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Petrobras - Petroleo Brasileiro S.A. (NYSE:PBR)

Q1 2013 Earnings Call

April 29, 2013 9:00 AM ET

Executives

Theodore M. Helms – Executive Manager, Investor Relations

Almir Guilherme Barbassa – Chief Financial Officer and Investor Relations Officer

Jose Miranda Formigli – Exploration and Production Director

Jose Carlos Cosenza – Downstream Director

Jose Alcides Santoro – Gas and Power Director

Maria das Gracas Silva – Executive Manager of Business Performance

Analysts

Marcus Sequeira – Deutsche Bank

Gustavo Gattass – BTG Pactual

Luiz Otávio Broad – Ágora Corretora

Christian Audi – Santander

Auro Rozenbaum – Bradesco

Frank McGann – Merrill Lynch Valores SA

John Herrlin – Societe Generale

Iain Reid – Jefferies

Operator

Good morning ladies and gentlemen, and welcome to Petrobras conference call with analysts and investors for the presentation of the first quarter 2013 results. We would like to inform you that participants will be in listen-only mode during the company’s presentation which will be conducted in Portuguese with simultaneous translation into English. Following the company’s presentation we will proceed with our Q&A session in Portuguese and English when further instructions will be provided.

(Operator Instructions) This broadcast is being recorded. Present here with us today are Mr. Almir Guilherme Barbassa, Chief Financial Officer and Investor Relations Officer; Mr. Jose Miranda Formigli, Exploration and Production Director; Mr. Jose Carlos Cosenza, Downstream Director; Mr. Jose Alcides Santoro, Gas and Power Director; Mr. Maria das Gracas Silva, Executive Manager of Business Performance, as well as other company officers.

Before we begin, I would like to give the floor to Mr. Theodore Helms, Executive Manager of Investor Relations. Please Mr. Helms, you may proceed.

Theodore M. Helms

Good morning everyone. We will now initiate another Petrobras conference with analysts and investors for the presentation of Q1 2013 results. This conference call is being broadcast live via the web at our website www.petrobras.com.br/ir. Also, if you want you can follow in Portuguese, and it’s available by dialing 112-101-1490 or 113-193-8000.

To listen to this conference call in English you can go to our website www.petrobras.com.br/ri/en, or call 1-866-890-2584 for U.S. participants, and also 1-646-843-6054 for participants from other countries. Before we continue, I would like to remind you that this meeting is being recorded. And, I would like to call your attention to slide number two, which contains a notice to shareholders and investors. The words believe, expect and the like related to the projections and goals of the company are mere forecasts based on the expectations of the executives regarding the future of Petrobras.

Lastly, I would like to inform you that the results have already been disclosed both in reis and dollars both in accordance with International Financial Reporting Standards, IFRS. However, today’s conference call will be limited to figures expressed in reis.

At this I would like to call CFO, Almir Barbassa, who along with the other officers will present Petrobras results and the main event that took place in the first quarter of 2013. Afterwards, we will be able to take any questions by the participants. So please Mr. Barbassa, you have the floor.

Almir Guilherme Barbassa

Thank you, Ted and good morning. It is a pleasure to be here once again with you to analyze and also talk about the results we had in the first quarter of 2013. Now looking at our net income, we were in keeping with what we had in the fourth quarter of last year approximately R$7.7 billion, but when we analyze this result you will see that this result has more quality to it than the result posted in the previous quarters.

Our operating income grew reaching R$9.849 million, and this also gave us the opportunity to generate more cash, reaching R$16.231 billion. With this cash generation, this positive cash generation we were able to reduce our ratio of net debt over EBITDA reaching this quarter 2.32 times, therefore stand below our internal target of 2.5 times.

In regards to exploration, which will be elaborated further by our officer Formigli, we experienced a reduction in production when compared to the previous quarter and Mr. Formigli will give us more details elaborating more on the reasons why we experience a decrease in production and which is in keeping with what we had projected.

Domestic production of natural gas increased and it did increase in an important moment of higher thermal demand, so Director Alcides will also gives us some more detailed information about the performance of this E&P area. Pre-salt production which is a reality today and is indeed a reality that accounts for more than 15% of Brazilian production reached a peak of 311 kbpd a day in the month of April.

We also installed two platforms this year Cidade de São Paulo in Sapinhoá, it’s a power project, and Cidade de Itajaí we installed in Baúna, and others will come Cidade de Paraty is currently being anchored at location. It will be a pilot for Lula Nordeste. And, four other production start-ups are expected to be installed by the end of the year and altogether they should contribute with 500,000 barrels per day of additional capacity. Also, this year we contracted two new leased FPSOs, Lula Alto and Lula Central for the Lula field, where pre-salt is produced. And also in terms of exploration, we had some new discoveries at the side of Tupi and Florim in areas of the Transfer of Rights, in Sagitário in the pre-salt Santos Basin as well as Mandarim, which is linked to the pre-salt Marlim Sul field of Campos Basin.

Downstream had an exceptional performance this period reaching some record figures of processed volume reaching [2.149] [ph] million barrels per day and also there were two price increases for diesel totaling 10.7% increase and there was a one adjustment for gasoline of plus 6.6%, both took place this quarter. Gas and energy, gas and power met a gas demand of 88 million cubic meters a day, and it had its own generation of power of 5120 megawatts of thermoelectric – in our thermoelectric plants. In terms of management PROCOP is very, very good results and [Maria das Gracas Silva] [ph] will give us more details about the program. The same thing goes for PROEF, PROEF is complying with the estimated target, bringing along all of the benefits that were in our pipeline.

And now, I’ll give this floor to Formigli and after his presentation we will hear from Cosenza, [Guido, Maria, and Jose] [ph] and at the end I will come back again, so that we can talk about the financial results. Thank you very much.

Formigli, you have the floor.

Jose Miranda Formigli Filho

Thank you, Barbassa. Good morning everyone. Continuing with the presentation, average oil production in first quarter of 2013 was 1,910,000 barrels per day. It is a 4% lower production when compared to the previous quarter and this is in keeping with what was planned by the company for the year of 2013. This process is linked to the significant number of scheduled maintenance that we had throughout these past months, and I would like to highlight the P-54 platform in Silva, P-9 and in February and January the Alto had large production platforms which had scheduled maintenance. And P-37, 53 and P-33 all of these scheduled maintenance are part of a structure recovery program to reinstall the efficiency of these units and it is severely monitored by our production with two teams together with the implementation of actions related to press, which is a program to increase performance.

This 4% reduction in the case of scheduled maintenance stoppages was related to minus 23K BPD last year and another important item that was also part of this program was the end of the early production system that was taking place until December of 2012 and again as planned had its production suspended. This is also associated to the similar metrics of Baúna and Piracaba which used to be conducted by FS11 platform and as of February this production is now being conducted, instead our ramp-up this is Cidade de Itajai (Inaudible) result for the suspension of the Oliva well that produced two FPSO Cidade de Rio das Ostras and P-34 platform produced part of the [Jubarte] [ph] production. And as planned, we interrupted that production to be further transferred to FPSO Capixaba and P-37. Also there was a natural decline in production, which was around 10% [that for work at the last year] [ph] this Petrobras decline was 9.4% of the whole. And we also encountered some operating problems, which were very specific and occurred due to the exchange of subsea pumping units that produced (Inaudible) P-57 and other significant problems that occurred in FPSO Capixaba and P-9 which have been already solved.

The productions target for 2013 is still maintaining in Q2 where production of 2012. And the second quarter of this year will continue to have a certain number of project maintenances with the installation of a system that has been previously mentioned by Director Almir, which is the part of (Inaudible) This past weekend we’ve started and completed the connection of the electrical and hydraulics pipeline and then with that we are within schedule with the beginning of the FPSO by the end of May.

We are within schedule with the beginning of the FPSO by the end of May.

Starting with the ramp up of the other unit of the (Inaudible) and that second pilot, which will then be integrated to the other four unit in addition to the other two that I just mentioned in the second half of the year. They are P-65, P-68 and P-61. P-63. P-61 is a system, model-3 and P-58, it’s another unit compared to (Inaudible). So continuing on, I would like to talk about the importance of the recovery work to regain efficiency especially in case of old efforts like the Campos basin to press and able to launch June last year, today in the first quarter.

Once we compare the production there, we would have, in case we had not introduced additional improvement measures to build efficiency, our production will be decreased by 14%. So today we meaningful 14,000 barrels per day in our operating net at Campos Basin. These are the oldest assets that also increased margins in our core fields.

If you look at our slide on operating efficiency, we were able to gain an additional fixed return in operating efficiency. And this is an example that this program is very relevant because it allows us to operate in keeping what international standard. It’s still going up and the target for this year is to be around 76%. And the reason is that we still have to keep some schedule making those to put this line in the standards what we desire.

Now when we look after the expectations for 2013 the forecast of gains is for 36,000 barrels per day, and if we add that to what already have in our efficiency performance for (inaudible) responsible for the most recent assets at the basin, and work for FE tries to avoid any drop in efficiency that we experienced last year in the Campos Basin.

We will come up to a figure of 34,000 barrels of oil per day and the projection for the whole year is of 62,000 barrels per day associated to this year program is important to highlight that NPV is still growing and positive, when it comes to these interventions, because these interventions were able to give oil with a high internal rate of return, allowing us to experience to have $542 million that can be used as investment, which we mentioned an investments in CapEx and we’ll talk about $1 million.

Now referring to lifting cost, this quarter our lifting cost, total lifting cost was slightly lower than the lifting cost of the first quarter of 2012. This already indicates that the Company is doing a lot of things to help us increase our production capacity of oil in the future at the lowest unit cost. As production in this quarter was lower, even though we were able to reduce the total cost, our average cost was higher. This cost is intervene with what has planned and pick up that Maria das Gracas will elaborate more that, we’ll also gives us clear improvement in our line of operating costs.

To read them that explain this cost increase that associated to the scheduled maintenance capitals and the introduction of new systems, which are not fully operational. Therefore we have the advent of new systems and their costs are now posted in the operating cost line and production, it was now at two-fourth and it’s still in the ramp up stage. The unit cost for those oil that is produced is then increased that, which time this cost tends to decrease.

Now moving on, we have now exploration area, we were able to keep this control in terms of lower number of dry and subcommercial wells, exactly as it was planned as of the second half of last year when Petrobras setup with exploratory policy balancing the aggregation on new volume with our capacity to taking more dry wells and serving the exploratory risk of the portfolio.

Out of 18 wells, where none of these wells were presold and fourth you first sold in the Brazil in the onshore area, and three canceled projects. We are still keeping very tight controls in this area and the numbers projected for this year or still according to what was planned last year, which was lower than what we had in 2012. So this is what I had for you at the moment, and I’ll give the floor to my colleague Cosenza, who will talk about the results for refining.

Jose Carlos Cosenza

Good morning. When it comes to downstream I would like to begin by talking about oil products. First of all, I would like to say that more recently, we had three records of oil processing the first in March of 2013 it was R$2.125 million it followed by March 30, with R$2.137 million and more recently in April we had another record of R$2.149 million. This stands from the integration among all of the processing areas, which will adds to performance increases.

Higher processing means more oil products. So when we compare fourth quarter of last year with this first quarter, we experience a 6% increase in production. Our profile after the time, we’re still maintaining then when if we renewed seasonality not seasonality, but when we compare the first quarter of 2012 with first quarter of 2013, we see a production increase of about 10%, which generally comes from this higher profits and losses. Then we look at refining cost, the result of a reduction when we compare 4Q of 2012 with Q1 of 2013 from R$6.98 in the fourth quarter of 2012 to R$6.24 in Q1 2013, and this 11% difference is attributed to a reduction to routine maintenance, expenses and also an increase in processing in our refining.

The result of higher processing is translated into the utilization of our facility in the first quarter this year, when you compare the value of the industry, which 98%. Out of this 98% processing R$2,083 million that is being average for the quarter and out of this R$2,083 total oil processing R$1,723 million is our own oil accounting for 82.6% of national oil processing being done in our refineries.

When we talk about oil product sales, we see here the effect of seasonality when we compare the fourth quarter of 2012 with the first quarter of 2013. These comparisons include the seasonality both for gasoline and diesel oil. Now when we compare the 1Q of 2013 with 1Q of 2012, we see a 7% increase in diesel, which accounts for the development in the real experience by the country, and also the results that we anticipate in terms of oil product. So this is a significant increase of 7%, when we compare this first quarter with the first quarter of the year before. In terms of oil product prices, there was an increase on 21.9% for diesel and 14.9% for gasoline in this first quarter of 2013 there was a 10.7% increase in diesel oil and 10.6% for gasoline, these increases tend to converge to international prices of oil product. In this curve as you may seen, the down curve is the ARP in Brazil and the other curve shows ARP in U.S. Gulf Coast, and so you see a variation of prices and we see a significant trend as well.

In terms of trade balance of oil and oil products, in terms of imports, I would like to highlight the fact that talking about exports when we compare the first quarter of 2012 and 2013 in terms of the figures we see a reduction in oil exports due to lower production and also associated to higher processing in oil refineries. We are buying more light oil products to corporate oil processing and capacity, and therefore to be able to reach the numbers that we want.

(Inaudible) highlight when compared with the first quarter of 2012, the first quarter of 2012 compared with the first quarter of 2013, we had a reduction in the numbers comparing with the first quarter of 2013 with the first quarter of 2012, we had a significant interest when compared with the first quarter of 2012 a significant reduction of 2015, which is quite significant. And this consequence is seen in the cost of oil products produced, lower production of oil products in the market. And finally (inaudible) to increase volume trend particularly given that they said beginning of the March, our cost retained in oil production of oil products. Thank you.

I’ll now give the floor to officer, Mr. Jose Alcides Santoro.

Jose Alcides Santoro Martins

Good morning everyone. The relevant point in gas and oil, the higher demand for natural oil and gas R$88 million completely when we compared to the thermal and electric demand. The revenue were (inaudible) that this is 4.2% higher than the fourth quarter of 2012, and 334% higher compared to the first quarter of 2012.

Thermal and natural generation of Petrobras within keeping the value that we got in the fourth quarter of 2012 about 500 gigawatt average gigawatt in the period. Even this due to the supply, both international and domestic production of impacts from Bolivia were aligned the Petrobras this quarter. And increase of domestic gas, with a significant increase 16.7% higher in the first quarter of 2012 towards a reduction of 12.8% for LNG.

Now, I would like to give the floor to (inaudible) talk about PROCOP.

Unidentified Company Representative

Good morning. On slide 13, (inaudible) for PROCOP program results. Our goal is to reach R$3.8 billion in 2013. On the imports and exports, which we are operating activities from left to right, where we are doing with our onshore production, offshore production into that areas, because of the downstream with activities that range from the refining, logistics, commercialization, all of these preferred area. Then we have gas and energy, the activity is related to fertilizers in natural gas logistics.

Looking forward to highlight that [pure], we will not include the energy part because in the first quarter of 2013 there were no growth length, which is operational activity. Continuing to horizontal, we have our engineering technology and material was the document showing the profit growth rate for balance and stock here as well as activity with the income mitigation.

The corporate and services the [personnel] in a reduction associated with cost related to building, travelling and volunteering and health and safety environment. So overall with the initiatives for the in terms of petro initiative in 2013. Now the note of operational activity, which professional to their contribution to growth revenue this level. It becomes very clear were refining is the operating activity that contributes the growth for 2013. On the efforts, the accumulated in each (inaudible) compared to what is expected for accomplished this as expected.

So the direct volume shows the expected savings to our future operating activity the recovers that will show you the increase over time, the charge of R$2.8 billion, the current COGS is linked to achieving the target for following the lower target. In the first quarter, we expected an accumulated sales was up R$646 million, the accomplished cost saving is R$1.260 billion in the first two months of the – in other words achieving 33% of the annual target for 2013. Those results, which was better than expected were that’s been three main activities firstly we had seen an number of volatility in the activities with better efficiency than we’ve expected and this has been in a side for the (inaudible).

And the second demand for gains that were expected to happen later on in the year whereas followed. Optimization actions et cetera and the result came before expected, but it is not in the reason to have additional gain for the activities along the year. And finally, in activities that we expected for the first quarter (inaudible) and in order the efficiency gain (inaudible) adequately managed or in these that performed in line will concern that the expected gains will change.

In other words, we maintain the target for 2013 R$3.8 billion in savings diluted to our operating activities. Thank you.

Unidentified Company Representative

Thank you. Now, we’re going to talk about the quality of our earnings for this quarter. In the first quarter, our operating income it was R$5.739 billion. General things in oil production our demand for oil products in the country, the market strength little and that’s why our sales was reduced to remain the lower volumes of our products to the certain domestic market. However, cost had a significant contribution R$2.164 billion. However, that is from explained by the cost of goods sold. Introducing the two factors we have processed more oil in terms of reproduced more oil product in our refineries, and we saw our credits to the produced given our higher operating efficiency and given the startup of new units in the refineries where that kind of puts back a part of the input of our oil products and this reduction in oil products in process – we have a couple of goods sold with that.

We have a major contribution in this period coming from a reduction in the production cost and because of those reduction the operational refining cost has also contributed to the cost reducing the cost of goods sold, because Petrobras overall, sales and general and administrative expenses were also lower. Remember our cost was written off those expenses and that’s contributed – that reduction contributed with another R$1.6 billion and with that we reached an operating income in the first quarter of 2013 of 9.894 billion. And you can see this improvement compared to 5.739 billion in the first quarter of 2012.

Let’s talk about the net income. The overall goodwill impacted by our operational performance and it translates to operating income to net income that brought into another 4.120 billion that in the first quarter within that a half defect has resulted (inaudible) that we had in the first quarter, and a low one time off the duration and expansion of the duration as we move. So, that contribution is not seen in this quarter. And in the fourth quarter of 2012, the production interest on equity, which was not seen in this quarter. The key elements, however, this could maintain our net income R$7.747 billion in the first quarter of 2012 and R$7.693 million in the first quarter of 2013.

Looking at exploration and production, review these segments now. We saw as expected a lower production in the quarter for E&P. E&P operator including R$2.5 billion negatively impacted by the product of oil that E&P posted on, and that was a bit lower. And the lower production was actually cost reduction in E&P results for the period. Also the cost of E&P average production costs was increased. And we disposed 146 million, the average cost effect on cost. This was relatively low E&P also spent less in the [requirements] of royalty overall improvement of R$1.388 billion and R$621 million came from operating expenses, the volume of expense is related to dry holes or abandoned holes was R$621 million. And with that E&P closes the quarter with R$16.84 billion as operating results.

Looking at downstream now, on slide 17, we started with a loss of R$8.715 billion in the first quarter of 2012 with the price effect on revenues drove both a gain of R$1.651 billion, however there’s some seasonality involved that led us to sell less oil products in that store from downstream R$2.414 billion. And just now, we have the operational contribution a little bit higher than what the production of oil products that allowed us to reduce the inputs of oil products to supply the local demand, in fact the loss operating income is lower domestic demand and then gave us another $3.378 billion, so that is a volume effect on costs. with that, our operating income was R$6.5 billion to R$2.2 billion better than the operating income for the first quarter of 2012.

Let me give you the net results by segment very briefly this is the summary of the factors that improved or reduced the performance of the segment for E&P production, we’ve had a decrease of oil and NGL production in Brazil lower dry for that commercial royalty write-offs and lower further lifting costs, but also contributed to include the results of gas and energy we had a higher power generation revenues due to energy prices in the market we were able to keep a flat volume supplier of domestic gas with lot of domestic gas available and we also had a larger acquisition price of LNG and this was in lower amount given that acquired of that the gas sense for domestic production. Moving to national segment we’ve had a quite positive result we have a negative R$6 million and moving to a positive R$7 million, we had higher sales volumes, many of our products have launched with higher production of volume as finally positive in this quarter there is no impairment whereas actually happened in the fourth quarter of 2012. We had worked driver on wider cost or subcommercial railroad after this quarter when compared to the previous quarter. (Inaudible) there is no stock devaluation of oil and oil products development.

For Downstream, we only have positive development NGL total assets of the international segment. For Downstream we had a price increase of diesel and gasoline [Eric] mentioned before and that contributed positively. We had a lower share of the imported oil products in sales mostly due to lower part of the oil products solvent in the domestic markets, that market are positive and we had a higher oil product production in Brazilian refinery which products have lot oil cost oil products.

We’re going to talk now about investments, our investments performed 10% higher than the investments in the same period of last year. R$19.8 billion of investments in this quarter, and with investments basically made in two areas that practically adds to 90% of the total of investment, 54% went to E&P, 35% went to Downstream.

And, by tracking the major projects of the company using the S-Curve, we can see there are 160 major projects we have an average physical accomplishment of 98.9% and 97.8% for financial progress than close to [79%].

Now let’s move on to our debt, which have the total debt, which remains stable of R$196.3 billion to R$196.9, it’s quite large, which was partially make possible by a slight appreciation of the real. In this first quarter we’ve got $2.04 per dollars and it’s now at R$2.41 real per dollar in the end of the first quarter of this year.

And let’s talk about the [investment account]. We have slight lower cash and cash equivalents that at the R$2.2 billion about R$1 billion we’ve invested in stocks, comparing our stocks because we will see the second quarter of any given year we have positive seasonal effect for the demand for our products, so the second quarter is coming we’ve decided to have our stocks stronger in that, particularly in some of our cash and cash equivalents. First of all, the results lower than (inaudible) of the EBITDA ratio declining from 2.77 to 2.32 times, as a result of our excellent cash generation in the period, while potentially EBITDA volumes to close this presentation. In the evening, I’m available for the question that you may have.

Question-and-Answer Session

Operator

(Operator Instructions) Marcus Sequeira from Deutsche Bank would like to ask a question.

Marcus Sequeira – Deutsche Bank

Good morning to all. I got one question about E&P and around about downstream. In downstream, I remember that you’ve indicated that a little bit of price increase for the result, my question is has the (inaudible) happened in the first quarter or can I expect further increase to production of gasoline in the result for the coming quarter. And can you explain the annual scheduled stoppage they could have a significant impact on the margin this year and actually in term of, could you talk about the performance of the platforms, do you expect that platforms whether it stood up in the next month, do you expect them to be significant platforms compared to set of assets?

Unidentified Company Representative

Well, this is (inaudible) to answer the question about downstream. In the first, in this quarter, we’re going to expand the insignificant strategies, strategies are not seeing the reduction in production but not anything substantial to impact our indicators roughly the future in terms of generating (inaudible). We were looking into that. The slow down as I mentioned our strategy in this system will give us more flexibility and we’re seeing that and we’re able to increase our processing. In addition on this view to buying oil, which is adequate and you’ll find that oil make enviable as a result of the investments made in this item, I’m talking about the ‘12 operating refineries, where our outlook is very positive for the future, we should have some additional production.

These four financial strategies for E&P, continuing during the second quarter in small, medium and heavy developed in this quarter. We cannot give you any projections, but what I can tell now that the revenue strategy will impact small and big, both small and big platform, where that’s stand for oil refining in terms of 2013. In Q2 would have well change schedule and the track of these strategies compare that is estimating this, what has achieved. And second half of the new ROE within the reduction of the second strategies then we will be able to fix a steady increase in production and that will be substantial. Thank you.

Marcus Sequeira – Deutsche Bank

Historical (inaudible) question. Good morning to all. My question was just about (inaudible) and the second question about E&P. My question in terms of the – we’re working very hard with rate (inaudible) positive in terms of because you are positive in terms of reduction. We are producing in the second and third quarter offers that as I mentioned, is there any operating risk of operating such higher efficiency level, it is a fact that there was two higher than the average level of the industry.

And my question is, I also want explain, is there any operating risks of our ability in a such a high realization work, gets effect, but last year, they were relevant maintenance packages and refining for absolutely we have a role, some other role in maintenance level for this year, but does like somewhat, so can you continue to operating 97%, 98% utilization works (inaudible) any operating risks of strategies. And I’m just trying to understand this level of production.

My second question is related to (inaudible) you mentioned the schedules and strategies in the first quarter accounted for a reduction averaged to 500 barrels per day that averaged to most of the production (inaudible) amounted to 11,000 barrels.

Unidentified Company Representative

We would be talking about 34,000 barrels per day reduction (inaudible) this year we have scheduled schedule strategies and that having the half year production reduction close to a 100,000 barrels per day, if we were interested scheduled and unscheduled strategies we’re concern about in reduction of 60,000 barrels a day. So I think you can understand it is in this first quarter. We’re considering that our schedule to operating impact. This production allows, we will sit with that. And you will look in this quarter – with a higher production levels since you just found the strategies we’ll be concentrating, we’re concentrated in the first quarter. Perhaps in the second quarter you cannot see any strategies.

Marcus Sequeira – Deutsche Bank

I am (inaudible). I think your comments are very appropriate. Well, we find in terms of together where the rest of downstream works towards liability. We work with the LIBOR systems. For a long time, we believed in the lifting systems, control systems and continuous improvement systems in our refining, as some of that (inaudible) but we want to make sure that we operate with high (inaudible) avoid stopping from maintenance. It's maintenance is necessary with stop and the repair, never give the (inaudible) on systems with less than optimal conditions. So, what these numbers are sustainable or are working strongly?

Unidentified Company Representative

It's a big difference. Comparing Petrobras, Petrobras (inaudible) gives the door into complexity that allows us to include the throughput but we never give the maintenance that is necessary, because we know the maintenance that we do not do today, will come and haunt us six months from now with different types of impact over the [logistic safety living] brand moment (inaudible) for the year. we are very convinced that this is the value, maintenance value to us. We focus on the safety and maintenance of our facilities so as to maintain good results.

Unidentified Company Representative

This is (inaudible), so confirming for this year, we’re not thinking about any more relevant stoppages? That’s right. We have natural stoppages that [preferably with our land] maintenance if necessary. But we are going to have maintenance stoppages in this second quarter. We are going to have some stoppages – like I said, we have substantial maintenance that began in the last quarter of the year, but result, part of our schedule of maintenance. It has nothing exceptional given to one issue here, one issue there and it was natural maintenance.

Unidentified Company Representative

Now, here is (inaudible). Well, first of all, the level of stoppages that we had in the first quarter was higher when compared to the previous quarter, and it will remain in that same level, and maybe a little bit higher. In the second quarter, there is no way to avoid these scheduled maintenance stoppages because they are part of our planning schedule and this is the way to achieve a sustainable growth in operating efficiency. We cannot afford to lose any more operating efficiency in the asset of Campos Basin and we cannot allow to decrease our average efficiency and the assets of Rio.

And the second point is related to decreases in production that you talked about relates to operating problems. We had some operating problems associated as I said very briefly, associated to two platforms, P-19, and FPSO (inaudible) which were quickly sold. We also experienced a drop in the subsea centrifuge with problems that are still – they are underway and they are close to being concluded in results. Then I think that what really made a difference between one quarter and the next, refers to the suspension of production, which we showed in one of the slides from 36,000 barrels per day with this requirement of suspending production without being able to make it up for that ramp up of the (Inaudible) is that we experienced also a drop in potential, but not associated to a decline, but it was linked to a schedule of suspension of two of our platforms that were under production only in the case of 334.

So they’re reallocated to 357 and in the case of PRB, but the (inaudible) platform is already producing more than in the first quarter. And it’s not even fully operational. This same process if we want to extrapolate a bit happened throughout the year of 2012, so when we compare the first quarter of 2012 to the first quarter of 2013, we experienced a 9.4% drop in this period. And we also had some exiting out of units of 60,000 barrels. So in addition to (inaudible) back in Oliva, we’ve actually added project out of that production. And in that period, we had the addition of a system that was Anchieta in the response from the reservoir was quite positive and we also added the start up of pilot and TRB north, north and as I said the initial ramp up of (inaudible), so when we put this new oil, it’s not yet enough to offset for the decline which is within the low, the historical 10%, which is very peculiar of how large production and deep water and start up quarter is of 18,000 barrels therefore and I would say that the process is under control and as we have new oil coming into the system that are already installed and those that are yet to be installed in the next coming months then we will have a sustainable production growth.

So let me see if I am comparing the right numbers, staff establishment maintains 23,000 barrels a day when compared to that number that has an average for 2012 adding up it was a non-schedule that was around 50 to 60 in my right when I run that comparison?

23 this 23 does not include non-schedule just schedule right yes precisely. And what we are saying is that the global difference with that 23 right next. Thank you.

Operator

Mr. Gustavo Gattass from BTG Pactual has the next question.

Gustavo Gattass – BTG Pactual

Good morning. I have a few questions here that I think I will just ask few of them. First of all I would like to understand one thing. I was looking at slide and what I could calculate and I do apologize, because I maybe too precise, but I think you’ve had something like R$330 million gain in E&P and R$600 million in savings in that cost efficiency program, when we look at Slide 16 and 17 how do we see that, where is the stock does that appear average cost reduction in COGS, I just want to set us a bridge between what you’re doing on the one side and what is happening on the other side.

One other point that I would just like to touch upon is that in the quarter, we see a significant improvement in the results of fuel distribution, you didn’t really elaborate on that subject, does was there any relevant impact when it comes to gains on stock in that quarter, because of price increases. We cannot see anymore or what is the inventory of (Inaudible), I would just like to understand, what is your point of view and what is there is something extraordinary?

Unidentified Company Representative

Gattass, I’ll ask Maria George to explain further to talk about per-cop and then next I’ll talk about distribution.

Unidentified Company Representative

Gustavo, good morning. In terms of the work estimate, your approximation is correct, when you look at a total gain and the area and then you deal, you arrive a significant savings in every operating unit that comparison was the extraction cost, refining cost et cetera is not so direct because in that slide, we are comparing one cost that would occur without the program compared to the actual cost or realized cost when it comes to refining cost, we are comparing it with the previous period, but in the figure, here is fact coming from cost or rate, but this is not a direct comparison, because again one is being compared with the previous period and per-cop is measuring savings.

So one cost that I would have is the program we’re not introduced was not introduced, so what is expected of a base concentration for per-cop is quite a lot,

Unidentified Company Representative

That’s an interesting point because one operating cost has three elements, the level of activity output and unit cost, Petrobras is increasing its level of activity, this is a fact, we are working at per-cop with productivity and unit cost especially productivity. So if the company increases its level of activity the total cost increases, but it increases much less than what it would increase without the productivity increases that we are attaining with this program.

Thank you. Talking about the cost of the product, we increase from an average price in the fourth quarter of 2012 from R$110 to R$112 per barrel in the first quarter of this year, so it increased from R$110 to R$112, so this stocks in this fourth quarter that were eventually used here, did not pay significant contribution, it is something positive that there isn’t anything too relevant about it. So when it comes to distribution to get significant results among other things, it was due to the fact that thermal plants received fuel oil and there we experience significant increase with the suppliers or refineries which makes that available and also distribution increased approximately 15% when it comes to delivering the fuel oil to the thermals which also allow them to experience additional deals.

Okay. Since as a follow-up, the margins of fuel oil tends to be higher than the average margin of other products. So you were referring particularly to the distributor, well I’m talking about the EBITDA margin of the distributor, which was very good and much higher than what we saw in other distributors. I do not have that information to give you unfortunately. Okay, we can talk about that later.

Operator

Mr. Luiz Otávio Broad from Ágora Corretora has the next question.

Luiz Otávio Broad – Ágora Corretora

Good morning. I would like you to talk a little bit about the debt market for Petrobras, and whether you wanted to do some fund raising now or maybe by the middle of the year and what about the funding costs? And, the second part of my question is what about your monitoring regarding the platforms that you will be receiving in the long range, some from Brazilian ship yards, whether your level of concern is aligned with last year or whether you are more concerned this year?

Unidentified Company Representative

(Inaudible), the debt issue is aligned with what was happening before Petrobras has very good penetration in the first and foremost area. The last capital raise, we did in February of last year and the dollar denominated market was up R$7 million with a demand for $25 million demand in dollar terms. We also experienced very high demand in Europe where we were able to get R$3.5 million equivalent, right, and the demand was close to R$10 billion. The view that the market has of Petrobras as a company of very strong growth with products to deliver with discovery in the pipeline, all of these things together are very positive for fixed income investors and this is our reality.

We are working, has been curtail throughout the presentation but our delivery goals, installation of producing this are quite significant, and the goal is to increase production as of the second half of this year, and we want to continue to grow continuously as much as I obviously can see a faraway in the horizon. Therefore Petrobras is in a very comfortable position in this market, half a time slow due to several other elements, but it has been very favorable to Petrobras especially when we compare the current position in the market versus other spending your capital results in the past. And then you saw the results of the company in terms of cash and cash equivalents and total debt level, which has been kept stable and those shows the achievements still the growth of our internal generation of cash flow in 2015. By 2015, our cash flow will be positive for the entire company.

And now, I will give the floor to (Inaudible) who will talk about the delivery of platforms.

Unidentified Company Representative

Good morning. When we talk about the mid and long-term platforms, I think that you were talking about those that are to be delivered by 2016 (inaudible). So let’s talk about those.

First of all, all the shipyards and work sides where we have projects either related to projects or integration or the production of ship, the folks are moving according to the plan. In virtual terms I would say that they are under construction. They are being built and the schedule is aligned with our own schedule. What we are doing is monitoring not only the hiring of the units, but the construction of where they will be either integrated or assembled and all of this is being monitored by our engineering department. And as we see opportunities in our portfolio to allocate, in addition of the unit, we are then managing the risk, which is associated with the construction of the platforms. And as [Rob] said, we are now contracting for early 2016 and this will give us some more room for FPSOs, where the buses are being built at shipyard, because everything is moving according to the schedule. We will allocate two of these units to the transfer of rights where the results are also very positive.

So in summary in areas where we have to be view platforms or rigs, all of the orders are moving according to schedule, the purchase of equipment and also right at the beginning and the cutting of cost everything is happening according to schedule. Thank you.

Operator

Ms. Christian Audi from Santander would like to ask a question.

Christian Audi – Santander

Thank you. I have three questions, (inaudible) the first one has to do with Texas. Another tax of payment increased from 25% to 31%, about 41% if long term results, what would be most sustainable, will tax payment remain at higher level or really drop in the next quarters.

My second question would be (inaudible) possible, could you give us an update in terms of the start-up timing for P-63, P-55, P-61, P-58, P-62. And my third question has to do with refining. I would like to understand if it’s going to be – to increase the utilization rate which is only there is a high 98%. Are you expecting to increase your refining production capabilities and further for the next quarter or should you remain at this level? So will the maintenance schedule caused production to fall from 98% and then pick up again. So it would be very helpful if we get enough wait on that.

Unidentified Company Representative

Next question, coming to the first part and we give the floor to our colleagues. Talking about taxes when we compare to first quarter with the first quarter of this year, essentially it is interest on equity. In the first quarter, we do have an accumulation results that allowed us to make this kind of statement. In this quarter, we couldn’t do the same and that is what really accounts for this difference related to taxes. We’d only advice you in terms of one thing, this is the accounting view of taxes, the financial view well payment uses different criteria when we are thinking about disbursement, it doesn’t mean that the amount that you see there was follow dispersed. So for the second and third quarter, we should see something similar to what we saw in this quarter.

Unidentified Company Representative

Christian, looking ahead at the second and third quarter, the tax level in terms of percentage perhaps it should be close to what we saw in the first quarter?

Christian Audi – Santander

Well, I wouldn’t be looking at this quarter-on-quarter; I would be looking at this for the whole year. For the whole year, I believe you should expect more or less the same thing. I’ll now give the floor to (inaudible).

Unidentified Company Representative

Christian, we are working with planning and disclosed in our business management plan. Page 63 for the second (Inaudible) of July please see Page 55 and at September Page 58 and in November and finally Page 61, end of December. So this is the timeframe that has been scheduled that there are companies working it. So we are working to achieve it and we got a growth production in the second last fiscal year. Okay, thank you very much.

Unidentified Company Representative

Christian, thank you for the refining (inaudible) with very high tariffs represented the other. About the significant internal [system] maintain with very high processing levels. Which was there is a significant but generally in terms of reducing input and because of the reduction of cost of goods sold. So we are sparing new vessel to maintain this level of the amortization rate. It is quite high as you said – there is an equipment challenge to keep it up but we are working on it.

Christian Audi – Santander

This is Christian again, but in other words can you improve this – these all order are having very high utilization rate. So it all sits at the top that we can get.

Unidentified Company Representative

And sorry Christian, so I couldn’t hear you there could you repeat the question.

Christian Audi – Santander

(inaudible) and saw in the presentation we are the refinery at a utilization rate of 98% correct yes?

Unidentified Company Representative

Yes.

Christian Audi – Santander

Do you increase those to say 100%, tend to go beyond the 100%, what kind of improvements are you possible to get, the positive improvement in the utilization rate is important or have a upper limit.

Unidentified Company Representative

It is all in case of improve, anyway we are saying, but the mode, I think the management probably set is a little bit lower for both these gentlemen and (inaudible). We can say when it’s still moving there is a little improvement in the processing of our refineries which will lead into the complicity of the facilities. Our refineries complicity was overall quite recently given the major investments we made both in generation and higher gasoline and diesel and also in conversion and generation, and all of that showing the balance and we are now studying the refineries with this new setup for new configuration and we are working to supply the mortgage within or what we can do and respecting the safety requirements of the facilities and environmental aspects of the operation of our refineries. And as for maintenance given the schedule that you have for the second, third and fourth quarter of this year, what can you tell us in terms of what we were except when or we are going to have heavier maintenance and each quarter we’re going to have heavier maintenance and each quarter we’re going to have low maintenance.

And the second and third quarters will surely have small to medium size maintenance operations. In the last quarter though we’re expecting substantial maintenance of the refineries, so overall we’re going to have a significant downtime, but our expectation is that part of the reduction will be offset by other refineries.

Our balance is very important. Processing is very emerge linked to integration among the refineries. You can move processing from one to another in the same region, you can transport more intermediate products among them and we are working with all of that and as we are looking for greater integration between the refineries and the wells. We had a lot of several positive effects when we increased the integration among the refineries. Particularly when you talk about the intermediate products the result is that, the deduction of the new (inaudible) significant and this is due to a strong integration, one area complementing the other. And we transfer that by total navigation of not using trucks, because you are talking about significant volumes here.

And the maintenance that you expect small and medium size maintenance for the second and third quarter how does that compare, or what kind of maintenance we had in the first quarter, in the first quarter did we also have small and medium maintenance stoppages. I’m just trying to compare what we can expect for the second and third quarters compared to the first quarter. Our expectation is that the maintenance in the second and third quarter will be a little bit better than in the first quarter. Thank you.

Unidentified Company Representative

Mr. Auro Rozenbaum from Bradesco would like to ask a question.

Auro Rozenbaum – Bradesco

Good morning to all. I have a question that I think it should address to officer from (inaudible). Can you help us a with the expected recovery curve for the second quarter? As it was said before, the schedule and maintenance first substance to increase a little and this was expected. Given the fleet of rigs that Petrobras has having (inaudible), well equipped now to be able to perform this for process with a good level. I would like to conform the number of rigs today thus allow for the maintenance that you consider to be optimal, all right, necessary and expected maintenance. So I hope you could give us perhaps some more color regarding the recovery curve for the second half of the year. In other words to reach whether we had reached to the minimum production, I would like to know in first question. My second question also has to do with the investment program if you could perhaps give us an update on that and tell us how this is unfolding and what you expect anything about would be also quite interesting. Thank you.

Unidentified Company Representative

Good evening folks. With all of the rigs that we need to develop production and to carry out what goes over and to maintain production with possible stoppages in some wells, which included in our planning so we are in asset growth totally under control. When we talk about scheduled maintenance obviously first includes in addition to the course and would included scheduled maintenance, scheduled stoppage using the preference and in the maintenance of the subsea system. All of that being considered and what we called scheduled stoppages so that in the second half we can have growth. Are you asked about the projected production as you know we progressed normally there is not disclosed, but a little depended. The level of maintenance in the second quarter will be inline in keeping with what we already had now. We have some bigger plans not stopping the expected production and average production increasing in the second quarter. Production will be in keeping with what we have today.

Now average and the half of the year when we expect a favorable ramp up of those already installed units and the start up of production of those units are little bit during the second half of the year. This is what is going to bring us this increase in production.

Today, for example, we have in Sapinhoá, it is producing through Cidade de São Paulo FPSO, and we are now installing the first big boiler and so that we can have wells starting up over time, and very soon in the Lula high within the northeast, we’ll start with an individual well, and then within the big (inaudible). And,in Bauna/Piracaba we have a number of rigs as we speak drilling to complete the interconnection of pipe and then we’re going to have a increase of Papa-Terra with the interconnection of the satellite wells, and finally, P-55 and P-58 with satellite wells.

All of these wells altogether will help us recover production bringing back to a level of 2 million barrels a day of oil a day. And, that gives us an average production in keeping with what we had last year, more or less 2%, actually in keeping with the goals from last year more or less 2%. Thank you.

Now, I will give the floor to Barbassa to talk about Prodesin.

Almir Guilherme Barbassa

I think, you ask for information about Prodesin, the divestment program. We are working in that goal with untouched or uncapped and disclose the information about the individual status of the projects. When the negotiations were complete we will disclose and make it public. That goal for this is R$10 billion right, yeah R$9.9 billion. Well in fact this divestment program has been designed by Petrobras, some time ago I don’t know that it carry the same name, but in general, I don’t know if it’s either for market conditions or what have you we’ve seen some difficulties, because in general we went up selling assets, is there any specific reason that allude us to believe that this year, this should be quite hard to target or maybe rephrasing it their goal that has been reinstated, the reinstated of this goal did you bring up any difference in this equation that you could probably mention to us?

Unidentified Company Representative

The only thing that I could tell you in that regard has to do with systemic work that we are doing internally to that end, in terms of results that we also depend on the other side, but now regarding Petrobras itself in our systematization, and the rigorous follow-up of all the processes, that there is successful outcome or conclusion certainly depends on finding the most suitable buyer that see some value in the asset or at least the value that we see otherwise it will not be materialized. Therefore it’s difficult to say anything for sure certainty or something that we cannot anticipate at the moment. What we have to do is to work well with that project that’s all we can do about it.

Auro Rozenbaum – Bradesco

All right, thank you.

Operator

(Operator Instructions) So now we have the next question.

Unidentified Analyst

Two very quick questions. First, could you give us an update about the refineries that are being built in the northeast Comperj. And secondly an accounting question, Barbassa,

we had a positive result this quarter, which was different from the results in other previous years. Is there any explanation in terms of cost and revenue in the Company, I think that’s all I had?

Almir Guilherme Barbassa

Comperj, we’ll take about the refineries. Now I think it was [energy premium] and Comperj, was that what you said? What is the status of the project and what is the start-up expectation regarding the other projects?

Unidentified Company Representative

(inaudible) project is moving along at normal speed. Today I think the refinery is 73% ready and Comperj 51% ready. Therefore everything is moving according to schedule. The first train of (inaudible) will leave on the 2013 and 2014, and the other one in May of 2015 both for 15,000 barrels a day, so in total 330,000 barrels per day of refining; Comperj processing of 165,000 barrels anticipated for April 2015. These two refineries that are under construction are according to schedule and the officers are keeping a close look and monitoring the construction to be able to conclude it on time. And also the ones in (inaudible) are being analyzed, so that we can make them profitable we wanted to have them operational and operating with a good profit. Thank you.

Unidentified Company Representative

In terms of the elimination, they occur between E&P and downstream E&P sells to downstream. However, if downstream increases it’s inventory level this is not sold to third parties that’s why it is not posted in the final result, and that’s when we have the elimination of the results of E&P, and that’s only verified when we sell it to third-party. So this is what you noticed and as I said before there was inventory increase in the first quarter, higher than what we had before due to the expected seasonal demand for the second quarter stemming from the harvesting and transportation of grains in the country.

Okay, so for the second quarter we may expect a return of the value on average to be a little bit higher than, what we saw in the past. Well, I explain to you from the fourth quarter of last year to the first quarter and why that happened so in terms of the first, second, third and so on and so forth. Okay, thank you.

Unidentified Company Representative

We have question in English, Frank McGann from Merrill Lynch would like to ask a question.

Frank McGann – Merrill Lynch Valores SA

Two questions, one question is, in terms of looking for the import trends, with imports have been much lower than expected, I think in the first quarter on the refining product side, I was wondering the trends that you expect over the next two to three quarters, I would assume would be to keep those relatively low, more in line with the first quarter at least for the second quarter, and then as production rises in the second half perhaps this number should actually improve even more. I was just wondering what your thoughts are in terms of the trends in imported refined products going forward.

And then just in terms of growth in 2014, I mean this year you think plus or minus 2%, if some kind of indication and how much relative growth you can see in 2014 versus 2013. Thank you very much.

Unidentified Company Representative

I transfer the question to Cosenza, just a moment please.

Jose Carlos Cosenza

Frank, key results this year, absolutely we have some import figure especially in the 30 to lesser, (inaudible) number to expectation increase import, but can we agree, we are the two – coming through, we need to stabilize the import because the level of tradition not only due to absolute tradition, but the EUs in the refining expectation increase because we (inaudible) use other projects other clean volumes into supply our finance, we change the EUs of the projection, this is critical issue for us and our expectation is just for (inaudible) other three trial for this year. Okay, fine.

Frank McGann – Merrill Lynch Valores SA

Okay, thank you.

Unidentified Company Representative

Thank you.

Jose Carlos Cosenza

Production in 2014, of course with so many new platforms, we installed modest capacity, we have more than R$50 to be connected with regard to this year, so when you add up all this production, productions were completely ’14 will be significantly higher than the level that we have been doing 2012 and 2014. We cannot anticipate number, we cannot make this public now, but for sure all the benefits of this system that has been installed in terms of processing both capacity we really have the benefit for having these in production next year, not only from software, but also from (inaudible).

Frank McGann – Merrill Lynch Valores SA

Okay, thank you, very helpful.

.

Operator

We have another question in English. Mr. Robert (inaudible) would like to ask a question. Please proceed sir.

Unidentified Analyst

Hello, I have just a very simple question. Given the (inaudible) half of the year for E&P production volumes, what do you expect for December of 2013 or maybe for the fourth quarter as an average production exit rate?

Unidentified Company Representative

[Production in the end of] [ph] 2013 will definitely be way above 2 million barrels of oil per day, so that's the average of the year (inaudible) target more than 22%, plus or minus 2% as Petrobras announced, I can’t tell you more than that because Petrobras does not disclose projection for future production. Okay.

Unidentified Analyst

Thanks anyway.

Operator

Mr. John Herrlin from Societe Generale would like to ask a question. Please proceed.

John Herrlin – Societe Generale

Yes. I have one on the pre-salt, you mentioned pre-salt was producing 300,000 barrels a day. I was wondering how many wells and if your – the wells performing in line with the projection or better. That’s it. Thank you.

Unidentified Company Representative

Okay. The question was for the 311,000 barrels of oil per day and how many wells are we working to achieve this kind of production. This record of 311,000 had one extra well compared to the 17 existing, so we have 18 producing wells. The average production is above what we had previously estimated in our projects. So we have been achieving production levels of around 20,000 barrels, some 25,000, some even close to 30,000 barrels. But we maintained in accordance with the pre-salt through levels of production between 15,000 and 20,000 barrels per day. We are really conservative on that and we intend to continue to be conservative until we have more data (inaudible) and that will be added this year, so that we can perhaps eventually consider an upside. At this point, we are not considering an upside in our production curve.

As for a production decline, all of these wells are performing exactly as expected. We have had no water production problems and since there was [new] [ph] in the pre-salt [of Campos] [ph] the Santos Basin they are not showing any production decline to date. But in terms of pressure they are performing exactly as an American model adopted by our people, okay.

John Wynn – Societe Generale

Thank you.

Operator

Mr. Iain Reid from Jefferies would like to ask a question

Iain Reid – Jefferies

Sorry, there’s a lot of echo on the line. Can I ask two questions, please? Firstly, depreciation rate a barrel seems to have gone up quite strongly compared to last year to around $9 per barrel. Is this sort of rate we should be looking for going forward? And secondly, on group CapEx, it seems quite a long way below on a run rate basis, the 98 billion you were talking about for the full-year. Is this expected, are we going to see a big build-up in the remaining quarters or are you looking for lower CapEx now? Thanks very much. Sorry, yeah, you want to – the depreciation rate per barrel in E&P, Brazil E&P seems to have gone up very strongly compared to the average of last year. Is this the sort of run rate we should expect going forward?

Unidentified Company Representative

Depreciation increased because we added the number of units and also due to [abandoned non] [ph] provision, this is a figure that should not increase any further. So if that’s what you ask, I don’t know whether that answers your question.

Iain Reid – Jefferies

Yes, answered the question.

Unidentified Company Representative

So adding to what Formigli just said new platforms are becoming operational and also new equipment in the downstream area, so the pieces of equipment that we invested in the last five or six years that are now beginning to produce giving us more opportunities to produce more diesel oil and that’s one of the products with a high – with higher rates of demand in Brazil. So now the equipment begins to be depreciated and this depreciation should continue to happen from now on. So there is no peak of depreciation the level of investment after (inaudible) are operational and productive also have their own depreciation cost throughout its lifespan that’s why there is no particular depreciation peak at the current moment.

Iain Reid – Jefferies

Okay, thank you.

Unidentified Company Representative

In terms of investment in dollar terms, the [investment can be reimbursed] [ph] first quarter and the total forecast for the year is approximately 48 billion. Again this is in keeping with the plan, our goal still is 48 billion for the year or R$97.7 billion for the year. The activity of the company is increasing. Therefore by the end of the year, we will reach that forecasted figure of R$98 billion.

Thank you. We’ll now conclude our Q&A session, the Q&A session of Petrobras. And I’ll give the floor to CFO, Almir Barbassa for his final remarks. You may proceed.

Almir Guilherme Barbassa

Once again I would like to thank you very much for participating in this webcast where we talked about our results for the quarter and all of your analysis are greatly appreciated and I hope to count on you next quarter when we will be able to post just as good results as these. Thank you very much and I hope to see you there then.

Operator

Thank you, ladies and gentlemen. The audio of this conference call for replay and slide presentation will be available at Petrobras IR website at www.petrobras.com.br/ir. This concludes today’s conference all. Thank you very much for your participation. Please hang up your telephones and have a very great day.

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