Petrobras’ results in 2016 were marked by a significant improvement in its operational performance over the course of the year, reflected in a reversal from the loss posted in 3Q16 to a net profit of R$2.51 billion in 4Q16, and a reduction in indebtedness.

Despite lower oil prices in 2016, an 8% decline in sales of oil products in the Brazilian market, and reduced power generation, the company obtained higher diesel and gasoline margins than in 2015. It also cut its spending on imports, royalties, sales, general and administrative expenses, and net financial expenses.

Exports increased 12% in 4Q16, amounting to 634,000 barrels per day of oil and oil products. Most notably, oil exports rose 14%, making the company a net exporter from Brazil in 2016.

In operational terms, Petrobras also achieved its production target for the second year in a row, producing 2.144 million barrels per day of oil in Brazil, and in December it set a new monthly record by producing 2.9 million barrels of oil equivalent per day, including oil and gas, in Brazil and abroad.

Thanks to higher operating cash generation and a 32% reduction in investment, the company achieved free cash flow of R$41.57 billion. 4Q16 was the seventh consecutive quarter of positive free cash flow, demonstrating the greater capital discipline the company has been pursuing.

Petrobras’ net debt declined 20%, to R$314 billion or US$96.4 billion, due to the amortization and early payment of debts using resources from disposals and cash flow, as well as the appreciation of the Brazilian real. Debt management also enabled an increase in the average debt term, from 7.14 to 7.46 years.

EBITDA, an indicator widely used in the financial markets as a yardstick for cash flow, was R$24.8 billion in 4Q16 and R$88.7 billion in 2016, up 16% from the previous year.

As a result, the net debt to EBITDA ratio fell from 5.11 at the end of 2015 to 3.54 at the end of 2016. The target established in the company’s Business and Management Plan is to reach 2.5 by the end of 2018.

The main highlights of Petrobras’ results for the whole of 2016 and 4Q16 are summarized below:

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