Petrobras announced a series of measures to preserve the health of its employees and support the prevention of coronavirus in its operational and administrative areas. The initiatives are in line with the recommendations of the World Health Organization (WHO) and the Ministry of Health and aim to contribute to the efforts of the population and Brazilian authorities to mitigate the risks of the disease. With the support of a special committee, we are daily monitoring the evolution of the coronavirus and evaluating the need for new measures.

Additionally, Petrobras donated 600,000 tests for the diagnosis of Covid-19 to the Unified Health System (SUS), which were imported from the United States and will arrive in Brazil in April. The company also created a multidisciplinary group of professionals from its research center (Cenpes) to evaluate and propose solutions in partnership with universities, companies and institutions that can help to fight the coronavirus.

As a result of the abrupt reduction in prices and demand for oil and fuels, the company is adopting a series of measures to reduce disbursements and preserve cash in this scenario of uncertainties, in order to reinforce its financial strength and resilience of its businesses, among the which we highlight:

• Disbursement of committed credit lines (Revolving Credit Lines), in the amount of approximately US $ 8 billion, as announced on 3/20/2020, which entered the cash register this week. 

• Disbursement of two new lines totaling R $ 3.5 billion. 

• Postponement to 12/15/2020 of the dividend payment announced on 02/19/2020 based on the 2019 annual result, in the amount of R $ 1.7 billion. This proposal will be submitted to the approval of the Ordinary General Assembly, which was rescheduled from 04/22/2020 to 04/27/2020. 

• Reduction and postponement of expenses with human resources, in the total amount of R $ 2.4 billion: 

• postponement of payment for the 2019 Performance Award Program; 

• postponement of overtime pay; 

• postponement of FGTS payment and vacation bonus payment, according to Provisional Measure No. 927, of 2020; 

• postponement of the payment of 30% of the total monthly remuneration of the President, Directors, Executive Managers and General Managers; 

• cancellation of the advancement and promotion processes for employees and advancement of bonus functions in 2020; 

• 50% reduction in the number of employees on partial alert in the next three months and temporary suspension of all training. 

• Working capital optimizations 

• Reduction of investments scheduled for 2020 from US $ 12 billion to US $ 8.5 billion (US $ 7 billion in cash), mainly due to the postponement of exploratory activities, interconnection of wells and construction of production and refining facilities , and the devaluation of the Real against the US dollar. 

• Accelerated reduction in operating expenses, with an additional decrease of US $ 2 billion, highlighting: 

• Hibernation of platforms in operation in shallow water fields, with higher extraction costs per barrel, which, due to the drop in oil prices, now have a negative cash flow. Current oil production from these fields is 23,000 bpd and divestments in these assets are still in progress. 

• Lower expenses with interventions in wells and optimization of production logistics. 

• Postponement of new relevant contracts for a period of 90 days.

As a result of implementing the measures described, the company estimates that it will balance its cash flow in 2020.

In relation to the sale of oil and oil products, Petrobras is continuously monitoring the domestic and foreign markets, as well as managing inventories and processing at its refineries, in line with changes in market demands. The COVID-19 crisis has caused significant reductions in demand for oil products, especially diesel, gasoline and QAV in Brazil and worldwide.

In this sense, the company decided to reduce a total of 100 thousand bpd of its oil production by the end of March, due to the oversupply of this product on the foreign market and the reduction in world oil demand caused by the effect of COVID-19. The company will assess market conditions and, if necessary, make new adjustments in oil production, always guaranteeing safety conditions for people, operations and processes.

The company continues to explore opportunities for further administrative and operating cost cuts. Given the high degree of uncertainty prevalent in the global economy, we believe it is premature to make revisions to the base scenario and oil price projections. Such reviews will be made when the uncertainties and the consequent price volatility decrease.

Petrobras reinforces its commitment to the management of its portfolio and its strategy supported by the five pillars: maximizing return on capital, reducing the cost of capital, relentless pursuit of low costs, meritocracy and respect for people, the environment and safety. The current crisis highlights the importance of these pillars, which should continue to be implemented with even more focus and intensity.

Reflecting its commitment to transparency, Petrobras will keep the markets informed about future movements.