2014 global energy conference – credit suisse
TRANSCRIPT
Rudimar LorenzattoExploration & ProductionJune, 2014
2014 Global Energy Conference – Credit Suisse
DISCLAIMERFORWARD-LOOKING STATEMENTS:
DISCLAIMER
The presentation may contain forward-looking statements about future events within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are not based on historical facts and are not assurances of future results. Such forward-looking statements merely reflect the Company’s current views and estimates of future economic circumstances, industry conditions, company performance and financial results. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forward-looking statements. Readers are cautioned that these statements are only projections and may differ materially from actual future results or events. Readers are referred to the documents filed by the Company with the SEC, specifically the Company’s most recent Annual Report on Form 20-F, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including, among other things, risks relating to general economic and business conditions, including crude oil and other commodity prices, refining margins and prevailing exchange rates, uncertainties inherent in making estimates of our oil and gas reserves including recently discovered oil and gas reserves, international and Brazilian political, economic and social developments, receipt of governmental approvals and licenses and our ability to obtain financing.
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. Figures for 2014 on are estimates or targets.
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 presentation.
NON-SEC COMPLIANT OIL AND GAS RESERVES:
CAUTIONARY STATEMENT FOR US INVESTORS
We present certain data in this presentation, such as oil and gas resources, that we are not permitted to present in documents filed with the United States Securities and Exchange Commission (SEC) under new Subpart 1200 to Regulation S-K because such terms do not qualify asproved, probable or possible reserves under Rule 4-10(a)of Regulation S-X.
AGENDA
• BUSINESS AND MANAGEMENT PLAN 2014-2018
• PRODUCTION UPDATE
- RAMPING UP NEW SYSTEMS
- MAINTAINING EXISTING SYSTEMS
• PER BOE ANALYSIS
• PRE-SALT UPDATE
• NEW UNITS
• CONCLUSION
Business and Management
Plan2014-2018
5
Investments in Exploration & Production: US$ 153.9 billion
Downstream 38.7 (17.5%)
Gas & Energy 10.1 (4.6%)
International 9.7 (4.4%)
Distribution 2.7 (1.2%)
Biofuels 2.3 (1.0%)
Engineering, Technology& Materials 2.2 (1.0%)
Other Areas 1.0 (0.5%)
2014-18 BMPTotal Investment
US$ 220.6billion
Exploration & Production153.9 (69.8%)
Production Development112.5 (73%)
Infrastructure: 18.0 (12%)
Exploration: 23.4 (15%)Pre-saltConcession
Transfer of RightsProduction Sharing
Post-salt
Exp + R&D
82.0(60%)
53.9(40%)
6
Projects Under Implementation, Bidding Process and Evaluation
2014-18 BMPTotal InvestmentUS$ 220.6
billion
Downstream 38.7 (17.5%)
Gas & Energy 10.1 (4.6%)
International 9.7 (4.4%)
Distribution 2.7 (1.2%)
Biofuels 2.3 (1.0%)
Engineering, Technology& Materials 2.2 (1.0%)
Other Areas 1.0 (0.5%)
Exploration & Production 153.9 (69.8%)
Under Implementation(US$ 175.9 billion)• Projects being executed
(construction)• Projects already bid• Resources required for studies
of Projects Under Evaluation
Under Bidding Process¹(US$ 30.9 billion)• E&P projects in Brazil
Represent around 200 th. bpd ofproduction in 2018 and 900 th. bpd in 2020.
Projects under Studies in Phase I, II or III
(except E&P in Brazil)
Portfolio of Projects Under Implementation + Under Bidding Process
US$ 206.8 Billion Portfolio of Projects Under Evaluation
US$ 13.8 Billion
¹ Includes E&P projects in Brazil which will stil go through bidding process of their units, as well as Premium I and Premium II refineries, which will have the bidding process carried out throughout 2014 ² Source: IHS CERA Regional Downstream Capital Costs Indexes - 2011
Oil Production 2020: 4.2 million bpd
No impact in Oil Production 2020
7
2014-2018 BMP: Investment and Operating Costs Management
2014-2018 BMP US$ 220.6 Billion
PRC-PoçoProgram to Reduce
Well Costs
PRC-SubProgram to Reduce
Subsea Facilities Costs
PROEFProgram to Increase
Operational Efficiency
UO-BCUO-RIO
PROCOPOperating Costs
Optimization Program
INFRALOG – Logistic Infrastructure Optimization ProgramLocal Content Management– Take advantage of the industry´s capacity to maximize gains to Petrobras
Health, Safety, Environment and Energy Efficiency
PROCOP: Focus on OPEX, operating costs of the Company activities – Manageable Operating Costs..PRC-Poço: Focus on CAPEX dedicated to Wells construction – Investments in Drilling and Completion.
PRC Sub: Focus on CAPEX dedicated to subsea systems construction.
8
1.9
3,2
4.2
2013 2014 2015 2016 2017 2018 2019 2020
New systems ensure future growth
Growth in 2014:7.5% ± 1p.p.
Piloto Sapinhoá (Cid. São Paulo)
Baúna(Cid. Itajaí)
Piloto Lula NE(Cid. Paraty)
Papa-Terra(P-63)
Roncador III(P-55)
Norte Pq. Baleias (P-58)
Iracema Sul(C. Mangaratiba)
Roncador IV (P-62)
Sapinhoá Norte (Cid. Ilhabela)
Papa-Terra (P-61+TAD)
Florim
Lula Alto
Lula CentralJúpiterLula Sul
(P-66)
Búzios I(P-74)
Lapa
Lula Norte (P-67)
Búzios II(P-75)
Lula Ext. Sul e CO Sul de Lula
(P-68)
Lula Oeste(P-69)
Búzios III(P-76)
Tartaruga Verde e Mestiça
Maromba I
Iara Horst(P-70)
Búzios IV(P-77)
Entorno de Iara(P-73)
NE de Tupi (P-72)
Iara NW (P-71)
Sul Pq. Baleias
ES ÁguasProfundas
Carcará
Espadarte III
SE ÁguasProfundas I
Búzios V
RevitalizaçãoMarlim I
SE ÁguasProfundas II
Libra
RevitalizaçãoMarlim II
Iracema Norte (Cid. Itaguaí)
On StreamBuiltOrderedUnder Bidding
+640kbpd +660kbpd +150kbpd +1000kbpd +900kbpd +1050kbpd Capacity added per year
3 MM bbl
Ramping Up New Systems
10
FPSO Cid. São Paulo(Sapinhoá)
2,200
1,900
1,950
1,850
2,150
2,050
2,000
2,100
Feb-14
1,9261,923
Jan-14 Mar-14
2,0142,009
Sep-13
2,022
1,979
Aug-13
1,951
1,908
Jul-13
1,929
1,888
Jun-13
2,021
1,955
1,920
Jan-13
1,994
1,9651,979
May-13
1,925
1,892
Apr-13
1,974
1,924
Mar-13
1,890
1,846
Fev-13
1,988
1,917
Dec-13
2,027
1,964
Nov-13
2,009
1,957
Oct-13
1,994
1,960
Th. bpd1Q13
Average 1,9102Q13
Average 1,9314Q13
Average 1,9601Q14
Average 1,9223Q13
Average 1,924P-58(Parque das Baleias)
P-55(Roncador)
P-63(Papa-Terra)
Nov 12thFPSO Cid. Paraty(Lula NE Pilot)
FPSO Cidade de Itajaí(Baúna)
Feb 16th
Jan 5th Mar 17thDec 31st
Capacity:120 th. bpd (45% Petrobras)2013 – 10 th. bpd1Q14 – 20 th. bpd
Capacity:80 th. bpd (100% Petrobras)2013 – 36 th. bpd1Q14 – 72 th. bpd
Capacity:120 th. bpd (65% Petrobras)2013 – 10 th. bpd1Q14 – 30 th. bpd
Capacity:140 th. bpd (62.5% Petrobras)
2013 – 1 th. bpd1Q14 – 9 th. bpd
Capacity:180 th. bpd (100% Petrobras)1Q14 – 8 th. bpd
Capacity:180 th. bpd
(100% Petrobras)1Q14 – 2 th. bpd
Production Operated by PetrobrasPetrobras Production
Jun 6th
» Main factors that impacted production in the 1Q14: Demobilization of FPSO Brasil (integrity) and complete stoppage of Marlim P-20 for 103 days (fire). Limited availability of PLSVs, due to the delayed decision of contracting abroad (2010 → 2012), after failed attempts to contract them in Brazil,
impacting the pace of interconnection of wells. Delays in the delivery of the platforms by the shipyards and bigger than expected scope for off-shore activities. Longer time for the execution of innovative projects, such as the BSRs (monobuoys) and systems P-63/P-61/TAD.
2013: 1,931 th. bpd
Production in the 1Q14 was 1,922 kbpd, in line with projections
11
2Q14 3Q14 4Q14
2014 Average: 2,075 th. bpd ± 1%
Factors that support production growth:» New systems: P-62 (May 12th), P-61/TAD (3Q14), FPSO Cidade de Ilhabela (3Q14) and FPSO Cidade de Mangaratiba (4Q14).» Connection of 65 production wells in 2014, of which 20 have already been connected by 05/09/2014.
» PLSV fleet increase: 11 vessels in 1Q14, 13 vessels in 2Q14, 16 vessels in 3Q14 and 19 vessels in 4Q13.» PLSV productivity increase: from 99 km / PLSV / year in 1Q13 to 129 km / PLSV / year in 1Q14 (+30%).
Th. bpd
2,400
2,600
2,500
2,300
2,200
2,100
2,000
1,900
1,800
0
jul-1
4
may-1
4
aug-
14
jun-1
4
apr-1
4
oct-1
4
dez-1
4
nov-1
4
sep-
14
mar-1
4
1,926
feb-1
4
1,923
jan-1
4
1,917
dec-1
3
1,964
nov-1
3
1,957
oct-1
3
1,960
sep-
13
1,979au
g-13
1,908
jul-1
3
1,888
jun-1
3
1,979
may-1
3
1,892
apr-1
3
1,924
mar-1
3
1,846
feb-1
3
1,920
jan-1
3
1,965
2Q13Average 1.931
3Q13Average 1.924
4Q13Average 1.960
2013 Average: 1,931 th. bpd
1Q13Average 1.910
1Q14Average 1.922
P-62
Realized
FPSO Cid. São PauloFPSO Cid. Paraty
FPSO Cidade de Itajaí
Jan 5th P-55
P-63
Cid. Ilhabela
Cid. Mangaratiba4th Quarter
3rd Quarter
3rd Quarter
3rd Quarter
P-61
TAD
P-58
May 12th
Jun 6th
Feb 16th Nov 12th
Dec 31st Mar 17th
3rd Quarter
Production growth target of 7.5% (± 1 p.p.) maintained
12
Our critical resources needs are fulfilled
1) Rigs above 2000m 2) PLSV = Pipe Laying Support Vessel
Current fleet: 55 Current fleet: 40 Current fleet: 11
New Production Units New UDW Drilling Rigs¹above 2000m New PLSVs²
51
7
6
92
5
5 6
13
19
28 3035
2014 2015 2016 2017 2018 2019 20202
7
5
8
51
2
9
14
22
27 28
2014 2015 2016 2017 2018 2019 2020
8
9
2
8 8
1719 19 19 19
2014 2015 2016 2017 2018 2019 2020
Sete Brasil drilling rigs will largely replace the internationally built rigs
13
Production Wells Expected to be Connected in 2014
New Production Wells in 2014 New Injection Wells in 2014
18
49
5964
17
22
28
Connected Completed Drilled Total
3
Connected Completed Drilled Total
In 2014, up to April, 20 wells connections were done with 30% more efficiency (km/PLSV/year) than in the last year.
15
Buoyancy Supported Risers
Dimensions: 33ft x 130ft x 170ft
A pioneer concept for subsea systems: a giant buoy to support rigid risers.
• Which fields?– Sapinhoá Field
(FPSO Cid. de São Paulo)– Lula NE Field
(FPSO Cid. de Paraty)
• Operational status:– All 4 buoyancies are
installed.
• Time for installation:– 1st buoy: 164 days– 2nd buoy: 55 days
• The Results:– In 2013: more 17 mil bpd– In 2014: more 19,5 mil
bpd
Maintaining Existing
Systems
18
Main Operational Units
Vitória
ES
MG
Rio de Janeiro
RJ
PR
São Paulo
SP
100 km
Curitiba
SC
Campos Basin
Santos Basin
Parque das Baleias
Cangoá Peroá
CanapuGolfinho
Camarupim
Carapó
RoncadorAlbacora
MarlimBarracuda
Garoupa
CarapicuXerelete
Papa-Terra
MarombaCarataí
Pampo
IaraLibra
Ent. Iara
Búzios
Jupiter
PerobaSul de Lula
LulaIracemaParati
Lapa
Sagitário Florim
Bem-te-vi/CarcaráCaramba
Sapinhoá
S. Guará
Merluza
GuaiamáPiracucá
BaúnaPiracaba
TubarãoEstrela do Mar
CoralCaravela
Cavalo Marinho
Mexilhão CarapiáPirapitanga
Tambaú
Tambuatá
UO-SUL1 production units71 kbpd
UO-BS8 production units142 kbpd
UO-BC34 production units372 kbpd
UO-ES7 production units287 kbpd
UO-RIO17 production units840 kbpd
19
Program to Increase Operational Efficiency (PROEF)
488 455 452 442
418 389 390 389
355 382
428 413 408 405 374 357 370
312 335
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Apr/14
With PROEFWithout PROEF
920
871 887 871 881
839 807
910
851 840 841 811 824
775
4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Apr/14
With PROEFWithout PROEF
Oil + NGL Production (kbpd)
Oil + NGL Production (kbpd)
73 68 71 76 76 74 75 77 77 81
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Apr/14
92 91 89 94 91 93 92 94 95 96
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Apr/14
Operational Efficiency(%)
Operational Efficiency(%)
UO-BCRecovering wells and subsea systems.Total Expenditure*US$ 1,897 mmNPV*US$ 1,080 mmProduction gain:+43 kbpd in the 1Q14.
UO-RIOIntegrity improvement and optimization in the usage of resources. Total Expenditure*US$ 3.2 mmNPV*US$ 1,340 mmProduction gain+15 kbpd in the 1Q14.
* By February 2014
20
Legacy Oil – accounts for 80% of the production target for 2014
0
0.5
1
1.5
2
2.5
2012 2013 2014
OIL
PO
TEN
TIAL
(MM
BPD
)
Reservoirs potential decline rate
SOURCE LARGEFIELDS
SMALLFIELDS
Onshore 5,3% 6,2%
Deep waters 12,0% 19,8%
Shallow waters 7,5% 12,1%
Decline Rates - CERA
CERA: Cambridge Energy Research AssociatesAuthors: Jackson/Eastwwod, 01/2012Deep waters = water depth > 300mLarge fields = reserves > 500 mm bbl
Decline rate1Q14 x 1Q13
10%
The control over the reservoirs decline rate ensures the oil
production forecast for the year
21
Average FX (R$/US$) 1.67 1.96 2.16 2.37 2.36
% of costs in US$ 18 18 32 35 35
Oil production (th. bpd) 2,022 1,980 1,931 1,922 2,088
Pre-salt production (th. bpd) 100 138 249 299 324
Days of workovers (PROEF) 1,402 2,966 3,479 872 3,711
Higher productivity guaranteed the maintenance of lifting cost
1920.93
22.31 22.47 22.57
26.39
30.7928.33 29.49
31.2534.28
32.66 33.14 32.65
11.3813.12 13.37 12.49 12.91 13.28
15.2413.8 14.76 15.02 14.96 14.33 14.15 14.62
0
5
10
15
20
25
30
35
40
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2014E
BRL/boeUSD/boe
More operational activities with constant oil production;Stabilized unitary costs with a downward trend → increase in productivity and cost reduction
2011 Average:R$ 21.19 /boe
2012 Average:R$ 26.97 /boe
2013 Average:R$ 31.94 /boe
2011 Average:R$ 21.19 /boe
2012 Average:R$ 26.97 /boe
2013 Average:R$ 31.94 /boe
1Q 2014:R$ 33.14 /boe
1Q 2014:R$ 33.14 /boe
+9% +7% -1%
+27%
+18% +1%
22
The 2014-18 BMP counts with the gains of PROCOP
Costs reduction between 2013 and 2016, with nominal values of R$ 37,5 billion
Ligting Cost(R$/boe)
• Optimization of routine processes and resources used in the production of oil & gas.
• Excellence level in the management of materials and spares.
• Adequacy of overhead.
34.8
27.3
32.7
24.2
-5,9% a.a.
-7,2% a.a.
2014 2018
Pre-salt Update
24
Rio de Janeiro
MG
100 km
MG
100 km
The Pre-Salt Province
RJ
São Paulo
Curitiba
* Comerciality declaration of Lula (6,5 bi boe), Lula–Iracema (1,8 bi boe), Sapinhoá(2,1 bi boe) e Lapa (459 mi boe)
Average Water Depth: 2,100 mDistance from the coast: 300 kmSalt thickness: 2 kmReservoir average depth: 5 kmRecoverable Volumes
· Lula: 6.5 bi boe· Lula – Iracema area: 1.8 bi boe· Sapinhoá: 2.1 bi boe· Transfer of Rights: 5.0 bi boe
Total: 15.4 bi boe
Remaining areas103.4 mil km²
69%
Areas underconcession45.6 mil km²
31%87%Petrobras andassociates
13%Consortium withoutPetrobras
CamposBasin
7,000 km2
(1.7 million acres)
Santos BasinPre-Salt
15,000 km2
(3.7 million acres)
650US GoMblocksConcessionTransfer of RightsProduction Sharing
25
Rio de Janeiro
MGMG
The Pre-Salt Province
RJ
São Paulo
Curitiba
FPSOCapixaba1 p. well
P-481 p. well
P-533 p. wells
FPSO Cid.Angra dos Reis4 p. wells
FPSO Cid.Paraty
2 p. wells
FPSO DynamicProducer
1 p. well
FPSO Cid.Niterói1 p. well
FPSO Cid.São Vicente1 p. well
ConcessionTransfer of RightsProduction Sharing
P-581 p. well
FPSO Cid.Anchieta5 p; wells
FPSO Cid.São Paulo
2 p. wells
9 production units+ 2 EWT
22 productionwells (10 PPSBS,5 BC/RJ e 7 BC/ES)
26
Pre-Salt Production Highlights
Lula Nordeste Pilot on stream since June 2013 with only 1 production well
Campos Basin
Santos Basin
13686
4718
208
316
42
119
169
301
385
2008 2009 2010 2011 2012 2013 April 2014
165
83
72
24
203
8
Monthly Production Average(kbpd) Daily Production Record
470 kbpd in May 11st 2014
Cumulative productionAug/08 to Apr/14378 million bbl
9.014.8
Lula Petrobras E&P
Lifting Cost 2013 (US$/boe)
34
36
36
BAZ-04 (Baleia Azul)
LL-02 (Lula Pilot)
SPS-77 (Sapinhoá Pilot)
High Productivity Wells (kbpd - peak)
411
27
Pre-salt Drilling Activity in the Santos Basin Pre-salt Cluster
2 23
7
10 10
2122
Active Rigs
2 3 4 4 69 10 12
6
15
21
2 3 4 57
15
25
33
2006 2007 2008 2009 2010 2011 2012 2013
DevelopmentExploration
23 injection wells21 production wells
50 exploratory wells
55% Reduction of drilling timefrom 134 to 60 days (2006-2013)*
Drilling + completion record (2013): 109 days
100% Exploratory success in thepre-salt province in 2013
>90% Exploratory success in thepre-salt province since 2006
* dryhole
28
168
125
98 98
78
2010 2011 2012 2013 2014Duration (days/well)
158
10289 86
64
2010 2011 2012 2013 2014Duration (days/well)
Drilling Completion (including WCT)
Wells Construction in Santos Pre-salt – Total Duration
-11% p.a. -15% p.a.
29
Libra
ConcessionTransfer of RightsProduction Sharing
Libra
L1L3
L2
L4
L5L6 L7
L8
L9
L10
L11L12
Unique Characteristics• Very thick Pre-salt reservoirs• Good reservoir quality
(porosity / permeability)• Light Oil (~ 27° API)
The Libra partnership offers a vast array of opportunities• Very strong oil companies• Integrated Project Team• Openness to new ideas
40% 20% 20% 10% 10%
New Units
FPSO Cidade de Ilhabela - Sapinhoá Norte
• Sail away by Jul/2014• 1st oil: 2H 2014• 150 kbpd oil• 6 MM m³/d gas• 8p + 7i wells
FPSO Cidade de Mangaratiba - Iracema Sul
• Sail away by Aug/2014• 1st oil: 2H 2014• 150 kppd oil• 8 MM m³/d gas• 8p + 7i wells
P-66 - Lula Sul (Replicant)
• 1st oil: 2016• The first of 8 new build
FPSOs (Replicants)
P-74 – Búzios I
• 1st oil: 2016• The first of 4 Converted
FPSOs
Conclusion
39
• To achieve our 7,5% (+-1%) growth in production in 2014, we are counting on:– Arrival of 8 PLSV, making a total of 19 PLSVs (12 to pre-salt) by the end of 2014– Out off the 10 new units planed for 2013-2014, 7 are already producing, one is in its final stage (P-61) and
the other 2 are almost done (92% and 93%).– The BSR technology are now field proof with all the buoy installed.– Highly productivity of the pre-salt fields (the last wells are producing 30- 35 kbpd).
• The decline rate of our fields are slightly better then the market benchmarks.
• PROEF is bringing great results by reducing the decline rate of our existing fields and also by improving the efficiency of our production systems.
• PROCOP is proving very important for the upstream department of Petrobras because is decreasing the lifting cost.
• The Pre-salt production is increasing in a sustainable manner and is showing the high productivity of its fields (average production of 410 kbpd in April).
CONCLUSION
40
• Petrobras is a businesses driven company and our focus now is the increase of production. Our board is directly involved in this matter.
• We are getting more efficient in drilling and completing wells the Pre-salt layer, with an average duration reduction of 13% yearly from 2012 to 2014, a remarkable outcome, since it accounts for 51% of our E&P investments.
• We are all very excited about Libra and committed to deliver a great project achieving production and cost targets.
CONCLUSION
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