - Differences settlement price (PLD) - US$/MWh 15

127

283

(55)

 

 

 

 

Electricity sales volumes to the Brazilian free contracting market (Ambiente de Contratação Livre – ACL) were 25% lower, resulting from the transfer of a portion of our available capacity (1,049 average MW) to the Brazilian regulated market (Ambiente de Contratação Regulada – ACR).

Electricity generation was 15% higher due to an increase in the domestic demand for thermal power (coordinated and controlled by the Brazilian Electric System National Operator – Operador Nacional do Sistema ONS) and to an increase in the installed capacity of the Petrobras’s Thermal Power Plants Complex (due to the execution of a lease agreement for UTE Cuiabá thermal power plant and to the closure of the cycle of UTE Baixada Fluminense in January 2015).

Electricity prices decreased by 55% in the spot market resulting from changes in the spot market price regulation established by the Brazilian Electricity Agency (Agência Nacional de Energia Elétrica ANEEL), which reduced the maximum spot price after December 27, 2014.

LNG imports decreased by 10% due to a higher domestic natural gas supply attributable to a 15% increase in domestic natural gas production.

 

 


(*) Not reviewed by independent auditor.

13 ACL – Ambiente de Contratação Livre (Free contracting market).

14 ACR - Ambiente de Contratação Regulada (Regulated contracting market).

15 Differences settlement price is the price of electricity in the spot market and is computed based on weekly weighed prices per output level (light, medium and heavy), number of hour and submarket capacity.

 

8


 
 

 

 

FINANCIAL AND OPERATING HIGHLIGHTS

DISTRIBUTION

 

U.S.$ million

 

Jan-Jun

 

2015

2014

2015 x 2014 (%)

 

 

 

 

Net Income Attributable to the Shareholders of Petrobras

253

417

(39)

 

 

 

 

 

 

Net income was US$ 253 million in Jan-Jun/2015, a 39% decrease when compared to Jan-Jun/2014 (US$ 417 million), due to lower average trading margins (6.9%), and to a decrease in domestic demand for ethanol and gasoline.

 

 

Jan-Jun

Market Share (*)16

2015

2014

2015 x 2014 (%)

 

36.1%

36.9%

(1)

 

 

 

 

Market share decreased mainly due to the expansion of the hydrated ethanol market (a 38% increase) in which Petrobras Distribuidora (BR) has a lower market share and also due to an increase in gasoline imports made by competitors in the 1H-2015.

 

 


(*) Not reviewed by independent auditors. Our market share in the Distribution Segment in Brazil is based on estimates made by Petrobras Distribuidora.

16 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.

 

9


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

INTERNATIONAL

As a result of the creation of the position of Chief Governance, Risk and Compliance Officer, which replaced the position of Chief International Officer in March 2015, the Company has recently approved adjustments to the structure of other business segments to allocate its international activities to those other segments. Considering the necessary steps to integrate the management of those activities, the Company is still presenting the results of international activities separately.

 

 

U.S.$ million

 

Jan-Jun

 

2015

2014

2015 x 2014 (%)

 

 

 

 

Net Income Attributable to the Shareholders of Petrobras

300

495

(39)

 

 

 

 

 

 

Net income was lower in the 1H-2015 when compared to the 1H-2014 due to a decrease in international crude oil prices, which reduced both the gross margin and the earnings from the Company’s equity-accounted joint-venture in Africa. The decrease in E&P crude oil sales volumes attributable to the disposal of onshore assets in Colombia and of the Company’s investment in Petrobras Energia Peru S/A in 2014 also affected net income. These effects were partially offset by a gain on the disposal of fields in the Austral Basin in Argentina in 2015.

 

Jan-Jun

Exploration & Production-International (Mbbl/d)17 (*)

2015

2014

2015 x 2014 (%)

 

 

 

 

Consolidated international production

 

 

 

Crude oil and NGLs

70

89

(21)

Natural gas

88

93

(5)

Total consolidated international production

158

182

(13)

Non-consolidated international production

31

31

Total international production

189

213

(11)

 

 

 

 

 

Consolidated international crude oil and NGL production decreased by 21%, due to the disposal of onshore areas in Peru in November 2014, in Colombia in April 2014 and in the Austral Basin in Argentina in March 2015. These effects were partially offset by an increase in production due to the start-up of Saint Malo fields in December 2014 and Lucius in January 2015 in the United States.

Natural gas international production decreased by 5%, mainly due to the disposal of onshore assets in Peru and of the Company’s investment in the Austral Basin in Argentina. These effects were partially offset by the production start-up of Hadrian South field in the United States in the end of March 2015. 

 

 

 

 

 

 

 

 

Jan-Jun

 

 

2015

2014

2015 x 2014 (%)

International Sales price

2Q-2015

1Q-2015

2Q15 X 1Q15 (%)

2Q-2014

59.51

86.10

(31)

. Crude oil (U.S.$/bbl)

60.52

58.40

4

87.91

22.53

21.74

4

. Natural gas (U.S.$/bbl)

22.66

22.40

1

20.36

 

 

 

 

 

 

 

 

 

 

 


(*) Not reviewed by independent auditor.

17 Some of the countries that comprise the international production are operating under the production-sharing model, with the production taxes charged in crude oil barrels.

 

10


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

 

Jan-Jun

Lifting Cost - International (U.S.$/barrel) 18 (*)

2015

2014

2015 x 2014 (%)

 

8.00

8.40

(5)

 

 

 

 

 

 

 

 

 

 

International lifting cost was 5% lower, mainly in the United States, due to the production start-up of Saint Malo, Lucius and Hadrian South fields that have lower-than-average lifting costs, and due to the disposal of onshore assets in Peru and Colombia, which had higher-than-average lifting costs.

 

 

Jan-Jun

Refining Operations - International (Mbbl/d) (*)

2015

2014

2015 x 2014 (%)

 

 

 

 

Total feedstock processed 19

131

172

(24)

Output of oil products

147

184

(20)

Reference feedstock 20

230

230

Refining plants utilization factor (%) 21

55

72

(17)

 

 

 

 

 

International total feedstock processed was 24% lower due to a decrease in oil product production and lower capacity utilization, mainly in the United States, due to a maintenance scheduled stoppage in the Pasadena Refinery distillation unit from the beginning of March 2015 to mid-April 2015, and in Japan due to the interruption of feedstock processing at the Okinawa Refinery since April 2015.

 

 

Jan-Jun

Refining Cost - International (U.S.$/barrel) (*)

2015

2014

2015 x 2014 (%)

 

4.00

3.71

8

 

 

 

 

 

 

 

 

 

 

International refining cost per unit was 8% higher, mainly due to higher employee compensation costs in Argentina.

BIOFUEL

 

U.S.$ million

 

Jan-Jun

 

2015

2014

2015 x 2014 (%)

 

 

 

 

Net Income Attributable to the Shareholders of Petrobras

(113)

(61)

(85)

 

 

 

 

 

Biofuel losses were 85% higher in Jan-Jun/2015, when compared to Jan-Jun/2014, due to impairment losses in biofuel investees, attributable to changes in the Company’s 2015-2019 Business and Management Plan. Losses in ethanol trading due to a decrease in selling prices also increased biofuel losses.

 

 

 


(*) Not reviewed by independent auditor.

18 Crude oil and natural gas lifting cost.

19 Total feedstock processed is the crude oil processed abroad at the atmospheric distillation plants, plus the intermediate products acquired from third parties and used as feedstock in other refining units.

20 Reference feedstock is the maximum sustainable crude oil feedstock processing reached at distillation plants.

21 Refining Plants Utilization Factor is the crude oil processed at the distillation plant divided by the reference feedstock.

 

11


 
 

 

 

FINANCIAL AND OPERATING HIGHLIGHTS

Sales Volumes – (Mbbl/d) (*)

 

Jan-Jun

 

2015

2014

2015 x 2014 (%)

 

 

 

 

Diesel

915

973

(6)

Gasoline

555

610

(9)

Fuel oil

111

112

(1)

Naphtha

146

170

(14)

LPG 22

229

230

Jet fuel 23

110

109

1

Others

173

203

(15)

Total oil products

2,239

2,407

(7)

Ethanol, nitrogen fertilizers, renewables and other products

117

92

27

Natural gas

448

439

2

Total domestic market

2,804

2,938

(5)

Exports

497

339

47

International sales

505

579

(13)

Total international market

1,002

918

9

Total

3,806

3,856

(1)

 

 

 

 

 

 

Our domestic sales volumes decreased by 5%, primarily due to:

·       Diesel (a 6% decrease): i) lower consumption by infrastructure construction projects in Brazil; and ii) a higher percentage of mandatory biodiesel content requirement in diesel (diesel/biodiesel mix). These effects were partially offset by: i) an increase in the Brazilian diesel-moved light vehicle fleet (vans, pick-ups and SUVs); and ii) higher thermoelectric consumption by thermoelectric plants of the Brazilian Integrated Electricity System;

·       Gasoline (a 9% decrease): i) an increase in the anhydrous ethanol content requirement for Type C gasoline (from 25% to 27%); ii) a decrease in the automotive gasoline-moved fleet; and iii) a higher share of gasoline sales from other market players;

·       Naphtha (a 14% decrease): due to lower demand by domestic customers, mainly Braskem; and

·       Natural gas (a 2% increase):  due to a higher demand in the non-thermal sector.

 

  (*) [22] [23]


(*) Not reviewed by independent auditor.

22 LPG – Liquified petroleum gas.

23 Jet fuel.

 

12


 
 

 

 

FINANCIAL AND OPERATING HIGHLIGHTS

LIQUIDITY AND CAPITAL RESOURCES

Consolidated Statement of Cash Flows – Summary24

U.S.$ million

Jan-Jun

 

 

2015

2014

 

2Q-2015

1Q-2015

2Q-2014

 

 

 

 

 

 

25,957

19,746

Adjusted cash and cash equivalents at the beginning of period 25

21,254

25,957

34,679

(9,302)

(3,878)

Government bonds and time deposits at the beginning of period

(10,515)

(9,302)

(4,424)

16,655

15,868

Cash and cash equivalents at the beginning of period 24

10,739

16,655

30,255

13,189

10,394

Net cash provided by (used in) operating activities

7,450

5,739

6,413

(5,740)

(16,130)

Net cash provided by (used in) investing activities

1,710

(7,450)

(7,590)

(11,758)

(17,185)

Capital expenditures and investments in operating segments

(5,583)

(6,175)

(8,584)

211

451

Proceeds from disposal of assets (divestment)

31

180

83

5,807

604

Investments in marketable securities

7,262

(1,455)

911

7,449

(5,736)

(=) Free cash flow

9,160

(1,711)

(1,177)

2,547

19,642

Net financings

6,147

(3,600)

1,029

12,285

27,341

Proceeds from long-term financing

10,981

1,304

4,538

(9,738)

(7,699)

Repayments

(4,834)

(4,904)

(3,509)

(3,916)

Dividends paid to shareholders

(3,916)

173

3

Acquisition of non-controlling interest

35

138

49

(663)

536

Effect of exchange rate changes on cash and cash equivalents

80

(743)

157

26,161

26,397

Cash and cash equivalents at the end of period 24

26,161

10,739

26,397

3,375

3,733

Government bonds and time deposits at the end of period

3,375

10,515

3,733

29,536

30,130

Adjusted cash and cash equivalents at the end of period 25

29,536

21,254

30,130

 

 

 

 

 

 

As of June 30, 2015, the balance of cash and cash equivalents increased by 57% when compared to the balance as of December 31, 2014 and the balance of adjusted cash and cash equivalents 25  increased by 14%. Our principal uses of funds in the 1H-2015 were for capital expenditures, interest payments and repayment of long-term financing. We met these requirements with cash provided by operating activities of US$ 13,189 million and with proceeds from long-term financing of US$ 12,285 million.

Net cash provided by operating activities increased by 27% in Jan-Jun/2015 when compared to Jan-Jun/2014, mainly due to higher diesel and gasoline prices, increased crude oil export volumes, lower production taxes and decreased crude oil and oil product imports costs (attributable to a decrease in Brent prices and in international oil product prices), along with a lower share of crude oil imports on feedstock processing and a lower share of oil product imports in the oil product sales mix, resulting mainly from a decrease in the economic activity in Brazil (which reduced sales volumes).

Capital expenditures and investments in operating segments were 32% lower in Jan-Jun/2015 compared to Jan-Jun/2014, mainly due to a 69% decrease in capital expenditures in our Refining, Transportation and Marketing (RTM) segment. The US$ 5,807 million received in marketable securities relate to proceeds from the maturity of financial investments with maturities longer than three months, most of which were invested in other financial investments, with maturities of less than three months (classified as cash and cash equivalents).

Free cash flow was positive in Jan-Jun 2015 (US$ 7,449 million) compared to a negative free cash flow in Jan-Jun 2014 (US$ 5,736 million).

The Company raised long-term financing amounting to US$ 10,981 million in the 2Q-2015, mainly through financing agreements totaling US$ 5 billion with the Chinese Development Bank (CDB), US$ 2 billion raised through the issuance of Global Notes maturing in 2115, and also through bilateral credit agreements with Brazilian banks. The average maturity of outstanding debt was 7.42 years as of June 30, 2015.

Repayments of interest and principal were US$ 9,738 million in Jan-Jun/2015, 26% higher than US$ 7,699 million in Jan-Jun/2014 and flat in the 2Q-2015 when compared to the 1Q-2015.

The 2015-2019 Business and Management Plan (Plano de Negócios e Gestão) projects deleverage targets of 35% net debt to net debt plus shareholders’ equity ratio and a decrease on net debt to Adjusted EBITDA ratio to 2.5 times by 2020, and also projects raising US$ 57.7 billion through divesting efforts, businesses restructurings and demobilization of assets betweeen 2015 and 2018.

 

 


24 For more details, see the Consolidated Statement of Cash Flows on page 18.

25 Our adjusted cash and cash equivalents include 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.

 

13


 
 

 

 

FINANCIAL AND OPERATING HIGHLIGHTS

Capital expenditures and investments

 

US$ million

 

Jan-Jun

 

2015

%

2014

%

Δ%

 

 

 

 

 

 

Exploration & Production

9,514

78

11,739

65

(19)

Refining, Transportation and Marketing

1,263

10

4,128

23

(69)

Gas & Power

471

4

1,132

6

(58)

International

691

6

643

4

7

Exploration & Production

571

83

554

86

3

Refining, Transportation and Marketing

95

14

73

11

30

Gas & Power

12

1

3

300

Distribution

12

2

10

2

20

Other

1

3

1

(67)

Distribution

115

1

187

1

(39)

Biofuel

13

9

44

Corporate

134

1

252

1

(47)

Total capital expenditures and investments

12,201

100

18,090

100

(33)

 

 

 

 

 

 

 

Pursuant to the Company’s strategic objectives, it operates through joint ventures in Brazil and abroad, as a concessionaire of oil and gas exploration, development and production rights.

The Company invested a total of US$ 12,201 million in the 1H-2015, primarily aiming at increasing crude oil and natural gas production.

 

 

14


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

Consolidated debt

 

U.S.$ million

 

 

 

 

 

06.30.2015

12.31.2014

Δ%

 

 

 

 

Current debt 26

14,393

11,884

21

Non-current debt 27

119,543

120,274

(1)

Total

133,936

132,158

1

Cash and cash equivalents

26,161

16,655

57

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

3,375

9,302

(64)

Adjusted cash and cash equivalents

29,536

25,957

14

Net debt 28

104,400

106,201

(2)

Net debt/(net debt+shareholders' equity)

51%

48%

3

Total net liabilities 29

247,426

272,730

(9)

Capital structure

 

 

 

(Net third parties capital / total net liabilities)

60%

57%

3

Net debt/LTM Adjusted EBITDA ratio 30

4.08

4.25

(4)

Average maturity of outstanding debt (years)

7.42

6.10

1.32

 

 

 

 

 

 

 

US$ million

 

 

 

 

 

06.30.2015

12.31.2014

Δ%

 

 

 

 

Summarized information on financing

 

 

 

Floating rate or fixed rate

 

 

 

Floating rate debt

68,591

65,494

5

Fixed rate debt

65,276

66,592

(2)

Total

133,867

132,086

1

 

 

 

 

Currency

 

 

 

Reais

22,866

23,425

(2)

US Dollars

98,612

95,173

4

Euro

8,763

9,719

(10)

Other currencies

3,626

3,769

(4)

Total

133,867

132,086

1

 

 

 

 

Maturity

 

 

 

2015

7,296

11,868

(39)

2016

12,195

12,572

(3)

2017

11,723

11,948

(2)

2018

17,551

17,789

(1)

2019

24,385

24,189

1

2020 and thereafter

60,717

53,720

13

Total

133,867

132,086

1

 

As of June 30, 2015, net debt in U.S. dollars was 2% lower when compared to December 31, 2014.

 

 


26 Includes finance lease obligations (Current debt: US$ 15 million on June 30, 2015 and US$16 million on December 31, 2014).

27 Includes finance lease obligations (Non-current debt: US$ 54 million on June 30, 2015 and US$56 million on December 31, 2014).

28 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.

29 Total liabilities net of adjusted cash and cash equivalents.

30 Beginning in the period ended June 30, 2015, the Company calculated its ratios including Adjusted EBITDA by adding the last four quarters (or Last Twelve Months - LTM Adjusted EBITDA), consistently with the market best practices. The Company previously annualized its Adjusted EBITDA by multiplying the year-to-date amount by the remaining period.

 

15


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

FINANCIAL STATEMENTS

Income Statement - Consolidated 31

U.S.$ million

Jan-Jun

 

 

2015

2014

 

2Q-2015

1Q-2015

2Q-2014

 

 

 

 

 

 

51,988

71,404

Sales revenues

26,021

25,967

36,910

(35,841)

(54,858)

Cost of sales

(17,701)

(18,140)

(28,470)

16,147

16,546

Gross profit

8,320

7,827

8,440

(1,867)

(2,397)

Selling expenses

(1,265)

(602)

(1,243)

(1,846)

(2,240)

General and administrative expenses

(900)

(946)

(1,157)

(805)

(1,454)

Exploration costs

(462)

(343)

(808)

(396)

(520)

Research and development expenses

(199)

(197)

(270)

(1,552)

(278)

Other taxes

(1,289)

(263)

(140)

(1,936)

(2,485)

Other income and expenses, net

(1,118)

(818)

(853)

(8,402)

(9,374)

 

(5,233)

(3,169)

(4,471)

7,745

7,172

Net income (loss) before finance income (expense), share of earnings in equity-accounted investments, profit sharing and income taxes

3,087

4,658

3,969

456

781

Finance income

200

256

340

(3,099)

(1,788)

Finance expenses

(1,810)

(1,289)

(1,006)

(1,289)

512

Foreign exchange and inflation indexation charges

(359)

(930)

244

(3,932)

(495)

Net finance income (expense)

(1,969)

(1,963)

(422)

115

343

Share of earnings in equity-accounted investments

55

60

122

(126)

(282)

Profit-sharing

(9)

(117)

(140)

3,802

6,738

Net income (loss) before income taxes

1,164

2,638

3,529

(1,926)

(1,963)

Income taxes

(870)

(1,056)

(1,200)

1,876

4,775

Net income (loss)

294

1,582

2,329

 

 

Net income (loss) attributable to:

 

 

 

2,033

4,505

Shareholders of Petrobras

171

1,862

2,225

(157)

270

Non-controlling interests

123

(280)

104

1,876

4,775

 

294

1,582

2,329

 


31 Beginning in 2014, the amount of inventory write-downs to net realizable value (market value) was reclassified from Other  Income and Expenses to Cost of Sales.

 

16


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

Statement of Financial Position – Consolidated

ASSETS

U.S.$ million

 

 

 

 

06.30.2015

12.31.2014

 

 

 

Current assets

51,693

50,832

Cash and cash equivalents

26,161

16,655

Marketable securities

3,377

9,323

Trade and other receivables, net

6,462

7,969

Inventories

10,885

11,466

Recoverable taxes

3,200

3,811

Assets classified as held for sale

91

5

Other current assets

1,517

1,603

 

 

 

Non-current assets

225,269

247,855

Long-term receivables

18,124

18,863

Trade and other receivables, net

5,228

4,832

Marketable securities

96

109

Judicial deposits

2,931

2,682

Deferred taxes

931

1,006

Other tax assets

3,330

4,008

Advances to suppliers

2,173

2,409

Other non-current assets

3,435

3,817

Investments

5,024

5,753

Property, plant and equipment

198,252

218,730

Intangible assets

3,869

4,509

Total assets

276,962

298,687

 

 

 

LIABILITIES

U.S.$ million

 

 

 

 

06.30.2015

12.31.2014

 

 

 

Current liabilities

32,424

31,118

Trade payables

7,923

9,760

Current debt

14,393

11,884

Taxes payable

5,552

4,311

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

1,764

2,066

Pension and medical benefits

680

796

Liabilities associated with assets classified as held for sale

62

Other current liabilities

2,050

2,301

Non-current liabilities

144,813

150,591

Non-current debt

119,543

120,274

Deferred taxes

1,588

3,031

Pension and medical benefits

14,850

16,491

Provision for decommissioning costs

6,632

8,267

Provisions for legal proceedings

1,433

1,540

Other non-current liabilities

767

988

Shareholders' equity

99,725

116,978

Share capital (net of share issuance costs) 

107,101

107,101

Profit reserves and others

(8,080)

9,171

Non-controlling interests

704

706

Total liabilities and shareholders' equity

276,962

298,687

 

 

 

 

17


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

Statement of Cash Flows – Consolidated

US$ million

 

 

 

 

 

 

Jan-Jun

 

 

2015

2014

 

2Q-2015

1Q-2015

2Q-2014

 

 

 

 

 

 

2,033

4,505

Net income (loss) attributable to the shareholders of Petrobras

171

1,862

2,225

11,156

5,889

(+) Adjustments for:

7,279

3,877

4,188

5,913

6,471

Depreciation, depletion and amortization

2,939

2,974

3,458

4,013

1,262

Foreign exchange and inflation indexation and finance charges

1,815

2,198

663

(157)

270

Non-controlling interests

123

(280)

104

(115)

(343)

Share of earnings in equity-accounted investments

(55)

(60)

(122)

(12)

93

Allowance for impairment of trade receivables

289

(301)

79

(71)

(125)

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

70

(141)

97

1,289

1,014

Deferred income taxes, net

575

714

724

555

1,117

Exploration expenditures written-off

354

201

670

440

205

Impairment of property, plant and equipment, intangible and other assets

339

101

88

1,136

983

Pension and medical benefits (actuarial expense)

548

588

543

(889)

(2,072)

Inventories

(531)

(358)

(1,027)

(110)

(1,365)

Trade and other receivables, net

(135)

25

(287)

(854)

84

Trade payables

(59)

(795)

289

(375)

(396)

Pension and medical benefits

(230)

(145)

(254)

1,958

(867)

Taxes payable

1,845

113

(328)

(1,565)

(442)

Other assets and liabilities

(608)

(957)

(509)

13,189

10,394

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

7,450

5,739

6,413

(5,740)

(16,130)

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

1,710

(7,450)

(7,590)

(11,758)

(17,185)

Capital expenditures and investments in operating segments

(5,583)

(6,175)

(8,584)

211

451

Proceeds from disposal of assets (divestment)

31

180

83

5,807

604

Divestments (investments) in marketable securities

7,262

(1,455)

911

7,449

(5,736)

(=) Net cash flow

9,160

(1,711)

(1,177)

2,720

15,729

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

6,182

(3,462)

(2,838)

12,285

27,341

Proceeds from long-term financing

10,981

1,304

4,538

(6,530)

(4,807)

Repayment of principal

(3,582)

(2,948)

(2,212)

(3,208)

(2,892)

Repayment of interest

(1,252)

(1,956)

(1,297)

(3,916)

Dividends paid to shareholders

(3,916)

173

3

Acquisition of non-controlling interest

35

138

49

(663)

536

Effect of exchange rate changes on cash and cash equivalents

80

(743)

157

9,506

10,529

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

15,422

(5,916)

(3,858)

16,655

15,868

Cash and cash equivalents at the beginning of period

10,739

16,655

30,255

26,161

26,397

Cash and cash equivalents at the end of period

26,161

10,739

26,397

 

 

 

 

 

 

 

18


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

SEGMENT INFORMATION

Consolidated Income Statement by Segment – Jan/Jun-2015

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

INTER.

CORP.

ELIMIN.

TOTAL

 

 

Sales revenues

19,341

38,541

7,045

105

16,105

4,666

(33,815)

51,988

Intersegments

19,089

13,059

1,109

99

310

149

(33,815)

Third parties

252

25,482

5,936

6

15,795

4,517

51,988

Cost of sales

(13,164)

(31,119)

(5,813)

(114)

(14,884)

(3,907)

33,160

(35,841)

Gross profit

6,177

7,422

1,232

(9)

1,221

759

(655)

16,147

Expenses

(1,673)

(1,562)

(633)

(26)

(823)

(386)

(3,415)

116

(8,402)

Selling, general and administrative expenses

(243)

(1,188)

(137)

(18)

(834)

(390)

(1,019)

116

(3,713)

Exploration costs

(761)

(44)

(805)

Research and development expenses

(151)

(64)

(41)

(6)

(2)

(132)

(396)

Other taxes

(36)

(74)

(267)

(7)

(56)

(1,112)

(1,552)

Other income and expenses, net

(482)

(236)

(188)

(2)

18

106

(1,152)

(1,936)

Net income (loss) before finance income (expense), share of earnings in equity-accounted investments, profit sharing and income taxes

4,504

5,860

599

(35)

398

373

(3,415)

(539)

7,745

Net finance income (expense)

(3,932)

(3,932)

Share of earnings in equity-accounted investments

(60)

162

57

(91)

1

47

(1)

115

Profit-sharing

(25)

(64)

(4)

(15)

(1)

(17)

(126)

Net income (loss) before income taxes

4,419

5,958

652

(126)

384

419

(7,365)

(539)

3,802

Income taxes

(1,524)

(1,970)

(202)

13

(131)

(61)

1,766

183

(1,926)

Net income (loss)

2,895

3,988

450

(113)

253

358

(5,599)

(356)

1,876

Net income (loss) attributable to:

 

 

 

 

 

 

 

 

 

Shareholders of Petrobras

2,897

3,988

400

(113)

253

300

(5,336)

(356)

2,033

Non-controlling interests

(2)

50

58

(263)

(157)

 

2,895

3,988

450

(113)

253

358

(5,599)

(356)

1,876

 

 

 

 

 

 

 

 

 

 

 Consolidated Income Statement by Segment – Jan/Jun-2014 32

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

INTER.

CORP.

ELIMIN.

TOTAL

 

 

Sales revenues

34,359

56,264

8,692

113

20,647

7,409

(56,080)

71,404

Intersegments

34,150

19,987

769

98

578

498

(56,080)

Third parties

209

36,277

7,923

15

20,069

6,911

71,404

Cost of sales

(17,246)

(60,080)

(7,506)

(139)

(18,961)

(6,541)

55,615

(54,858)

Gross profit

17,113

(3,816)

1,186

(26)

1,686

868

(465)

16,546

Expenses

(2,858)

(1,977)

(559)

(34)

(1,034)

(383)

(2,639)

110

(9,374)

Selling, general and administrative expenses

(193)

(1,505)

(633)

(25)

(970)

(372)

(1,051)

112

(4,637)

Exploration costs

(1,367)

(87)

(1,454)

Research and development expenses

(270)

(85)

(41)

(7)

(117)

(520)

Other taxes

(22)

(50)

(45)

(8)

(48)

(105)

(278)

Other income and expenses, net

(1,006)

(337)

160

(2)

(56)

124

(1,366)

(2)

(2,485)

Net income (loss) before finance income (expense), share of earnings in equity-accounted investments, profit sharing and income taxes

14,255

(5,793)

627

(60)

652

485

(2,639)

(355)

7,172

Net finance income (expense)

(495)

(495)

Share of earnings in equity-accounted investments

(1)

97

141

(21)

124

3

343

Profit-sharing

(96)

(79)

(11)

(20)

(6)

(70)

(282)

Net income (loss) before income taxes

14,158

(5,775)

757

(81)

632

603

(3,201)

(355)

6,738

Income taxes

(4,814)

1,996

(210)

20

(215)

(63)

1,201

122

(1,963)

Net income (loss)

9,344

(3,779)

547

(61)

417

540

(2,000)

(233)

4,775

Net income (loss) attributable to:

 

 

 

 

 

 

 

 

 

Shareholders of Petrobras

9,346

(3,776)

533

(61)

417

495

(2,216)

(233)

4,505

Non-controlling interests

(2)

(3)

14

45

216

270

 

9,344

(3,779)

547

(61)

417

540

(2,000)

(233)

4,775

 

 

 

 

 

 

 

 

 

 

 


32 Beginning in 2014, the amount of inventory write-downs to net realizable value (market value) was reclassified from Other  Income and Expenses to Cost of Sales.

 

19


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

Other Income (Expenses) by Segment – Jan/Jun-2015

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

INTER.

CORP.

ELIMIN.

TOTAL

 

 

Pension and medical benefits - retirees

(638)

(638)

Unscheduled stoppages and pre-operating expenses

(405)

(134)

(55)

(5)

(4)

(603)

Impairment

(80)

(119)

(190)

(30)

(419)

Legal, administrative and arbitration proceedings

(39)

(66)

5

(14)

(4)

(142)

(260)

Institutional relations and cultural projects

(12)

(11)

(1)

(27)

(5)

(187)

(243)

Health, safety and environment

(11)

(10)

(3)

(1)

(26)

(51)

Voluntary Separation Incentive Plan - PIDV

(8)

(5)

(12)

(1)

(1)

(27)

E&P areas returned and cancelled projects

(20)

(20)

Government grants

4

1

(1)

2

6

Amounts recovered - "overpayments incorrectly capitalized"

51

51

Gains / (losses) on disposal/write-offs of assets

(113)

89

4

2

111

(2)

91

Reimbursements from E&P partnership operations

160

160

Others

42

19

64

57

40

(205)

17

 

(482)

(236)

(188)

(2)

18

106

(1,152)

(1,936)

 

 

 

 

 

 

 

 

 

 

 Other Income (Expenses) by Segment – Jan/Jun-2014 33

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

INTER.

CORP.

ELIMIN.

TOTAL

 

 

Pension and medical benefits - retirees

(481)

(481)

Unscheduled stoppages and pre-operating expenses

(457)

(12)

(42)

(7)

(10)

(528)

Impairment

6

6

Legal, administrative and arbitration proceedings

(33)

(38)

(13)

(18)

(9)

(231)

(342)

Institutional relations and cultural projects

(24)

(16)

(2)

(26)

(3)

(312)

(383)

Health, safety and environment

(15)

(15)

(4)

(2)

(38)

(74)

Voluntary Separation Incentive Plan - PIDV

(410)

(203)

(48)

(3)

(71)

(10)

(260)

(1,005)

E&P areas returned and cancelled projects

(222)

(222)

Government grants

5

18

48

6

77

Gains / (losses) on disposal/write-offs of assets

(82)

(32)

306

3

169

(17)

347

Reimbursements from E&P partnership operations

167

167

Others

65

(39)

(85)

1

56

(20)

(23)

(2)

(47)

 

(1,006)

(337)

160

(2)

(56)

124

(1,366)

(2)

(2,485)

 

 

 

 

 

 

 

 

 

 

Consolidated Assets by Segment – 06.30.2015

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

INTER.

CORP.

ELIMIN.

TOTAL

 

 

Total assets

141,444

61,283

24,921

845

6,600

12,656

34,260

(5,047)

276,962

 

 

Current assets

6,414

13,410

3,458

58

2,918

2,075

27,396

(4,036)

51,693

Non-current assets

135,030

47,873

21,463

787

3,682

10,581

6,864

(1,011)

225,269

Long-term receivables

6,382

3,297

1,689

3

1,487

1,719

4,504

(957)

18,124

Investments

192

1,427

462

610

17

2,207

109

5,024

Property, plant and equipment

125,976

42,946

19,034

174

1,981

6,163

2,032

(54)

198,252

Operating assets

91,302

35,557

15,441

160

1,647

5,066

1,802

(54)

150,921

Assets under construction

34,674

7,389

3,593

14

334

1,097

230

47,331

Intangible assets

2,480

203

278

197

492

219

3,869

 

 

 

 

 

 

 

 

 

 

 Consolidated Assets by Segment – 12.31.2014

[33]

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

INTER.

CORP.

ELIMIN.

TOTAL

 

 

Total assets

151,524

70,038

28,367

1,109

7,221

13,009

32,385

(4,966)

298,687

 

 

Current assets

6,008

14,724

3,979

65

3,481

2,345

24,160

(3,930)

50,832

Non-current assets

145,516

55,314

24,388

1,044

3,740

10,664

8,225

(1,036)

247,855

Long-term receivables

6,729

3,605

1,411

3

1,211

1,848

5,029

(973)

18,863

Investments

200

1,807

524

836

15

2,226

145

5,753

Property, plant and equipment

135,671

49,662

22,126

205

2,284

6,058

2,787

(63)

218,730

Operating assets

99,313

40,940

17,868

189

1,730

3,716

2,094

(63)

165,787

Assets under construction

36,358

8,722

4,258

16

554

2,342

693

52,943

Intangible assets

2,916

240

327

230

532

264

4,509

 

 

 

 

 

 

 

 

 

 


 33 Beginning in 2014, the amount of inventory write-downs to net realizable value (market value) was reclassified from Other  Income and Expenses to Cost of Sales.

 

20


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

Consolidated Adjusted EBITDA Statement by Segment – Jan-Jun/2015

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

INTER.

CORP.

ELIMIN.

TOTAL

 

 

Net income (loss)

2,895

3,988

450

(113)

253

358

(5,599)

(356)

1,876

Net finance income (expense)

3,932

3,932

Income taxes

1,524

1,970

202

(13)

131

61

(1,766)

(183)

1,926

Depreciation, depletion and amortization

3,672

1,214

479

5

76

328

139

5,913

EBITDA

8,091

7,172

1,131

(121)

460

747

(3,294)

(539)

13,647

Share of earnings in equity-accounted investments

60

(162)

(57)

91

(1)

(47)

1

(115)

Impairment losses / (reversals)

80

119

190

30

419

Adjusted EBITDA

8,231

7,129

1,264

(30)

459

730

(3,293)

(539)

13,951

 

 

 

 

 

 

 

 

 

 

 Consolidated Adjusted EBITDA Statement by Segment – Jan-Jun/2014

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

BIOFUEL

DISTRIB.

INTER.

CORP.

ELIMIN.

TOTAL

 

 

Net income (loss)

9,344

(3,779)

547

(61)

417

540

(2,000)

(233)

4,775

Net finance income (expense)

495

495

Income taxes

4,814

(1,996)

210

(20)

215

63

(1,201)

(122)

1,963

Depreciation, depletion and amortization

3,778

1,423

483

7

83

516

181

6,471

EBITDA

17,936

(4,352)

1,240

(74)

715

1,119

(2,525)

(355)

13,704

Share of earnings in equity-accounted investments

1

(97)

(141)

21

(124)

(3)

(343)

Impairment losses / (reversals)

(6)

(6)

Adjusted EBITDA

17,937

(4,449)

1,099

(53)

715

989

(2,528)

(355)

13,355

 

 

 

 

 

 

 

 

 

 

 Reconciliation between Adjusted EBITDA and Net Income

U.S.$ million

Jan-Jun

 

 

2015

2014

2015 x 2014 (%)

 

2Q-2015

1Q-2015

2Q15 X 1Q15 (%)

2Q-2014

 

 

 

 

 

 

 

 

1,876

4,775

(61)

Net income (loss)

294

1,582

(81)

2,329

3,932

495

(694)

Net finance income (expense)

1,969

1,963

422

1,926

1,963

(2)

Income taxes

870

1,056

(18)

1,200

5,913

6,471

(9)

Depreciation, depletion and amortization

2,939

2,974

(1)

3,458

13,647

13,704

EBITDA

6,072

7,575

(20)

7,409

(115)

(343)

66

Share of earnings in equity-accounted investments

(55)

(60)

(8)

(122)

419

(6)

Impairment losses / (reversals)

418

1

13,951

13,355

4

Adjusted EBITDA

6,435

7,516

(14)

7,287

27

19

8

Adjusted EBITDA margin (%) 34

25

29

(4)

20

 

 

 

 

 

 

 

 

 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. Adjusted EBITDA should not be considered as a substitute for operational profit or as a better measure of liquidity than cash flow provided by operations, both of which are calculated in accordance with IFRS.

 


34 Adjusted EBITDA margin equals Adjusted EBITDA divided by sales revenues.

 

 


 
 

 

FINANCIAL AND OPERATING HIGHLIGHTS

Consolidated Income Statement for International Segment

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

DISTRIB.

CORP.

ELIMIN.

TOTAL

 

 

Income Statement - Jan-Jun 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales revenues

968

2,322

243

2,165

3

(1,035)

4,666

Intersegments

493

670

17

1

3

(1,035)

149

Third parties

475

1,652

226

2,164

4,517

 

 

Net income (loss) before finance income (expense), share of earnings in equity-accounted investments, profit sharing and income taxes

303

82

23

51

(101)

15

373

 

 

Net income (loss) attributable to the shareholders of Petrobras

297

67

43

44

(166)

15

300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

DISTRIB.

CORP.

ELIMIN.

TOTAL

 

 

Income Statement - Jan-Jun 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales revenues

1,653

3,992

244

2,560

9

(1,049)

7,409

Intersegments

702

820

17

1

7

(1,049)

498

Third parties

951

3,172

227

2,559

2

6,911

 

 

Net income (loss) before finance income (expense), share of earnings in equity-accounted investments, profit sharing and income taxes

422

76

42

76

(116)

(15)

485

 

 

Net income (loss) attributable to the shareholders of Petrobras

469

85

56

72

(172)

(15)

495

 

 

 

 

 

 

 

 

Consolidated Assets for International Segment

 

U.S.$ million

 

 

 

E&P

RTM

GAS & POWER

DISTRIB.

CORP.

ELIMIN.

TOTAL

 

 

Total assets on June 30, 2015

9,527

1,731

448

871

1,111

(1,032)

12,656

 

 

Total assets on December 31, 2014

9,623

1,861

472

940

1,230

(1,117)

13,009

 

 

 

 

 

 

 

 


 

 

22

 

 

 

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 06, 2015
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.