Petrobras - Petroleo Brasileiro SA 6-K, filed Aug 5, 2021
Petrobras - Petroleo Brasileiro SA (PBR)
About this 6-K
Petrobras - Petroleo Brasileiro SA filed this 6-K on August 5, 2021.
UNITED STATES
SECURITIES AND EXCHANGECOMMISSION
Washington, D.C.20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month ofAugust, 2021
Commission File Number1-15106
PETRÓLEO BRASILEIROS.A. – PETROBRAS
(Exact name of registrant as specified in its charter)
Brazilian PetroleumCorporation – PETROBRAS
(Translation of Registrant's name into English)
Avenida Repúblicado Chile, 65 20031-912 – Rio de Janeiro, RJFederative Republic of Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No___X____
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Petrobras Financial Performance in 2Q21
In 2Q21, Petrobras reported solid operational and financial results. In the words of Petrobras CEO Joaquim Silva e Luna: "It is a pleasure to present the excellent operationaland financial results for the second quarter of 2021. We continue working hard, supported by absolutely technical decisions; evolvingand becoming stronger to invest better, supply an increasingly challenging market, and generate prosperity for our shareholders and forsociety.”
In view of the solid results presented, Petrobras Board of Directors approved, on August 4^th^, the anticipation of shareholder remuneration for 2021 in the amount of R$ 31.6 billion (US$ 6 billion), R$ 21 billion (US$ 4 billion) of which to be paid on August 25, 2021, and R$ 10.6 billion (US$ 2 billion) on December 15, 2021.
The year 2021 is still a transition year, in which Petrobras still allocates much of its cash generation to prepaying debt, with the goal of reaching gross debt of $60 billion.
CFO Rodrigo Araújo Alves commented: “Thesolid results achieved this quarter, especially the operating cash flow and free cash flow, result from our resilience, focus on the bestassets and our ability to adapt. I also highlight the strong deleveraging, the achievements with the portfolio management process and,last but not least, the substantial dividend payment in recognition to our shareholders and an important contribution to the Braziliansociety. We will work to make this payout more consistent over time.”
Main highlights of 2Q21:
| · | Adjusted EBITDA of US$ 11.8 billion, 32% higher than the previous quarter. |
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| · | Net income positively impacted by the effect of the appreciation of the Real<br>on debt. |
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| · | Significant operating cash flow and free Cash Flow, totaling US$ 10.8 billion<br>and US$ 9.3 billion, respectively. |
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| · | Cash inflow from asset sales of US$ 2.8 billion until 08/03/2021. |
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| · | Reduction of US$ 27.5 billion in gross debt in the annual comparison and US$<br>7.3 billion in the quarterly comparison, reaching US$ 63.7 billion. |
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| · | Net Debt / Adjusted EBITDA reached 1.49x on June 30, 2021, the best result since<br>3Q11, when leases were not yet accounted for as debt. |
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Disclaimer
This report may contain forward-looking statements. Such forward-looking statements only reflect expectations of the Company's managers regarding future economic conditions, as well as the Company's performance, financial performance and results, among others. The terms "anticipates", "believes", "expects", "predicts", "intends", "plans", "projects", "objective", "should", and similar terms, which evidently involve risks and uncertainties that may or may not be anticipated by the Company and therefore are not guarantees of future results of the Company's operations that may differ from current expectations. The readers should not rely exclusively on any forward-looking statement contained herein. The Company does not undertake any responsibility to update the presentations and forecasts in the light of new information or its future developments, and the figures reported for 2Q21 onwards are estimates or targets. These indicators do not have standardized meanings and may not be comparable to indicators with a similar description used by others. We provide these indicators because we use them as measures of company performance; they should not be considered in isolation or as a substitute for other financial metrics that have been disclosed in accordance with BR GAAP or IFRS. See definitions of Free Cash Flow, Adjusted EBITDA and Net Indebtedness in the Glossary and their reconciliations in the Liquidity and Capital Resources sections, Reconciliation of Adjusted EBITDA and Net Indebtedness. Consolidated accounting information audited by independent auditors in accordance with international accounting standards (IFRS).
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Main Items
Table 1 – Main items
| Variation (%) | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Sales revenues | 20,982 | 15,698 | 9,481 | 36,680 | 26,624 | 33.7 | 121.3 | 37.8 |
| Gross profit | 10,824 | 8,007 | 3,417 | 18,831 | 10,681 | 35.2 | 216.8 | 76.3 |
| Operating expenses | (1,929) | (2,032) | (1,416) | (3,961) | (17,107) | (5.1) | 36.2 | (76.8) |
| Consolidated net income (loss) attributable to the shareholders of Petrobras | 8,121 | 180 | (417) | 8,301 | (10,132) | 4411.7 | − | − |
| Recurring consolidated net income (loss) attributable to the shareholders of Petrobras * | 7,717 | 231 | (2,536) | 7,948 | (3,268) | 3240.7 | − | − |
| Net cash provided by operating activities | 10,823 | 7,244 | 5,457 | 18,067 | 13,234 | 49.4 | 98.3 | 36.5 |
| Free cash flow | 9,329 | 5,592 | 3,012 | 14,921 | 8,923 | 66.8 | 209.7 | 67.2 |
| Adjusted EBITDA | 11,750 | 8,906 | 4,785 | 20,656 | 13,366 | 31.9 | 145.6 | 54.5 |
| Recurring adjusted EBITDA * | 11,394 | 8,694 | 3,375 | 20,088 | 11,825 | 31.1 | 237.6 | 69.9 |
| Gross debt (US$ million) | 63,685 | 70,966 | 91,227 | 63,685 | 91,227 | (10.3) | (30.2) | (30.2) |
| Net debt (US$ million) | 53,262 | 58,424 | 71,222 | 53,262 | 71,222 | (8.8) | (25.2) | (25.2) |
| Net debt/LTM Adjusted EBITDA ratio | 1.49 | 2.03 | 2.34 | 1.49 | 2.34 | (26.6) | (36.3) | (36.3) |
| Average commercial selling rate for U.S. dollar | 5.30 | 5.47 | 5.39 | 5.38 | 4.92 | (3.1) | (1.7) | 9.3 |
| Brent crude (US$/bbl) | 68.83 | 60.90 | 29.20 | 64.86 | 39.73 | 13.0 | 135.7 | 63.3 |
| Domestic basic oil by-products price (US$/bbl) | 76.05 | 63.82 | 36.79 | 70.17 | 51.46 | 19.2 | 106.7 | 36.4 |
| TRI (total recordable injuries per million men-hour frequency rate) | - | - | - | 0.64 | 0.67 | - | - | (4.5) |
| ^*^ | See reconciliation of Recurring net income and Adjusted EBITDA in the Special Items section. | |||||||
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Consolidated Results
Net Revenues
Table 2 – Net revenues by products
| Variation (%) | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Diesel | 6,069 | 4,578 | 2,513 | 10,647 | 6,599 | 32.6 | 141.5 | 61.3 |
| Gasoline | 2,743 | 2,022 | 914 | 4,765 | 2,813 | 35.7 | 200.1 | 69.4 |
| Liquefied petroleum gas (LPG) | 1,120 | 916 | 705 | 2,036 | 1,607 | 22.3 | 58.9 | 26.7 |
| Jet fuel | 401 | 426 | 76 | 827 | 926 | (5.9) | 427.6 | (10.7) |
| Naphtha | 362 | 331 | 258 | 693 | 930 | 9.4 | 40.3 | (25.5) |
| Fuel oil (including bunker fuel) | 388 | 335 | 122 | 723 | 388 | 15.8 | 218.0 | 86.3 |
| Other oil by-products | 1,005 | 878 | 501 | 1,883 | 1,193 | 14.5 | 100.6 | 57.8 |
| Subtotal Oil By-Products | 12,088 | 9,486 | 5,089 | 21,574 | 14,456 | 27.4 | 137.5 | 49.2 |
| Natural gas | 1,333 | 1,037 | 729 | 2,370 | 1,940 | 28.5 | 82.9 | 22.2 |
| Renewables and nitrogen products | 9 | 13 | 6 | 22 | 32 | (30.8) | 50.0 | (31.3) |
| Revenues from non-exercised rights | 94 | 67 | 143 | 161 | 234 | 40.3 | (34.3) | (31.2) |
| Electricity | 591 | 543 | 80 | 1,134 | 372 | 8.8 | 638.8 | 204.8 |
| Services, agency and others | 170 | 214 | 227 | 384 | 386 | (20.6) | (25.1) | (0.5) |
| Total domestic market | 14,285 | 11,360 | 6,274 | 25,645 | 17,420 | 25.7 | 127.7 | 47.2 |
| Exports | 6,359 | 4,137 | 2,799 | 10,496 | 8,419 | 53.7 | 127.2 | 24.7 |
| Crude oil | 4,711 | 2,801 | 1,971 | 7,512 | 6,306 | 68.2 | 139.0 | 19.1 |
| Fuel oil (including bunker fuel) | 1,254 | 1,201 | 622 | 2,455 | 1,671 | 4.4 | 101.6 | 46.9 |
| Other oil by-products and other products | 394 | 135 | 206 | 529 | 442 | 191.9 | 91.3 | 19.7 |
| Sales abroad | 338 | 201 | 408 | 539 | 785 | 68.2 | (17.2) | (31.3) |
| Total foreign market | 6,697 | 4,338 | 3,207 | 11,035 | 9,204 | 54.4 | 108.8 | 19.9 |
| Total | 20,982 | 15,698 | 9,481 | 36,680 | 26,624 | 33.7 | 121.3 | 37.8 |
Net revenue in 2Q21 was 33.7% higher than in 1Q21, reaching US$ 21 billion, mainly due to the 13% appreciation in Brent prices and the increase in oil product sales volume in the domestic market and in exports.
In 2Q21, exports revenues were US$ 6.4 billion, 53.7% higher than in 1Q21, reflecting the increase in Brent prices and the higher export volume, as a result of the higher realization of inventories that were in progress in 1Q21 and the lower processed feedstock at the refineries due to scheduled stoppages for the quarter.
Oil products revenue in the domestic market reached US$ 12.1 billion, an increase of 27.4% compared to 1Q21, reflecting higher prices and the 5.5% growth in sales volume, mainly in diesel and gasoline.
Natural gas revenue was US$ 1.3 billion (28.5% higher than 1Q21) due to higher demand in the non-thermal market and the quarterly update of sales contracts.
In terms of revenue breakdown in the domestic market, diesel and gasoline continued to be the main products, accounting, together, for 73% of the domestic oil products sales revenues in 2Q21.
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We are continually looking for the best opportunities to place our oils and our efforts to build a robust and diversified customer base delivered results in 2Q21. In addition to China, the best destinations for the sales of Brazilian oil in this period were Europe, Latin America, the United States and India. Additionally, new refiners were added to the Búzios and Atapu portfolio. In 2Q21, we had the following distribution of export destinations:
Table 3 – Crude oil exports volume
| Country | 2Q21 | 1Q21 | 2Q20 |
|---|---|---|---|
| China | 45% | 56% | 87% |
| India | 9% | 7% | 0% |
| Portugal | 8% | 7% | 1% |
| United States | 9% | 3% | 0% |
| Netherlands | 8% | 1% | 1% |
| Chile | 3% | 5% | 4% |
| Peru | 4% | 3% | 1% |
| Others | 14% | 18% | 6% |
Table 4 – Oil products exports volume
| Country | 2Q21 | 1Q21 | 2Q20 |
|---|---|---|---|
| Singapore | 55% | 75% | 49% |
| United States | 18% | 15% | 35% |
| Bahamas | 12% | 0% | 3% |
| Netherlands | 4% | 2% | 7% |
| Others | 11% | 8% | 6% |
Cost of Goods Sold
Table 5 – Cost of goods sold
| Variation (%) | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Acquisitions | (3,597) | (2,337) | (1,167) | (5,934) | (3,332) | 53.9 | 208.2 | 78.1 |
| Crude oil imports | (1,620) | (951) | (693) | (2,571) | (1,949) | 70.3 | 133.8 | 31.9 |
| Oil by-product imports | (1,304) | (663) | (329) | (1,967) | (848) | 96.7 | 296.4 | 132.0 |
| Natural gas imports | (673) | (723) | (145) | (1,396) | (535) | (6.9) | 364.1 | 160.9 |
| Production | (6,145) | (4,976) | (4,494) | (11,121) | (11,774) | 23.5 | 36.7 | (5.5) |
| Crude oil | (4,941) | (3,936) | (3,478) | (8,877) | (9,357) | 25.5 | 42.1 | (5.1) |
| Production taxes | (2,499) | (1,624) | (686) | (4,123) | (2,783) | 53.9 | 264.3 | 48.1 |
| Other costs | (2,442) | (2,312) | (2,792) | (4,754) | (6,574) | 5.6 | (12.5) | (27.7) |
| Oil by-products | (706) | (596) | (434) | (1,302) | (1,135) | 18.5 | 62.7 | 14.7 |
| Natural gas | (498) | (444) | (582) | (942) | (1,282) | 12.2 | (14.4) | (26.5) |
| Production taxes | (153) | (121) | (87) | (274) | (199) | 26.4 | 75.9 | 37.7 |
| Other costs | (345) | (323) | (495) | (668) | (1,083) | 6.8 | (30.3) | (38.3) |
| Services rendered, electricity, renewables, nitrogen products, operations abroad and others | (416) | (378) | (403) | (794) | (837) | 10.1 | 3.2 | (5.1) |
| Total | (10,158) | (7,691) | (6,064) | (17,849) | (15,943) | 32.1 | 67.5 | 12.0 |
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In 2Q21, the cost of goods sold increased 32.1% when compared to 1Q21, mainly due to higher sales volume and the higher share of imported oil and oil products in the sales mix. In addition, the appreciation in Brent prices contributed to higher spending on production taxes and imports.
Operating Expenses
Table 6 – Operating expenses
| Variation (%) | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Selling, General and Administrative Expenses | (1,346) | (1,221) | (1,537) | (2,567) | (3,283) | 10.2 | (12.4) | (21.8) |
| Selling expenses | (1,086) | (948) | (1,246) | (2,034) | (2,581) | 14.6 | (12.8) | (21.2) |
| Materials, third-party services, freight, rent and other related costs | (925) | (784) | (1,057) | (1,709) | (2,212) | 18.0 | (12.5) | (22.7) |
| Depreciation, depletion and amortization | (140) | (149) | (128) | (289) | (251) | (6.0) | 9.4 | 15.1 |
| Allowance for expected credit losses | 1 | 5 | (21) | 6 | (30) | (80.0) | − | − |
| Employee compensation | (22) | (20) | (40) | (42) | (88) | 10.0 | (45.0) | (52.3) |
| General and administrative expenses | (260) | (273) | (291) | (533) | (702) | (4.8) | (10.7) | (24.1) |
| Employee compensation | (191) | (185) | (226) | (376) | (514) | 3.2 | (15.5) | (26.8) |
| Materials, third-party services, freight, rent and other related costs | (48) | (64) | (42) | (112) | (136) | (25.0) | 14.3 | (17.6) |
| Depreciation, depletion and amortization | (21) | (24) | (23) | (45) | (52) | (12.5) | (8.7) | (13.5) |
| Exploration costs | (191) | (214) | (65) | (405) | (169) | (10.7) | 193.8 | 139.6 |
| Research and development expenses | (147) | (117) | (68) | (264) | (163) | 25.6 | 116.2 | 62.0 |
| Other taxes | (46) | (106) | (245) | (152) | (363) | (56.6) | (81.2) | (58.1) |
| Impairment of assets | (90) | (90) | − | (180) | (13,371) | − | − | (98.7) |
| Other income and expenses, net | (109) | (284) | 499 | (393) | 242 | (61.6) | − | − |
| Total | (1,929) | (2,032) | (1,416) | (3,961) | (17,107) | (5.1) | 36.2 | (76.8) |
Selling expenses were 14.6% higher than in 1Q21, due to the increase in logistics expenses linked to exports, due to higher export volumes, especially oil.
General and administrative expenses decreased 4.8% due to higher recovery of expenses in partnerships and lower expenses with outsourced services.
Other expenses reached US$ 109 million in 2Q21, 61.6% lower than in 1Q21, due to the complementary gain with the exclusion of ICMS from the PIS/COFINS calculation base of US$ 471 million and higher result from partnership operations in E&P, partially offset by losses with contingencies.
Adjusted EBITDA
Adjusted EBITDA for 2Q21 reached $11.8 billion, $2.8 billion higher than 1Q21. This result reflects: (a) the appreciation of Brent prices, (b) higher product margins, (c) increased domestic sales volume and exports, and (d) complementary gain from the exclusion of ICMS from the PIS/COFINS tax base.
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Financial results
Table 7 – Financial results
| Variation (%) | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Finance income | 206 | 122 | 108 | 328 | 282 | 68.9 | 90.7 | 16.3 |
| Income from investments and marketable securities (Government Bonds) | 45 | 29 | 52 | 74 | 119 | 55.2 | (13.5) | (37.8) |
| Other income, net | 161 | 93 | 56 | 254 | 163 | 73.1 | 187.5 | 55.8 |
| Finance expenses | (1,871) | (1,208) | (1,134) | (3,079) | (2,756) | 54.9 | 65.0 | 11.7 |
| Interest on finance debt | (904) | (752) | (846) | (1,656) | (1,854) | 20.2 | 6.9 | (10.7) |
| Unwinding of discount on lease liabilities | (297) | (295) | (310) | (592) | (652) | 0.7 | (4.2) | (9.2) |
| Discount and premium on repurchase of debt securities | (666) | (183) | (2) | (849) | (262) | 263.9 | 33200.0 | 224.0 |
| Capitalized borrowing costs | 266 | 212 | 215 | 478 | 494 | 25.5 | 23.7 | (3.2) |
| Unwinding of discount on the provision for decommissioning costs | (195) | (189) | (160) | (384) | (352) | 3.2 | 21.9 | 9.1 |
| Other finance expenses and income, net | (75) | (1) | (31) | (76) | (130) | 7400.0 | 141.9 | (41.5) |
| Foreign exchange gains (losses) and indexation charges | 3,684 | (4,553) | (1,231) | (869) | (4,334) | − | − | (79.9) |
| Foreign exchange gains (losses) | 4,443 | (3,442) | (2,009) | 1,001 | (3,776) | − | − | − |
| Reclassification of hedge accounting to the Statement of Income | (1,194) | (1,113) | (1,043) | (2,307) | (2,443) | 7.3 | 14.5 | (5.6) |
| Recoverable taxes inflation indexation income (*) | 461 | 13 | 1,793 | 474 | 1,842 | 3446.2 | (74.3) | (74.3) |
| Other foreign exchange gains (losses) and indexation charges, net | (26) | (11) | 28 | (37) | 43 | 136.4 | − | − |
| Total | 2,019 | (5,639) | (2,257) | (3,620) | (6,808) | − | − | (46.8) |
| (*) Includes PIS and Cofins inflation indexation income - exclusion of ICMS (VAT tax) from the basis of calculation. |
The financial result in 2Q21 was positive by US$ 2.0 billion compared to the expense of US$ 5.6 billion in 1Q21. This result reflects the FX gains, with no cash effect, related to the 12.2% appreciation of the Brazilian real against the dollar and the monetary adjustment related to the complementary gain from the exclusion of ICMS from the PIS/COFINS tax base.
In 2Q21 liability management resulted in higher repurchase expenses with goodwill of US$ 0.5 billion and transaction costs of US$ 0.3 billion reflecting our improved credit risk and higher repurchase volume.
We ended 2Q21 with a FX exposure of US$ 33.6 billion compared to US$ 34.8 billion in 1Q21. We highlight the lower passive exposure in dollars.
Net income (loss) attributable to Petrobras’shareholders
We recorded net income of US$ 8.1 billion in 2Q21, US$ 7.9 billion higher than in 1Q21, reflecting higher margins on oil products, higher sales volumes of oil and oil products in the domestic market and from exports, FX gains due to the appreciation of the real against the dollar, and gains from equity in investments, mainly due to the reversal of impairment at Petrobras Distribuidora (BR Distribuidora), reflecting the pricing of the follow-on.
Recurring net income attributable to Petrobras’shareholders and recurring adjusted EBITDA
The 2Q21 result was positively impacted by non-recurring items. Excluding such items, mainly the impairment reversal of US$ 335 million, especially from BR Distribuidora, the complementary gain from the ICMS exclusion of US$ 905 million and expenses with goodwill on the repurchase of bonds of US$ 666 million, we would have recorded a profit of US$ 7.7 billion in 2Q21. Recurring EBITDA would be US$ 11.4 billion, 31% higher than in 1Q21.
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Special Items
Table 8 – Special items
| Variation (%) | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Net income | 8,156 | 200 | (436) | 8,356 | (10,412) | 3978.0 | − | − |
| Nonrecurring items | 615 | (43) | 3,198 | 572 | (10,447) | − | (80.8) | − |
| Nonrecurring items that do not affect Adjusted EBITDA | 259 | (255) | 1,788 | 4 | (11,988) | − | (85.5) | − |
| Impairment of assets and investments | 335 | (124) | 1 | 211 | (13,422) | − | 33400.0 | − |
| Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments | − | (34) | − | (34) | − | − | − | − |
| Gains and losses on disposal / write-offs of assets | 57 | 49 | 9 | 106 | (85) | 16.3 | 533.3 | − |
| Agreements signed for the electricity sector | 78 | − | − | 78 | − | − | − | − |
| Pis and Cofins inflation indexation charges - exclusion of ICMS (VAT tax) from the basis of calculation | 455 | − | 1,780 | 455 | 1,780 | − | (74.4) | (74.4) |
| Discount and premium on repurchase of debt securities | (666) | (183) | (2) | (849) | (261) | 263.9 | 33200.0 | 225.3 |
| Financial updating on state amnesty programs | − | 37 | − | 37 | − | − | − | − |
| Other nonrecurring items | 356 | 212 | 1,410 | 568 | 1,541 | 67.9 | (74.8) | (63.1) |
| PDV | 4 | 3 | (903) | 7 | (944) | 33.3 | − | − |
| Amounts recovered from Lava Jato investigation | 55 | 141 | 64 | 196 | 85 | (61.0) | (14.1) | 130.6 |
| Gains / (losses) on decommissioning of returned/abandoned areas | − | (6) | (2) | (6) | (2) | − | − | 200.0 |
| State amnesty programs | − | 117 | − | 117 | − | − | − | − |
| Gains / (losses) related to legal proceedings | (144) | − | 35 | (144) | 163 | − | − | − |
| Equalization of expenses - Production Individualization Agreements | (9) | (43) | 822 | (52) | 845 | (79.1) | − | − |
| PIS and COFINS over inflation indexation charges - exclusion of ICMS (VAT tax) from the basis of calculation | (21) | − | (83) | (21) | (83) | − | (74.7) | (74.7) |
| PIS and COFINS recovered - exclusion of ICMS (VAT tax) from the basis of calculation | 471 | − | 1,477 | 471 | 1,477 | − | (68.1) | (68.1) |
| Net effect of nonrecurring items on IR / CSLL | (212) | (8) | (1,078) | (220) | 3,586 | 2550.0 | (80.3) | − |
| Recurring net income | 7,753 | 251 | (2,557) | 8,004 | (3,549) | 2988.8 | − | − |
| Shareholders of Petrobras | 7,717 | 231 | (2,536) | 7,948 | (3,268) | 3240.7 | − | − |
| Non-controlling interests | 36 | 20 | (21) | 56 | (281) | 80.0 | − | − |
| Adjusted EBITDA | 11,750 | 8,906 | 4,785 | 20,656 | 13,366 | 31.9 | 145.6 | 54.5 |
| Nonrecurring items | 356 | 212 | 1,410 | 568 | 1,541 | 67.9 | (74.8) | (63.1) |
| Recurring Adjusted EBITDA | 11,394 | 8,694 | 3,375 | 20,088 | 11,825 | 31.1 | 237.6 | 69.9 |
In management's opinion, the special items presented above, although related to the Company's business, were highlighted as complementary information for a better understanding and evaluation of the result. Such items do not necessarily occur in all periods and are disclosed when relevant.
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Capex
Investment amounts (Capex) encompass acquisition of property, plant and equipment, including costs with leasing, intangible assets, investments in subsidiaries and affiliates, costs with geology and geophysics and pre-operating costs.
Table 9 – Capex
| Variation % | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Exploration and Production | 1,948 | 1,626 | 1,609 | 3,574 | 3,749 | 19.8 | 21.0 | (4.7) |
| Refining, Transportation and Marketing | 254 | 193 | 239 | 447 | 410 | 31.6 | 6.3 | 9.0 |
| Gas and Power | 94 | 63 | 53 | 157 | 138 | 49.2 | 77.4 | 13.8 |
| Others | 68 | 32 | 35 | 100 | 73 | 112.5 | 94.3 | 37.0 |
| Total | 2,364 | 1,913 | 1,937 | 4,278 | 4,370 | 23.6 | 22.0 | (2.1) |
In 2Q21, investments amounted US$ 2.4 billion, 23.6% above 1Q21, being more than 54% of capex related to growth capex.
Growth investments are those with the main objective of increasing the capacity of existing assets, implementing new production systems up to the full ramp up, disposal and storage assets, increasing efficiency or profitability of the asset and implementing essential infrastructure to enable other growth projects. It includes acquisitions of assets / companies and remaining investments in systems that started in 2019, exploratory investments, and investments in R&D.
Sustaining investments, on the other hand, have the main objective of maintaining the operation of existing assets, they do not aim at increasing the capacity of the facilities. Includes investments in safety and reliability of installations, substitute well projects, complementary development, remaining investments in systems that entered before 2019, scheduled stoppages and revitalizations (without new systems), 4D seismic, SMS projects, line changes, infrastructure operational and ICT.
In 2Q21, investments in the Exploration and Production segment totaled US$ 1.9 billion, with approximately 60% related to growth. Investments were mainly concentrated in: (i) development of production in ultra-deep waters of the Santos Basin pre-salt (US$ 0.9 billion); (ii) exploratory investments (US$ 0.2 billion) and (iii) development of new projects in deep waters (US$ 0.1 billion).
In the Refining, Transportation and Marketing segment, investments totaled US$ 254 million in 2Q21, approximately 27% of which were growth investments. Investments in the Gas and Power segment totaled US$ 94 million in 2Q21, of which approximately 58% are investments in growth.
The following table presents the main information on the new, already contracted, oil and gas production systems.
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Table 10 – Main projects
| Unit | Start-up | FPSO capacity (bbl/day) | CAPEX Petrobras spent<br><br> <br>US$ bi | Total CAPEX Petrobras US$ bi² | Petrobras Share | Status |
|---|---|---|---|---|---|---|
| Sépia 1<br><br> <br>FPSO Carioca (Chartered unit) | 2021 | 180,000 | 1.07 | 2.2 | 97.6% | Project in phase of execution with production system under construction. 11 wells drilled and 11 completed |
| Mero 1<br><br> <br>FPSO Guanabara (Chartered unit) | 2022 | 180,000 | 0.33 | 1.0 | 40.0% | Project in phase of execution with production system under construction. 13 wells drilled and 9 completed |
| Búzios 5<br><br> <br>FPSO Alm. Barroso (Chartered unit) | 2022 | 150,000 | 0.57 | 2,4¹ | 100%¹ | Project in phase of execution with production system under construction. 7 wells drilled and 3 completed. |
| Marlim 1<br><br> <br>FPSO Anita Garibaldi (Chartered unit) | 2023 | 80,000 | 0.10 | 2.1 | 100% | Project in phase of execution with production system under construction. 1 well drilled and 1 completed³ |
| Marlim 2<br><br> <br>FPSO Anna Nery (Chartered unit) | 2023 | 70,000 | 0.03 | 1.6 | 100% | Project in phase of execution with production system under construction.³ |
| Mero 2<br><br> <br>FPSO Sepetiba (Chartered unit) | 2023 | 180,000 | 0.03 | 0.8 | 40% | Project in phase of execution with production system under construction. 5 wells drilled and 2 completed |
| Itapu<br><br> <br>P-71 (Owned unit) | 2023 | 150,000 | 1.70 | 3.4 | 100% | Project in phase of execution with production system under construction. 3 wells drilled and 1 completed |
| Mero 3<br><br> <br>FPSO Marechal Duque de Caxias (Chartered unit) | 2024 | 180,000 | 0.02 | 0.8 | 40% | Project in phase of execution with production system under construction. 3 wells drilled and 1 completed |
| Búzios 6th module<br><br> <br>FPSO Almirante Tamandaré (Chartered unit) | 2024 | 225,000 | 0.02 | 2,2¹ | 100%¹ | Project in phase of execution, letter of intent signed for charter of the platform in February 2021. 2 wells drilled |
| Búzios 7th module<br><br> <br>P-78 (Owned unit) | 2025 | 180,000 | 0.04 | 4,6¹ | 100%¹ | Project in phase of execution. FPSO contract signed in May 2021 |
| Búzios 8th module<br><br> <br>P-79 (Owned unit) | 2025 | 180,000 | 0.03 | 4,4¹ | 100%¹ | Project in phase of execution. FPSO contract signed in June 2021.<br><br> <br>3 well drilled and 1 completed |
| Mero 4<br><br> <br>FPSO Alexandre de Gusmão (Chartered unit) | 2025 | 180,000 | 0.02 | 0.9 | 40% | Project in phase of execution, letter of intent signed for the platform charter<br> in Aug/2021.<br><br> <br>4 well drilled and 2 completed |
| ¹ Will change after the co-participation agreement.<br><br> <br>² Total CAPEX with the Strategic Plan 21-25 assumptions and Petrobras WI.<br> Chartered units leases are not included.<br><br> <br>³ Refers to new wells. It is scope of the project to relocate some wells<br> of the decommissioning units |
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Portfolio Management
In 2021, up to August 3^rd^, we concluded the sale of: Frade and Do-Re-Mi fields, the wind power plants Mangue Seco 1, Mangue Seco 2, Mangue Seco 3 and Mangue Seco 4, Petrobras Uruguay Distribución (PUDSA), the remaining 10% stake in NTS and BSBios company.
In addition to the above-mentioned transactions, on July 5^th^, we concluded the follow-on of 37.5% of Petrobras Distribuidora (BR Distribuidora) shares, which corresponded to our entire interest in the company. The transaction amounted to US$ 2.2 billion and is aligned with our strategic positioning of exiting the distribution business.
Cash inflows from those transactions, coupled with upfront cash inflows from the signing of Peroá, Miranga and Alagoas clusters and Papa-terra and Rabo Branco fields divestments, totaled US$ 2.8 billion up to August 3^rd^.
Table 11 – Amounts received up to August3^rd^, 2021 and respective transaction value
| Assets | Amounts received<br><br> <br>(US$ million) | Transaction amount ^1^<br><br> <br>(US$ million) |
|---|---|---|
| Campo de Frade | 36 | 100^3^ |
| Campo Dó-Ré-Mi | - | 0.04^4^ |
| Polo Rio Ventura | 33.9 | 94.2^4^ |
| Mangue Seco 1 | 7.8^2^ | 8^2^ |
| Mangue Seco 2 | 6.5^2^ | 6^2^ |
| Mangue Seco 3 e 4 | 18^2^ | 16.8^2^ |
| PUDSA | 62 | 61.7^4^ |
| BSBios | 47 | 60^4^ |
| NTS (10%) | 285^2^ | 333^2^ |
| Petrobras Distribuidora | 2,238^2^ | 2,238^2^ |
| Polo Peroá | 5 | 55 |
| Polo Miranga | 11 | 220.1 |
| Polo Alagoas | 60 | 300 |
| Campo de Papa-Terra | 6 | 105.6 |
| Campo de Rabo Branco | 1.5 | 1.5 |
| Phil RLAM | - | 1,650 |
| UTE Polo Camaçari | - | 17.6² |
| Gaspetro | - | 394² |
| Termelétrica Potiguar (TEP) | - | 16² |
| Cia Energética Manauara | - | 15.6² |
| Total | 2,817.7 | 5,693.1 |
¹ Amounts agreed in the signing date, subject to adjustments upon closing
² Original amounts in BRL, converted to US $ at the PTAX rate on the day of the SPA signing or of the cash inflow.
³Transaction signed in 2019
^4^Transaction signed in 2020
Petrobras reinforces the importance of portfolio management focusing on world-class assets in deep and ultra-deep waters, in order to improve our capital allocation, enable debt and capital cost reduction, and the consequent increase in value generation to the company and to our shareholders.
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Liquidity and Capital Resources**^[1]^**
Table 12 – Liquidity and capital resources
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 |
|---|---|---|---|---|---|
| Adjusted cash and cash equivalents at the beginning of period | 12,543 | 12,384 | 16,112 | 12,384 | 8,265 |
| Government bonds and time deposits with maturities of more than 3 months at the beginning of period * | (579) | (659) | (644) | (659) | (888) |
| Cash and cash equivalents at the beginning of period | 11,964 | 11,725 | 15,468 | 11,725 | 7,377 |
| Net cash provided by (used in) operating activities | 10,823 | 7,244 | 5,457 | 18,067 | 13,234 |
| Net cash provided by (used in) investing activities | (994) | (1,359) | (2,147) | (2,353) | (3,628) |
| Acquisition of PP&E and intangibles assets | (1,485) | (1,650) | (1,502) | (3,135) | (3,371) |
| Investments in investees | (9) | (2) | (943) | (11) | (940) |
| Proceeds from disposal of assets - Divestment | 301 | 201 | 153 | 502 | 434 |
| Dividends received | 133 | 67 | 60 | 200 | 104 |
| Divestment (Investment) in marketable securities | 66 | 25 | 85 | 91 | 145 |
| (=) Net cash provided by operating and investing activities | 9,829 | 5,885 | 3,310 | 15,714 | 9,606 |
| Net cash provided by (used) in financing activities | (12,343) | (5,574) | 699 | (17,917) | 2,831 |
| Net financings | (9,029) | (4,088) | 2,175 | (13,117) | 6,877 |
| Proceeds from financing | 1,614 | 54 | 5,623 | 1,668 | 15,796 |
| Repayments | (10,643) | (4,142) | (3,448) | (14,785) | (8,919) |
| Repayment of lease liability | (1,432) | (1,467) | (1,448) | (2,899) | (2,971) |
| Dividends paid to shareholders of Petrobras | (1,848) | − | − | (1,848) | (1,020) |
| Dividends paid to non-controlling interest | (39) | − | (22) | (39) | (30) |
| Investments by non-controlling interest | 5 | (19) | (6) | (14) | (25) |
| Effect of exchange rate changes on cash and cash equivalents | 372 | (72) | (7) | 300 | (344) |
| Cash and cash equivalents at the end of period | 9,822 | 11,964 | 19,470 | 9,822 | 19,470 |
| Government bonds and time deposits with maturities of more than 3 months at the end of period * | 602 | 579 | 539 | 602 | 539 |
| Adjusted cash and cash equivalents at the end of period | 10,424 | 12,543 | 20,009 | 10,424 | 20,009 |
| Reconciliation of Free Cash Flow | |||||
| Net cash provided by (used in) operating activities | 10,823 | 7,244 | 5,457 | 18,067 | 13,234 |
| Acquisition of PP&E and intangibles assets | (1,485) | (1,650) | (1,502) | (3,135) | (3,371) |
| Investments in investees ** | (9) | (2) | (943) | (11) | (940) |
| Free cash flow | 9,329 | 5,592 | 3,012 | 14,921 | 8,923 |
As of June 30^th^, 2021, cash and cash equivalents were US$ 9.8 billion and adjusted cash and cash equivalents totaled US$ 10.4 billion.
In 2Q21, the increase in sales and exports volumes, besides the 13% increase in Brent prices, resulted in substantial operating cash flow, which was 49% higher than 1Q21, reaching US$ 10.8 billion. Free cash flow was US$ 9.3 billion.
This level of cash generation, alongside cash inflows from divestments of US$ 301 million and cash and cash equivalents, were used: (a) to prepay debt and amortize principal and interest due in the period (US$ 10.6 billion), (b) to amortize lease liabilities (US$ 1.4 billion), reducing gross debt to US$ 63.7 billion and (c) to fund investments of US$ 1.5 billion. Notwithstanding the focus to reduce indebtedness, the high level of cash generation allowed the company to approve the anticipation of 2021’s shareholder remuneration payment in the amount of R$ 31.6 billion (US$ 6 billion).
| * | Includes short-term government bonds and time deposits and cash and cash equivalents of companies classified as held for sale. |
|---|---|
| ** | In accordance with the Shareholders’ remuneration policy, the additions (reductions) in investments shall not be considered in<br>the calculation. |
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In 2Q21, the company settled several loans and financial debts, amounting to US$ 10.6 billion, notably: (a) prepayment of banking loans in the domestic and international market totaling US$ 2.7 billion, (b) US$ 5.5 billion in the repurchase of global bonds previously issued by the Company in the capital market, with net premium paid to bond holders amounting to US$ 666 million and (c) total prepayment of loans with export credit agencies, in the amount of US$ 369 million.
The company issued US$ 1.5 billion in bonds in the international capital markets, maturing in 2051 and achieved the lowest yield for a 30-year bond issued by Petrobras.
Conciliation EBITDA x OCF x FCF x FCFE
US$ billion
| * accounts receivable, inventory and suppliers<br><br> <br>** additional gain of ICMS exclusion from PIS/COFINS calculation basis<br><br> <br>*** includes funding, amortization, prepayment and goodwill on bond repurchase<br><br> <br>**** Includes dividends received, non-controlling interest, investments in securities<br> and foreign exchange rate variation over cash position |
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Debt
The cash flow generation and continuous liability management have been allowing for the reduction in our indebtedness. Gross debt reached US$ 64 billion, in June 30^th^, 2021, 10.3% lower than March 31^st^ 2021 and lower than the target established for 2021, mainly due to debt prepayments.
In addition, liability management helped increase the average maturity from 11.84 years to 12.54 years.
The Gross Debt/LTM adjusted EBITDA ratio decreased from 2.47x on March 31^st^, 2021 to 1.78x on June 30^th^, 2021.
Net debt reduced 8.8%, reaching US$ 53.3 billion. The Net Debt/LTM adjusted EBITDA ratio decreased from 2.03x on March 31^st^, 2021 to 1.49x on June 30^th^, 2021, the best mark recorded since 3Q11, when leases were not yet accounted for as debt.
Table 13 – Debt indicators
| US$ million | 06.30.2021 | 03.31.2021 | Δ % | 06.30.2020 |
|---|---|---|---|---|
| Financial Debt | 43,505 | 50,317 | (13.5) | 69,312 |
| Capital Markets | 25,178 | 28,393 | (11.3) | 36,563 |
| Banking Market | 14,028 | 17,359 | (19.2) | 27,287 |
| Development banks | 908 | 1,149 | (21.0) | 1,552 |
| Export Credit Agencies | 3,189 | 3,210 | (0.7) | 3,686 |
| Others | 202 | 206 | (1.9) | 224 |
| Finance leases | 20,180 | 20,649 | (2.3) | 21,915 |
| Gross debt | 63,685 | 70,966 | (10.3) | 91,227 |
| Adjusted cash and cash equivalents | 10,423 | 12,542 | (16.9) | 20,005 |
| Net debt | 53,262 | 58,424 | (8.8) | 71,222 |
| Net Debt/(Net Debt + Market Cap) - Leverage | 40% | 51% | (21.6) | 57% |
| Average interest rate (% p.a.) | 5.9 | 6.0 | (1.7) | 5.6 |
| Weighted average maturity of outstanding debt (years) | 12.54 | 11.84 | 5.9 | 10.12 |
| Net debt/LTM Adjusted EBITDA ratio | 1.49 | 2.03 | (26.6) | 2.34 |
| Gross debt/LTM Adjusted EBITDA ratio | 1.78 | 2.47 | (27.8) | 3.00 |
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Results by Segment
Exploration and Production^[2]^
Table 14 – E&P results
| Variation (%) | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Sales revenues | 13,509 | 11,666 | 5,165 | 25,175 | 16,042 | 15.8 | 161.5 | 56.9 |
| Gross profit | 7,903 | 6,432 | 1,660 | 14,335 | 6,630 | 22.9 | 376.1 | 116.2 |
| Operating expenses | (458) | (521) | 149 | (979) | (13,379) | (12.1) | − | (92.7) |
| Operating income (loss) | 7,445 | 5,911 | 1,809 | 13,356 | (6,749) | 26.0 | 311.6 | − |
| Net income (loss) attributable to the shareholders of Petrobras | 4,948 | 3,925 | 1,187 | 8,873 | (4,617) | 26.1 | 316.8 | − |
| Adjusted EBITDA of the segment | 9,679 | 8,053 | 3,924 | 17,732 | 11,391 | 20.2 | 146.7 | 55.7 |
| EBITDA margin of the segment (%) | 72 | 69 | 76 | 70 | 71 | 2.6 | (4.3) | (0.6) |
| Average Brent crude (US$/bbl) | 68.83 | 60.90 | 29.20 | 64.86 | 39.73 | 13.0 | 135.7 | 63.3 |
| Sales price - Brazil | ||||||||
| Crude oil (US$/bbl) | 65.57 | 57.32 | 23.98 | 61.45 | 37.09 | 14.4 | 173.4 | 65.7 |
| Lifting cost - Brazil (US/boe)* | ||||||||
| excluding production taxes and leases | 4.91 | 4.91 | 4.94 | 4.91 | 5.42 | 0.0 | (0.5) | (9.4) |
| excluding production taxes | 6.37 | 6.66 | 6.59 | 6.51 | 7.06 | (4.4) | (3.4) | (7.7) |
| Onshore and shallow waters | ||||||||
| with leases | 13.43 | 12.37 | 14.52 | 12.89 | 17.59 | 8.6 | (7.5) | (26.7) |
| excluding leases | 13.43 | 12.37 | 13.42 | 12.89 | 16.61 | 8.6 | 0.1 | (22.4) |
| Deep and ultra-deep post-salt | ||||||||
| with leases | 11.19 | 11.11 | 10.43 | 11.15 | 10.65 | 0.7 | 7.3 | 4.7 |
| excluding leases | 10.12 | 9.39 | 8.96 | 9.75 | 9.12 | 7.8 | 12.9 | 7.0 |
| Pre-salt | ||||||||
| with leases | 4.22 | 4.63 | 4.17 | 4.42 | 4.35 | (8.8) | 1.3 | 1.7 |
| excluding leases | 2.52 | 2.70 | 2.39 | 2.61 | 2.59 | (6.6) | 5.6 | 0.8 |
| including production taxes and excluding leases | 17.07 | 16.11 | 8.91 | 16.60 | 10.91 | 6.0 | 91.7 | 52.1 |
| including production taxes and leases | 18.53 | 17.87 | 10.56 | 18.20 | 12.55 | 3.7 | 75.5 | 45.1 |
| Production taxes - Brazil | 2,633 | 2,359 | 933 | 4,992 | 2,814 | 11.6 | 182.2 | 77.4 |
| Royalties | 1,356 | 1,190 | 569 | 2,546 | 1,541 | 14.0 | 138.4 | 65.2 |
| Special Participation | 1,267 | 1,160 | 355 | 2,427 | 1,253 | 9.2 | 257.0 | 93.7 |
| Retention of areas | 9 | 9 | 9 | 18 | 20 | 5.5 | 3.3 | (7.9) |
All values are in US Dollars.
In 2Q21, gross profit was US$ 7.9 billion, an increase of 23% when compared to 1Q21. This increase was mainly due to higher Brent prices, which resulted in higher revenues, partially offset by higher government participation. Operating profit was US$ 7.4 billion, 26% higher than 1Q21, in line with gross profit growth.
In 2Q21, lifting cost remained stable compared to 1Q21. The effect of the appreciation of the Real against the dollar was offset by higher pre-salt production.
In the pre-salt, we continue to observe low unit costs at levels below US$3/boe. The 7% decrease this quarter is due to the increase in production, mainly due to the ramp-up of platforms P-68 (Berbigão and Sururu fields) and P-70 (Atapu field) and the better performance in P-74 and P-76 in Búzios, in addition to lower costs due to the decrease in well intervention activities.
In the post-salt, the increase in lifting cost compared to 1Q21 was mainly due to higher expenses with maintenance of subsea equipment and the appreciation of the Real against the dollar.
In onshore and shallow water assets, there was a 9% increase in the lifting cost in 2Q21, due to increased activities with interventions in onshore wells, equipment maintenance and the natural decline in production, in addition to the appreciation of the Real against the dollar.
| * | Leases refers to platform leasing |
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Refining, Transportation and Marketing
Table 15 – RTM results **
| Variation (%) | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Sales revenues | 19,007 | 13,973 | 8,261 | 32,980 | 23,741 | 36.0 | 130.1 | 38.9 |
| Gross profit | 2,270 | 2,136 | 832 | 4,406 | 915 | 6.3 | 172.8 | 381.5 |
| Operating expenses | (522) | (399) | (1,304) | (921) | (2,218) | 30.8 | (60.0) | (58.5) |
| Operating Income (Loss) | 1,748 | 1,737 | (472) | 3,485 | (1,303) | 0.6 | − | − |
| Net income (loss) attributable to the shareholders of Petrobras | 1,673 | 1,255 | (566) | 2,928 | (1,268) | 33.3 | − | − |
| Adjusted EBITDA of the segment | 2,261 | 2,265 | 27 | 4,526 | (180) | (0.2) | 8274.1 | − |
| EBITDA margin of the segment (%) | 12 | 16 | − | 14 | (1) | (4.3) | 11.6 | 14.5 |
| Refining cost (US$ / barrel) - Brazil | 1.63 | 1.61 | 1.67 | 1.62 | 1.98 | 1.2 | (2.4) | (18.2) |
| Domestic basic oil by-products price (US$/bbl) | 76.05 | 63.82 | 36.79 | 70.17 | 51.46 | 19.2 | 106.7 | 36.4 |
In 2Q21, gross profit was US$ 134 million higher than 1Q21 mainly due to higher margins for oil products in the domestic market, especially diesel and gasoline, associated with higher sales volumes, and better margin and volume in crude oil exports.
This improvement in margin was partially offset by the lower positive effect of inventory turnover between quarters (US$ 1.63 billion in 1Q21 and US$ 932 million in 2Q21). Excluding the effect of inventory turnover, gross profit would have been US$ 1.34 billion in 2Q21 and US$ 502 million in 1Q21.
The operating income was in line with 1Q21.The increase in gross profit was offset by higher operational expenses, mainly due to the increase in sales volumes.
Refining unit cost was in line with the previous quarter.
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Gas and Power
Table 16 – G&P results
| Variation (%) | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Sales revenues | 2,654 | 2,208 | 1,517 | 4,862 | 3,887 | 20.2 | 75.0 | 25.1 |
| Gross profit | 994 | 876 | 907 | 1,870 | 1,932 | 13.5 | 9.6 | (3.2) |
| Operating expenses | (665) | (746) | (654) | (1,411) | (1,327) | (10.9) | 1.7 | 6.3 |
| Operating income (loss) | 329 | 130 | 253 | 459 | 605 | 153.1 | 30.0 | (24.1) |
| Net income (loss) attributable to the shareholders of Petrobras | 226 | 104 | 169 | 330 | 383 | 117.3 | 33.7 | (13.8) |
| Adjusted EBITDA of the segment | 388 | 323 | 369 | 711 | 867 | 20.1 | 5.1 | (18.0) |
| EBITDA margin of the segment (%) | 15 | 15 | 24 | 15 | 22 | − | (10) | (8) |
| Natural gas sales price - Brazil (US$/bbl) | 42.57 | 34.04 | 33.70 | 38.37 | 38.13 | 25.1 | 26.3 | 0.6 |
In 2Q21, gross profit was US$ 994 million, an increase of 13.5% compared to 1Q21, reflecting the recovery of margins in the sale of natural gas, due to: (a) higher demand in the non-thermoelectric market, boosted by the industrial segment, and (b) the quarterly update of sales contracts in this market. In addition, there was a higher margin in generation, due to the higher volume of energy and steam generation.
Operating profit in 2Q21 was US$ 200 million higher than in 1Q21, mainly due to: (a) higher gross profit, (b) asset sales (remaining portion of NTS and sale of wind farms), and (c) the agreement between Amazonas Energia and Breitner.
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Reconciliation of Adjusted EBITDA
EBITDA is an indicator calculated as the net income for the period plus taxes on profit, net financial result, depreciation and amortization. Petrobras announces EBITDA, as authorized by CVM Instruction 527 of October 2012.
In order to reflect the management view regarding the formation of the company's current business results, EBITDA is also presented adjusted (Adjusted EBITDA) as a result of: results in equity-accounted investments, impairment, results with divestments and write-off of assets, and reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments.
Adjusted EBITDA, reflecting the sum of the last twelve months (Last Twelve Months), also represents an alternative to the company's operating cash generation. This measure is used to calculate the Gross Debt and Net Debt to Adjusted EBITDA metric, helping to evaluate the company's leverage and liquidity.
EBITDA and adjusted EBITDA are not provided for in International Financial Reporting Standards (IFRS) and should not serve as a basis for comparison with those disclosed by other companies and should not be considered as a substitute for any other measure calculated in accordance with IFRS. These measures should be considered in conjunction with other measures and indicators for a better understanding of the company's performance and financial condition.
Table 17 - Reconciliation of Adjusted EBITDA
| Variation (%) | ||||||||
|---|---|---|---|---|---|---|---|---|
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 | 2Q21 /<br><br> <br>1Q21 | 2Q21 /<br><br> <br>2Q20 | 1H21 /<br><br> <br>1H20 |
| Net income (loss) | 8,156 | 200 | (436) | 8,356 | (10,412) | 3978.0 | − | − |
| Net finance income (expense) | (2,019) | 5,639 | 2,257 | 3,620 | 6,808 | − | − | (46.8) |
| Income taxes | 3,784 | 319 | (31) | 4,103 | (3,331) | 1086.2 | − | − |
| Depreciation, depletion and amortization | 2,822 | 2,856 | 2,793 | 5,678 | 6,336 | (1.2) | 1.0 | (10.4) |
| EBITDA | 12,743 | 9,014 | 4,583 | 21,757 | (599) | 41 | 178 | − |
| Results in equity-accounted investments | (1,026) | (183) | 211 | (1,209) | 509 | 460.7 | − | − |
| Impairment | 90 | 90 | − | 180 | 13,371 | − | − | (98.7) |
| Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments | − | 34 | − | 34 | − | − | − | − |
| Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | (57) | (49) | (9) | (106) | 85 | 16.3 | 533.3 | − |
| Adjusted EBITDA | 11,750 | 8,906 | 4,785 | 20,656 | 13,366 | 31.9 | 145.6 | 54.5 |
| Adjusted EBITDA margin (%) | 56 | 57 | 50 | 56 | 50 | (1.0) | 6.0 | 6.0 |
| 18 |
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Financial Statements
Table 18
- Income Statement - Consolidated
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 |
|---|---|---|---|---|---|
| Sales revenues | 20,982 | 15,698 | 9,481 | 36,680 | 26,624 |
| Cost of sales | (10,158) | (7,691) | (6,064) | (17,849) | (15,943) |
| Gross profit | 10,824 | 8,007 | 3,417 | 18,831 | 10,681 |
| Selling expenses | (1,086) | (948) | (1,246) | (2,034) | (2,581) |
| General and administrative expenses | (260) | (273) | (291) | (533) | (702) |
| Exploration costs | (191) | (214) | (65) | (405) | (169) |
| Research and development expenses | (147) | (117) | (68) | (264) | (163) |
| Other taxes | (46) | (106) | (245) | (152) | (363) |
| Impairment of assets | (90) | (90) | − | (180) | (13,371) |
| Other income and expenses | (109) | (284) | 499 | (393) | 242 |
| (1,929) | (2,032) | (1,416) | (3,961) | (17,107) | |
| Operating income (loss) | 8,895 | 5,975 | 2,001 | 14,870 | (6,426) |
| Finance income | 206 | 122 | 108 | 328 | 282 |
| Finance expenses | (1,871) | (1,208) | (1,134) | (3,079) | (2,756) |
| Foreign exchange gains (losses) and inflation indexation charges | 3,684 | (4,553) | (1,231) | (869) | (4,334) |
| Net finance income (expense) | 2,019 | (5,639) | (2,257) | (3,620) | (6,808) |
| Results in equity-accounted investments | 1,026 | 183 | (211) | 1,209 | (509) |
| Income (loss) before income taxes | 11,940 | 519 | (467) | 12,459 | (13,743) |
| Income taxes | (3,784) | (319) | 31 | (4,103) | 3,331 |
| Net Income (Loss) | 8,156 | 200 | (436) | 8,356 | (10,412) |
| Net income (loss) attributable to: | |||||
| Shareholders of Petrobras | 8,121 | 180 | (417) | 8,301 | (10,132) |
| Non-controlling interests | 35 | 20 | (19) | 55 | (280) |
| 19 |
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|  |
| --- |
Table 19 - Statement of Financial Position – Consolidated
| ASSETS - US$ million | 06.30.2021 | 12.31.2020 |
|---|---|---|
| Current assets | 30,294 | 27,388 |
| Cash and cash equivalents | 9,821 | 11,711 |
| Marketable securities | 602 | 659 |
| Trade and other receivables, net | 4,474 | 4,731 |
| Inventories | 7,204 | 5,677 |
| Recoverable taxes | 1,934 | 2,595 |
| Assets classified as held for sale | 4,611 | 785 |
| Other current assets | 1,648 | 1,230 |
| Non-current assets | 157,913 | 162,622 |
| Long-term receivables | 14,420 | 20,200 |
| Trade and other receivables, net | 1,706 | 2,631 |
| Marketable securities | 49 | 44 |
| Judicial deposits | 8,107 | 7,281 |
| Deferred taxes | 564 | 6,451 |
| Other tax assets | 3,439 | 3,158 |
| Other non-current assets | 555 | 635 |
| Investments | 2,058 | 3,273 |
| Property, plant and equipment | 125,914 | 124,201 |
| Intangible assets | 15,521 | 14,948 |
| Total assets | 188,207 | 190,010 |
| LIABILITIES - US$ million | 06.30.2021 | 12.31.2020 |
| Current liabilities | 23,176 | 26,225 |
| Trade payables | 5,333 | 6,859 |
| Finance debt | 2,861 | 4,186 |
| Lease liability | 5,576 | 5,698 |
| Taxes payable | 3,935 | 2,834 |
| Dividends payable | 7 | 858 |
| Short-term benefits | 1,818 | 1,953 |
| Pension and medical benefits | 969 | 1,549 |
| Liabilities related to assets classified as held for sale | 961 | 685 |
| Other current liabilities | 1,716 | 1,603 |
| Non-current liabilities | 92,584 | 103,909 |
| Finance debt | 40,644 | 49,702 |
| Lease liability | 14,604 | 15,952 |
| Income taxes payable | 353 | 357 |
| Deferred taxes | 449 | 195 |
| Pension and medical benefits | 12,930 | 14,520 |
| Provision for legal and administrative proceedings | 2,228 | 2,199 |
| Provision for decommissioning costs | 19,172 | 18,780 |
| Other non-current liabilities | 2,204 | 2,204 |
| Shareholder’s equity | 72,447 | 59,876 |
| Share capital (net of share issuance costs) | 107,101 | 107,101 |
| Profit reserves and others | (35,921) | (47,753) |
| Non-controlling interests | 1,267 | 528 |
| Total liabilities and shareholders´ equity | 188,207 | 190,010 |
| 20 |
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|  |
| --- |
Table 20 - Statement of Cash Flows – Consolidated
| US$ million | 2Q21 | 1Q21 | 2Q20 | 1H21 | 1H20 |
|---|---|---|---|---|---|
| Cash flows from Operating activities | |||||
| Net income (loss) for the period | 8,156 | 200 | (436) | 8,356 | (10,412) |
| Adjustments for: | |||||
| Pension and medical benefits (actuarial expense) | 323 | 315 | 373 | 638 | 817 |
| Results of equity-accounted investments | (1,026) | (183) | 211 | (1,209) | 509 |
| Depreciation, depletion and amortization | 2,822 | 2,856 | 2,793 | 5,678 | 6,336 |
| Impairment of assets (reversal) | 90 | 90 | − | 180 | 13,371 |
| Allowance (reversals) for credit loss on trade and other receivables | 11 | (15) | 35 | (4) | 132 |
| Exploratory expenditure write-offs | 56 | 131 | 12 | 187 | 38 |
| Disposal/write-offs of assets, remeasurement of investment retained with loss of control and reclassification of CTA | (56) | (15) | (9) | (71) | 85 |
| Foreign exchange, indexation and finance charges | (1,892) | 5,544 | 4,236 | 3,652 | 8,205 |
| Deferred income taxes, net | 3,683 | 200 | (144) | 3,883 | (3,614) |
| Revision and unwinding of discount on the provision for decommissioning costs | 195 | 194 | 161 | 389 | 354 |
| PIS and COFINS recovery - exclusion of ICMS (VAT tax) from the basis of calculation | (973) | − | (3,257) | (973) | (3,257) |
| Inventory write-down (write-back) to net realizable value | (2) | (1) | 30 | (3) | 372 |
| Early termination and cash outflows revision of lease agreements | (157) | (70) | (53) | (227) | (147) |
| Decrease (Increase) in assets | |||||
| Trade and other receivables, net | (607) | (128) | (1,477) | (735) | (504) |
| Inventories | 394 | (1,973) | 660 | (1,579) | 1,106 |
| Judicial deposits | (287) | (151) | (279) | (438) | (728) |
| Other assets | (233) | 51 | (120) | (182) | (421) |
| Increase (Decrease) in liabilities | |||||
| Trade payables | (276) | 616 | 538 | 340 | (292) |
| Other taxes payable | 1,358 | 1,105 | 1,027 | 2,463 | 451 |
| Pension and medical benefits | (687) | (976) | (325) | (1,663) | (659) |
| Provisions for legal proceedings | 170 | (205) | (111) | (35) | (269) |
| Short-term benefits | (137) | (91) | 1,201 | (228) | 1,110 |
| Provision for decommissioning costs | (162) | (163) | (45) | (325) | (172) |
| Other liabilities | 51 | 41 | 472 | 92 | 1,090 |
| Income taxes paid | 9 | (128) | (36) | (119) | (267) |
| Net cash provided by operating activities | 10,823 | 7,244 | 5,457 | 18,067 | 13,234 |
| Cash flows from Investing activities | |||||
| Acquisition of PP&E and intangible assets | (1,485) | (1,650) | (1,502) | (3,135) | (3,371) |
| Investments in investees | (9) | (2) | (943) | (11) | (940) |
| Proceeds from disposal of assets - Divestment | 301 | 201 | 153 | 502 | 434 |
| Divestment (Investment) in marketable securities | 66 | 25 | 85 | 91 | 145 |
| Dividends received | 133 | 67 | 60 | 200 | 104 |
| Net cash provided (used) by investing activities | (994) | (1,359) | (2,147) | (2,353) | (3,628) |
| Cash flows from Financing activities | |||||
| Changes in non-controlling interest | 5 | (19) | (6) | (14) | (25) |
| Financing and loans, net: | |||||
| Proceeds from financing | 1,614 | 54 | 5,623 | 1,668 | 15,796 |
| Repayment of principal - finance debt | (10,495) | (3,063) | (2,879) | (13,558) | (7,222) |
| Repayment of interest - finance debt | (148) | (1,079) | (569) | (1,227) | (1,697) |
| Repayment of lease liability | (1,432) | (1,467) | (1,448) | (2,899) | (2,971) |
| Dividends paid to Shareholders of Petrobras | (1,848) | − | − | (1,848) | (1,020) |
| Dividends paid to non-controlling interests | (39) | − | (22) | (39) | (30) |
| Net cash provided by (used) in financing activities | (12,343) | (5,574) | 699 | (17,917) | 2,831 |
| Effect of exchange rate changes on cash and cash equivalents | 372 | (72) | (7) | 300 | (344) |
| Net increase (decrease) in cash and cash equivalents | (2,142) | 239 | 4,002 | (1,903) | 12,093 |
| Cash and cash equivalents at the beginning of the period | 11,964 | 11,725 | 15,468 | 11,725 | 7,377 |
| Cash and cash equivalents at the end of the period | 9,822 | 11,964 | 19,470 | 9,822 | 19,470 |
| 21 |
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|  |
| --- |
Financial information by business areas
Table 21 - Consolidated Income by Segment – 1H21
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Sales revenues | 25,175 | 32,980 | 4,862 | 271 | (26,608) | 36,680 |
| Intersegments | 24,724 | 573 | 1,185 | 126 | (26,608) | − |
| Third parties | 451 | 32,407 | 3,677 | 145 | − | 36,680 |
| Cost of sales | (10,840) | (28,574) | (2,992) | (264) | 24,821 | (17,849) |
| Gross profit | 14,335 | 4,406 | 1,870 | 7 | (1,787) | 18,831 |
| Expenses | (979) | (921) | (1,411) | (638) | (12) | (3,961) |
| Selling expenses | (5) | (738) | (1,272) | (7) | (12) | (2,034) |
| General and administrative expenses | (60) | (71) | (33) | (369) | − | (533) |
| Exploration costs | (405) | − | − | − | − | (405) |
| Research and development expenses | (191) | (6) | (17) | (50) | − | (264) |
| Other taxes | (41) | (63) | (47) | (1) | − | (152) |
| Impairment of assets | (102) | − | (79) | 1 | − | (180) |
| Other income and expenses | (175) | (43) | 37 | (212) | − | (393) |
| Operating income (loss) | 13,356 | 3,485 | 459 | (631) | (1,799) | 14,870 |
| Net finance income (expense) | − | − | − | (3,620) | − | (3,620) |
| Results in equity-accounted investments | 56 | 628 | 73 | 452 | − | 1,209 |
| Income (loss) before income taxes | 13,412 | 4,113 | 532 | (3,799) | (1,799) | 12,459 |
| Income taxes | (4,541) | (1,185) | (156) | 1,167 | 612 | (4,103) |
| Net Income (Loss) | 8,871 | 2,928 | 376 | (2,632) | (1,187) | 8,356 |
| Net income (loss) attributable to: | ||||||
| Shareholders of Petrobras | 8,873 | 2,928 | 330 | (2,643) | (1,187) | 8,301 |
| Non-controlling interests | (2) | − | 46 | 11 | − | 55 |
| 8,871 | 2,928 | 376 | (2,632) | (1,187) | 8,356 |
Table 22 - Consolidated Income by Segment – 1H20
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Sales revenues | 16,042 | 23,741 | 3,887 | 401 | (17,447) | 26,624 |
| Intersegments | 15,611 | 452 | 1,288 | 96 | (17,447) | − |
| Third parties | 431 | 23,289 | 2,599 | 305 | − | 26,624 |
| Cost of sales | (9,412) | (22,826) | (1,955) | (398) | 18,648 | (15,943) |
| Gross profit | 6,630 | 915 | 1,932 | 3 | 1,201 | 10,681 |
| Expenses | (13,379) | (2,218) | (1,327) | (169) | (14) | (17,107) |
| Selling expenses | − | (1,345) | (1,213) | (10) | (13) | (2,581) |
| General and administrative expenses | (103) | (111) | (46) | (442) | − | (702) |
| Exploration costs | (169) | − | − | − | − | (169) |
| Research and development expenses | (103) | (6) | (3) | (51) | − | (163) |
| Other taxes | (90) | (89) | (12) | (172) | − | (363) |
| Impairment of assets | (13,167) | (43) | − | (161) | − | (13,371) |
| Other income and expenses | 253 | (624) | (53) | 667 | (1) | 242 |
| Operating income (loss) | (6,749) | (1,303) | 605 | (166) | 1,187 | (6,426) |
| Net finance income (expense) | − | − | − | (6,808) | − | (6,808) |
| Results in equity-accounted investments | (164) | (444) | 23 | 76 | − | (509) |
| Income (loss) before income taxes | (6,913) | (1,747) | 628 | (6,898) | 1,187 | (13,743) |
| Income taxes | 2,294 | 443 | (206) | 1,203 | (403) | 3,331 |
| Net Income (Loss) | (4,619) | (1,304) | 422 | (5,695) | 784 | (10,412) |
| Net income (loss) attributable to: | ||||||
| Shareholders of Petrobras | (4,617) | (1,268) | 383 | (5,414) | 784 | (10,132) |
| Non-controlling interests | (2) | (36) | 39 | (281) | − | (280) |
| (4,619) | (1,304) | 422 | (5,695) | 784 | (10,412) |
| 22 |
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Table 23
- Quarterly Consolidated Income by Segment – 2Q21
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Sales revenues | 13,509 | 19,007 | 2,654 | 116 | (14,304) | 20,982 |
| Intersegments | 13,271 | 338 | 633 | 62 | (14,304) | − |
| Third parties | 238 | 18,669 | 2,021 | 54 | − | 20,982 |
| Cost of sales | (5,606) | (16,737) | (1,660) | (114) | 13,959 | (10,158) |
| Gross profit | 7,903 | 2,270 | 994 | 2 | (345) | 10,824 |
| Expenses | (458) | (522) | (665) | (278) | (6) | (1,929) |
| Selling expenses | (5) | (403) | (669) | (3) | (6) | (1,086) |
| General and administrative expenses | (28) | (39) | (16) | (177) | − | (260) |
| Exploration costs | (191) | − | − | − | − | (191) |
| Research and development expenses | (106) | (3) | (12) | (26) | − | (147) |
| Other taxes | (24) | (23) | (24) | 25 | − | (46) |
| Impairment of assets | (7) | − | (79) | (4) | − | (90) |
| Other income and expenses | (97) | (54) | 135 | (93) | − | (109) |
| Operating income (loss) | 7,445 | 1,748 | 329 | (276) | (351) | 8,895 |
| Net finance income (expense) | − | − | − | 2,019 | − | 2,019 |
| Results in equity-accounted investments | 33 | 520 | 33 | 440 | − | 1,026 |
| Income (loss) before income taxes | 7,478 | 2,268 | 362 | 2,183 | (351) | 11,940 |
| Income taxes | (2,531) | (595) | (111) | (666) | 119 | (3,784) |
| Net income (loss) | 4,947 | 1,673 | 251 | 1,517 | (232) | 8,156 |
| Net income (loss) attributable to: | ||||||
| Shareholders of Petrobras | 4,948 | 1,673 | 226 | 1,506 | (232) | 8,121 |
| Non-controlling interests | (1) | − | 25 | 11 | − | 35 |
| 4,947 | 1,673 | 251 | 1,517 | (232) | 8,156 |
Table 24
- Quarterly Consolidated Income by Segment – 1Q21
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Sales revenues | 11,666 | 13,973 | 2,208 | 155 | (12,304) | 15,698 |
| Intersegments | 11,453 | 235 | 552 | 64 | (12,304) | − |
| Third parties | 213 | 13,738 | 1,656 | 91 | − | 15,698 |
| Cost of sales | (5,234) | (11,837) | (1,332) | (150) | 10,862 | (7,691) |
| Gross profit | 6,432 | 2,136 | 876 | 5 | (1,442) | 8,007 |
| Expenses | (521) | (399) | (746) | (360) | (6) | (2,032) |
| Selling expenses | − | (335) | (603) | (4) | (6) | (948) |
| General and administrative expenses | (32) | (32) | (17) | (192) | − | (273) |
| Exploration costs | (214) | − | − | − | − | (214) |
| Research and development expenses | (85) | (3) | (5) | (24) | − | (117) |
| Other taxes | (17) | (40) | (23) | (26) | − | (106) |
| Impairment of assets | (95) | − | − | 5 | − | (90) |
| Other income and expenses | (78) | 11 | (98) | (119) | − | (284) |
| Operating income (loss) | 5,911 | 1,737 | 130 | (355) | (1,448) | 5,975 |
| Net finance income (expense) | − | − | − | (5,639) | − | (5,639) |
| Results in equity-accounted investments | 23 | 108 | 40 | 12 | − | 183 |
| Income (loss) before income taxes | 5,934 | 1,845 | 170 | (5,982) | (1,448) | 519 |
| Income taxes | (2,010) | (590) | (45) | 1,833 | 493 | (319) |
| Net income (loss) | 3,924 | 1,255 | 125 | (4,149) | (955) | 200 |
| Net income (loss) attributable to: | ||||||
| Shareholders of Petrobras | 3,925 | 1,255 | 104 | (4,149) | (955) | 180 |
| Non-controlling interests | (1) | − | 21 | − | − | 20 |
| 3,924 | 1,255 | 125 | (4,149) | (955) | 200 |
| 23 |
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Table 25 - Other Income and Expenses by Segment – 1H21
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Unscheduled stoppages and pre-operating expenses | (627) | (8) | (14) | (2) | − | (651) |
| Pension and medical benefits - retirees | − | − | − | (439) | − | (439) |
| Gains / (losses) related to legal, administrative and arbitration proceedings | (74) | 5 | (3) | (203) | − | (275) |
| Variable compensation program | (76) | (44) | (8) | (67) | − | (195) |
| Profit sharing | (23) | (15) | (1) | (19) | − | (58) |
| Equalization of expenses - Production Individualization Agreements | (52) | − | − | − | − | (52) |
| Gains/(losses) with Commodities Derivatives | − | − | − | (42) | − | (42) |
| Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments | − | − | − | (33) | − | (33) |
| Voluntary Separation Plan - PDV | − | 1 | − | 6 | − | 7 |
| Fines imposed on suppliers | 64 | 5 | 4 | 4 | − | 77 |
| Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | 33 | 31 | 40 | − | − | 104 |
| Amounts recovered from Lava Jato investigation | − | − | − | 196 | − | 196 |
| Early termination and changes to cash flow estimates of leases | 239 | 16 | (23) | (6) | − | 226 |
| Expenses/Reimbursements from E&P partnership operations | 291 | − | − | − | − | 291 |
| Recoverable taxes (*) | − | 3 | 27 | 476 | − | 506 |
| Others | 50 | (37) | 15 | (83) | − | (55) |
| (175) | (43) | 37 | (212) | − | (393) | |
| (*) It Includes the effects of the exclusion of ICMS (VAT tax) in the basis of calculation of sales taxes PIS and COFINS. |
Table 26 - Other Income and Expenses by Segment – 1H20
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Unscheduled stoppages and pre-operating expenses | (659) | (94) | (61) | (1) | − | (815) |
| Pension and medical benefits - retirees | − | − | − | (488) | − | (488) |
| Gains / (losses) related to legal, administrative and arbitration proceedings | (104) | (194) | 67 | 66 | − | (165) |
| Variable compensation program | 13 | 5 | 1 | 10 | − | 29 |
| Profit sharing | − | (11) | − | − | − | (11) |
| Equalization of expenses - Production Individualization Agreements | 845 | − | − | − | − | 845 |
| Gains/(losses) with Commodities Derivatives | − | − | − | (253) | − | (253) |
| Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments | − | − | − | − | − | − |
| Voluntary Separation Plan - PDV | (376) | (283) | (29) | (256) | − | (944) |
| Fines imposed on suppliers | 57 | 3 | 1 | 2 | − | 63 |
| Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | (51) | (24) | (10) | − | − | (85) |
| Amounts recovered from Lava Jato investigation | 8 | − | − | 77 | − | 85 |
| Early termination and changes to cash flow estimates of leases | 96 | 2 | 10 | 39 | − | 147 |
| Expenses/Reimbursements from E&P partnership operations | 366 | − | − | − | − | 366 |
| Recoverable taxes (*) | − | 10 | 1 | 1,484 | − | 1,495 |
| Others | 58 | (38) | (33) | (13) | (1) | (27) |
| 253 | (624) | (53) | 667 | (1) | 242 | |
| (*) It Includes the effects of the exclusion of ICMS (VAT tax) in the basis of calculation of sales taxes PIS and COFINS. |
| 24 |
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|  |
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Table 27 - Other Income and Expenses by Segment – 2Q21
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Unscheduled stoppages and pre-operating expenses | (336) | (6) | (8) | (1) | − | (351) |
| Gains / (losses) related to legal, administrative and arbitration proceedings | (31) | (35) | (3) | (257) | − | (326) |
| Pension and medical benefits - retirees | − | − | − | (221) | − | (221) |
| Variable compensation program | (39) | (22) | (5) | (35) | − | (101) |
| Profit sharing | (12) | (8) | − | (10) | − | (30) |
| Gains/(losses) with Commodities Derivatives | − | − | − | (19) | − | (19) |
| Equalization of expenses - Production Individualization Agreements | (9) | − | − | − | − | (9) |
| Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments | − | − | − | − | − | − |
| Voluntary Separation Plan - PDV | 2 | 3 | − | (1) | − | 4 |
| Fines imposed on suppliers | 40 | 3 | 2 | 3 | − | 48 |
| Amounts recovered from Lava Jato investigation | − | − | − | 55 | − | 55 |
| Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | (90) | 19 | 127 | − | − | 56 |
| Early termination and changes to cash flow estimates of leases | 167 | 20 | (25) | (5) | − | 157 |
| Expenses/Reimbursements from E&P partnership operations | 191 | − | − | − | − | 191 |
| Recoverable taxes (*) | − | − | 27 | 458 | − | 485 |
| Others | 20 | (28) | 20 | (60) | − | (48) |
| (97) | (54) | 135 | (93) | − | (109) | |
| (*) It Includes the effects of the exclusion of ICMS (VAT tax) in the basis of calculation of sales taxes PIS and COFINS. |
Table 28 - Other Income and Expenses by Segment – 1Q21
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Unscheduled stoppages and pre-operating expenses | (291) | (2) | (6) | (1) | − | (300) |
| Gains / (losses) related to legal, administrative and arbitration proceedings | (43) | 40 | − | 54 | − | 51 |
| Pension and medical benefits - retirees | − | − | − | (218) | − | (218) |
| Variable compensation program | (37) | (22) | (3) | (32) | − | (94) |
| Profit sharing | (11) | (7) | (1) | (9) | − | (28) |
| Gains/(losses) with Commodities Derivatives | − | − | − | (23) | − | (23) |
| Equalization of expenses - Production Individualization Agreements | (43) | − | − | − | − | (43) |
| Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments | − | − | − | (33) | − | (33) |
| Voluntary Separation Plan - PDV | (2) | (2) | − | 7 | − | 3 |
| Fines imposed on suppliers | 24 | 2 | 2 | 1 | − | 29 |
| Amounts recovered from Lava Jato investigation | − | − | − | 141 | − | 141 |
| Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | 123 | 11 | (86) | − | − | 48 |
| Early termination and changes on payments of lease agreements | 72 | (4) | 2 | (1) | − | 69 |
| Expenses/Reimbursements from E&P partnership operations | 100 | − | − | − | − | 100 |
| Recoverable taxes (*) | − | 3 | − | 19 | − | 22 |
| Others | 30 | (8) | (6) | (24) | − | (8) |
| (78) | 11 | (98) | (119) | − | (284) | |
| (*) It Includes the effects of the exclusion of ICMS (VAT tax) in the basis of calculation of sales taxes PIS and COFINS. |
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Table 29 - Consolidated Assets by Segment – 06.30.2021
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Total assets | 121,964 | 37,720 | 11,016 | 23,433 | (5,926) | 188,207 |
| Current assets | 3,886 | 14,074 | 3,275 | 14,985 | (5,926) | 30,294 |
| Non-current assets | 118,078 | 23,646 | 7,741 | 8,448 | − | 157,913 |
| Long-term receivables | 5,073 | 2,400 | 410 | 6,537 | − | 14,420 |
| Investments | 406 | 1,154 | 472 | 26 | − | 2,058 |
| Property, plant and equipment | 97,473 | 19,990 | 6,731 | 1,720 | − | 125,914 |
| Operating assets | 86,623 | 17,335 | 4,192 | 1,418 | − | 109,568 |
| Assets under construction | 10,850 | 2,655 | 2,539 | 302 | − | 16,346 |
| Intangible assets | 15,126 | 102 | 128 | 165 | − | 15,521 |
Table 30 - Consolidated Assets by Segment – 12.31.2020
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Total assets | 120,280 | 32,049 | 10,296 | 30,810 | (3,425) | 190,010 |
| Current assets | 5,333 | 8,170 | 1,975 | 15,337 | (3,427) | 27,388 |
| Non-current assets | 114,947 | 23,879 | 8,321 | 15,473 | 2 | 162,622 |
| Long-term receivables | 4,745 | 2,539 | 976 | 11,938 | 2 | 20,200 |
| Investments | 390 | 400 | 607 | 1,876 | − | 3,273 |
| Property, plant and equipment | 95,222 | 20,842 | 6,614 | 1,523 | − | 124,201 |
| Operating assets | 84,916 | 18,304 | 4,300 | 1,238 | − | 108,758 |
| Assets under construction | 10,305 | 2,537 | 2,315 | 286 | − | 15,443 |
| Intangible assets | 14,590 | 98 | 124 | 136 | − | 14,948 |
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Table 31 - Reconciliation of Adjusted EBITDA by Segment – 1H21
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Net income (loss) | 8,871 | 2,928 | 376 | (2,632) | (1,187) | 8,356 |
| Net finance income (expense) | − | − | − | 3,620 | − | 3,620 |
| Income taxes | 4,541 | 1,185 | 156 | (1,167) | (612) | 4,103 |
| Depreciation, depletion and amortization | 4,307 | 1,072 | 213 | 86 | − | 5,678 |
| EBITDA | 17,719 | 5,185 | 745 | (93) | (1,799) | 21,757 |
| Results in equity-accounted investments | (56) | (628) | (73) | (452) | − | (1,209) |
| Impairment | 102 | − | 79 | (1) | − | 180 |
| Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments | − | − | − | 34 | − | 34 |
| Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | (33) | (31) | (40) | (2) | − | (106) |
| Adjusted EBITDA | 17,732 | 4,526 | 711 | (514) | (1,799) | 20,656 |
Table 32 - Reconciliation of Adjusted EBITDA by Segment – 1H20
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Net income (loss) | (4,619) | (1,304) | 422 | (5,695) | 784 | (10,412) |
| Net finance income (expense) | − | − | − | 6,808 | − | 6,808 |
| Income taxes | (2,294) | (443) | 206 | (1,203) | 403 | (3,331) |
| Depreciation, depletion and amortization | 4,922 | 1,056 | 252 | 106 | − | 6,336 |
| EBITDA | (1,991) | (691) | 880 | 16 | 1,187 | (599) |
| Results in equity-accounted investments | 164 | 444 | (23) | (76) | − | 509 |
| Impairment | 13,167 | 43 | − | 161 | − | 13,371 |
| Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments | − | − | − | − | − | − |
| Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | 51 | 24 | 10 | − | − | 85 |
| AdjustBITDA | 11,391 | (180) | 867 | 101 | 1,187 | 13,366 |
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Table 33 - Reconciliation of Adjusted EBITDA by Segment – 2Q21
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Net income (loss) | 4,947 | 1,673 | 251 | 1,517 | (232) | 8,156 |
| Net finance income (expense) | − | − | − | (2,019) | − | (2,019) |
| Income taxes | 2,531 | 595 | 111 | 666 | (119) | 3,784 |
| Depreciation, depletion and amortization | 2,137 | 532 | 107 | 46 | − | 2,822 |
| EBITDA | 9,615 | 2,800 | 469 | 210 | (351) | 12,743 |
| Results in equity-accounted investments | (33) | (520) | (33) | (440) | − | (1,026) |
| Impairment | 7 | − | 79 | 4 | − | 90 |
| Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments | − | − | − | − | − | − |
| Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | 90 | (19) | (127) | (1) | − | (57) |
| Adjusted EBITDA | 9,679 | 2,261 | 388 | (227) | (351) | 11,750 |
Table 34 - Reconciliation of Adjusted EBITDA by Segment – 1Q21
| US$ million | E&P | RTM | GAS & POWER | CORP. AND OTHERS | ELIMIN. | TOTAL |
|---|---|---|---|---|---|---|
| Net income (loss) | 3,924 | 1,255 | 125 | (4,149) | (955) | 200 |
| Net finance income (expense) | − | − | − | 5,639 | − | 5,639 |
| Income taxes | 2,010 | 590 | 45 | (1,833) | (493) | 319 |
| Depreciation, depletion and amortization | 2,170 | 540 | 106 | 40 | − | 2,856 |
| EBITDA | 8,104 | 2,385 | 276 | (303) | (1,448) | 9,014 |
| Results in equity-accounted investments | (23) | (108) | (40) | (12) | − | (183) |
| Impairment | 95 | − | − | (5) | − | 90 |
| Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments | − | − | − | 34 | − | 34 |
| Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | (123) | (12) | 87 | (1) | − | (49) |
| Adjusted EBITDA | 8,053 | 2,265 | 323 | (287) | (1,448) | 8,906 |
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| --- | | Glossary<br><br> <br><br><br> <br>ACL - Ambiente de Contratação Livre (Free contracting market) in the electricity system.<br><br> <br>ACR - Ambiente de Contratação Regulada (Regulated contracting market) in the electricity system.<br><br> <br>Adjusted cash and cash equivalents - Sum of<br> cash and cash equivalents, government bonds and time deposits from highly rated financial institutions abroad with maturities of more<br> than 3 months from the date of acquisition, considering the expected realization of those financial investments in the short-term. This<br> measure is not defined under the International Financial Reporting Standards – IFRS and should not be considered in isolation or<br> as a substitute for cash and cash equivalents computed in accordance with IFRS. It may not be comparable to adjusted cash and cash equivalents<br> of other companies, however management believes that it is an appropriate supplemental measure to assess our liquidity and supports leverage<br> management.<br><br> <br>Adjusted EBITDA – EBITDA plus results<br> in equity-accounted investments; impairment, cumulative translation adjustment, reclassification of comprehensive income (loss) due to<br> the disposal of equity-accounted investments and gains/losses on disposal/write-offs of assets. Adjusted EBITDA is not a measure defined<br> by IFRS and it is possible that it may not be comparable to similar measures reported by other companies, however management believes<br> that it is an appropriate supplemental measure to assess our profitability. Adjusted EBITDA shall be considered in conjunction with other<br> metrics for a better understanding on our performance.<br><br> <br>Adjusted EBITDA margin - Adjusted EBITDA divided<br> by sales revenues.<br><br> <br>Basic and diluted earnings (losses) per share - Calculated based on the weighted average number of shares.<br><br> <br>Consolidated Structured Entities – Entities<br> that have been designated so that voting rights or the like are not the determining factor in deciding who controls the entity. Petrobras<br> has no equity interest in certain structured entities that are consolidated in the Company's financial statements, but control is determined<br> by the power it has over its relevant operating activities. As there is no equity interest, the income from certain consolidated structured<br> entities is attributable to non-controlling shareholders in the income statement, and disregarding the profit or loss attributable to<br> Petrobras shareholders.<br><br> <br>CTA – Cumulative translation adjustment<br> – The cumulative amount of exchange variation arising on translation of foreign operations that is recognized in Shareholders’<br> Equity and will be transferred to profit or loss on the disposal of the investment.<br><br> <br>Effect of average cost in the Cost of Sales<br> – In view of the average inventory term of 60 days, the crude oil and oil products international prices movement, as well as foreign<br> exchange effect over imports, production taxes and other factors that impact costs, do not entirely influence the cost of sales in the<br> current period, having their total effects only in the following period.<br><br> <br>Free cash flow - Net cash provided by operating<br> activities less acquisition of PP&E and intangibles assets (except for signature bonus) and investments in investees. Free cash flow<br> is not defined under the IFRS and should not be considered in isolation or as a substitute for cash and cash equivalents calculated in<br> accordance with IFRS. It may not be comparable to free cash flow of other companies, however management believes that it is an appropriate<br> supplemental measure to assess our liquidity and supports leverage management.<br><br> <br>Investments – Capital expenditures based<br> on the cost assumptions and financial methodology adopted in our Business and Management Plan, which include acquisition of PP&E,<br> including expenses with leasing, intangibles assets, investment in investees and other items that do not necessarily qualify as cash flows<br> used in investing activities, primarily geological and geophysical expenses, pre-operating charges, purchase of property, plant and equipment<br> on credit and borrowing costs directly attributable to works in progress. | <br><br> <br><br><br> <br>Leverage – Ratio between the Net Debt<br> and the sum of Net Debt and Shareholders’ Equity. Leverage is not a measure defined in the IFRS and it is possible that it may not<br> be comparable to similar measures reported by other companies, however management believes that it is an appropriate supplemental measure<br> to assess our liquidity.<br><br> <br>Lifting Cost - Crude oil and natural gas lifting<br> cost indicator, which considers expenditures occurred in the period.<br><br> <br>LTM Adjusted EBITDA - Sum of the last 12 months<br> (Last Twelve Months) of Adjusted EBITDA. This metric is not foreseen in the international accounting standards - IFRS and it is possible<br> that it is not comparable with similar indexes reported by other companies, however Management believes that it is supplementary information<br> to assess liquidity and helps manage leverage. Adjusted EBITDA should be considered in conjunction with other metrics to better understand<br> the Company's liquidity.<br><br> <br>OCF - Net Cash provided by (used in) operating<br> activities (operating cash flow)<br><br> <br>Net Debt – Gross debt less adjusted<br> cash and cash equivalents. Net debt is not a measure defined in the IFRS and should not be considered in isolation or as a substitute<br> for total long-term debt calculated in accordance with IFRS. Our calculation of net debt may not be comparable to the calculation of net<br> debt by other companies, however our management believes that net debt is an appropriate supplemental measure that helps investors assess<br> our liquidity and supports leverage management.<br><br> <br>Net Income by Business Segment - The information<br> by the company's business segment is prepared based on available financial information that is directly attributable to the segment or<br> that can be allocated on a reasonable basis, being presented by business activities used by the Executive Board to make resource allocation<br> decisions. and performance evaluation. When calculating segmented results, transactions with third parties, including jointly controlled<br> and associated companies, and transfers between business segments are considered. Transactions between business segments are valued at<br> internal transfer prices calculated based on methodologies that take into account market parameters, and these transactions are eliminated,<br> outside the business segments, for the purpose of reconciling the segmented information with the consolidated financial statements of<br> the company. company.<br><br> <br>PLD (differences settlement price) - Electricity<br> price in the spot market. Weekly weighed prices per output level (light, medium and heavy), number of hours and related market capacity.<br><br> <br>Refining - includes crude oil refining, logistics,<br> transportation, acquisition and export activities, as well as the purchase and sale of petroleum and ethanol products in Brazil and abroad.<br> Additionally, this segment includes the petrochemical area, which includes investments in companies in the petrochemical sector, shale<br> exploration and processing.<br><br> <br>Sales Price of Petroleum in Brazil - Average<br> internal transfer prices from the E&P segment to the Refining segment.<br><br> <br>Total net liabilities - Total liability less<br> adjusted cash and cash equivalents. | | --- | --- |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 5, 2021
PETRÓLEO BRASILEIRO S.A–PETROBRASBy: /s/ Rodrigo Araujo Alves
______________________________
Rodrigo Araujo Alves
Chief Financial Officer and Investor Relations Officer