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Petrobras corporate report

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14 August 2019

Petrobras corporate report

Report summary

Petrobras is in an expansive phase. It should see peer-leading production gains, barring any execution mishaps. The company’s world-class portfolio of pre-salt projects has positioned it to outperform the industry on our return-based metrics. With Brazil attracting high levels of upstream investment, Petrobras’ heavy exposure to the country should act as tailwind. The NOC is positioned to capitalize on this momentum. Petrobras has made encouraging progress in strengthening its balance sheet. Its disposal campaign is moving ahead at full steam – over US$15 billion in deals this year alone. It also faces less political risk after President Bolsonaro’s election.

Table of contents

  • SWOT analysis
    • Wood Mackenzie perspective
    • Market rating
    • Net debt outlook, liquidity and cash management
    • Deleveraging
    • Midstream – TAG closing bodes well
    • Downstream – eight refineries up for sale
    • Upstream – more smaller deals
    • Portfolio strategic positioning
    • Production outlook
    • Santos basin – pre-salt is the growth engine
    • Top-class economics, peer-leading returns
    • Expertise cuts down deepwater risks
    • Project execution largely on track, but risk of delay remains
    • Campos basin – sustaining the base business
    • Bolstering value and reserves through IOR and partnering
    • Redevelopment should continue, candidates abound
    • Exploration – prime position in Brazil
    • Exploration activity is picking up
    • Brazil holds a wide breadth of exploratory opportunities
    • Refining
    • Divestment plan – ending a monopoly
    • Fuel pricing policy – striving for international parity
    • Marketing
  • Gas & Midstream
    • Exiting biofuels to staunch losses
    • Slowly shifting to wind and solar

Tables and charts

This report includes 59 images and tables including:

  • Gearing ratio* – reported vs. targets
  • Capex evolution per business plan
  • Evolution of key financial metrics
  • WM net cash flow* – Santos basin fields vs overall
  • Ownership of wind and solar PV capacity*
  • ROACE evolution for Petrobras' businesses
  • Benchmark: share price performance
  • Benchmark: premium/discount to WM NPV10
  • Net debt outlook*
  • Brent price required for cash flow neutrality
  • Closed or signed deals in H1 2019
  • Midstream - potential divestment candidates
  • Downstream - potential divestment candidates
  • Upstream - potential divestment candidates
  • Petrobras’ production evolution by country
  • Benchmark: WM NPV10 by resource theme
  • Strategic fit of upstream assets
  • Production targets vs actual and forecast production
  • Production delta in top growth and declining fields
  • Production outlook by basin
  • Benchmark: WM production CAGR
  • Gross project IRR for key pre-salt fields
  • Benchmark: WM upstream opex spend intensity
  • Payback period for Petrobras' projects by start date
  • Case study #1 – Marlim legacy vs. redevelopment
  • Case study #2 – Roncador legacy vs. IOR (gross)
  • Campos basin recovery factor for key fields
  • Benchmark: deepwater-turbidite recovery factors
  • Benchmark: Total organic reserve replacement
  • Benchmark: exploration wells (net)
  • Outlook for top prospective basins globally
  • Benchmark: Brazilian offshore acreage by basin
  • Exploration portfolio
  • WM supply and demand balance for Brazil
  • Benchmark: WM NCM outlook (2019-2023)
  • Petrobras’ refining portfolio
  • Upstream EV vs. Upstream NPV10
  • Upstream portfolio sensitivities vs. NPV10
  • Base case upstream NPV10
  • Current NPV10 vs. future NPV10
  • Forecast development expenditure (nominal)
  • Forecast operating expenditure (nominal)
  • New project returns
  • Reported costs
  • Reported and Wood Mackenzie forecast production
  • Oil vs. gas
  • Liquid production
  • Gas production
  • Total reserves: Wood Mackenzie commercial
  • Total reserves: commercial vs. subcommercial
  • Total reserves: reported vs. Wood Mackenzie
  • Reserve life: reported vs. Wood Mackenzie
  • Base price assumptions (nominal terms)
  • Base price assumptions (nominal terms)
  • Base, high and low Brent (nominal terms)
  • High price assumptions
  • Low price assumptions
  • Value assumptions

What's included

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