Petrobras - Earnings Call - Q2 2025

Transcript

Speaker 0

They were inhabited and they had no crew, so we changed this procedure. Now they have a crew, they go straight to their location, or their sites, and that also anticipates production and operation of more oil. Again, to benefit our investors, government or private sector investors. That's another improved procedure that ultimately means more oil in the tanks, in our tanks. We also had more natural gas supply offered to the market. We increased our gas production by 15% to the market. This was a result of our Route 3, reaching the state of Rio de Janeiro in the Boaventura complex. This also means that in addition to Route 3, there has been a lot of effort put into processing this gas in a gas processing unit in the Boaventura complex in the Itaboraí hub.

Ladies and gentlemen, we are really happy to have all this good news to you. These deliveries are under our control. We're totally in control of them. We are delivering them, we're improving on them, and you can rest assured that in our daily work, that means continuous improvement. This is done when the company realizes that there's a challenging scenario, geopolitical challenges that are ahead of us when we consider the price of our final product, crude oil and gas. As I said, these factors are not controlled. The price of crude oil is not under our control. However, mitigating effects of these price variations, this is indeed under our control. We are responding by increasing production with also increased production and also a very strong perspective in cost reduction.

In the second quarter, you know, the second quarter was impacted by a falling oil price that was around $68 per barrel. That was 10% down as compared to last year, last semester. We responded by increasing our production by 5%, and that mitigated that effect considerably, the effect of oil price falls in our balance sheets. We are now working hard, and you can rest assured that we're doing this to make our projects increasingly more competitive in this scenario of uncertainty and in this scenario of price falls of our final product. The major product is crude oil. You will see that we will have more earnings in our next business plan that will be presented by the end of the year. We are analyzing all possibilities of simplifying and optimizing our projects to reduce costs and also to increase efficiency gains.

Having said that, I'd like to repeat what I mentioned in the previous webcast and what I have been saying since the beginning of my speech today. We are absolutely committed to looking for the best possible results for our investors and for the Brazilian society as a whole. We will generate value even in challenging scenarios in terms of oil prices. Our projects will be profitable and valuable for the portfolio of our company. We will dedicate to the things we do best, which is to explore and produce oil and gas and its products, selling these products efficiently and with quality, always reconciling all these efforts, considering our needs to provide a fair energy transition. Thank you very much for joining us. Now we will proceed to the presentation of our CFO, Fernando Sabbi Melgarejo, who will talk about the financial results of our company.

Fernando, the floor is yours. Good morning, everyone. Good morning to those who are listening to us. I'd like also to greet everyone from the Spaniel. Thank you for joining us for another Petrobras Earnings webcast. I'll begin by presenting the key figures for the second quarter of 2025. Magda Maria de Regina Chambriard has already highlighted in her opening remarks the remarkable growth in our production this quarter. On this slide, you can see that while Brent crude prices declined by 10% quarter over quarter, going from $75.7 to $75, we had an increase of 5% with new production systems and improved operational efficiency across our fields. As our CEO mentioned, in the first half of the year, we already reached the midpoint of our 2025 production target, which is 2.3 million barrels per day. Commercial gas production also grew significantly.

Petrobras increased its gas supply to the market by 15%, mainly due to the progress of the Route 3 pipeline and the Boaventura gas processing unit. When considering total production, we reached a new record of 4.2 million barrels of oil equivalent per day. This increased production volume in quarter two was key to delivering financial results in line with the previous quarter. It was only made possible through consistent CAPEX execution and strong engagement from our workforce. Our CAPEX has been discussed in many situations. If it would be productive, it would have an impact on our production, and this is being presented now. Let's move on to slide six, our operational slide six. We reported net income excluding one-off events of $4.1 billion and EBITDA also excluding one-off events of $10.2 billion. These figures are on par with the previous quarter when Brent prices were 10% higher.

In other words, our strong operation results offset external factors which were beyond our control. For example, the price of the commodities. Efficient management of our commercial strategy also positively contributed to the results. We implemented three diesel price reductions in quarter two and one gasoline price reduction during the period, maintaining competitive margins and profitable operations and also the company's share. Operating cash flow was $7.5 billion. Here, we saw a decline compared to the previous quarter, mainly due to known events such as PIS/COFINS tax credit related to last year's tax transaction, which had positively impacted quarter one 2024 results, but was not the case for this quarter. Additionally, the payment of variable remuneration, which had a higher breadth, which is the basis to payment to government shareholders, and payment of variable remuneration, which usually impacts company cash flow in quarter two after the shareholders' meeting.

All events that will not happen in the next quarter. Additionally, in quarter two, we had higher selling expenses, mainly due to increased crude oil export volumes because of our production. Slide seven. Here, we present our debt history. You can see that both financial debt and short-term remain under control and that over 60% of total indebtedness relates to leases of platforms, vessels, and rigs, which, according to accounting standards, must be recognized as debt. It is important to remember that this lease portion refers to assets generating production and, consequently, revenue for the company. When we commissioned this year the FPSOs Alexandre de Gusmão and Omirante Tamandaré, both chartered platforms, we had to record lease liabilities as debt. These two platforms added $3.7 billion to our debt this year, but on the other hand, we added 207,000 barrels per day of production capacity for our company.

Considering other vessels and amortizations, leases added approximately $5 billion to our debt in the first half of 2024. These leases are associated with more capacity, more production, and therefore, they add revenue to our company. Regarding financial debt, this quarter we highlight a successful public offering of debentures, totaling R$3 billion. It was successful with high demand and allowed us to raise funds in the local market, something we hadn't done for ages, with competitive costs in line with our liabilities management strategy. Slide eight, we are going to talk about CAPEX. We invested $4.4 billion in Q2, which, added to the first quarter, leads to $8.5 billion for this year. We are, according to our plan of our guidance, which is $18.5 billion for the year. We have a firm commitment to the market to execute what we planned, accelerating value, generating deliveries, and anticipating revenue.

Due to these efforts, we started production from the FPSO Alexandre de Gusmão, starting over two months ahead of schedule. As our CEO has already mentioned, the Omirante Tamandaré, a huge platform, began operating in February, has already reached 200,000 barrels with only four producing wells. Soon, we will reach peak production in 2025. We have already connected more wells than in the entire previous years, 48 wells, including 30 producing and 18 injecting wells. In the same period last year, we had 31, 12 producers, and 19 injectors. This is therefore a CAPEX that is very much focused on production. Let's now proceed to slide number nine. Petrobras' investment has been bringing benefits to the company, its shareholders, and society. We are talking here about more production and, consequently, more operational cash flow. We are now an important exporter of commodities contributing to Brazil's trade balance.

It's not just investment in new projects. We are improving efficiency, adjusting our maintenance schedules, and managing reservoirs efficiently. All this contributes to the production curve growth. Our CEO mentioned in her opening remarks production in July, which exceeded the previous quarter. We are talking here about an increase of 380,000 barrels per day only in seven months. With this trend and ongoing efforts, we expect average oil and gas production in 2025 to be at the upper end of the target range, representing about 100,000 barrels per day above the midpoint. At a price of $70, we will have an additional $2.5 billion revenue. This current planned production curve carries less risk today than when the plan was approved. In other words, for the same confidence level, we would have a higher curve today. Slide number 10.

We have talked about CAPEX production, and now we will talk about dividends. I want to remind you of the strength of our shareholders' remuneration policy. The formula ensures dividends align with different oil prices without compromising the company's financial robustness. Accordingly, we apply the formula set forth in our policy, and we will distribute 45% of free cash flow from quarter two. Therefore, the board approved a distribution of R$8.7 billion, equivalent to R$0.67 per share, to be paid in two equal installments in November and December of this year. This concludes my presentation, and I thank you all again for your attention. Along with the other directors, I'm available to answer your questions. I hand over to Eduardo, who will then continue with the Q&A session. Thank you, Fernando. Thank you, Magda. Let's start with the Q&A session. Mirene, can you hear us?

You can proceed with the question.

Speaker 1

Good morning. Thank you very much for the call. I will align CAPEX results with what you mentioned yesterday so that you work with natural gas distribution. As the CEO mentioned, Petrobras has been focusing CAPEX, particularly on upstream, delivering operational results. We'd like to understand what we can expect in terms of new investments in the next few years and how this is generated. Is this integrated to the business plan, including a strategy from the board and timing for this operation? Thank you for the question. We are a company that is started already integrated. Petrobras is 71 years old, and it started, and it became what it is because it is a company that is integrated all over. 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. What we did yesterday was to say the following. 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? We have nothing in sight right now. No project to acquire LNG. There is nothing in Petrobras' portfolio, but we guarantee and make sure we wanted 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.

Maybe we can say basically Petrobras has already been working to be the best choice to our customers, and being the best choice to our customers means to have competitive prices, to really have availability where there's demand for the product. 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. 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. For that, we need markets. The market is the way to monetize, and it's the most profitable thing for our company.

This is where our efforts go to. 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. We have a driver here. I think it's on the table for discussion, and we will look at it. Obviously, finding this economic rationale, as our CEO mentioned, we are going to look at it, and this will be considered for approval going through our board. 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.

We are really sure that any project will be implemented if it creates value for our shareholders and if there's discipline in the capital to be used in the project. 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. Thank you, Fernando Magna Mileni, for the question. Next question by Bruno Montanari. Good afternoon. Thank you for taking my question. 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 platforms in the pre-salt layer.

I'd like to understand about the risk factors that are less, that lead to a more conservative curve and connecting to a better execution, trying to advance a potential revitalization of Interpinoar so that you have even greater production in the midterm. Thank you very much. Good morning, everyone. We are in a very special quarter. We had an increase in our production. We spent less, we produced more, and we also strongly reduced our costs. The issue of production in these fields, we are talking about this growth, and this really refers to the reservoir. We have a reservoir in the pre-salt layer, and the effective response of this reservoir is only given when the field is connected. We have had very good surprises. Expectations have been confirmed in terms of increasing production and wells that are really very productive.

We have four wells with over 200,000 production, and by the end of the year, we are planning to increase production, but we'd like to remind you that we will have this issue of platforms. We have started some big platforms, and we will have the planned shutdowns. This increase will level off, but anyway, by the end of this year, we will have an increase reaching our target as planned. At the upper portion of our target, we are looking at Interpinoar and Tupi, improving optimization with new units to increase production there. Now, adding to the question, you mentioned Tupi in particular, right? As Sylvia mentioned, Tupi is having at least another two projects revitalizing Tupi and what we call complementary Tupi. Our challenge is to make Tupi reach the level of 1 million barrels of oil a day. Thank you. Thank you, Sylvia. Thank you, Magda.

Thank you, Bruno, for your question. Now, Vicente. Vicente of Banco Bradesco BBI. Banco Bradesco BBI. Vicente, over to you. Good afternoon, everyone. Thank you for taking my question. I'd like to discuss the LPG release that you published last night. Any M&A movements in this sector need to be approved in the November plan first, and only then would you make any transactions. You also mentioned on the release that you had partnerships, distribution partnerships, according to quote-unquote "provisional contract provisions." What kind of partnership is this? What are these contract provisions? Thank you. As the Executive Director Claudio Schlosser mentioned, as our production increases, our greatest challenge is really to put these products onto the market and also to widen our market base. We have increasing production that means extending our refinery facility or refinery system.

We want to increase diesel as sin, which is highly profitable, in at least an additional 200,000 barrels a day. As a result, there's more pressure for increasing our markets. What have we been doing? We knock at the door of our largest consumers, including agribusiness in Brazil, agribusiness consumers. We are now having LPG, not only industrial, but also domestic. In other words, we are expanding our natural gas market. As you can see, our efforts to have natural gas in Brazil's free market meant that a large number of companies are now part of this movement by Petrobras. This is why we extended this gas market by 15%. What we cannot have is limitations to make strides to make progress in this area.

Whatever is needed, B2B or sales to large consumers, sales to final consumers in gas stations or even in terms of gas, what we want is to have open doors to make choices, to choose the best company that will add the most value possible and in the most efficient way of really placing our product in the market. After we understood that Petrobras, over time, Petrobras has chosen to leave some markets behind, we had this duty. Why having this duty of leaving some markets? Why can't we leave this door open so that this door may be used in the best possible way? This is what we did yesterday. Thank you, Magda. Thank you for your question. Now, Gabriel Bardo of Citigroup. Gabriel, you have the floor. Thank you a lot. President Magda, Fernando, thank you for taking my question. 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 in taking the cue 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. 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. How flexible are you for next year and what solutions could you provide or improve for 2026? What are NMAs and also LPG or other fuels?

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? I'll start answering and then I'll give the floor to Fernando and also Sylvia and Renata if they believe they should also comment on the question. What we've been telling you is that we do have extremely relevant business opportunities in exploration and production of oil. The company has the major focus. Its major focus is exploration and production with highly profitable projects. You saw the profitability level of these projects. When we show results in the second quarter, we have decreased prices that were offset by increased production levels. When we look at these projects, first, we will check whether they're profitable and number two, whether their profitability level is desired.

If this is the case, then we move on. In other words, we will not destroy value. Rather, we will move on with profitable projects. In a way, we should also inform you that for the first time in all Petrobras' life, a project changed its phase. We had projects that were progressing in our portfolio, advancing in their phases, moving on in their phases. You know, you have zero, one, two, three, and four assigned to our project. Four means the project is totally mature. We had projects that were expected to migrate from phase three to phase four. Now, when we look at them with this new level, they went back to level two. The idea was that these projects should be optimized. In other words, we won't leave these projects behind. They are still profitable.

They used to be profitable before, but the profitability level that they had at that time with the current oil price, we decided to put them a few phases back, back to the drawing board so that these projects could be better optimized. I'll now give the floor to Fernando and then Renata so that they can give you a little more details. Thank you, Gabriel, for your question. First, I should stress that the current scenario is more challenging and that reflects in our business plan. As we have this commitment with 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. I believe the greatest goal, our greatest commitment is really to reduce cost for the company and also optimizing projects that our President mentioned. It's the first time we went back to phase one to consider engineering aspects and then also productivity. All these factors together, they are integrated in 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. We want to create a portfolio and a business plan that is safe and secure and adapted to the current situation and scenario. Hello, Gabriel. I think they've 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 and make it happen this year. In the first quarter of last year, it was at 30%. In this quarter, it is aligned to what we had planned. It was 30% below the expected level. Whatever the value, we will execute as planned. Magda, Fernando, Renata, thank you. Thank you, Gabriel, for your question. Now, Lilyanna Yang of HSBC. You have the floor, Lilyanna.

Hello, and thank you for the opportunity. 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're probably at the top of the guidance, but again, can you please make comments about your CapEx, your $18.5 billion investment plan? 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? That might be a good consumer of your gas. Thank you. Hello, Lilyanna. Thank you for your question. All contracts for our 2025 plan and part of 2026, they are already, the contracts have already been signed. There's no possibility of or any idea of really exceeding our guidance.

We will meet whatever was set on our guidance. Our commitment is short. There are no surprises ahead. Petrobras team, if you allow me to just go on a protocol and pinpoint some of the things you've discussed. You had 2,470 products. That was the production number for July and then new platforms this year. I'd like to confirm something that you said earlier, that the curve with 2,470 is still growing, and then there's the effect of scheduled shutdowns. Maybe you can give me more details. This, I think, has to do with previous comments. I wanted to repeat these points and maybe if you could clarify them a little bit more. The question is about the last auction with the Amazonas blocks. In particular, what was that partnership with Exxon like? Do you believe there's synergy with the Guyanas and Suriname? Thank you. Okay, Regis.

With regard to the ramp-up, there was indeed a production increase in our reports. You can see that you have efficiency in the linking of the wells. Omirante Tamandaré, Bouzou 7, and the reservoir then responded well, and we had a rapid production increase. This growth will be offset by the other large platforms that are programmed to start production. I can confirm that there's a safety. We want our platform to have a long life, and also we want to make sure that we have future operations. Scheduled shutdowns are essential. They need to be done, but we are within our plan goal, and in fact, in the upper range, that's about four. We will have a very positive result. It is important to mention that the pre-salt layer is really surprising in terms of productivity. It's been a very positive surprise with very good results and earnings.

We have an oil column that's as high as the Pão de Açúcar Mountain and the size of the Guanabara Bay. Búzios is twice as large as the Guanabara Bay. This is only confirmed when you start producing. As for the auction, yes, we did. I had the auction and defined the 10 blocks. We now have 16 blocks in Amapá. We're just waiting for environmental licensing to test our productivity out. I should stress that the blocks we have there, they're very similar to the ones that we have in Venezuela and Guyana, and very similar to what we have here in the Campos Basin as well. We know them really well. The partnership with Exxon and Shell, we have over 30 partners here. Petrobras has over 30 partners.

Choosing or this choice of working with Exxon, which is a great operator, has meant very significant results at that Guyana, and that's very similar to the Equatorial Margin results. That's the best operator for us to share risks and knowledge. Thank you, Sylvia, and Hedge for your question, Regis for your question. Now, Dick Greco of Itaú. Monique, Monique, you have the floor, Monique. Hello, good afternoon, and thank you for taking my questions. By the way, congratulations for your operating performance. It's really impressive. Congratulations to the entire team. I have one question only. The message that your CAPEX and gas was very, that message was very clear. We know that there are some potential movements on the radar and on the horizon in the next few months, like President Magda Maria de Regina Chambriard mentioned, movements in ethanol, for instance.

You know that the government will hold auctions for areas, pre-salt layer areas that were not hired this year still. Can you clarify about what we're expecting in terms of CAPEX execution, in addition to the $18.5 billion, when you consider these additional movements that are on the short-term horizon? Can you maybe explain, especially in the non-hired areas? Thank you. Hello, Monique. Thank you for your question. Petrobras will always be present when we discuss any opportunity of auctions. The Brazilian territory is our home. In other words, when pre-salt layer 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. 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. Thank you, Magda. Thank you, Monique, for your question. Next question by Luiz Felipe Carvalho from Banco BTG Pactual. Luiz, the floor is yours. Good afternoon. Thank you for taking my question. I would like to congratulate you for your production ramp-up. It's really nice to see it. I have a question. I'd like to reconcile it.

I don't know, maybe to our CEO, Magda or Fernando, the initial estimates for the use of this year have planned oil of $83 per barrel. As Fernando said, now it's around $67, $68. That's the oil price right now. In this scenario, you have a gap, a delta for cash generation that is below what was initially planned. When we look at that graph, we know that it's a five-year plan, but this year, cash generation should be less than planned. You were keeping the CAPEX guidance for this year and also for next year. My question is, what is the flexibility depending on oil prices and changes in oil prices vis-à-vis this investment plan and also vis-à-vis the debt or indebtedness limit the company has? Of course, considering also the payment of dividends.

In this scenario with lower oil prices, you were talking a lot about profitability of projects. They have to show that they are profitable to be approved. In which level of oil prices could we see not cancellation of projects, but maybe postponing projects towards the end of the plan because of lower cash generation more in the short term? Thank you, Luis. 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 this scenario that occurred, reduction in Brent prices and thus reduction in revenue. It is 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 billion.

We have many contracts that have already been signed. We have scheduled that and this should happen. The flexibility will take place when we build the strategic plan for 2026-2030. We will have to reevaluate some projects. Actually, we will look again at all assumptions and include these assumptions on the projects and see which ones are 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 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.

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. I think the probability for this year is pretty low. I would like to add and then give the floor to Director Renata to further elaborate on that. Often we are dealing not only with the engineering of the projects, but how we contract projects. When we look, for example, at this issue of contracting Renas, the mere change in the way we contract and publicizing the price and the dilution of the lots in a larger number of lots, these meant a saving of BRL 1 billion for our company.

We had a work for bidding. We changed how these packages would be contracted, and we diluted a larger number of packages to have more competition. With that, we could save BRL 1 billion. We are multiplying this effort in other works. I'll give the floor to Renata to further elaborate on that because, after all, this is a major effort being carried out by her team. We really have been thinking out of the box. When the CEO invited us to take this position, she said, "You should do it differently." This is what we have been doing. One of the things we have been doing differently, which is POT. Just to give you an idea, POT enables us to change specifications during the bidding process because this is a conceptual concept. It's designed so you can change requirements in this conceptual design.

When there's initiatives and with a lot of discussions with the market, in the past, we had some restrictions, but only with this move alone, we could reduce the weight of CI platforms between 15% to 20%. That alone represents a cost reduction that is very significant. We will open these packages on September 30, and we expect that with that, we will really have a significant reduction in prices. As our CEO said, depending on the market, on the scenario, depending on the demands, depending on how the world is, depending on geopolitics, every contract has a different strategy so that we can take the most, the best of our contracts. Thank you, Magda. Thank you, Fernando, Renata. Thank you, Luis, for your question. 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. I'd like to thank you all for having joined our webcast. I'll give the floor to Fernando and to Magda for their final remarks. Fernando, Magda, the floor is yours. I'd like to thank you all for joining us. I'd like to say that our team is really available if you have any further questions. We are always at your disposal. To close, I would like to say that we are really happy because we could show what a proper, well-thought-of and planned CAPEX can do, which was to increase production. In our view, this will really stay for a very long time with very positive prospects looking forward and with new equipment coming, with new production equipment starting up.

I think that our increase will be more than our decrease. In the next five years, we are really sure that this will take place. Production was better, and with that, it offset reduction in Brent prices. This was very important for our earnings so that we could complete our strategic plan as we planned. All contracts regarding distribution will be complied with. We have contracts. No, there is no discussion, no argument. We will comply with all these contracts. This is a commitment we have. Thank you all very much. We are available and also during this week to discuss any issues you deem necessary. To close, I would like to thank you all for joining us in this webcast. 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 wants to have profitable projects, optimizing its projects portfolio, and really making investments in projects that are as efficient as possible. We have wonderful actions from exploration and production, very attractive projects, including refining and the 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. 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 investors' relationship, and Eduardo is available so that we can answer all the questions you may have. Whatever questions you have, just ask. Thank you all very much and have a nice day. Thank you, Magda. Thank you, Fernando. 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 see you in the next webcast.