Net income of R$ 18.9 billion is 368% higher than the first quarter of 2019

Petrobras recorded a net income of BRL 18.9 billion in the second quarter of 2019, a historical record for the company. This result represents a 368% increase in relation to the net income recorded in the first quarter of 2019, which was BRL 4 billion, and 87% if compared to the second quarter of 2018, which was BRL 10.1 billion.

The main explanation for this performance was the conclusion of the sale of 90% of Petrobras' stake in Transportadora Associada de Gás S.A. (TAG), in the amount of BRL 33.5 billion, of which BRL 2 billion used to settle the carrier's debt with BNDES. The increase in international oil prices and the appreciation of the USD against the BRL also positively impacted the company's results.

Petrobras recorded an adjusted EBITDA of BRL 32.7 billion, representing a growth of 19% if compared to the previous quarter, due to higher oil prices, higher volume in diesel sales and higher margins in gasoline, naphtha and gas. Natural. In addition, the Free Cash Flow was positive for the 17th consecutive quarter, totaling BRL 11.3 billion.

The company’s net debt continued its downward trajectory, reaching USD 83.7 billion in the second quarter of this year, a reduction of 12% from the previous quarter. With active debt management, it was also possible to increase the average maturity from 9 to 10 years, keeping the average interest rate at 6% per year. The ratio of net debt to adjusted EBITDA also declined to 2.69, 16% lower than the registered in the first quarter of 2019.

Investments totaled USD 2.6 billion, of which 82% in exploration and production activities. For the sake of transparency and capital allocation efficiency, we have revised 2019 investments from USD 16 billion for the range of USD 10 and USD 11 billion.

In the second quarter of 2019, we reduced the recordable accident rate from 1.02 accident per million hours worked in the first quarter of this year to 0.88 accident per million hours worked, below the 1.0 warning threshold.

“We have reported a good financial result in the second quarter, mainly benefited from the sale of TAG, with net income reaching a record high of BRL 19 billion. We will continue our trajectory of value creation, focusing on higher return assets, such as pre-salt, and the relentless pursuit of cost reduction”, said Petrobras’ President Roberto Castello Branco.

Second Quarter’s Operational Highlights 

The company's oil, natural gas and NGL production reached 2,633 million barrels of oil equivalent (boe) per day in the second quarter, an increase of 3.8% over the first quarter of this year. In the pre-salt fields alone, production grew 12.7%, with 1,168 million barrels of oil per day (bpd) in the second quarter.

This increase reflects the progressive growth in production (ramp up) of the platforms that went into operation in 2018 - P-69, P-74, P-75 and Cidade dos Campos dos Goytacazes - and in 2019 - P-67, P-76 and P-77. These units contributed with 436,000 boe/d in the second quarter, with capacity to produce up to 1,5 million bpd when fully loaded. Thanks to this consistent performance, the pre-salt jumped from 48% of total oil production in Brazil in the second quarter of 2018 to 57% in the second quarter of 2019. In addition, we were able to reduce the cost of pre-salt extraction to the USD 6/boe mark this quarter.

Despite the positive results, we decided to revise the 2019 production target to 2.7 million barrels of oil equivalent per day (2.1 million barrels per day of oil production), with a variation of +/- 2.5%. Despite the increase in production in the quarterly comparison, the results were lower than planned, mainly due to the complexity in stabilizing the gas plants of Buzios field’s platforms.

In the second quarter, derivatives sales increased 0.5% in the Brazilian market compared to the first quarter, with diesel sales up by 4.9%. Derivatives production and utilization factor also increased, reflecting the increase in sales in the Brazilian market and the seasonality of diesel demand.

Portfolio Management 

In line with the strategy of concentrating on the higher return assets, Petrobras' divestments reached USD 15.1 billion by July this year. The largest transaction was the sale of 90% of TAG, for BRL 33.5 billion, followed by the Public Offering of Petrobras Distribuidora S.A. shares for BRL 9.6 billion.