Earnings Call Transcript - PBR Q2 2025

Operator, Operator

Good morning. Welcome to Petrobras' earnings webcast for analysts and investors for 2025. It's a pleasure to be with you today to discuss our earnings. We will present this conference in Portuguese, which will be translated into English. The links for both languages are available on our Investor Relations website. Today, we have Magda Chambriard, President of Petrobras; Angélica Laureano, Executive Director for Energy Transition and Sustainability; Clarice Coppetti, Executive Director of Corporate Affairs; Claudio Schlosser, Executive Director of Logistics, Commercialization and Markets; Fernando Melgarejo, Executive Director of Finance and Investor Relations; Ricardo Wagner, Director of Governance and Compliance; Renata Baruzzi, Executive Director for Engineering, Technology and Innovation; Sylvia dos Anjos, Executive Director for Exploration and Production; and William Franca, Executive Director for Industrial Processes and Other Products. I will now turn it over to our President, Magda Chambriard for her initial remarks. You may proceed, Mrs. President.

Magda Maria de Regina Chambriard, President

Good morning, everyone. I want to acknowledge all of you here today, including our finance and executive teams. It’s a pleasure to have you join us for this quarterly call, and we take pride in presenting our recent earnings. In the second quarter of 2025, a significant highlight was our increase in oil production. To remind you, in the fourth quarter of 2024, we produced just over 2 million barrels of oil per day. It's important to clarify that this is not a barrel equivalent but actual barrels of oil. Additionally, we faced inquiries regarding our reduced capital expenditures earlier this year. We’ve addressed these questions and have now provided clarity on our decisions. In the last quarter of last year, we had the company operating for a full six months. When we cut our capital expenditures mid-year, it was in line with a demand forecast and an investment plan from the previous quarter. Following this, we increased our capital expenditures in the fourth quarter to align with our guidance, leading to higher production levels. In the second quarter of 2025, we achieved an average production of 2.3 million barrels per day, reflecting an increase of 230,000 barrels per day compared to fourth quarter 2024. This represents a 5% increase from the first quarter of this year and an 8% rise compared to the same period last year. Notably, we have continued to ramp up production in July, reaching an average of 2.47 million barrels per day, which is 380,000 barrels more than fourth quarter 2024. This clear upward trend exemplifies our effective use of capital expenditures to drive increased output. The substantial rise in production underscores our commitment to meeting the expectations of both our government and private sector shareholders, prioritizing robust execution of our strategy. We are nearing the upper end of our production guidance for the year while adhering to our investment plans. Our accelerated delivery supports value generation for all stakeholders. Achieving an additional 380,000 barrels per day in such a short duration was no small feat and required extensive teamwork and improved internal processes. The increase is comparable to the total production of some countries and reflects our concerted effort to enhance our management practices. Our efforts have been driven by executing our capital expenditures while also ensuring safety and environmental responsibility. I want to highlight some of our key operational achievements. We have increased our production capacity at the Duque de Caixas platform to 180,000 barrels per day and have brought the Alexandre de Gusmão platform online two months ahead of schedule, also at 180,000 barrels per day. We recently activated Brazil's largest oil platform, producing 200,000 barrels per day from just four pre-salt wells, with plans to increase production even further in the coming weeks. We are fully aware of the current oil price climate and are ready to adapt by enhancing production and optimizing costs. This year alone, we’ve linked over 50 new wells, surpassing last year's total thanks to collaboration and efficient management practices. We remain on track to initiate the operation of the P-78 platform, which can add 180,000 barrels per day to our capacity. We have increased natural gas production by 15%, driven by the progress of Route 3 into the Boaventura complex. As we work through geopolitical challenges and fluctuating oil prices, we remain committed to cost management and production efficiency. The second quarter was impacted by a decrease in oil prices, but our response was to ramp up our production by 5%, mitigating potential impacts on our financial performance. We are dedicated to exploring new avenues for project optimization, cost reduction, and efficiency improvements. Our commitment to generating value for our investors and Brazilian society is unwavering, and we are determined to deliver profitable projects in this challenging environment. Thank you for your time, and I will now hand it over to our CFO, Fernando Melgarejo, who will discuss our financial results. Fernando, the floor is yours.

Fernando Sabbi Melgarejo, CFO

Good morning, everyone. I want to extend a warm greeting to all of you listening and to my fellow panelists. Thank you for joining us for another Petrobras earnings webcast. I will begin by sharing the key figures for the second quarter of 2025. As Magda pointed out in her opening remarks, we experienced impressive growth in our production this quarter. Although Brent prices fell by 10% quarter-over-quarter, we saw a 5% increase in production due to new production systems and enhanced operational efficiency across our fields. As our CEO noted, we have already achieved the midpoint of our production target for 2025, which is 2.3 million barrels per day. Our commercial gas production also saw significant growth, with Petrobras increasing its gas supply to the market by 15%, thanks mainly to the progress of the Rota 3 pipeline and the Boaventura gas processing unit. In total production, we set a new record of 4.2 million barrels of oil equivalent per day. The increased production volume in the second quarter was essential for delivering financial results consistent with the previous quarter, made possible by consistent CapEx execution and strong workforce engagement. Our CapEx has been discussed extensively, and it has a noticeable impact on our production, which is what we're presenting now. Moving on to Slide 6, we reported a net income of USD 4.1 billion and EBITDA of USD 10.2 billion, both excluding one-off events. These figures align with the previous quarter, despite Brent prices being 10% higher during that time. Our strong operational results were able to counterbalance external factors, such as commodity prices. Effective management of our commercial strategy also contributed positively to our results, as we executed 3 diesel price reductions and 1 gasoline price reduction, ensuring competitive margins, profitable operations, and maintaining the company’s share. Our operating cash flow stood at USD 7.5 billion, showing a decline compared to the previous quarter, mainly due to known events like the PIS/COFINS tax credit linked to last year's tax transaction that positively affected the first quarter but not this one. The payment of variable remuneration, which had a higher rent affecting government shareholders, also impacted our cash flow in the second quarter following the shareholders' meeting. These events will not recur next quarter. Furthermore, in quarter 2, we incurred higher selling expenses primarily due to increased export volumes of crude oil due to our production. Slide 7 shows our debt history. Both financial debt and chartering remain manageable, with over 60% of total indebtedness being related to leases for platforms, vessels, and rigs, which must be recorded as debt according to accounting standards. It's important to note that this lease portion corresponds to assets generating production and revenue for the company. When we commissioned the FPSOs Alexandre de Gusmão and Almirante Tamandaré this year, we had to recognize lease liabilities as debt, adding BRL 3.7 billion to our debt. However, this also resulted in an additional 207,000 barrels per day of production capacity. Considering other vessels and amortizations, leases contributed around USD 5 billion to our debt in the first half of 2025. These leases are vital for increased capacity, enhanced production, and ultimately more revenue for our company. Regarding financial debt, we successfully completed a public offering of debentures totaling BRL 3 billion this quarter, which was well-received, allowing us to raise funds in the local market for the first time in 8 years at competitive costs aligned with our liability management strategy. On Slide 8, we will discuss CapEx. We invested USD 4.4 billion in the second quarter, bringing our total to USD 18.5 billion for the year. We remain committed to executing our planned guidance of USD 18.5 billion, focusing on accelerating value-generating deliveries and logistics revenue. Due to these efforts, we started production from the FPSO Alexandre de Gusmão over 2 months ahead of schedule. The Almirante Tamandaré platform, which began operations in February, has already reached 200,000 barrels with just 4 producing wells, and we expect to peak production soon. In 2025, we have already connected more wells than in all of last year, totaling 48 wells, including 30 producing and 18 injecting wells compared to last year's 31 wells, 12 producers and 19 injectors. This reflects a CapEx that is highly focused on production. Now, moving to Slide 9. Petrobras investment is generating benefits for the company, its shareholders, and society. We are producing more, leading to increased operational cash flow, and we are becoming a key exporter of commodities, which helps Brazil's trade balance. Our efforts include not only investment in new projects but also improving efficiency, optimizing maintenance schedules, and effectively managing reservoirs, all contributing to our production growth. Our CEO noted earlier that production in July exceeded that of the previous quarter, with an increase of 380,000 barrels per day in just 7 months. With this trajectory and ongoing efforts, we anticipate average oil and gas production in 2025 to exceed the midpoint target by about 100,000 barrels per day. At a price of USD 70, this would result in an additional USD 2.5 billion in revenue. The current production plan carries less risk than when it was originally approved, meaning we can expect a higher output with the same level of confidence. Lastly, on Slide 10, we have discussed CapEx and production, and now let’s address dividends. I want to underscore the strength of our shareholders' remuneration policy, which ensures that dividends align with varying oil prices while maintaining the financial health of the company. As such, we will distribute 45% of our free cash flow from quarter 2, resulting in an approved distribution of BRL 8.7 billion, or BRL 0.67 per share, to be paid in two equal installments in November and December of this year. This wraps up my presentation, and I appreciate your attention. My fellow directors and I are here to answer any questions you may have. Now, I'll hand over the floor to Eduardo to continue with the Q&A session.

Operator, Operator

Thank you, Fernando. Thank you, Magda. Let's start the Q&A session. Medani, can you hear us? Please go ahead with your question.

Unidentified Analyst, Analyst

I will align CapEx results with what you mentioned yesterday regarding your work with natural gas distribution. As the CEO noted, Petrobras has been focusing its CapEx, particularly on upstream operations, to deliver results. We would like to know what advancements we can expect in the coming years and how these will be generated. Is this integrated into the business plan, including the strategy from the Board and the timeline for this operation?

Magda Maria de Regina Chambriard, President

Thank you for the question. We are a company that started already integrated. So Petrobras is 71 years old, and it started and it became what it is because it is a company that is integrated all over. So with that, we are looking at the possibility of reaching synergy. When we look at an increase in gas production, for example, we are looking at what it represents, for example, in terms of more LNG for the market. We import LNG, and we will deliver more. These margins related to our product, they also need to be captured. So what we did yesterday was to say the following. Well, here, we have the product that will have an increase in production. And if it's a good business for the company, if that's profitable and if this is properly attractive, why not have this additional synergy? So we have nothing in sight right now. No project to acquire LNG. There is nothing in Petrobras' portfolio, but we want to make sure that the doors were open for a possibility if the project is good and profitable and if the project attractiveness is in line with what Petrobras demands.

Fernando Sabbi Melgarejo, CFO

Well, maybe we can say, basically, Petrobras has already been working to be the best choice for our customers, and being the best choice for our customers means to have competitive prices and really have availability where there's demand for the products. So we have already been doing that to the extent that we have direct sales. We have been trying to have direct sales to big customers. So we are doing that already. We have tried to access terminals, channels and advancing in a way obviously, this is a way of distributing. We will get to the source. It's something that is natural. As our CEO has mentioned, we will have a significant production of diesel. We will have an increase in production of LNG. So for that, we need the market. So the market is the way to monetize and it's the most profitable thing for our company. This is where our efforts go to. And in this regard, we have been advancing in direct sales, in direct sales of LNG where we have infrastructure available. We are talking with big customers to supply LNG directly to them, capturing a margin. As our CEO said, I would say that this vision is very natural. So we have a driver here. I think it's on the table for discussion, and we will look at it. And obviously, finding this economic rationale, as our CEO mentioned, and we are going to look at it, and this will be considered for approval going through our Board. Well, just adding to that, from the point of view of governance, as we've already said, we will follow all the assessment by governance, availability of funds in order to make investments when needed. So we are really sure that any project will be implemented if it creates value for our shareholders and if there is discipline in the capital to be used in the project. So it has to do with the debt limit we have, and we have been strongly managing our debt, and we intend to reach the target we presented in our strategic plan for 2025, 2029.

Operator, Operator

Thank you, Fernando, Magda. Next question by Bruno Montanari, Morgan Stanley.

Bruno Montanari, Analyst

I'd like to congratulate the company for the significant increase in production in such a short period of time. It's very clear the ramp-up of the new platform in the pre-salt layer. I'd like to understand the risk factors that are leading to a more conservative curve and how they connect to better execution, as we try to advance a potential revitalization of Itaborai to achieve even greater production in the midterm.

Sylvia Maria Couto dos Anjos, Executive Director for Exploration and Production

We are experiencing a unique quarter with an increase in our production reduction. We spent less, produced more, and significantly cut costs. The production issue in this field pertains to growth, which is tied to the reservoir. We have a reservoir in the pre-salt layer whose effective response occurs only when the field is connected. There have been positive surprises, as expectations regarding increased production have been validated, with some wells being highly productive. We have four wells producing over 200,000 each. By the end of the year, we plan to boost production; however, it’s essential to note that we will face challenges with platforms since we have initiated work on major platforms and will conduct scheduled shutdowns. Thus, this increase will taper off. Regardless, we expect to meet our production target by year-end, aiming for the upper range of our goal, particularly focusing on Itaborai and Tupi, where we are optimizing with new units to enhance production.

Bruno Montanari, Analyst

Now adding to the question, you mentioned Tupi in particular, right?

Magda Maria de Regina Chambriard, President

As Sylvia mentioned, Tupi is undergoing at least two more projects aimed at revitalizing it, along with what we refer to as complementary Tupi. Our challenge is to elevate Tupi's production to 1 million barrels of oil per day.

Operator, Operator

Thank you, Sylvia. Thank you, Magda. Now Vicente of Bradesco.

Vicente Falanga Neto, Analyst

I'd like to discuss the GLP release or LPG release that you published last night. Any movements in this sector need to be approved in the November plant first, and only then can you make any transactions. You also mentioned in the release that you would have distribution partnerships according to provisional contract provisions. What kind of partnership is this? What are these contract provisions?

Magda Maria de Regina Chambriard, President

As Executive Director Claudio Schlosser noted, our primary challenge with increasing production is effectively bringing these products to market and expanding our market reach. We are ramping up production, which entails enhancing our refinery capabilities. Our aim is to boost diesel S10 output, which is very profitable, by at least an additional 200,000 barrels per day. Consequently, there is added pressure to broaden our markets. To address this, we are actively engaging with our largest consumers, particularly those in Brazil's agribusiness sector. We are also expanding our liquefied petroleum gas offerings, catering to both industrial and residential needs. This indicates our efforts to penetrate the natural gas market are taking shape, with a significant number of companies now involved in this initiative alongside Petrobras, leading to a 15% expansion of this gas market. We must ensure there are no barriers to progress in this domain. We are focused on B2B sales, selling to large consumers, and retail sales at gas stations, striving to keep our options open to select the best partners that bring the highest value in an efficient manner. Over time, Petrobras has decided to step back from certain markets, so we felt it was necessary not to close those opportunities permanently, but rather to keep the door open for optimal future use. This is what we accomplished yesterday.

Operator, Operator

Thank you, Magda. Now Gabriel Barra of Citi.

Gabriel Coelho Barra, Analyst

My point here is just one. One of the major topics that has been discussed with investors are, of course, your investment plan for next year. We have a perspective and taking the queue of the last commitment when you discussed efficiency gains and the difficulty we have today hiring new personnel in a tighter industry environment, we have a softer price movement for probes. But I think what I need to understand better is about what's going to happen, what can we expect next year when you look at our plans for the future and also considering your previous CapEx data. So how flexible are you for next year? And what solutions could you provide or improve for 2026? And what are NMAs and also LPG or other fuels? So how does that mean more CapEx efficiency for a market that is a little more uncertain in terms of oil price in the next few months or even the next few years?

Magda Maria de Regina Chambriard, President

I'll start answering and then I'll let Fernando, Sylvia, and Renata share their thoughts on the question as well. We have significant business opportunities in oil exploration and production, which is our main focus, particularly on highly profitable projects. You may have noticed the profitability levels of these projects. In the second quarter, we experienced decreased prices, but this was balanced by increased production levels. First, we assess whether these projects are profitable, and then we determine if their profitability meets our expectations. If so, we proceed. We will not pursue unprofitable ventures; instead, we will concentrate on projects that yield profits. For the first time in Petrobras' history, a project has shifted its phase. We have projects in our portfolio that are advancing through their phases, with levels ranging from zero to four, where level four indicates a fully mature project. Some projects anticipated moving from phase three to phase four, but upon reevaluation, we decided to move certain projects back to level two. This decision was aimed at optimizing these projects. We won’t abandon them, as they remain profitable, but we believe that with the current oil price, returning to the drawing board will help us enhance their optimization. I will now turn it over to Fernando and then Renata for more details.

Fernando Sabbi Melgarejo, CFO

Thank you, Gabriel, for your question. First, I should stress that the current scenario is more challenging, and that reflects in our business plan. And as we have this commitment to capital discipline, all our business plan structure needs to be adequate to reflect the needs for this new scenario. In other words, we'll be able to restructure all our CapEx that will then meet the needs of our investing capacity, considering our new production curve that we will deliver until potentially even above the margin, but within the margin or even in the upper range, the Brent is lower. So we need to offset that. And then the cash flow generation that is possible. So I believe the greatest goal, our greatest commitment is really to reduce costs for the company and also optimizing projects that our President mentioned. It's the first time we went back to Phase 1 to consider engineering aspects and then also productivity. So all these factors together, they are integrated into our business plan. The idea is for us to devise a business plan that shows all this capital discipline with adjusted debt adjusted to our size. We do not want to increase our debt for no reason, of course. Our target is still $65 billion. This will remain. So we want to create a portfolio and a business plan that is safe and secure and adapted to the current situation and scenario.

Renata Baruzzi, Executive Director for Engineering, Technology and Innovation

Gabriel, I think they said everything that had to be said, but I'd just like to add one more point. Whatever the value of our business plan in 2026, rest assured that we will realize, make it happen this year. In the first quarter of last year, it was at 30%. And this quarter, it is aligned to what we had planned. It was 30% below the expected level. So whatever the value, we will execute as planned.

Operator, Operator

Thank you, Magda, Fernando, Renata. Thank you. Now Lilyanna Yang of HSBC.

Lilyanna Yang, Analyst

Can you please tell us about how different the results are today as compared to what you promised in your strategic plan? Of course, it's better than expected. You probably at the top of the guidance. But again, can you please make comments about your CapEx, your $18.5 billion investment plan? So in summary, is it safe to say that today, there's a higher likelihood of this CapEx being higher this year? Are you feeling pressure from providers, suppliers? Can you expect Petrobras to put more money into Braskem and that might be a good consumer of your gas?

Magda Maria de Regina Chambriard, President

Lilyanna, thank you for your question. All contracts for our 2025 plan and part of 2026 have already been signed. So there's no possibility or expectation of exceeding our guidance. We will meet whatever was set in our guidance. Our commitment is assured. There are no surprises ahead for the Petrobras team.

Lilyanna Yang, Analyst

If you allow me to step outside of protocol and highlight some of the topics you've mentioned, you indicated that July's production number was 2,470,000 and there are new platforms being introduced this year. I want to confirm your earlier statement that production is still increasing. There are also scheduled shutdowns that may be impacting this. Could you provide further details on these points? Additionally, I have a question regarding the recent auction of the Amazonas blocks, specifically about your partnership with Exxon. Do you see any synergy with operations in Guyana and Suriname?

Sylvia Maria Couto dos Anjos, Executive Director for Exploration and Production

Regarding the ramp-up, we have observed a production increase in our reports. Efficiency has improved in linking the wells and the reservoir responded positively, resulting in a rapid production increase. However, this growth will be balanced out by other large platforms that are scheduled to start production. I can confirm that safety is a priority, and we aim for our platform to have a long lifespan while ensuring future operations. Scheduled shutdowns are necessary, and we are on track to meet our planned goals, actually in the upper range, which is about 4. We anticipate very positive results. It’s noteworthy that the pre-salt layer has exceeded our expectations in productivity, yielding excellent results and profits. Our oil column is as tall as the Pão de Açúcar Mountain, and the size of the volume is twice that of Guanabara Bay, and this will only be validated once we commence production. Regarding the auction, we successfully defined 10 blocks and now have 16 blocks in Amapá, awaiting environmental licensing to test our productivity. It's important to highlight that these blocks are very similar to those in Venezuela and Guyana, as well as comparable to what we have in the Campos basin. We are well acquainted with them. Additionally, in partnership with Exxon and Shell, we have over 30 partners, and collaborating with Exxon, a top operator, has yielded substantial results in Guyana, which is akin to the results seen in the Equatorial margin. Thus, they are the ideal partner for sharing risks and expertise.

Operator, Operator

Thank you, Sylvia. Monique Greco of Itau.

Monique Martins Greco Natal, Analyst

Congratulations on your impressive operating performance. Well done to the entire team. I have one question. The message regarding your CapEx and gas was very clear. We are aware that there might be potential developments on the horizon in the coming months, as President Magda Chambriard mentioned, such as movements in ethanol. The government will hold auctions for pre-salt areas that were not awarded this year. Can you clarify what we should expect regarding CapEx execution, in addition to the $18.5 billion, considering these upcoming developments, particularly in the non-awarded areas?

Magda Maria de Regina Chambriard, President

Monique, thank you for your question. Okay. Petrobras will always be present when we discuss any opportunity of auctions. The Brazilian territory is our home. In other words, when pre-salt areas are being offered, we will always be present at such auctions. This is really in our interest. However, irrespective of any other factor, this will only happen if it makes economic sense to us. No one is considering embarking on a wild adventure, of course. If the project is worth it, and if it is on our business plan, this is the direction we'll be taking. The same thing applies to ethanol. Our project portfolio includes investment in renewable fuels. In energy transition and also in biofuels, it also expects considerable effort, for instance, in electricity, including thermal power plants. So again, we will do it provided the project is profitable and attractive, provided the project meets the attractiveness and expectations of our company in terms of economic returns.

Operator, Operator

Thank you, Magda. Next question by Luiz Carvalho from BTG.

Luiz Felipe Carvalho, Analyst

I want to congratulate you on your production ramp-up; it's great to see it. However, I have a question regarding the initial estimates for this year. It was planned at $83 per barrel, but as Fernando mentioned, it's now around $67 or $68. This situation creates a gap in cash generation that falls short of the original expectations. Although the graph indicates a 5-year plan, this year’s cash generation is projected to be less than planned. You are maintaining the CapEx guidance for this year and next year. My question is about the flexibility of your investment plan given fluctuations in oil prices and the company’s debt limits, while also considering dividend payments. With the current lower oil prices and discussions around project profitability, at what oil price level might we see projects being postponed rather than cancelled due to reduced cash generation in the short term?

Fernando Sabbi Melgarejo, CFO

Thank you, Luiz. Well, let's talk a bit about this topic. I think that the first thing is that last year, we adjusted our debt level so that we could have a little bit more flexibility so that we could consider the scenario that occurred reduction in Brent prices and thus reduction in revenue. So still at the limit of our debt, we can still take some investments in the short term, meaning for this year we have this CapEx of $18.5 million. We have many contracts that have already been signed. So we have scheduled that, and this should happen. The flexibility will take place when we build the strategic plan for '26, 2030. There we have to reevaluate some projects. Actually, we will look again at all assumptions and include these assumptions on the projects and see which was feasible. Those who are not, they will be along the way or maybe they will be postponed or we will look for engineering alternatives that will lead to lower CapEx so that it's financially feasible. As our CEO said, we had one project and for the first time it went back so that we could rethink how our engineering would work and whether there would be more profitable alternatives because we understand that at the current price levels with this very volatile world scenario, we should have some flexibility for that. Well, dividends will continue at the same levels. There are no discussions going on in terms of changes regarding the ordinary. Now for the extraordinary with lower revenue, we would have a harder time paying extraordinary dividends, even though we would really like very much to have surplus cash in order to pay extraordinary dividends. But I think the probability for this year is pretty low.

Magda Maria de Regina Chambriard, President

I would like to add and then give the floor to Director Renata to further elaborate on that. But often, we are dealing not only with the engineering of the project, but how we contract projects. So when we look, for example, at this issue of contracting RNEST. So the mere change in the way we contract and publicizing the price and the dilution of the lots in a larger number of lots, this meant a saving of BRL 1 billion for our company. So we had a work for bidding, we changed how these packages would be contracted, and we diluted in a larger number of packages to have more competition. And with that, we could save BRL 1 billion. And we are multiplying this effort in other works. And I'll give the floor to Renata to further elaborate on that because after all, this is a major effort being carried out for her team.

Renata Baruzzi, Executive Director for Engineering, Technology and Innovation

We have been encouraged to think creatively since the CEO asked us to approach things differently. One of the innovative methods we are implementing is BOT, which allows us to adjust specifications during the bidding process due to its conceptual nature. This flexibility has previously faced limitations, but with this initiative and extensive discussions in the market, we have managed to reduce the weight of our CR platforms by 15% to 20%, resulting in significant cost savings. We plan to open these packages on September 30 and expect to see a notable decrease in prices. As our CEO mentioned, the strategy for each contract varies based on market conditions, demand, global circumstances, and geopolitical factors, ensuring we maximize the value of all our contracts.

Operator, Operator

Thank you, Magda. Thank you, Fernando, and Renata. So we are coming to the end of our webcast. We will close the Q&A session. If you have any additional questions, you can send it to our Investor Relations team, and we will answer them later. So I'd like to thank you all for having joined our webcast. And I'll give the floor to Fernando and to Magda for their final remarks. Fernando, Magda, the floor is yours.

Fernando Sabbi Melgarejo, CFO

Thank you all for joining us. Our team is available for any further questions you may have. We are here to help. In closing, I would like to express our happiness about demonstrating the impact of a well-planned capital expenditure, which has resulted in increased production. We believe this will have lasting positive effects moving forward, especially with new production equipment becoming operational. We anticipate that our production increase will surpass any decrease we may experience. Over the next five years, we are confident this growth will continue. Our production levels have improved, which helped offset the decline in Brent prices, and this was crucial for our earnings, allowing us to execute our strategic plan as intended. We are committed to complying with all distribution contracts without fail. Thank you once again, and we are here to discuss any issues you may want to address throughout this week.

Magda Maria de Regina Chambriard, President

Well, to close, I would like to thank you all for joining us in this webcast. And thank you all for the attention you give to Petrobras and Petrobras businesses. I agree with Fernando. And I would like to again say that we are really willing to meet everything that has been planned, offering our investors, be it government or private investors, making sure that Petrobras really want to have profitable projects, optimizing its projects portfolio and really making investments and projects that are as efficient as possible. We have wonderful actions from exploration and production, very attractive projects, including refining and sales. We are making money. We have 24% renewable energy in Asia, expanding our market. We are making money. We are expanding production of diesel with profitability, very high levels of profitability. So you can all be reassured that Petrobras is making an effort and that this Board is really making an effort so that we can achieve the best results possible. Thank you all very much. Our doors are open. And our Investor Relationship and Eduardo is available so that we can answer all the questions you may have. And so whatever questions you have, you just ask. Thank you all very much, and have a nice day.

Operator, Operator

Thank you, Magda. Thank you, Fernando. So the presentation will be made available at the Investor Relationship website. And soon, we will also make the audio available. Thank you all very much for having joined us and hope to see you in the next webcast.