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Name | Symbol | Market | Type |
---|---|---|---|
Petroleo Brasileiro ADR | NYSE:PBR | NYSE | Depository Receipt |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.41 | 2.42% | 17.35 | 17.44 | 17.1625 | 17.27 | 19,638,298 | 00:22:17 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of July, 2020
Commission File Number 1-15106
PETRÓLEO BRASILEIRO S.A. – PETROBRAS
(Exact name of registrant as specified in its charter)
Brazilian Petroleum Corporation – PETROBRAS
(Translation of Registrant's name into English)
Avenida República do Chile, 65
20031-912 – Rio de Janeiro, RJ
Federative Republic of Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No___X____
Quarterly Information- ITR
At June 30, 2020 and report on review of Quarterly Information
1
INDEX
PETROBRAS
2
Petróleo Brasileiro S.A. – Petrobras |
Parent Company Interim Accounting Information / Statement of Financial Position - Assets
(R$ Thousand)
Account Code | Account Description | 06.30.2020 | 12.31.2019 |
1 | Total Assets | 1,189,549,000 | 1,129,118,000 |
1.01 | Current Assets | 133,204,000 | 143,014,000 |
1.01.01 | Cash and Cash Equivalents | 3,609,000 | 4,322,000 |
1.01.02 | Marketable Securities | 2,578,000 | 3,200,000 |
1.01.03 | Trade and Other Receivables | 56,443,000 | 78,813,000 |
1.01.04 | Inventories | 22,751,000 | 28,206,000 |
1.01.06 | Recoverable Taxes | 28,672,000 | 13,241,000 |
1.01.06.01 | Current Recoverable Taxes | 28,672,000 | 13,241,000 |
1.01.06.01.01 | Current Income Tax and Social Contribution | 8,227,000 | 9,456,000 |
1.01.06.01.02 | Other Recoverable Taxes | 20,445,000 | 3,785,000 |
1.01.08 | Other Current Assets | 19,151,000 | 15,232,000 |
1.01.08.01 | Non-Current Assets Held for Sale | 10,930,000 | 8,615,000 |
1.01.08.03 | Others | 8,221,000 | 6,617,000 |
1.01.08.03.03 | Others | 8,221,000 | 6,617,000 |
1.02 | Non-Current Assets | 1,056,345,000 | 986,104,000 |
1.02.01 | Long-Term Receivables | 120,663,000 | 62,718,000 |
1.02.01.03 | Marketable Securities Measured at Amortized Cost | 206,000 | 208,000 |
1.02.01.04 | Trade and Other Receivables | 10,575,000 | 8,490,000 |
1.02.01.07 | Deferred Taxes | 68,023,000 | 15,363,000 |
1.02.01.07.01 | Deferred Income Tax and Social Contribution | 51,841,000 | − |
1.02.01.07.02 | Deferred Taxes and Contributions | 16,182,000 | 15,363,000 |
1.02.01.10 | Other Non-Current Assets | 41,859,000 | 38,657,000 |
1.02.01.10.03 | Advances to Suppliers | 2,121,000 | 1,029,000 |
1.02.01.10.04 | Judicial Deposits | 36,339,000 | 32,861,000 |
1.02.01.10.05 | Other Long-Term Assets | 3,399,000 | 4,767,000 |
1.02.02 | Investments | 249,205,000 | 182,666,000 |
1.02.03 | Property, Plant and Equipment | 608,648,000 | 662,816,000 |
3
Petróleo Brasileiro S.A. – Petrobras
Parent Company Interim Accounting Information / Statement of Financial Position - Liabilities
(R$ Thousand)
4
Petróleo Brasileiro S.A. – Petrobras |
Parent Company Interim Accounting Information / Statement of Income
(R$ thousand)
Account Code | Account Description | Accumulated of the Current Quarter 04/01/2020 to 06/30/2020 | Accumulated of the Current Year 01/01/2020 to 06/30/2020 | Accumulated of the Previous Quarter 04/01/2019 to 06/30/2019 | Accumulated of the Previous Year 01/01/2019 to 06/30/2019 | |||||||||||
3.01 | Sales Revenues | 48,931,000 | 117,040,000 | 71,111,000 | 135,344,000 | |||||||||||
3.02 | Cost of Sales | (35,269,000) | (77,351,000) | (44,627,000) | (87,803,000) | |||||||||||
3.03 | Gross Profit | 13,662,000 | 39,689,000 | 26,484,000 | 47,541,000 | |||||||||||
3.04 | Operating Expenses / Income | 2,767,000 | (54,038,000) | 13,737,000 | 6,125,000 | |||||||||||
3.04.01 | Selling Expenses | (4,716,000) | (9,853,000) | (4,544,000) | (8,996,000) | |||||||||||
3.04.02 | General and Administrative Expenses | (1,183,000) | (2,613,000) | (1,718,000) | (3,412,000) | |||||||||||
3.04.05 | Other Operating Expenses | 4,114,000 | (52,831,000) | 15,525,000 | 9,973,000 | |||||||||||
3.04.05.01 | Other Taxes | (1,204,000) | (1,562,000) | (183,000) | (464,000) | |||||||||||
3.04.05.02 | Research and Development Expenses | (365,000) | (787,000) | (572,000) | (1,091,000) | |||||||||||
3.04.05.03 | Exploration Costs | (344,000) | (809,000) | (389,000) | (1,039,000) | |||||||||||
3.04.05.05 | Other Operating Expenses, Net | 6,027,000 | 5,953,000 | 16,077,000 | 11,780,000 | |||||||||||
3.04.05.07 | Impairment of Assets Charges / Reversals | − | (55,626,000) | 592,000 | 787,000 | |||||||||||
3.04.06 | Share of Profit / Gains on Interest in Equity-Accounted Investments | 4,552,000 | 11,259,000 | 4,474,000 | 8,560,000 | |||||||||||
3.05 | Net Income Before Financial Results and Income Taxes | 16,429,000 | (14,349,000) | 40,221,000 | 53,666,000 | |||||||||||
3.06 | Finance Income (Expenses), Net | (20,603,000) | (64,685,000) | (8,372,000) | (17,637,000) | |||||||||||
3.06.01 | Finance Income | 729,000 | 1,743,000 | 1,434,000 | 2,185,000 | |||||||||||
3.06.01.01 | Finance Income | 729,000 | 1,743,000 | 1,434,000 | 2,185,000 | |||||||||||
3.06.02 | Finance Expenses | (21,332,000) | (66,428,000) | (9,806,000) | (19,822,000) | |||||||||||
3.06.02.01 | Finance Expenses | (9,464,000) | (18,142,000) | (8,431,000) | (15,778,000) | |||||||||||
3.06.02.02 | Foreign Exchange and Inflation Indexation Charges, Net | (11,868,000) | (48,286,000) | (1,375,000) | (4,044,000) | |||||||||||
3.07 | Net Income Before Income Taxes | (4,174,000) | (79,034,000) | 31,849,000 | 36,029,000 | |||||||||||
3.08 | Income Tax and Social Contribution | 1,461,000 | 27,798,000 | (13,198,000) | (13,687,000) | |||||||||||
3.08.01 | Current | − | 120,000 | (3,787,000) | (5,316,000) | |||||||||||
3.08.02 | Deferred | 1,461,000 | 27,678,000 | (9,411,000) | (8,371,000) | |||||||||||
3.09 | Net Income from Continuing Operations | (2,713,000) | (51,236,000) | 18,651,000 | 22,342,000 | |||||||||||
3.10 | Net Income from Discontinued Operations | − | − | 215,000 | 555,000 | |||||||||||
3.10.01 | Income / (Loss) from Discontinued Operations | − | − | 215,000 | 555,000 | |||||||||||
3.11 | Income / (Loss) for the Period | (2,713,000.00) | (51,236,000.00) | 18,866,000 | 22,897,000 | |||||||||||
3.99.01 | Income per Share | |||||||||||||||
3.99.01.01 | Ordinary Shares | (0.21) | (3.93) | 1.45 | 1.76 | |||||||||||
3.99.01.02 | Preferred Shares | (0.21) | (3.93) | 1.45 | 1.76 | |||||||||||
3.99.02 | Diluted Income per Share | |||||||||||||||
3.99.02.01 | Ordinary Shares | (0.21) | (3.93) | 1.45 | 1.76 | |||||||||||
3.99.02.02 | Preferred Shares | (0.21) | (3.93) | 1.45 | 1.76 | |||||||||||
5
Petróleo Brasileiro S.A. – Petrobras |
Parent Company Interim Accounting Information / Statement of Comprehensive Income
(R$ thousand)
Account Code | Account Description | Accumulated of the Current Quarter 04/01/2020 to 06/30/2020 | Accumulated of the Current Year 01/01/2020 to 06/30/2020 | Accumulated of the Previous Quarter 04/01/2019 to 06/30/2019 | Accumulated of the Previous Year 01/01/2019 to 06/30/2019 | |||||||
4.01 | Net Income for the Period | (2,713,000) | (51,236,000) | 18,866,000 | 22,897,000 | |||||||
4.02 | Other Comprehensive Income | 13,650,000 | (1,539,000) | 3,398,000 | 4,801,000 | |||||||
4.02.01 | Actuarial Gains / (Losses) on Defined Benefits Plans | 8,610,000 | 8,610,000 | − | − | |||||||
4.02.02 | Deferred Income Tax and Social Contribution on Actuarial Gains / (Losses) on Defined Benefits Plans | (939,000) | (939,000) | − | − | |||||||
4.02.03 | Cumulative Translation Adjustments | 11,247,000 | 60,666,000 | (2,289,000) | (1,257,000) | |||||||
4.02.04 | Unrealized Gains/(Losses) on securities measured at fair value through other comprehensive income | 5,000 | (5,000) | (3,000) | (5,000) | |||||||
4.02.07 | Unrealized Gains / (Losses) on Cash Flow Hedge - Recognized in Shareholders' Equity | (14,396,000) | (114,440,000) | 5,962,000 | 3,561,000 | |||||||
4.02.08 | Unrealized Gains / (Losses) on Cash Flow Hedge - Reclassified to Profit and Loss | 5,292,000 | 11,388,000 | 2,543,000 | 5,118,000 | |||||||
4.02.09 | Deferred Income Tax and Social Contribution on Cash Flow Hedge | 3,096,000 | 35,038,000 | (2,892,000) | (2,951,000) | |||||||
4.02.10 | Share of Other Comprehensive Income of Equity-Accounted Investments | 735,000 | (1,857,000) | 77,000 | 335,000 | |||||||
4.03 | Total Comprehensive Income for the Period | 10,937,000 | (52,775,000) | 22,264,000 | 27,698,000 | |||||||
6
Petróleo Brasileiro S.A. – Petrobras |
Parent Company Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2020 to 06/30/2020
(R$ thousand)
Account Code | Account Description | Share Capital | Capital Reserves, Granted Options and Treasury Shares | Profit Reserves | Retained Earnings / Accumulated Losses | Other Comprehensive Income | Shareholders' Equity |
5.01 | Balance at the Beginning of the Period | 205,432,000 | 2,665,000 | 124,613,000 | − | (37,169,000) | 295,541,000 |
5.03 | Adjusted Opening Balance | 205,432,000 | 2,665,000 | 124,613,000 | − | (37,169,000) | 295,541,000 |
5.04 | Capital Transactions with Owners | − | − | − | (3,000) | 3,000 | − |
5.04.09 | Realization of the Deemed Cost | − | − | − | (3,000) | 3,000 | − |
5.05 | Total of Comprehensive Income | − | − | − | (51,236,000) | (1,539,000) | (52,775,000) |
5.05.01 | Net Income for the Period | − | − | − | (51,236,000) | − | (51,236,000) |
5.05.02 | Other Comprehensive Income | − | − | − | − | (1,539,000) | (1,539,000) |
5.07 | Balance at the End of the Period | 205,432,000 | 2,665,000 | 124,613,000 | (51,239,000) | (38,705,000) |
242,766,000
|
7
Petróleo Brasileiro S.A. – Petrobras
Parent Company Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2019 to 06/30/2019
(R$ thousand)
Account Code | Account Description | Share Capital | Capital Reserves, Granted Options and Treasury Shares | Profit Reserves | Retained Earnings / Accumulated Losses | Other Comprehensive Income | Shareholders' Equity |
5.01 | Balance at the Beginning of the Period | 205,432,000 | 2,674,000 | 95,148,000 | − | (26,029,000) | 277,225,000 |
5.03 | Adjusted Opening Balance | 205,432,000 | 2,674,000 | 95,148,000 | − | (26,029,000) | 277,225,000 |
5.04 | Capital Transactions with Owners | − | − | − | (1,305,000) | 1,000 | (1,304,000) |
5.04.07 | Interest on Shareholders' Equity | − | − | − | (1,304,000) | − | (1,304,000) |
5.04.09 | Realization of the Deemed Cost | − | − | − | (1,000) | 1,000 | − |
5.05 | Total of Comprehensive Income | − | − | − | 22,897,000 | 4,801,000 | 27,698,000 |
5.05.01 | Net Income for the Period | − | − | − | 22,897,000 | − | 22,897,000 |
5.05.02 | Other Comprehensive Income | − | − | − | − | 4,801,000 | 4,801,000 |
5.07 | Balance at the End of the Period | 205,432,000 | 2,674,000 | 95,148,000 | 21,592,000 | (21,227,000) | 303,619,000 |
8
Petróleo Brasileiro S.A. – Petrobras |
Parent Company Interim Accounting Information / Statement of Cash Flows – Indirect Method
(R$ Thousand)
Account Code | Account Description | Accumulated of the Current Year 01/01/2020 to 06/30/2020 | Accumulated of the Previous Year 01/01/2019 to 06/30/2019 | |
6.01 | Net cash provided by operating activities | 23,063,000 | 11,443,000 | |
6.01.01 | Cash provided by operating activities | 64,483,000 | 53,901,000 | |
6.01.01.01 | Net Income (loss) for the period | (51,236,000) | 22,897,000 | |
6.01.01.02 | Pension and medical benefits (actuarial expense) | 3,976,000 | 3,980,000 | |
6.01.01.03 | Results in equity-accounted investments | (11,259,000) | (8,560,000) | |
6.01.01.04 | Depreciation, depletion and amortization | 35,154,000 | 30,553,000 | |
6.01.01.05 | Impairment of assets (reversal) | 55,626,000 | (787,000) | |
6.01.01.06 | Exploratory expenditures write-offs | 182,000 | 243,000 | |
6.01.01.08 | Foreign exchange, indexation and finance charges | 73,680,000 | 17,481,000 | |
6.01.01.09 | Deferred income taxes, net | (27,678,000) | 8,371,000 | |
6.01.01.10 | Allowance for expected credit losses | 572,000 | 81,000 | |
6.01.01.11 | Write-Off - Overpayments Incorrectly Capitalized | 391,000 | − | |
6.01.01.13 | Revision and unwinding of discount on the provision for decommissioning costs | 1,716,000 | 1,571,000 | |
6.01.01.17 | Disposal/write-offs of assets and remeasurement of investment retained with loss of control | 284,000 | (21,374,000) | |
6.01.01.18 | PIS and COFINS recovery - exclusion of ICMS (VAT tax) from the basis of calculation | (16,925,000) | − | |
6.01.01.19 | Net cash provided by operating activities from continuing operations | − | (555,000) | |
6.01.02 | Decrease / (increase) in assets / increase/ (decrease) in liabilities | (41,420,000) | (42,458,000) | |
6.01.02.01 | Trade and other receivables, net | (34,224,000) | (19,478,000) | |
6.01.02.02 | Inventories | 5,063,000 | (986,000) | |
6.01.02.03 | Judicial deposits | (3,478,000) | (4,139,000) | |
6.01.02.04 | Escrow account - Class action agreement | − | (3,090,000) | |
6.01.02.05 | Other assets | (185,000) | (985,000) | |
6.01.02.06 | Trade payables | (8,601,000) | (9,935,000) | |
6.01.02.07 | Other taxes payable | 3,043,000 | 3,937,000 | |
6.01.02.08 | Pension and medical benefits | (3,352,000) | (1,883,000) | |
6.01.02.09 | Provisions for legal proceedings | (1,385,000) | (1,786,000) | |
6.01.02.10 | Short-term benefits | 5,757,000 | 422,000 | |
6.01.02.11 | Income tax and social contribution paid | (853,000) | (1,874,000) | |
6.01.02.12 | Provision for Decommissioning Costs | (787,000) | (985,000) | |
6.01.02.14 | Other liabilities | (2,418,000) | (1,676,000) | |
6.02 | Net cash used in investing activities | (20,319,000) | (25,330,000) | |
6.02.01 | Acquisition of PP&E and intangibles assets | (44,855,000) | (12,119,000) | |
6.02.02 | Increase in investments in investees | 226,000 | 6,000 | |
6.02.03 | Proceeds from disposal of assets - Divestment | 868,000 | 32,668,000 | |
6.02.04 | Divestment (investment) in marketable securities | 22,712,000 | (51,273,000) | |
6.02.05 | Dividends received | 730,000 | 5,388,000 | |
6.03 | Net cash used in financing activities | (3,457,000) | 11,839,000 | |
6.03.02 | Proceeds from financing | 90,438,000 | 89,639,000 | |
6.03.03 | Repayment of principal | (54,723,000) | (49,251,000) | |
6.03.04 | Repayment of interest | (10,478,000) | (8,958,000) | |
6.03.05 | Dividends paid to shareholders | (4,426,000) | (3,944,000) | |
6.03.08 | Settlement of lease liabilities | (24,268,000) | (15,647,000) | |
6.05 | Net increase/ (decrease) in cash and cash equivalents | (713,000) | (2,048,000) | |
6.05.01 | Cash and cash equivalents at the beginning of the period | 4,322,000 | 6,334,000 | |
6.05.02 | Cash and cash equivalents at the end of the period | 3,609,000 | 4,286,000 | |
9
Petróleo Brasileiro S.A. – Petrobras |
Parent Company Interim Accounting Information / Statement of Added Value
(R$ Thousand)
Account Code | Account Description | Accumu-lated of the Current Year 01/01/2020 to 06/30/2020 | Accumu-lated of the Previous Year 01/01/2019 to 06/30/2019 |
7.01 | Sales Revenues | 169,836,000 | 216,820,000 |
7.01.01 | Sales of Goods and Services | 152,335,000 | 179,248,000 |
7.01.02 | Other Revenues | 2,994,000 | 23,260,000 |
7.01.03 | Revenues Related to the Construction of Assets to be Used in Own Operations | 15,079,000 | 14,393,000 |
7.01.04 | Allowance for expected credit losses | (572,000) | (81,000) |
7.02 | Inputs Acquired from Third Parties | (106,626,000) | (60,872,000) |
7.02.01 | Cost of Sales | (14,113,000) | (24,482,000) |
7.02.02 | Materials, Power, Third-Party Services and Other Operating Expenses | (23,294,000) | (23,100,000) |
7.02.03 | Impairment Charges / Reversals of Assets | (55,626,000) | 787,000 |
7.02.04 | Others | (13,593,000) | (14,077,000) |
7.02.04.01 | Tax Credits on Inputs Acquired from Third Parties | (13,202,000) | (14,077,000) |
7.02.04.02 | Inventory Write-Down to Net Realizable Value | (391,000) | − |
7.03 | Gross Added Value | 63,210,000 | 155,948,000 |
7.04 | Retentions | (37,446,000) | (33,220,000) |
7.04.01 | Depreciation, Amortization and Depletion | (37,446,000) | (33,220,000) |
7.05 | Net Added Value Produced | 25,764,000 | 122,728,000 |
7.06 | Transferred Added Value | 30,807,000 | 11,855,000 |
7.06.01 | Share of Profit of Equity-Accounted Investments | 11,259,000 | 8,560,000 |
7.06.02 | Finance Income | 1,743,000 | 2,185,000 |
7.06.03 | Others | 17,805,000 | 1,110,000 |
7.06.03.01 | Rentals, royalties and others | 880,000 | 555,000 |
7.06.03.02 | Total Added Value from Discontinued operations to be distributed | − | 555,000 |
7.06.03.03 | PIS and COFINS recovery - exclusion of ICMS (VAT tax) from the basis of calculation | 16,925,000 | − |
7.07 | Total Added Value to be Distributed | 56,571,000 | 134,583,000 |
7.08 | Distribution of Added Value | 56,571,000 | 134,583,000 |
7.08.01 | Employee Compensation | 16,952,000 | 13,641,000 |
7.08.01.01 | Salaries | 6,600,000 | 7,768,000 |
7.08.01.02 | Fringe Benefits | 9,881,000 | 5,321,000 |
7.08.01.03 | Unemployment Benefits (FGTS) | 471,000 | 552,000 |
7.08.02 | Taxes and Contributions | 10,291,000 | 69,468,000 |
7.08.02.01 | Federal | 814,000 | 55,329,000 |
7.08.02.02 | State | 9,306,000 | 14,031,000 |
7.08.02.03 | Municipal | 171,000 | 108,000 |
7.08.03 | Return on Third-Party Capital | 80,564,000 | 28,577,000 |
7.08.03.01 | Interest | 78,038,000 | 22,411,000 |
7.08.03.02 | Rental Expenses | 2,526,000 | 6,166,000 |
7.08.04 | Return on Shareholders' Equity | (51,236,000) | 22,342,000 |
7.08.04.01 | Interest on Capital | − | 1,304,000 |
7.08.04.03 | Retained Earnings / (Losses) for the Period | (51,236,000) | 21,038,000 |
7.08.05 | Others | - | 555,000 |
7.08.05.04 | Total distributed added value from discontinued operation - Shareholders | − | 555,000 |
10
Petróleo Brasileiro S.A. – Petrobras |
Consolidated Interim Accounting Information / Statement of Financial Position - Assets
(R$ Thousand)
Account Code | Account Description | 06.30.2020 | 12.31.2019 | ||||
1 | Total Assets | 1,015,142,000 | 926,011,000 | ||||
1.01 | Current Assets | 201,926,000 | 112,101,000 | ||||
1.01.01 | Cash and Cash Equivalents | 106,598,000 | 29,714,000 | ||||
1.01.02 | Marketable Securities | 2,952,000 | 3,580,000 | ||||
1.01.03 | Trade and Other Receivables | 14,316,000 | 15,164,000 | ||||
1.01.04 | Inventories | 27,594,000 | 33,009,000 | ||||
1.01.06 | Recoverable Taxes | 29,788,000 | 14,287,000 | ||||
1.01.06.01 | Current Recoverable Taxes | 29,788,000 | 14,287,000 | ||||
1.01.06.01.01 | Current Income Tax and Social Contribution | 8,827,000 | 10,050,000 | ||||
1.01.06.01.02 | Other Recoverable Taxes | 20,961,000 | 4,237,000 | ||||
1.01.08 | Other Current Assets | 20,678,000 | 16,347,000 | ||||
1.01.08.01 | Non-Current Assets Held for Sale | 11,137,000 | 10,333,000 | ||||
1.01.08.03 | Others | 9,541,000 | 6,014,000 | ||||
1.01.08.03.03 | Others | 9,541,000 | 6,014,000 | ||||
1.02 | Non-Current Assets | 813,216,000 | 813,910,000 | ||||
1.02.01 | Long-Term Receivables | 124,449,000 | 71,306,000 | ||||
1.02.01.03 | Marketable Securities measured at amortized cost | 207,000 | 232,000 | ||||
1.02.01.04 | Trade and Other Receivables | 12,559,000 | 10,345,000 | ||||
1.02.01.07 | Deferred Taxes | 69,176,000 | 21,470,000 | ||||
1.02.01.07.01 | Deferred Income Tax and Social Contribution | 52,454,000 | 5,593,000 | ||||
1.02.01.07.02 | Deferred Taxes and Contributions | 16,722,000 | 15,877,000 | ||||
1.02.01.10 | Other Non-Current Assets | 42,507,000 | 39,259,000 | ||||
1.02.01.10.03 | Advances to Suppliers | 1,110,000 | 1,313,000 | ||||
1.02.01.10.04 | Judicial Deposits | 36,683,000 | 33,198,000 | ||||
1.02.01.10.05 | Other Long-Term Assets | 4,714,000 | 4,748,000 | ||||
1.02.02 | Investments | 19,007,000 | 22,166,000 | ||||
1.02.03 | Property, Plant and Equipment | 591,299,000 | 641,949,000 | ||||
1.02.04 | Intangible Assets | 78,461,000 | 78,489,000 | ||||
11
Petróleo Brasileiro S.A. – Petrobras
Consolidated Interim Accounting Information / Statement of Financial Position - Liabilities
(R$ Thousand)
12
Petróleo Brasileiro S.A. – Petrobras |
Consolidated Interim Accounting Information / Statement of Income
(R$ Thousand)
Account Code | Account Description | Accumulated of the Current Quarter 04/01/2020 to 06/30/2020 | Accumulated of the Current Year 01/01/2020 to 06/30/2020 | Accumulated of the Previous Quarter 04/01/2019 to 06/30/2019 | Accumulated of the Previous Year 01/01/2019 to 06/30/2019 | |||||||
3.01 | Sales Revenues | 50,898,000 | 126,367,000 | 72,567,000 | 143,423,000 | |||||||
3.02 | Cost of Sales | (32,680,000) | (76,534,000) | (42,357,000) | (88,380,000) | |||||||
3.03 | Gross Profit | 18,218,000 | 49,833,000 | 30,210,000 | 55,043,000 | |||||||
3.04 | Operating Expenses / Income | (9,198,000) | (86,253,000) | 9,027,000 | (1,780,000) | |||||||
3.04.01 | Selling Expenses | (6,752,000) | (12,666,000) | (3,668,000) | (7,069,000) | |||||||
3.04.02 | General and Administrative Expenses | (1,568,000) | (3,388,000) | (2,194,000) | (4,321,000) | |||||||
3.04.05 | Other Operating Expenses | 211,000 | (67,671,000) | 14,419,000 | 8,645,000 | |||||||
3.04.05.01 | Other Taxes | (1,305,000) | (1,822,000) | (260,000) | (612,000) | |||||||
3.04.05.02 | Research and Development Expenses | (366,000) | (788,000) | (572,000) | (1,091,000) | |||||||
3.04.05.03 | Exploration Costs | (350,000) | (818,000) | (394,000) | (1,048,000) | |||||||
3.04.05.05 | Other Operating Expenses, Net | 2,232,000 | 1,058,000 | 15,752,000 | 11,477,000 | |||||||
3.04.05.07 | Impairment of Assets Charges / Reversals | − | (65,301,000) | (107,000) | (81,000) | |||||||
3.04.06 | Share of Profit / Gains on Interest in Equity-Accounted Investments | (1,089,000) | (2,528,000) | 470,000 | 965,000 | |||||||
3.05 | Net Income Before Financial Results and Income Taxes | 9,020,000 | (36,420,000) | 39,237,000 | 53,263,000 | |||||||
3.06 | Finance Income (Expenses), Net | (12,308,000) | (33,486,000) | (8,576,000) | (16,995,000) | |||||||
3.06.01 | Finance Income | 579,000 | 1,377,000 | 1,303,000 | 2,272,000 | |||||||
3.06.01.01 | Finance Income | 579,000 | 1,377,000 | 1,303,000 | 2,272,000 | |||||||
3.06.02 | Finance Expenses | (12,887,000) | (34,863,000) | (9,879,000) | (19,267,000) | |||||||
3.06.02.01 | Finance Expenses | (6,098,000) | (13,514,000) | (6,240,000) | (12,935,000) | |||||||
3.06.02.02 | Foreign Exchange and Inflation Indexation Charges, Net | (6,789,000) | (21,349,000) | (3,639,000) | (6,332,000) | |||||||
3.07 | Net Income Before Income Taxes | (3,288,000) | (69,906,000) | 30,661,000 | 36,268,000 | |||||||
3.08 | Income Tax and Social Contribution | 475,000 | 17,369,000 | (11,611,000) | (13,455,000) | |||||||
3.08.01 | Current | (610,000) | (1,207,000) | (6,453,000) | (6,830,000) | |||||||
3.08.02 | Deferred | 1,085,000 | 18,576,000 | (5,158,000) | (6,625,000) | |||||||
3.09 | Net Income from Continuing Operations | (2,813,000) | (52,537,000) | 19,050,000 | 22,813,000 | |||||||
3.10 | Net Income from Discontinued Operations | − | − | 302,000 | 779,000 | |||||||
3.10.01 | Income / Loss from Discontinued Operations | − | − | 302,000 | 779,000 | |||||||
3.11 | Income / (Loss) for the Period | (2,813,000) | (52,537,000) | 19,352,000 | 23,592,000 | |||||||
3.11.01 | Attributable to Shareholders of Petrobras | (2,713,000) | (51,236,000) | 18,866,000 | 22,897,000 | |||||||
3.11.02 | Attributable to Non-Controlling Interests | (100,000) | (1,301,000) | 486,000 | 695,000 | |||||||
3.99.01 | Income per Share | |||||||||||
3.99.01.01 | Ordinary Shares | (0.21) | (3.93) | 1.45 | 1.76 | |||||||
3.99.01.02 | Preferred Shares | (0.21) | (3.93) | 1.45 | 1.76 | |||||||
3.99.02 | Diluted Income per Share | |||||||||||
3.99.02.01 | Ordinary Shares | (0.21) | (3.93) | 1.45 | 1.76 | |||||||
3.99.02.02 | Preferred Shares | (0.21) | (3.93) | 1.45 | 1.76 | |||||||
13
Petróleo Brasileiro S.A. – Petrobras |
Consolidated Interim Accounting Information / Statement of Comprehensive Income
(R$ Thousand)
Account Code | Account Description | Accumulated of the Current Quarter 04/01/2020 to 06/30/2020 | Accumulated of the Current Year 01/01/2020 to 06/30/2020 | Accumulated of the Previous Quarter 04/01/2019 to 06/30/2019 | Accumulated of the Previous Year 01/01/2019 to 06/30/2019 |
4.01 | Net Income for the Period | (2,813,000) | (52,537,000) | 19,352,000 | 23,592,000 |
4.02 | Other Comprehensive Income | 13,876,000 | (419,000) | 3,346,000 | 4,768,000 |
4.02.01 | Actuarial Gains / (Losses) on Defined Benefits Plans | 9,073,000 | 9,075,000 | 4,000 | 4,000 |
4.02.02 | Deferred Income Tax and Social Contribution on Actuarial Gains / (Losses) on Defined Benefits Plans | (1,005,000) | (1,006,000) | − | − |
4.02.03 | Cumulative Translation Adjustments | 11,461,000 | 61,773,000 | (2,341,000) | (1,290,000) |
4.02.04 | Unrealized Gains/(Losses) on securities measured at fair value through other comprehensive income | 5,000 | (5,000) | (3,000) | (5,000) |
4.02.07 | Unrealized Gains / (Losses) on Cash Flow Hedge - Recognized in Shareholders' Equity | (14,396,000) | (114,440,000) | 5,946,000 | 3,538,000 |
4.02.08 | Unrealized Gains / (Losses) on Cash Flow Hedge - Reclassified to Profit and Loss | 5,578,000 | 12,027,000 | 2,900,000 | 5,747,000 |
4.02.09 | Deferred Income Tax and Social Contribution on Cash Flow Hedge | 2,998,000 | 34,820,000 | (3,008,000) | (3,157,000) |
4.02.10 | Share of Other Comprehensive Income of Equity-Accounted Investments | 162,000 | (2,663,000) | (152,000) | (69,000) |
4.03 | Total Comprehensive Income for the Period | 11,063,000 | (52,956,000) | 22,698,000 | 28,360,000 |
4.03.01 | Attributable to Shareholders of Petrobras | 10,937,000 | (52,775,000) | 22,264,000 | 27,698,000 |
4.03.02 | Attributable to Non-controlling Interests | 126,000 | (181,000) | 434,000 | 662,000 |
14
Petróleo Brasileiro S.A. – Petrobras |
Consolidated Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2020 to 06/30/2020
(R$ Thousand)
Account Code | Account Description | Share Capital |
Capital Reserves, Granted Options and Treasury Shares |
Profit Reserves |
Retained Earnings / Accumulated Losses |
Other Comprehensive Income |
Shareholders' Equity |
Non-controlling interest |
Shareholders' Equity Consolidated |
5.01 | Balance at the Beginning of the Period | 205,432,000 | 2,665,000 | 124,613,000 | − | (37,169,000) | 295,541,000 | 3,596,000 | 299,137,000 |
5.03 | Adjusted Opening Balance | 205,432,000 | 2,665,000 | 124,613,000 | − | (37,169,000) | 295,541,000 | 3,596,000 | 299,137,000 |
5.04 | Capital Transactions with Owners | − | − | − | (3,000) | 3,000 | − | (460,000) | (460,000) |
5.04.06 | Dividends | − | − | − | − | − | − | (235,000) | (235,000) |
5.04.08 | Capital Transactions | − | − | − | − | − | − | (225,000) | (225,000) |
5.04.09 | Capital Transactions | − | − | − | (3,000) | 3,000 | − | − | − |
5.05 | Total of Comprehensive Income | − | − | − | (51,236,000) | (1,539,000) | (52,775,000) | (181,000) | (52,956,000) |
5.05.01 | Net Income for the Period | − | − | − | (51,236,000) | − | (51,236,000) | (1,301,000) | (52,537,000) |
5.05.02 | Other Comprehensive Income | − | − | − | − | (1,539,000) | (1,539,000) | 1,120,000 | (419,000) |
5.07 | Balance at the End of the Period | 205,432,000 | 2,665,000 | 124,613,000 | (51,239,000) | (38,705,000) | 242,766,000 | 2,955,000 | 245,721,000 |
15
Petróleo Brasileiro S.A. – Petrobras
Consolidated Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2019 to 06/30/2019
(R$ Thousand)
Account Code | Account Description | Share Capital |
Capital Reserves, Granted Options and Treasury Shares |
Profit Reserves |
Retained Earnings / Accumulated Losses |
Other Comprehensive Income |
Shareholders' Equity |
Non-controlling interest |
Shareholders' Equity Consolidated |
5.01 | Balance at the Beginning of the Period | 205,432,000 | 2,674,000 | 95,148,000 | 0 | (26,029,000) | 277,225,000 | 6,318,000 | 283,543,000 |
5.03 | Adjusted Opening Balance | 205,432,000 | 2,674,000 | 95,148,000 | − | (26,029,000) | 277,225,000 | 6,318,000 | 283,543,000 |
5.04 | Capital Transactions with Owners | − | − | − | (1,305,000) | 1,000 | (1,304,000) | (1,181,000) | (2,485,000) |
5.04.06 | Dividends | − | − | − | − | − | − | (825,000) | (825,000) |
5.04.07 | Interest on Shareholders' Equity | − | − | − | (1,304,000) | − | (1,304,000) | − | (1,304,000) |
5.04.08 | Capital Transactions | − | − | − | − | − | − | (356,000) | (356,000) |
5.04.09 | Realization of the Deemed Cost | − | − | − | (1,000) | 1,000 | − | − | − |
5.05 | Total of Comprehensive Income | − | − | − | 22,897,000 | 4,801,000 | 27,698,000 | 662,000 | 28,360,000 |
5.05.01 | Net Income for the Period | − | − | − | 22,897,000 | − | 22,897,000 | 695,000 | 23,592,000 |
5.05.02 | Other Comprehensive Income | − | − | − | − | 4,801,000 | 4,801,000 | (33,000) | 4,768,000 |
5.07 | Balance at the End of the Period | 205,432,000 | 2,674,000 | 95,148,000 | 21,592,000 | (21,227,000) | 303,619,000 | 5,799,000 | 309,418,000 |
16
Consolidated Interim Accounting Information / Statement of Cash Flows – Indirect Method
(R$ Thousand)
Account Code | Account Description | Accumulated of the Current Year 01/01/2020 to 06/30/2020 | Accumulated of the Previous Year 01/01/2019 to 06/30/2019 | |
6.01 | Net cash provided by operating activities | 64,301,000 | 38,249,000 | |
6.01.01 | Cash provided by operating activities | 60,112,000 | 57,769,000 | |
6.01.01.01 | Net Income (loss) for the period | (52,537,000) | 23,592,000 | |
6.01.01.02 | Pension and medical benefits (actuarial expense) | 4,175,000 | 4,114,000 | |
6.01.01.03 | Results in equity-accounted investments | 2,528,000 | (965,000) | |
6.01.01.04 | Depreciation, depletion and amortization | 30,733,000 | 28,572,000 | |
6.01.01.05 | Impairment of assets (reversal) | 65,301,000 | 81,000 | |
6.01.01.06 | Exploratory expenditures write-offs | 182,000 | 243,000 | |
6.01.01.08 | Foreign exchange, indexation and finance charges | 41,000,000 | 16,357,000 | |
6.01.01.09 | Deferred income taxes, net | (18,576,000) | 6,625,000 | |
6.01.01.10 | Allowance for expected credit losses | 657,000 | 146,000 | |
6.01.01.11 | Write-Off - Overpayments Incorrectly Capitalized | 1,502,000 | (32,000) | |
6.01.01.13 | Revision and unwinding of discount on the provision for decommissioning costs | 1,724,000 | 1,577,000 | |
6.01.01.17 | Disposal/write-offs of assets and remeasurement of investment retained with loss of control | 348,000 | (21,762,000) | |
6.01.01.18 | PIS and COFINS recovery - exclusion of ICMS (VAT tax) from the basis of calculation | (16,925,000) | − | |
6.01.01.19 | Net cash provided by operating activities from continuing operations | − | (779,000) | |
6.01.02 | Decrease / (increase) in assets / increase/ (decrease) in liabilities | 4,189,000 | (19,520,000) | |
6.01.02.01 | Trade and other receivables, net | (3,445,000) | 3,982,000 | |
6.01.02.02 | Inventories | 6,308,000 | (2,478,000) | |
6.01.02.03 | Judicial deposits | (3,479,000) | (4,155,000) | |
6.01.02.04 | Escrow account - Class action agreement | − | (3,693,000) | |
6.01.02.05 | Other assets | (2,142,000) | (3,523,000) | |
6.01.02.06 | Trade payables | (558,000) | (3,211,000) | |
6.01.02.07 | Other taxes payable | 3,502,000 | 4,025,000 | |
6.01.02.08 | Pension and medical benefits | (3,358,000) | (1,911,000) | |
6.01.02.09 | Provisions for legal proceedings | (1,230,000) | (4,685,000) | |
6.01.02.10 | Short-term benefits | 5,936,000 | 475,000 | |
6.01.02.11 | Income tax and social contribution paid | (1,306,000) | (2,360,000) | |
6.01.02.12 | Provision for Decommissioning Costs | (789,000) | (985,000) | |
6.01.02.14 | Other liabilities | 4,750,000 | (1,959,000) | |
6.01.02.15 | Discontinued operations – net cash provided by operating activities | − | 958,000 | |
6.02 | Net cash used in investing activities | (18,569,000) | 26,536,000 | |
6.02.01 | Acquisition of PP&E and intangibles assets | (16,557,000) | (13,964,000) | |
6.02.02 | (Increase) decrease in investments in investees | (5,305,000) | (41,000) | |
6.02.03 | Proceeds from disposal of assets - Divestment | 2,034,000 | 35,688,000 | |
6.02.04 | Divestment (investment) in marketable securities | 740,000 | 1,868,000 | |
6.02.05 | Dividends received | 519,000 | 3,183,000 | |
6.02.08 | Discontinued operations – net cash provided by (used in) investing activities | − | (198,000) | |
6.03 | Net cash used in financing activities | 16,415,000 | (51,701,000) | |
6.03.01 | Non-controlling interest | (218,000) | (356,000) | |
6.03.02 | Proceeds from financing | 78,670,000 | 17,882,000 | |
6.03.03 | Repayment of principal | (34,807,000) | (45,397,000) | |
6.03.04 | Repayment of interest | (8,023,000) | (8,974,000) | |
6.03.05 | Dividends paid to shareholders | (4,426,000) | (3,944,000) | |
6.03.06 | Dividends paid to non-controlling interests | (152,000) | (337,000) | |
6.03.08 | Settlement of lease liabilities | (14,629,000) | (8,643,000) | |
6.03.09 | Discontinued operations – net cash used in financing activities | − | (1,932,000) | |
6.04 | Effect of exchange rate changes on cash and cash equivalents | 14,743,000 | (1,001,000) | |
6.05 | Increase (decrease) in cash and cash equivalents | 76,890,000 | 12,083,000 |
6.05.01 | Cash and cash equivalents at the beginning of the period | 29,729,000 | 53,584,000 |
6.05.02 | Cash and cash equivalents at the end of the period | 106,619,000 | 65,937,000 |
17
Consolidated Interim Accounting Information / Statement of Added Value (R$ Thousand) |
Account Code | Account Description | Accumulated of the Current Year 01/01/2020 to 06/30/2020 | Accumulated of the Previous Year 01/01/2019 to 06/30/2019 |
7.01 | Sales Revenues | 177,171,000 | 227,046,000 |
7.01.01 | Sales of Goods and Services | 161,945,000 | 187,556,000 |
7.01.02 | Other Revenues | 85,000 | 24,268,000 |
7.01.03 | Revenues Related to the Construction of Assets to be Used in Own Operations | 15,798,000 | 15,368,000 |
7.01.04 | Allowance for expected credit losses | (657,000) | (146,000) |
7.02 | Inputs Acquired from Third Parties | (122,729,000) | (64,081,000) |
7.02.01 | Cost of Sales | (15,075,000) | (30,251,000) |
7.02.02 | Materials, Power, Third-Party Services and Other Operating Expenses | (28,805,000) | (21,285,000) |
7.02.03 | Impairment Charges / Reversals of Assets | (65,301,000) | (81,000) |
7.02.04 | Others | (13,548,000) | (12,464,000) |
7.02.04.01 | Tax Credits on Inputs Acquired from Third Parties | (12,046,000) | (12,496,000) |
7.02.04.02 | Inventory Write-Down to Net Realizable Value | (1,502,000) | 32,000 |
7.03 | Gross Added Value | 54,442,000 | 162,965,000 |
7.04 | Retentions | (33,025,000) | (31,239,000) |
7.04.01 | Depreciation, Amortization and Depletion | (33,025,000) | (31,239,000) |
7.05 | Net Added Value Produced | 21,417,000 | 131,726,000 |
7.06 | Transferred Added Value | 16,236,000 | 15,500,000 |
7.06.01 | Share of Profit of Equity-Accounted Investments | (2,528,000) | 965,000 |
7.06.02 | Finance Income | 1,377,000 | 2,272,000 |
7.06.03 | Others | 17,387,000 | 12,263,000 |
7.06.03.01 | Rentals, royalties and others | 462,000 | 409,000 |
7.06.03.02 | Total Added Value from Discontinued operations to be distributed | − | 11,854,000 |
7.06.03.03 | PIS and COFINS recovery - exclusion of ICMS (VAT tax) from the basis of calculation | 16,925,000 | − |
7.07 | Total Added Value to be Distributed | 37,653,000 | 147,226,000 |
7.08 | Distribution of Added Value | 37,653,000 | 147,226,000 |
7.08.01 | Employee Compensation | 18,859,000 | 15,660,000 |
7.08.01.01 | Salaries | 7,956,000 | 9,336,000 |
7.08.01.02 | Fringe Benefits | 10,339,000 | 5,718,000 |
7.08.01.03 | Unemployment Benefits (FGTS) | 564,000 | 606,000 |
7.08.02 | Taxes and Contributions | 22,654,000 | 71,497,000 |
7.08.02.01 | Federal | 12,548,000 | 56,552,000 |
7.08.02.02 | State | 9,705,000 | 14,632,000 |
7.08.02.03 | Municipal | 401,000 | 313,000 |
7.08.03 | Return on Third-Party Capital | 48,677,000 | 25,402,000 |
7.08.03.01 | Interest | 46,502,000 | 21,934,000 |
7.08.03.02 | Rental Expenses | 2,175,000 | 3,468,000 |
7.08.04 | Return on Shareholders' Equity | (52,537,000) | 22,813,000 |
7.08.04.01 | Interest on Capital | − | 1,304,000 |
7.08.04.03 | Retained Earnings / (Losses) for the Period | (51,236,000) | 21,038,000 |
7.08.04.04 | Non-controlling Interests on Retained Earnings / (Losses) | (1,301,000) | 471,000 |
7.08.05 | Others | − | 11,854,000 |
7.08.05.01 | Total distributed added value from discontinued operation - Employees and administration | − | 787,000 |
18
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
1. | Basis of preparation |
These interim financial statements present the significant changes in the period, avoiding repetition of certain notes to the financial statements previously reported, and present the consolidated information, considering Management’s understanding that it provides a comprehensive view of the Company’s financial position and operational performance, complemented by certain information of the Parent Company. Hence, this interim financial information should be read together with the Company’s audited annual financial statements for the year ended December 31, 2019, which include the full set of notes.
The interim consolidated and separate financial statements (Parent Company) have been prepared and are presented in accordance with IAS 34 – “Interim Financial Reporting” as issued by the International Accounting Standards Board (IASB), and with the pronouncement CPC 21 (R1) – Demonstrações Intermediárias as issued by the Brazilian Accounting Pronouncements Committee (Comitê de Pronunciamentos Contábeis - CPC) and released by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM). All financial statements relevant information is being evidenced and corresponds to the ones used by the Company’s Management.
In July 2019, after the additional sale of its interest in Petrobras Distribuidora S/A (BR) through a secondary public offering of shares (follow on), Petrobras’ interest was reduced to 37.50% of the share capital, ceasing to be a Petrobras subsidiary. This operation was characterized as a “discontinued operation”. Thus, the consolidated statements of income cash flow, for the period ended June 30, 2019, present the results and cash flows from operating, investing and financing activities in separate lines, as net income of discontinued operations. The statements of added value for the period ended June 30, 2019 also show the total added value to be distributed and the total added value distributed from discontinued operations, separately. The opening of the effects on the results for the period and cash flows of June 30, 2019, related to the discontinued operation are presented in note 7 of the Quarterly Information of June 30, 2019.
These interim financial statements were approved and authorized for issue by the Company’s Board of Directors in a meeting held on July 30, 2020.
2. | Summary of significant accounting policies |
The same accounting policies and methods of computation were followed in these consolidated interim financial statements as those followed in the preparation of the annual financial statements of the Company for the year ended December 31, 2019.
3. | Context, resilience measures and impacts of the COVID-19 pandemic |
3.1 Context
In January 2020, China reported having identified a new variant of coronavirus, causing the disease COVID-19, which was spreading quickly in its population. On March 11, 2020, COVID-19 was a declared a pandemic by the World Health Organization (WHO). Social isolation measures arising from this pandemic affected the global economic environment, reducing the demand for oil and its oil products and triggering a shock in the oil and gas industry.
In early April, members of the Organization of the Petroleum Exporting Countries (OPEC +) and other countries announced a new agreement providing for the reduction of their combined production by 9.7 million barrels per day (bpd) for May and June 2020.
In July 2020, at a new meeting, OPEC announced that the level of adherence to the agreement in June was 107%, considering the additional voluntary cuts from Saudi Arabia, the United Arab Emirates and Kuwait and 95%, without them. Unlike the agreement signed in June 2020, it was decided not to change the planned timetable for implementing the combined production cuts. In this way, the current level of 9.7 MM bpd will be reduced to 7.7 MM bpd, starting in August, remaining at this level until December. This agreement provides for a predefined cut schedule by the end of 2021.
The adversity in the global scenario caused the company to revise its top metric of indebtedness contained in the Strategic Plan 2020-2024, replacing the indicator of net debt / EBITDA by the indicator of gross debt. The approved gross debt target for 2020 is US$ 87 billion, the same level as that of 2019.
The company's projections indicate that the Brent oil price should remain significantly low in the medium term, converging to US$ 50 per barrel in the long term. This price assumption has not been modified for the preparation of the financial statements of June 30, 2020, compared to that practiced in the first quarter of 2020.
19
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
Within this scenario, the moment requires constant monitoring of market conditions and cost reduction.
3.2 Resilience measures
The Company, in line with the recommendations of the WHO and the Ministry of Health, announced measures to preserve the health of its employees and support the prevention of contagion in its administrative and operational areas home office, reduced work shifts in operational areas to minimize the number of workers commuting, rigorous cleaning of workplaces, distribution of PPE, testing of suspected cases, measuring body temperature and fast testing on pre-shipment for oil platforms, medical monitoring and access to telemedicine services.
Brazilian governmental authorities, in turn, implemented a set of measures to face the economic side effects of increasing and still uncertain dimensions that paralyzed world activities, aiming at helping the productive sector, mainly: Federal Government measures - (i) PIS and Cofins and Social Security-Companies’ Contribution - had the due amounts of competencies from March to May 2020, deferred for collection in August, October and November 2020, respectively; (ii) FGTS - had the collection of the amounts from March to May deferred in six equal installments to be paid from July to December 2020; (iii) System S (employer contributions to social entities that train and support employees) - 50% reduction in rates from April to June 2020; and (iv) IOF - reduction from 3% to zero in certain operations carried out from April 3 to October 2 2020; and State of Pernambuco - (i) VAT tax rate on import of fuel (from April 9 to December 31 2020) - deferral of up to 30 days.
As a result of the abrupt reduction on the demand and prices of oil and fuel, the Company adopted a set of measures aiming at reducing costs, postponing cash outflows and optimizing its working capital, in order to ensure its financial strength and resilience of its businesses. The main measures are:
· | Draw down of committed credit lines (Revolving Credit Lines) in the total amount of US$ 8 billion, as well as two new lines of R$ 3.5 billion; |
· | postponement of the payment of the remaining dividends based on the annual result of 2019 (note 28); |
· | postponement of judicial deposits to 2021, in particular of a tax nature; |
· | reduction and postponement of expenses with human resources, with emphasis on: (i) postponement of payment for the 2019 Performance Award Program; (ii) postponement of the payment of 30% of the total monthly remuneration of the Board of Directors, President, Executive Officers and upper management, and between 10% to 30% of the monthly remuneration of lower management and consultants, from April to June 2020; and (iii) temporary change from shift and alert systems to administrative regime until December 31, 2020, being reassessed monthly or earlier according to the return to operational work; |
· | reduction of capital expenditures scheduled for 2020 from US$ 12 billion to US$ 8.5 billion, mainly due to the postponement of exploratory activities, interconnection of wells and construction of production and refining facilities, and the depreciation of the Brazilian real against the U.S. dollar; |
· | reduction of 200 thousand bpd (barrels of oil per day) of oil production from April 2020 (included the reduction of 100 thousands bpd announced in the end of March 2020), and a reduction in the utilization factor of refineries from 79% to 60% that contributed to the maintenance of reasonable clearance in the storage capacity, consequently avoiding the adoption of costly measures such as the chartering of ships to store liquids. However, with the evolution of the demand for our products performing better than expected, the Company opted for the gradual return to the previous level of average oil production, accompanied by an increase in the utilization factor of the refining facilities; |
· | reduction in operating expenses with an additional decrease of US$ 2 billion, mainly through: (i) hibernation of platforms operating in shallow waters, with higher lifting costs per barrel, and for which, due to the drop in oil prices, the Company estimates negative cash flows; (ii) lower expenses with stoppages in wells and optimization of production logistics; and (iii) postponement of new relevant contracts for a period of 90 days; |
· | negotiation efforts with suppliers in order to obtain postponement of cash outflows, the cancellation or suspension of certain contracts, postponement of deliveries of materials and services, reductions in price and scope of services. In relation to the postponement of disbursements, the extension of the payment period of obligations to suppliers is being considered, with the consequent increase in financial charges established in the contractual amendments; |
· | as a result of the structural reduction in the demand for natural gas in the Brazilian market, the Company declared force majeure in the agreement for the purchase of natural gas related to Manati field, as provided for in the contract. The Company is also negotiating with other agents in the natural gas chain aiming at reducing the effects resulting from the pandemic. Petrobras is constantly monitoring the current scenario and its developments on the gas market, reinforcing that, given the gravity, unpredictability and unprecedentedly of the subject, actions by all agents in the natural gas chain are necessary in order to reduce the impacts on the sector and, consequently, on the society. Accordingly, Petrobras has been working together with the sellers of the natural gas purchase agreement related to Campo de Manati to seek to mitigate the effects of force majeure in this contract. |
20
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
In the second quarter of 2020, compared to the first quarter of 2020, despite the challenging context, the company achieved the following results: (i) average production of oil, NGL and natural gas was slightly lower; (ii) increase in production exports, after meeting domestic demand; (iii) higher export volume of oil products; (iv) recovery in demand, allowing increased sales for some oil products; (v) refinery optimization, there was a recovery of the utilization factor of the refining park to levels prior to the pandemic.
As a result of the implementation of the aforementioned measures, the Company, after simulating several stress scenarios, estimates that will be able to balance its financing and its cash flows. Thus, management believes that it has adequate resources to continue its operations in the short-term and, therefore, the going concern assumption is applied in the preparation of these interim financial statements.
3.3 | Effects on these interim financial statements |
The impacts of COVID-19 pandemic on the economic environment were considered in the preparation of these interim financial statements. Information on key estimates and judgments that require a high level of judgment and complexity in their applications and that could materially affect the Company's financial condition and results, were disclosed in the financial statements of December 31, 2019 and revised for this interim financial statements, in order to determine possible changes in assumptions and judgments arising from current market conditions.
The results of the revision of these assumptions and others came from COVID-19 are presented below:
· | the oil price and expectations for the growth of the world economy suffered a consistent decline throughout the 1st half of 2020, especially from the end of the 1st quarter of 2020. With the economic impacts, the global demand for oil products was also severely affected in that period. In this context, short, medium and long-term planning scenarios for macroeconomic and price assumptions were no longer compatible with those approved in the 2020-2024 Strategic Plan (SP), which meant that the company anticipated approval of a new set of premises already for SP 2021-2025. As a result, impairment losses on assets were recognized in the 1st quarter of 2020 in the amount of R$ 65 billion. In the second quarter, there was no recognition of additional impairment losses (note 20); |
· | the expected export values and consequently the highly probable export values were impacted by the effects of the oil price war and the COVID-19 pandemic. In this way, the values of exports whose exchange variations were designated in hedge relationships for the months of April to December / 2020 are no longer foreseen and there was a significant increase in the company's dollar x real exchange exposure on June 30, 2020. Then, the amount of R$ 2.6 billion was reclassified from Other Comprehensive Income to Statement of Income mainly in the first quarter of 2020 (note 30.2); |
· | inventories adjusted to net realizable value, mainly from the first quarter of 2020, of R$ 1.5 billion (note 11); |
· | the recognition of expected credit losses (PCE) in the company's financial assets that are not measured at fair value through profit or loss considered the expected impacts of COVID-19. For financial assets whose counterparties had ratings published by risk agencies, where the notes already reflected the effects of the pandemic, the information disclosed by such agencies was used to calculate the PCE. For other financial assets, in general, the expected effects of COVID-19 were incorporated into the PCE by identifying the deterioration in the probability of default based on observable data that considered the stratification of the debtor by area of operation, type of product and region. No relevant effects have been identified; |
· | deferred tax credits were recognized based on the projected taxable profit for subsequent years (note 12.2); |
· | estimates of reserve volumes are prepared reflecting, in an integrated manner, the projects in the company's Strategic Planning portfolio, technical uncertainties and assumptions such as prices and costs. In the first half of 2020, there was no change in the project portfolio or in the company's reserve volumes that impacted the quarterly financial statements. In addition, the current estimates of the provision for the dismantling of areas of the company largely reflect requirements that will be realized in the medium and long term. Such assumptions used for the estimates are supported by the company's Strategic Planning and Reserves estimation cycle, processes that express long-term visions. In this context, the company evaluated the main assumptions that formed the cost of dismantling areas vis-à-vis the temporal formation structure of its abandonment liabilities and concluded that there are no relevant effects that impact the updating of the provision made in the annual financial statements of 2019; |
21
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
· | there were no changes in assumptions in the recognition of revenue contracts with customers. The expectation of the customer's completion of the obligation remains at the maturity of each transaction, classified as highly probable, subject only to the fulfillment of the precedent conditions contained in the sales contracts. Customers did not indicate their intention to breach or revise the contractual terms and conditions signed; |
· | in the scope of the company's legal litigation, there are no cases related to COVID-19 with a risk of financial disbursement that directly impact the financial statements on June 30, 2020. However, the company became aware of some public civil actions in the labor field brought by unions, whose objects are related to the COVID-19 Crisis and to the Resilience Plan to reduce expenses. Such actions represent obligations to do and are divided into three groups, basically questioning: (i) two measures to contain personnel expenses contained in the Resilience Plan; (ii) sufficiency of preventive measures against the spread of COVID-19 and criterion for removing people from the risk group; and (iii) the union's participation in the Organizational Response Structure (Estrutura Organizacional de Resposta - EOR). The company is taking the appropriate legal measures for each case and the best estimate at the moment, when there is still no decision on the merits at first instance, is that the likelihood of loss is not probable; |
· | In the second quarter of 2020, the Company accounted for R$ 932 within other income and expenses, of as a result of the reduction in the level of activity, of which R$ 495 related to the lower processed feedstock at the refineries and in the gas and energy plants, and R$ 437 due to idleness of rigs and platforms. Additionally, with the expansion of the pandemic, several expenses were made in the amount of R$ 132, which were destined to urgent and emergency health actions, such as health care, exams, purchase of medicines, removals as well as donations that aim to contribute to society in the containment and treatment of the pandemic. |
4 | Cash and cash equivalents and Marketable securities |
4.1 | Cash and cash equivalents |
Cash and cash equivalents comprise cash in hand, term deposits with banks and short-term highly liquid financial investments that are readily convertible to known amounts of cash, are subject to insignificant risk of changes in value and have a maturity of three months or less from the date of acquisition.
Consolidated | ||
06.30.2020 | 12.31.2019 | |
Cash at bank and in hand | 2,132 | 2,306 |
Short-term financial investments | ||
- In Brazil | ||
Brazilian interbank deposit rate investment funds and other short-term deposits | 12,710 | 6,849 |
Other investment funds | 130 | 16 |
12,840 | 6,865 | |
- Abroad | ||
Time deposits | 37,826 | 27 |
Automatic investing accounts and interest checking accounts | 51,819 | 18,622 |
Other financial investments | 1,981 | 1,894 |
91,626 | 20,543 | |
Total short-term financial investments | 104,466 | 27,408 |
Total cash and cash equivalents | 106,598 | 29,714 |
Short-term financial investments in Brazil primarily consist of investments in funds holding Brazilian Federal Government Bonds that can be redeemed immediately, as well as reverse repurchase agreements that mature within three months as of the date of their acquisition. Short-term financial investments abroad comprise time deposits that mature in three months or less from the date of their acquisition, highly-liquid automatic investment accounts, interest checking accounts and other short-term fixed income instruments.
The main funds generated were substantially provided by operating cash generation of R$ 64,301, proceeds from financing of R$ 78,670, with emphasis on the draw down of Revolving Credit Lines and proceeds from financing through the offering of securities in the international capital market (Global Notes), proceeds from divestments of R$ 2,034, exchange rate effect on the balances of cash and cash equivalents of R$ 14,743 and a set of measures to reduce cash outflows and preserve cash in this scenario of uncertainty, in order to reinforce its financial strength and resilience of its businesses.
The main uses of funds in the period ended June 30, 2020 were for debt service obligations, including pre-payments of debt and lease payments, totaling R$ 57,459, in addition to investments in the business segments in the amount of R$ 16,557 and acquisition of additional interest in shares in Tupi B.V. and Iara B. V. in the amount of R$ 5,034.
22
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
4.2 Marketable securities
Consolidated | ||
06.30.2020 | 12.31.2019 | |
Fair value through profit or loss | 2,886 | 3,528 |
Fair value through other comprehensive income | 20 | 28 |
Amortized cost | 253 | 256 |
Total | 3,159 | 3,812 |
Current | 2,952 | 3,580 |
Non-current | 207 | 232 |
Marketable securities classified as fair value through profit or loss refer mainly to investments in Brazilian Federal Government Bonds. These financial investments have maturities of more than three months and are generally classified as current assets due to their maturity or the expectation of their realization in the short term.
5 | Sales revenues |
In the six-month periods ended June 30, 2020 and 2019, sales to BR Distribuidora represent more than 10% of the Company sales revenues, mainly associated with the refining, transportation and marketing segment.
5.1 | Remaining performance obligations |
The company has sales contracts for products or services in force and signed until June 30, 2020, with terms longer than 1 year, where there is established a quantity of goods or services for sales in the next years with their respective payment terms.
Revenues will be recognized through transfers of goods and services to the respective customers, their values and period of recognition being subject to future demands, changes in the value of commodities, exchange rates and other market factors.
The following are the remaining amounts of these contracts at the end of June 30, 2020 or practiced in recent sales when they reflect the most directly observable information:
23
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
The table above does not include information on contracts with original expected duration of one year or less, such as spot-market contracts, variable considerations which are constrained, and information on contracts only establishing general terms and conditions (Master Agreements), for which volumes and prices will only be defined in subsequent contracts.
In addition, electricity sales are manly driven by demands to generate electricity from thermoelectric power plants, according the Brazilian National Electric System Operator (ONS) requests. These requests are substantially affected by Brazilian hydrological conditions, thus, the table above presents fixed amounts representing sales of certified capacity in accordance with the installed capacity of the Company.
5.2 | Contract liabilities |
As of June 30, 2020, the company has R$ 403 in advances related mainly to take and ship or pay contracts, to be offset against future sales of natural gas or the non-exercise of the right by the client, classified as other accounts and expenses payable in current liabilities.
6 | Costs and expenses by nature |
6.1 Cost of sales
Consolidated | ||||
2020 | 2019 | |||
Apr-Jun | Jan-Jun | Apr-Jun | Jan-Jun | |
Raw material, products for resale, materials and third-party services (*) | (13,799) | (33,711) | (17,049) | (39,039) |
Depreciation, depletion and amortization | (11,124) | (23,917) | (11,826) | (23,657) |
Production taxes | (5,149) | (13,180) | (10,216) | (19,254) |
Employee compensation | (2,608) | (5,726) | (3,266) | (6,430) |
Total | (32,680) | (76,534) | (42,357) | (88,380) |
(*) It Includes short-term leases and inventory turnover. |
6.2 Selling expenses
Consolidated | ||||
2020 | 2019 | |||
Apr-Jun | Jan-Jun | Apr-Jun | Jan-Jun | |
Materials, third-party services, freight, rent and other related costs | (5,741) | (10,846) | (2,903) | (5,488) |
Depreciation, depletion and amortization | (688) | (1,237) | (557) | (1,068) |
Allowance for expected credit losses | (108) | (154) | 8 | (103) |
Employee compensation | (215) | (429) | (216) | (410) |
Total (*) | (6,752) | (12,666) | (3,668) | (7,069) |
(*) The increase in selling expenses mainly reflects an increase in tariffs for the increased use of TAG gas pipelines since the sale in June 2019.
6.3 | General and administrative expenses |
Consolidated | ||||
2020 | 2019 | |||
Abr-Jun | Jan-Jun | Abr-Jun | Jan-Jun | |
Employee compensation | (1,218) | (2,495) | (1,457) | (2,900) |
Materials, third-party services, freight, rent and other related costs | (226) | (642) | (549) | (1,071) |
Depreciation, depletion and amortization | (124) | (251) | (188) | (350) |
Total | (1,568) | (3,388) | (2,194) | (4,321) |
24
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
7 | Other income and expenses |
Consolidated | ||||
2020 | 2019 | |||
Apr-Jun | Jan-Jun | Apr-Jun | Jan-Jun | |
Voluntary Separation Incentive Plan – PDV | (4,835) | (5,022) | (336) | (335) |
Unscheduled stoppages and pre-operating expenses | (2,481) | (4,065) | (1,517) | (2,730) |
Pension and medical benefits – retirees | (1,027) | (2,354) | (1,348) | (2,695) |
Gains/(losses) with Commodities Derivatives | (2,720) | (1,683) | (601) | (1,449) |
Gains / (losses) related to legal, administrative and arbitration proceedings | (601) | (882) | (833) | (2,166) |
Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | 98 | (348) | 21,200 | 21,889 |
Variable compensation program | (3) | 168 | (417) | (791) |
Amounts recovered from Lava Jato investigation | 335 | 431 | 309 | 309 |
Early termination of contracts | 277 | 734 | (5) | (5) |
Expenses/Reimbursements from E&P partnership operations | 624 | 1,280 | 181 | 370 |
Equalization of expenses - Production Individualization Agreements | 4,363 | 4,474 | (34) | (34) |
PIS and Cofins recovered - VAT tax exclusion from PIS and Cofins tax basis | 7,675 | 7,675 | − | − |
Others | 527 | 650 | (847) | (886) |
Total | 2,232 | 1,058 | 15,752 | 11,477 |
8 | Net finance income (expense) |
9 | Net income by operating segment |
25
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated Statement of Income by operating segment – Jan-Jun/2020 | ||||||
Exploration and Production | Refining, Transportation & Marketing |
Gas & Power |
Corporate and other business | Eliminations | Total | |
Continuing operations | ||||||
Sales revenues | 75,266 | 112,486 | 18,624 | 1,949 | (81,958) | 126,367 |
Intersegments | 73,144 | 2,140 | 6,210 | 464 | (81,958) | − |
Third parties | 2,122 | 110,346 | 12,414 | 1,485 | − | 126,367 |
Cost of sales | (45,114) | (107,997) | (9,217) | (1,928) | 87,722 | (76,534) |
Gross profit | 30,152 | 4,489 | 9,407 | 21 | 5,764 | 49,833 |
Expenses | (65,178) | (11,146) | (6,537) | (802) | (62) | (83,725) |
Selling | (2) | (6,650) | (5,906) | (52) | (56) | (12,666) |
General and administrative | (506) | (542) | (221) | (2,119) | − | (3,388) |
Exploration costs | (818) | − | − | − | − | (818) |
Research and development | (498) | (21) | (19) | (250) | − | (788) |
Other taxes | (485) | (455) | (52) | (830) | − | (1,822) |
Impairment | (64,304) | (208) | − | (789) | − | (65,301) |
Other income and expenses | 1,435 | (3,270) | (339) | 3,238 | (6) | 1,058 |
Net income (loss) before financial results and income taxes | (35,026) | (6,657) | 2,870 | (781) | 5,702 | (33,892) |
Net finance income (expenses) | − | − | − | (33,486) | − | (33,486) |
Results in equity-accounted investments | (806) | (2,189) | 122 | 345 | − | (2,528) |
Net Income (loss) before income taxes | (35,832) | (8,846) | 2,992 | (33,922) | 5,702 | (69,906) |
Income taxes | 11,909 | 2,263 | (976) | 6,111 | (1,938) | 17,369 |
Net income (loss) from continuing operations for the period | (23,923) | (6,583) | 2,016 | (27,811) | 3,764 | (52,537) |
Attributable to: | ||||||
Net income attributable to shareholders of Petrobras | (23,911) | (6,413) | 1,823 | (26,499) | 3,764 | (51,236) |
Net income from continuing operations | (23,911) | (6,413) | 1,823 | (26,499) | 3,764 | (51,236) |
Non-controlling interests | (12) | (170) | 193 | (1,312) | − | (1,301) |
Net income from continuing operations | (12) | (170) | 193 | (1,312) | − | (1,301) |
(23,923) | (6,583) | 2,016 | (27,811) | 3,764 | (52,537) |
26
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated Statement of Income by operating segment – Jan-Jun/2019 | ||||||
Exploration and Production | Refining, Transportation & Marketing |
Gas & Power |
Corporate and other business | Eliminations | Total | |
Continuing operations | ||||||
Sales revenues | 92,547 | 126,202 | 22,188 | 2,453 | (99,967) | 143,423 |
Intersegments | 90,765 | 29,334 | 6,736 | 424 | (99,967) | 27,292 |
Third parties | 1,782 | 96,868 | 15,452 | 2,029 | − | 116,131 |
Cost of sales | (52,411) | (115,488) | (14,954) | (2,361) | 96,834 | (88,380) |
Gross profit | 40,136 | 10,714 | 7,234 | 92 | (3,133) | 55,043 |
Expenses | (4,321) | (6,973) | 17,369 | (8,742) | (78) | (2,745) |
Selling | (4) | (3,668) | (3,251) | (80) | (66) | (7,069) |
General and administrative | (591) | (689) | (288) | (2,753) | − | (4,321) |
Exploration costs | (1,048) | − | − | − | − | (1,048) |
Research and development | (759) | (27) | (27) | (278) | − | (1,091) |
Other taxes | (109) | (137) | (93) | (273) | − | (612) |
Impairment | 1,101 | (1,181) | (1) | − | − | (81) |
Other income and expenses | (2,911) | (1,271) | 21,029 | (5,358) | (12) | 11,477 |
Net income (loss) before financial results and income taxes | 35,815 | 3,741 | 24,603 | (8,650) | (3,211) | 52,298 |
Net finance income (expenses) | − | − | − | (16,995) | − | (16,995) |
Results in equity-accounted investments | 280 | 535 | 169 | (19) | − | 965 |
Net Income (loss) before income taxes | 36,095 | 4,276 | 24,772 | (25,664) | (3,211) | 36,268 |
Income taxes | (12,177) | (1,272) | (8,365) | 7,268 | 1,091 | (13,455) |
Net income from continuing operations for the period | 23,918 | 3,004 | 16,407 | (18,396) | (2,120) | 22,813 |
Net income from discontinued operations for the period | − | − | 30 | 749 | − | 779 |
Net income for the period | 23,918 | 3,004 | 16,437 | (17,647) | (2,120) | 23,592 |
Attributable to: | ||||||
Net income attributable to shareholders of Petrobras | 23,927 | 3,027 | 16,190 | (18,127) | (2,120) | 22,897 |
Net income from continuing operations | 23,927 | 3,027 | 16,169 | (18,661) | (2,120) | 22,342 |
Net income from discontinued operations | − | − | 21 | 534 | − | 555 |
Non-controlling interests | (9) | (23) | 247 | 480 | − | 695 |
Net income from continuing operations | (9) | (23) | 238 | 265 | − | 471 |
Net income from discontinued operations | − | − | 9 | 215 | − | 224 |
23,918 | 3,004 | 16,437 | (17,647) | (2,120) | 23,592 |
The consolidated amounts of intersegment sales (remaining after eliminations) relates to sales from the RT&M to BR Distribuidora, which is presented as discontinued operation within Corporate and other business, after Petrobras ceased to be the parent company of BR Distribuidora.
10 | Trade and other receivables |
10.1 Trade and other receivables, net
Consolidated | ||
06.30.2020 | 12.31.2019 | |
Receivables from contracts with customers | ||
Third parties | 18,139 | 18,057 |
Related parties | ||
Investees (note 31.6) | 3,529 | 3,201 |
Receivables from the electricity sector | 1,171 | 1,347 |
Subtotal | 22,839 | 22,605 |
Other trade receivables | ||
Third parties | ||
Receivables from divestments (*) | 8,220 | 5,781 |
Lease receivables | 2,546 | 1,941 |
Other receivables | 3,972 | 3,348 |
Related parties | ||
Petroleum and alcohol accounts - receivables from Brazilian Government (note 31.7) | 1,236 | 1,226 |
Subtotal | 15,974 | 12,296 |
Total trade receivables | 38,813 | 34,901 |
Expected credit losses (ECL) - Third parties | (11,734) | (9,214) |
Expected credit losses (ECL) - Related parties | (204) | (178) |
Total trade receivables, net | 26,875 | 25,509 |
Current | 14,316 | 15,164 |
Non-current | 12,559 | 10,345 |
(*)It comprises receivable from the divestment of NTS and contingent payments from the sale of interest in Roncador field |
Trade and other receivables are generally classified as measured at amortized cost, except for receivables with final prices linked to changes in commodity price after their transfer of control, which are classified as measured at fair value through profit or loss. Changes in such prices on June 30, 2020 amounted to R$ 1,326.
27
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
10.2 | Aging of trade and other receivables – third parties |
Consolidated | ||||
06.30.2020 | 12.31.2019 | |||
Trade receivables | Expected credit losses (ECL) | Trade receivables | Expected credit losses (ECL) | |
Current | 20,502 | (816) | 18,776 | (567) |
Overdue: | ||||
1- 3 months | 660 | (141) | 1,011 | (154) |
3 - 6 months | 223 | (74) | 98 | (33) |
6 - 12 months | 316 | (128) | 197 | (51) |
More than 12 months | 11,176 | (10,575) | 9,045 | (8,409) |
Total | 32,877 | (11,734) | 29,127 | (9,214) |
10.3 | Changes in provision for expected credit losses |
In the year ended December 31, 2019, the write-offs of R$ 4,964 primarily relate to the termination of a lawsuit relating to the electricity sector, according to note 13.4
11 | Inventories |
Consolidated | ||
06.30.2020 | 12.31.2019 | |
Crude oil | 11,290 | 15,738 |
Oil products | 8,894 | 9,165 |
Intermediate products | 2,039 | 2,362 |
Natural gas and LNG (*) | 373 | 699 |
Biofuels | 108 | 114 |
Fertilizers | 153 | 112 |
Total products | 22,857 | 28,190 |
Materials, supplies and others | 4,737 | 4,819 |
Total | 27,594 | 33,009 |
(*) Liquefied Natural Gas | ||
Consolidated inventories are presented less a provision for adjustment to their net realizable value. The adversity in the current global scenario, due to the impacts resulting from the pandemic of COVID-19 and the shock of oil prices, brought a significant reduction in the prices of oil and its derivatives in the international market, and consequently, in the national market, implying the constitution of adjustments in inventories to net realizable value, recognized in the income for the year as costs of products and services sold. In the period from January to June 2020, a provision of R$ 1,502 was recorded (reversal of a provision of R$ 32, in the period from January to June 2019).
As of June 30, 2020, the company had an inventory volume of oil and / or derivatives given as a guarantee of the Terms of Financial Commitment - TCF, signed in 2008 with Petros, with no relevant changes in relation to the values disclosed on December 31 2019.
28
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
12 | Taxes |
12.1 | Income taxes and other taxes |
Income tax and social contribution | Consolidated | |||||
Current assets | Current liabilities | Non-current liabilities | ||||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | |
Taxes in Brazil | ||||||
Income taxes | 8,814 | 10,018 | 324 | 288 | − | − |
Income taxes - Tax settlement programs | − | − | 268 | 228 | 1,951 | 2,031 |
8,814 | 10,018 | 592 | 516 | 1,951 | 2,031 | |
Taxes abroad | 13 | 32 | 552 | 598 | − | − |
Total | 8,827 | 10,050 | 1,144 | 1,114 | 1,951 | 2,031 |
Exclusion of VAT tax rate from PIS and COFINS tax basis
In June 2020, the company obtained a favorable and definitive court decision on the exclusion of VAT tax (ICMS tax) from the calculation basis of PIS and Cofins contributions.
Considering the long period that involves the right to recover taxes, competences between the months of October 2001 and June 2020, dates that precede the validity and mandatory of the electronic invoice and digital fiscal bookkeeping (SPED), there is greater complexity in the calculation of values. In this context, the recorded amount of R$ 16,925, as of June 30, 2020, in current assets as taxes and contributions, represents management's best estimate based on prevailing calculation assumptions and available documents.
The net gain in the result was R$ 10,887, of which R$ 7,675 was recovered from taxes on other operating income, R$ 9,250 from inflation indexation charges in net finance income (expense), partially offset by R$ 430 of tax expenses and R$ 5,608 of expenses with Income tax and social contribution.
The credit will be used by offsetting it with federal taxes, after the necessary regulatory procedures.
12.2 | Deferred income taxes - non-current |
The changes in the deferred income taxes are presented as follows:
29
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated | |
Balance at January 1, 2019 | 7,848 |
Recognized in the statement of income for the year | (11,036) |
Recognized in the statement of income of discontinued operation (*) | (2,520) |
Recognized in shareholders’ equity | 6,486 |
Cumulative translation adjustment | 253 |
Use of tax credits | (1,224) |
Transfers to held for sale | (1,138) |
Others | (171) |
Balance at December 31, 2019 | (1,502) |
Recognized in the statement of income for the year | 18,576 |
Recognized in shareholders’ equity | 33,820 |
Cumulative translation adjustment | 638 |
Use of tax credits | 36 |
Transfers to held for sale | 30 |
Others | 34 |
Balance at June 30, 2020 | 51,632 |
Deferred tax assets | 5,593 |
Deferred tax liabilities | (7,095) |
Balance at December 31, 2019 | (1,502) |
Deferred tax assets | 52,454 |
Deferred tax liabilities | (822) |
Balance at June 30, 2020 | 51,632 |
(*) Deferred income taxes on the remeasurement of the remaining interest in BR Distribuidora, as set out in note 30 to the audited consolidated financial statements as of December 31, 2019.
The company conducts annual studies to determine the recognition of deferred tax credits in the financial statements. Exceptionally, due to the pandemic of the new coronavirus (COVID-19) and the impacts observed in the company's operations, a new study was carried out based on the update of the main assumptions such as the price of brent oil and the rate exchange rates approved by the Board of Directors within the scope of Strategic Planning 2021-2025. This new study confirmed the existence of future taxable profits to support the maintenance of the balances of tax losses and deferred income and social contribution taxes recorded in the assets, with realization expected to occur in the period from 2021 to 2027.
The balance of deferred tax assets increased in the first half of 2020 mainly due to the foreign exchange variation on finance debt, recorded in other comprehensive income of R$ 34,820, and to impairment losses of R$ 18,913.
12.3 | Reconciliation between statutory tax rate and effective tax expense rate |
The following table provides the reconciliation of Brazilian statutory tax rate to the Company’s effective rate on income before income taxes:
30
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
13 | Short-term and other benefits |
The balance of the main short-term benefits for employees, current and non-current, is presented as follows:
Consolidated | ||
06.30.2020 | 12.31.2019 | |
Accrued vacation pay | 3,547 | 2,659 |
Profit sharing | 106 | 65 |
Employees variable compensation program | 1,794 | 2,640 |
Voluntary seveerance program (PDV) | 5,306 | 565 |
Salaries and related charges | 1,962 | 856 |
Total | 12,715 | 6,785 |
Current | 9,284 | 6,632 |
Non current | 3,431 | 153 |
13.1 | Variable compensation |
Performance Award Program
In the first quarter of 2020, the company paid, in advance, the amount of R$ 655 referring to the variable remuneration program obtained on the goals achieved for the year 2019, whose final payment is expected to occur until December 2020.
On April 28, 2020, the Board of Directors approved the program for 2020 that will be activated if the company presents a net income in the year 2020, associated with the fulfillment of the company's performance metrics and the individual performance of employees and results of the areas.
In the current scenario, where the company does not present net income in the first half of 2020, there was no provision for variable remuneration for the year 2020.
13.2 | Voluntary Severance Programs |
As of June 30, 2020, the company has four current voluntary severance programs (PDV) and incentive retirement programs (PAI) that provide for the same legal and indemnity benefits, namely:
i. PDV 2019 for retirees by the Social Security until promulgation of the Pension Reform;
ii. Specific PDV for employees working in assets/units in the process of divestment;
iii. Exclusive PDV for employees working in the company's corporate segment; and
iv. PAI for employees entitled to retirement valid until promulgation of the Pension Reform.
The changes in the provision as of June 30, 2020 are shown below:
Consolidated | ||
06.30.2020 | 12.31.2019 | |
Opening Balance | 565 | 141 |
Discontinued operations | − | (83) |
Enrollments | 5,059 | 798 |
Revision of provisions | (37) | (8) |
Separations in the period | (281) | (283) |
Closing Balance | 5,306 | 565 |
Current | 1,875 | 394 |
Non-current | 3,431 | 171 |
On April 7, 2020, the Board of Directors approved adjustments to the current severance programs that generated an additional provision of R$ 1,290 in the second quarter of 2020, referring to the enrolled and already dismissed public, as well as approving the creation of the Incentive Retirement Program (PAI), a new severance program with an enrollment period between May 6, 2020 and July 31, 2020, aimed at employees entitled to retirement who, after the promulgation of the Pension Reform, were unable to participate in the 2019 PDV.
The recognition of the provision for expenses on retirement programs will occur as employees join them.
On June 30, 2020, the company registered 10,082 enrollments and the dismissals of 2,122 employees with the programs in force.
31
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
The expected impact of the indemnities on the company's cash will be diluted over the next three years, according to the expected dismissal date. In addition, the company chose to defer the payment of severance payments in two installments, one at the time of dismissal and the other in July 2021 or one year after the dismissal, whichever is greater.
14 | Employee benefits (Post-Employment) |
Consolidated | Parent Company | |||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | |
Liability | ||||
Pension plan Petros Renegotiated | 30,583 | 41,239 | 30,583 | 41,239 |
Pension plan Petros Non-Renegotiated | 8,836 | 13,154 | 8,836 | 13,154 |
Pension plan Petros Renegotiated Pre-70 | 7,301 | − | 7,301 | − |
Pension plan Petros Non-Renegotiated Pre-70 | 5,209 | − | 5,209 | − |
Pension plan Petros 2 | 2,403 | 3,987 | 2,030 | 3,455 |
Health Care (AMS) | 44,114 | 48,312 | 42,826 | 46,921 |
Other plans | 104 | 98 | − | − |
Total | 98,550 | 106,790 | 96,785 | 104,769 |
Current | 3,659 | 3,577 | 3,659 | 3,577 |
Non current | 94,891 | 103,213 | 93,126 | 101,192 |
Total | 98,550 | 106,790 | 96,785 | 104,769 |
14.1 | Pension and medical benefits |
On December 27, 2019, the Previc authorized the split of PPSP-R and PPSP-NR plans, aiming to gather participants of “Pre-70 group” in “PPSP-R Pre-70” and “PPSP-NR Pre-70”.
On March 18, 2020, the Petros Foundation's Deliberative Council approved the financial statements for 2019 with accumulated deficits of R$ 2,309 and R$ 1,093 for the Petrobras System Renegotiated (PPSP –R) and Petrobras System Non-Renegotiated (PPSP-NR) plans, respectively, in accordance with accounting practices adopted in Brazil applicable to entities regulated by the Conselho Nacional de Previdência Complementar (CNPC).
The deficits determined by Petros have been calculated annually by an independent actuary and are already recognized in Petrobras' financial statements for 2019, in accordance with the technical pronouncements issued by the Comitê de Pronunciamentos Contábeis (CPC), approved by the Comissão de Valores Mobiliários (Brazilian Securities Commission) (CVM).
The main differences in accounting practices adopted in Brazil (CNPC and CVM) between Pension Fund and Sponsor to calculate the actuarial commitment, are shown below:
New deficit settlement plan (New PED)
On April 28, 2020, the new Deficit Equation Plan (New PED) of the Petros plans of the Petrobras Renegotiated and Non-Renegotiated System (PPSP-R and PPSP-NR), as well as the changes in the regulation referring to the reduction of the lump sum death benefit and others were approved by the Secretariat for Coordination and Governance of State-owned Companies (Secretaria de Coordenação e Governança das Empresas Estatais) (Sest) and, on May 5, 2020, by the National Superintendence of Supplementary Pension Plans (Superintendência Nacional de Previdência Complementar) (Previc).
The New PED, which covers deficits from 2015 to 2018 and incorporates 2019 results, was valued at R$ 33,700 on December 31, 2019. Of the total amount, the amount of R$ 15,620 will be borne by Petrobras in compliance with the principle of the contributory parity provided for in Constitutional Amendment No. 20/1998, of which R$ 13,566 through extraordinary contributions throughout the existence of the plans and R$ 2,054 from contributory contributions in 20 years as a counterpart of the company for the reduction of the lump sum death benefit.
The remaining deficit will be borne by the other sponsors and participants in the PPSP-R and PPSP-NR plans.
32
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
The current model differs from that applied in PED-2015 and aimed to reduce the extraordinary contributions to the monthly budget of most of the participants by: (i) extending the collection time to a lifetime, replacing 18 years; (ii) adoption of a single rate for assets and another for assisted (iii) institution of an annual contribution of 30% on the 13th benefit; and (iv) reduction in the amount of the lump sum death benefit.
The New PED includes changes to some rights and changes in the regulations of the PPSP-R and PPSP-NR in accordance with Resolution 25 of CGPAR (Interministerial Commission for Corporate Governance and Administration of Corporate Participation of the Union), of December 6, 2018, which establishes guidelines and parameters for federal state companies regarding the sponsorship of pension plans.
The main changes in the regulation were: (i) establishment of a new criterion for calculating the amount of lump sum death benefit; (ii) disconnection from the Social Security, (iii) calculation of the benefit and (iv) readjustment by the IPCA. Since, except for item (i), these changes are only applicable to active participants without acquired rights (assets that did not retire by the Social Security before the regulation was amended).
Mid-term review of PPSP-R and PPSP-NR plans
In May 2020, with the approval of the New PED that included the amendment of the regulations, in addition to the contributory contribution obligation, the liability of the PPSP-R and PPSP-NR pension benefit plans decreased by R$ 1,479, with recognition of:
(i) R$ 51 of net gain in net income (loss), referring to the cost of the past service, of which R$ 2,430 of gain due to the reduction of the lump sum death benefit, R$ 325 of expenses due to other changes in regulations and R$ 2,054 of expenses due to the assumption the contributory contribution obligation; and
(ii) R$ 1,428 of net gain in other comprehensive income in shareholders’ equity, referring mainly to the increase in the discount rate, partially offset by the loss in guarantee assets and by the recalculation of extraordinary contributions.
The value of the cost of past service calculated is the result of changes in the plan's regulations, mainly due to the reduction of the lump sum death benefit and the disconnection of the Social Security and the establishment of a reference unit of the plan (UR), which sets a single value, of R$ 4 thousand, adjusted annually by the IPCA, necessary to determine the value of Petros supplementation, replacing the value of the Social Security estimated, the active participants not granted.
The disconnection from the Social Security provides that the Petros benefit is granted to the participant regardless of retirement by Social Security.
The average duration of the actuarial liabilities of the PPSP-R and PPSP-NR plans, on May 31, 2020, is 13.14 years and 12.34 years, respectively (13.78 years and 11.05 years on December 31 2019, respectively).
a) Debt instrument
The company entered into an obligation with Petros under the New PED in the amount of R$ 2,054, calculated based on the Previc rules, referring to the contributory contribution, equivalent to the revision of the lump sum death benefit for solving the deficit, provided for in the rules of the New PED. This contribution differs from the R$ 2,430 reduction in actuarial liabilities, calculated in accordance with CVM rules, basically due to the difference in the discount rate.
The debt instrument will be paid in 40 semiannual installments for a period of up to 20 years and updated based on the fixed actuarial goal of the plans, which is reviewed annually. In December 2019, the rate was 4.43% + IPCA for PPSP-R and 4.37% + IPCA for PPSP-NR.
33
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
b) Pension plan assets - PPSP-R and PPSP-NR plans
The balance of guaranteeing assets, considered in the mid-term review, positioned on May 31, 2020, of the PPSP-R and PPSP-NR plans, in the amount of R$ 38,431 and R$ 9,945, respectively (R$ 43,081 and R$ 10,847 in 2019), had a reduction in relation to the year of 2019 due to the devaluation of investments linked to the index of the Brazilian stock exchange (Ibovespa) and those linked to the index of federal government bonds indexed to inflation (IMAB5 +).
The assets are basically represented by investments in fixed income and variable income, according to the allocation limit provided for in the current regulation.
c) Update of liabilities of other plans - Petros 2, AMS and others
In view of the mid-term review of the PPSP-R and PPSP-NR plans, the company assessed the need to update the liabilities, net of guarantee assets, positioned in May 2020, of the other pension and health plans with the new discount rate calculated, given its representativeness in the value of the obligation, in order to obtain uniformity between the plans, using the sensitivity analysis of the year of 2019 (effect of the rate variation on the obligation) as a parameter for registration, as well as the guaranteeing assets positioned in May 2020. This update resulted in a reduction in liabilities and gains in other comprehensive income in shareholders' equity of R$ 7,647 mainly due to the increase in the discount rate.
d) Actuarial assumptions
The actuarial assumptions used to carry out the interim actuarial valuation of May 2020, compared with those adopted in the actuarial valuation of December 2019 were revisited and have not changed, except for the discount rate assumption presented below:
34
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
06.30.2020 | 12.31.2019 | |||||||
PPSP-R | PPSP-NR | PP2 | AMS | PPSP-R | PPSP-NR | PP2 | AMS | |
Real discount rate | 4.18% | 4.12% | 4.56% | 4.34% | 3.40% | 3.37% | 3.56% | 3.46% |
Changes in obligations with pension and health plans recognized in the Statement of Financial Position and in the Statement of Income
The movement of these events occurred with pension and health plans with defined benefit characteristics is shown below:
The net actuarial gain of R$ 9,242 in the financial hypothesis is due to the increase in the discount rate on the actuarial liability in the amount of R$ 16,900, partially offset by the loss in the return on guarantee assets of R$ 7,658, mainly in the PPSP-R plans and PPSP-NR..
The net expense for pension and health plans is shown below:
The Petros 2 Plan has a defined contribution portion whose payments are recognized in the income statement. In the period from January to June 2020, the company's contribution to the defined contribution portion of the Petros 2 Plan was R$ 410 (R$ 448, for the period from January to June 2019). In the period from April to June 2020, the contribution was R$ 186 (R$ 221 in the same period of 2019).
35
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
15 | Provisions for legal proceedings |
15.1 | Provisions for legal proceedings, judicial deposits and contingent liabilities |
The Company recognizes provisions based on the best estimate of the costs of proceedings for which it is probable that an outflow of resources embodying economic benefits will be required and that can be reliably estimated. These proceedings mainly include:
· | Labor claims, in particular: (i) opt-out claims related to a review of the methodology by which the minimum compensation based on an employee's position and work schedule (Remuneração Mínima por Nível e Regime - RMNR) is calculated; (ii) lawsuits relating to overtime pay and (iii) actions of outsourced employees; |
· | Tax claims including: (i) claims relating to Brazilian federal tax credits applied that were disallowed; and (ii) alleged misappropriation of VAT tax credits; and (iii) fines for non-compliance with accessory tax obligation; |
· | Civil claims relating to: (i) litigations involving the company Sete Brasil; (ii) claims involving contracts; (iii) royalties and special participation charges, including royalties over the shale extraction; and (iv) penalties applied by ANP relating to measurement systems. |
· | Environmental claims for compensation relating to an environmental accident in the State of Paraná, in 2000. |
Provisions for legal proceedings are set out as follows:
(*) Amounts classified in other accounts payable in current liability.
Consolidated | ||
06.30.2020 | 12.31.2019 | |
Opening Balance | 12,546 | 28,695 |
Additions, net of reversals | 345 | 4,449 |
Use of provision | (2,115) | (21,050) |
Accruals and charges | 538 | 1,492 |
Transfer to assets held for sale | − | (1,136) |
Others | 130 | 96 |
Closing balance | 11,444 | 12,546 |
In preparing its consolidated financial statements for the first half of 2020, the Company considered all available information concerning legal proceedings in which the Company is a defendant, in order to estimate the amounts of obligations and probability that outflows of resources will be required.
36
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
In the period from January to June 2020, the decrease in liabilities arises mainly from changes in the following cases: (i) a reduction of R$ 797 due to agreements made in litigation involving the company Sete Brasil; (ii) reduction of R$ 331 referring to the agreement approved by the STF in claim for indemnity of loss of profit in a lawsuit filed by Sergás and the State of Sergipe; mainly offset by (iii) R$ 359 in the provision for lawsuits involving a refinery engineering contract; (iv) an increase of R$ 165 due to the transfer to a probable loss in an VAT RATE collection action in domestic bunker oil consumption operations for chartered vessels; and (v) R$ 425 in fines state level related to accessory obligations.
15.2 | Judicial deposits |
Judicial deposits made in connection with legal proceedings are set out in the table below according to the nature of the corresponding lawsuits:
Consolidated | ||
Non-current assets | 06.30.2020 | 12.31.2019 |
Tax | 26,084 | 23,885 |
Labor | 4,362 | 4,258 |
Civil | 5,141 | 4,361 |
Environmental | 630 | 645 |
Others | 466 | 49 |
Total | 36,683 | 33,198 |
Consolidated | ||
06.30.2020 | 12.31.2019 | |
Opening Balance | 33,198 | 26,003 |
Additions | 3,302 | 7,942 |
Use | (236) | (739) |
Accruals and charges | 417 | 1,300 |
Transfer to assets held for sale | − | (1,305) |
Others | 2 | (3) |
Closing balance | 36,683 | 33,198 |
In the first half of 2020, the Company made judicial deposits in the amount of R$ 3,302, including: (i) R$ 1,154 related to the chartering of platforms due to the legal dispute related to the withholding income tax (IRRF); and (ii) R$ 757 referring to IRPJ and CSLL for not adding the income of subsidiaries and affiliates domiciled abroad to the IRPJ and CSLL calculation basis; and (iii) R$ 421 of deposit in guarantee abroad for the foreclosure of a ship.
15.3 | Contingent liabilities |
The estimates of contingent liabilities for legal proceedings are indexed to inflation and updated by applicable interest rates. As of June 30 2020, estimated contingent liabilities for which the possibility of loss is not considered remote are set out in the following table:
Consolidated | ||
Nature | 06.30.2020 | 12.31.2019 |
Tax | 129,967 | 130,499 |
Labor | 40,787 | 39,235 |
Civil – General | 22,589 | 24,097 |
Civil – Environmental | 7,133 | 6,352 |
Total | 200,476 | 200,183 |
The main contingent liabilities are:
· | Tax matters comprising: i) withholding income tax (IRRF), Contribution of Intervention in the Economic Domain (CIDE), Social Integration Program (PIS) and Contribution to Social Security Financing (COFINS) on remittances for payments of vessel charters; (ii) income from foreign subsidiaries and associates located outside Brazil not included in the computation of taxable income (IRPJ and CSLL); (iii) requests to compensate federal taxes disallowed by the Brazilian Federal Tax Authority; and (iv) collection and crediting of VAT tax by several states; |
· | Labor matters comprising mainly actions requiring a review of the methodology by which the minimum compensation based on an employee's position and work schedule (Remuneração Mínima por Nível e Regime - RMNR) is calculated; |
· | Civil matters comprising: (i) litigations regarding Sete Brasil; (ii) administrative proceedings challenging an ANP order requiring Petrobras to pay additional special participation fees and royalties (production taxes) with respect to several fields; and (iii) a public civil action that discusses the alleged illegality of the gas supply made by the Company to its Nitrogen Fertilizer Production Unit. |
· | Environmental lawsuits, with emphasis on indemnities for collective material and moral damages to the environment and environmental fines from IBAMA related to the company's operation. |
37
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
In the period from January to June 2020, in addition to the increase resulting from the monetary restatement of the amounts, there were reductions related to the following events: i) R$ 3,153 in civil litigation involving contractual issues; and ii) R$ 2,447 reclassified to remote loss, related to differences in VAT tax rates on jet fuel sales made based on State Law 4,181 / 2003, of Rio de Janeiro, which was declared unconstitutional by the Federal Supreme Court, but later remitted by state legislation, in accordance with VAT tax Agreement 190/2017.
15.4 | Legal proceedings arising from divestments |
As of June 30, 2020, Petrobras is responsible for certain lawsuits classified as possible loss in the amount of R$ 4,159 (R$ 2,470 on December 31, 2019) arising from the sale of 90% of the interest in Transportadora Associada de Gás (TAG) in April 2019. The increase in the period is mainly due to the receipt of administrative procedures, pending by the Federal Tax Revenue of Brazil, which question the partial approval of federal tax offset declarations.
15.5 | Class action and related proceedings |
With regard to collective action in the Netherlands, it is worth mentioning the decision of January 29, 2020 and the presentation of a petition by the Foundation in response to questions raised by the Court on May 6, 2020, as detailed in item 19.4.2 of the financial statements for the year ended December 31, 2019.
In Argentina's arbitration, described in item 19.4.4 of the financial statements for the year ended December 31, 2019, the appeal filed by the Association has not yet been judged by the Argentine Supreme Court.
As for the criminal proceedings in Argentina, described in item 19.5, of the financial statements for the year ended December 31, 2019, it should be noted that, during the period between March and June 2020, the preliminary procedural defenses presented by Petrobras were rejected. The Company filed appeals against such decisions, which are pending judgment. As part of the action related to an alleged fraudulent offer of securities, aggravated by the fact that Petrobras allegedly declared false data in its financial statements prior to 2015, the responsible judge revoked one of its decisions. On July 23, 2020, based on the emergence of new facts, the judge revoked the decision that had rejected the defense of immunity from jurisdiction presented by the company, so that he can reassess the issue
15.6 | Arbitrations in Brazil |
Petrobras responds to six arbitrations instituted before the Market Arbitration Chamber (CAM), linked to B3 - Brasil, Bolsa, Balcão. Five of these arbitrations were initiated by multiple national and foreign investors. The other, established by an association that is not a shareholder of the company, intends to be collective, through representation of all minority shareholders of Petrobras that acquired shares in B3 between January 22, 2010 and July 28, 2015. Investors intend that the company indemnify them for the alleged financial losses caused by the decrease in the price of Petrobras shares listed on the stock exchange in Brazil, resulting from the acts revealed by Operation Lava Jato.
These arbitrations involve very complex issues, which are subject to substantial uncertainties and which depend on factors such as: unprecedented legal theses, schedules yet to be defined by the Arbitral Courts, the obtaining of evidence in the hands of third parties or opponents and expert analysis.
Furthermore, the claims made are broad and span several years. The uncertainties inherent in all of these issues affect the amount and timing of the final decision on these arbitrations. As a result, the company is unable to produce a reliable estimate of the potential loss in these arbitrations.
Depending on the outcome of all these cases, the company may have to pay substantial amounts, which could have a material adverse effect on its financial condition, consolidated results or consolidated cash flow in a given period. However, Petrobras does not acknowledge responsibility for the supposed losses alleged by investors in these arbitrations, nor is it appropriate for collective arbitration.
Most of these arbitrations are still far from an outcome, either in preliminary stages or beginning the evidence production phase. However, in one of the arbitrations, proposed by two institutional investors, on May 26, 2020, a partial arbitral award was issued that indicates the company's responsibility, but does not determine the payment of amounts by Petrobras, nor does it end the procedure. This arbitration is confidential, as well as the others in progress, and the partial award - which does not represent a CAM position, but only the three arbitrators that make up this arbitration panel - does not extend to the other existing arbitrations.
On July 20, 2020, Petrobras filed a lawsuit for the annulment of this partial arbitration award, as it understands that it contains serious flaws and improprieties. In compliance with CAM rules, the lawsuit is pending in secret. Petrobras reiterates that it will continue to defend itself vigorously, out of respect for its current shareholders, in all arbitrations to which it is a party.
38
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
16 | Provision for decommissioning costs |
Consolidated | ||
06.30.2020 | 12.31.2019 | |
Opening balance | 70,377 | 58,637 |
Adjustment to provision | 64 | 23,228 |
Transfers related to liabilities held for sale (*) | (14) | (12,261) |
Payments made | (777) | (1,986) |
Interest accrued | 1,463 | 2,749 |
Others | 92 | 10 |
Total | 71,205 | 70,377 |
(*) In 2019, includes transfers related to the Campos basin (R$ 10,404); concessions in Rio Grande do Norte (R$ 149); Bahia concessions (R$ 60); Frade field (R$ 471) and Baúna field (R$ 1,177), according to note 24.
The review of the key assumptions in the company's planning, when preparing the financial statements of March 31, 2020, according to note 3.3, did not result in material changes in the provision for decommissioning costs, given its formation, for the most part, long term, and composition of its cost structure, basically in dollars. This position has not been changed for the preparation of the financial statements of June 30, 2020.
17 | The “Lava Jato (Car Wash) Operation” and its effects on the Company |
The Company has monitored the progress of investigations under the “Lava Jato” Operation and, in the preparation of these unaudited interim financial statements for the period ended June 30, 2020, did not identify any additional information that would affect the adopted calculation methodology to write off, in the third quarter of 2014, amounts overpaid for the acquisition of property, plant and equipment. The Company will continue to monitor these investigations for additional information in order to assess their potential impact on the adjustment made.
In the the six-month period ended June 30, 2020, new leniency and plea agreements entitled the Company to receive funds with respect to compensation for damages, in the amount of R$ 431, accounted for as other income and expenses. Thus, the total cumulative amount recovered from the “Lava Jato” investigation through June 30, 2020 is R$ 4,151.
17.1 | U.S. Commodity Futures Trading Commission – CFTC |
On May 30, 2019, Petrobras was contacted by the U.S. Commodity Futures Trading Commission - CFTC with requests for information on the trading activities that are the subject of investigation in Operation Lava Jato. Petrobras will continue to cooperate with the authorities, including the CFTC, with respect to any investigation.
17.2 | Order of civil inquiry - Brazilian Public Prosecutor’s Office |
On December 15, 2015, the State of São Paulo Public Prosecutor’s Office issued the Order of Civil Inquiry 01/2015, establishing a civil proceeding to investigate the existence of potential damages caused by Petrobras to investors in the Brazilian stock market. The Brazilian Attorney General’s Office (Procuradoria Geral da República) assessed this civil proceeding and determined that the São Paulo Public Prosecutor’s Office has no authority over this matter, which must be presided over by the Brazilian Public Prosecutor’s Office. The Company has provided all relevant information requested by the authorities.
39
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
18 | Property, plant and equipment |
18.1 | By class of assets |
The rights-of-use comprise the following underlying assets:
Consolidated | Parent Company | ||||
Platforms | Vessels | Buildings and others | Total | Total | |
Balance at June 30, 2020 | 44,901 | 33,645 | 3,563 | 82,109 | 151,165 |
Cost | 58,636 | 48,522 | 6,444 | 113,602 | 200,042 |
Accumulated depreciation, amortization, depletion and impairment | (13,735) | (14,877) | (2,881) | (31,493) | (48,877) |
Balance at December 31, 2019 | 49,162 | 33,594 | 4,257 | 87,013 | 172,111 |
Cost | 58,618 | 43,119 | 5,496 | 107,233 | 206,743 |
Accumulated depreciation, amortization, depletion and impairment | (9,456) | (9,525) | (1,239) | (20,220) | (34,632) |
Expenses and Volumes Equalization Agreements
On April 30, 2020, Petrobras and partner companies in the shared deposits of Tupi, Sépia and Atapu signed the Expenses and Volumes Equalization Agreements (AEGV), referring to the expenses incurred and the revenue obtained from the volumes produced by each party from the beginning of the concession contracts to the date of the effectiveness of the Production Individualization Agreements (AIP) of these shared deposits.
40
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
On May 29, 2020, due to the equalization referring to the increase in participation in the three deposits, Petrobras received from the partner companies in these fields the amount of R$ 2,347, of which R$ 3,840 was recorded in other operating revenues and R$ 1,493 recorded in property, plant and equipment.
Also as a result of these Agreements, on May 1, 2020, Petrobras Netherlands BV signed Share Purchase Agreements acquiring an additional 2.589% interest in Tupi BV (Tupi), for the amount of R$ 509 (US$ 84 million), and additional 47.613% interest in Iara BV (Atapu) for R$ 4,525 (US$ 805 million), subject to price adjustments. The allocation of the acquisition price of the interests was based on the relative fair values of the assets acquired and liabilities assumed, generating an increase in the amount of R$ 5,034 (US$ 889 million), mainly in property, plant and equipment.
18.2 | Capitalization rate used to determine the amount of borrowing costs eligible for capitalization |
The capitalization rate used to determine the amount of borrowing costs eligible for capitalization was the weighted average of the borrowing costs applicable to the borrowings that were outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. For the six-month period ended June 30, 2020, the capitalization rate was 6.22% p.a. (6.19% p.a. for the same period of 2019).
19 | Intangible assets |
19.1 | By class of assets |
Consolidated | Parent Company | ||||
Rights and Concessions | Softwares | Goodwill | Total | Total | |
Balance at January 1, 2019 | 9,024 | 1,060 | 786 | 10,870 | 9,268 |
Additions | 5,505 | 423 | − | 5,928 | 5,823 |
Concession for exploration of oil and natural gas - Oil Surplus on the Transfer of Rights Agreement | 63,141 | − | − | 63,141 | 63,141 |
Capitalized borrowing costs | − | 19 | − | 19 | 19 |
Write-offs | (38) | (22) | − | (60) | (49) |
Transfers | (324) | (190) | (539) | (1,053) | 5 |
Amortization | (42) | (315) | − | (357) | (303) |
Impairment recognition | (5) | − | − | (5) | − |
Cumulative translation adjustment | − | 1 | 5 | 6 | − |
Balance at December 31, 2019 | 77,261 | 976 | 252 | 78,489 | 77,904 |
Cost | 77,755 | 5,929 | 252 | 83,936 | 82,449 |
Accumulated amortization and impairment | (494) | (4,953) | − | (5,447) | (4,545) |
Balance at December 31, 2019 | 77,261 | 976 | 252 | 78,489 | 77,904 |
Additions | 9 | 144 | − | 153 | 141 |
Capitalized borrowing costs | − | 4 | − | 4 | 4 |
Write-offs | (55) | (5) | − | (60) | (47) |
Transfers | (12) | (22) | − | (34) | (26) |
Amortization | (18) | (145) | − | (163) | (147) |
Cumulative translation adjustment | 22 | 3 | 47 | 72 | − |
Balance at June 30, 2020 | 77,207 | 955 | 299 | 78,461 | 77,829 |
Cost | 77,649 | 6,197 | 299 | 84,145 | 82,545 |
Accumulated amortization and impairment | (442) | (5,242) | − | (5,684) | (4,716) |
Balance at June 30, 2020 | 77,207 | 955 | 299 | 78,461 | 77,829 |
Estimated useful life in years | (*) | 5 | Undefined | ||
(*) Mainly composed of assets with indefinite useful lives, which are reviewed annually to determine whether events and circumstances continue to support an indefinite useful life assessment.
All agreements whose signature bonuses were paid in the last quarter of 2019, were signed with the regulatory authorities in the first quarter of 2020.
41
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
20 | Impairment |
The Company annually tests its assets for impairment or when there is an indication that their carrying amount may not be recoverable.
During the first quarter of 2020, there were two events with significant and adverse effects on the oil and oil products market: (i) the outbreak of the COVID-19 pandemic, with an abrupt reduction in the circulation of people, causing a double shock of supply and demand with retraction in world activity and (ii) failure in negotiations between members of the Organization of Petroleum Exporting Countries and other producers, led by Russia, to define production quotas, which contributed to the increase in the global oil supply and the reduction in price in early March.
These events led the company to adopt a series of measures aimed at preserving cash generation, in order to reinforce its financial strength and resilience of its businesses, as well as to review, and approve in the Board of Directors, some of its key premises of its Strategic Planning, such as Brent price, exchange rate, spreads of derivatives, among others. It should be noted that this set of assumptions remains the same, with no changes during the second quarter.
Reserve volume estimates are prepared reflecting, in an integrated manner, the projects in the company's Strategic Planning portfolio, technical uncertainties and assumptions such as prices and costs. As of June 30, 2020, there was no change in the company's portfolio of projects or in the reserve volumes that impacted the quarterly financial statements.
In this scenario, the company assessed the economic recoverability of its assets and in the period from January to June 2020, impairment losses of R$ 65,301 were recognized, fully concentrated in the first quarter of 2020, with emphasis on:
i) the effect of a new set of planning assumptions on the recoverable amount of several E&P fields (R$ 57,619), mainly in the CGUs Roncador, Marlim Sul; Polo Norte, Albacora Leste, Polo Berbigão-Sururu, Polo CVIT, and Mexilhão;
ii) hibernation of fields and platforms in shallow water (R$ 6,625), affecting the CGUs Polo Norte, Polo Ceará-Mar, Polo Ubarana and the Caioba, Guaricema and Camorim fields.
The indicative assessments conducted by the company, during the second quarter of 2020, did not point to the need for additional records of losses or reversals in relation to the amount recognized in the first quarter of 2020.
As of June 30, 2019, property, plant and equipment and intangible assets held for sale recorded net losses in their recoverable amounts in the amount of R$ 81. In property, plant and equipment and intangible assets, net losses in the amount of R$ 172 were recognized, mainly for losses in the COMPERJ CGU, NS-30 drillship and oil and gas production fields in Brazil. Losses of R$ 91 were reversed in the assets held for sale, mainly due to the sale of the Maromba production field and the Pasadena Refinery.
The following is the total impairment loss on assets, net of reversal, by nature of assets or CGUs, recognized in the income for the year:
42
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
20.1 | Impairment of property, plant and equipment and intangible assets |
20.1.1. Review of Cash Generating Units:
During the first half of 2020, management identified and assessed change in CGU Polo Norte (E&P Segment) excluding platforms PCH-1, PCH-2 and PNA-2, and fields of Anequim, Bagre, Cherne, Congro , Garoupa, Malhado, Namorado, Parati and Viola, who had their activities hibernated, with no expected resumption. Currently, this CGU is formed by Marlim, Albacora and Voador fields and remaining platforms.
20.1.2. Planning assumptions used in Impairment tests:
With a new set of planning assumptions in the company, approved by the Board of Directors, the estimates of the key assumptions used in the cash flow projections to determine the value in use of the CGUs for the tests performed on March 31, 2020 were:
2020 | 2021 | 2022 | 2023 | 2024 | Long term Average | |
Average Brent (US$/bbl) | 25 | 30 | 35 | 40 | 45 | 50 |
Average Brazilian Real (excluding inflation) - Real /U.S. dollar exchange rate (2019 prices) | 5.09 | 5.04 | 4.69 | 4.46 | 4.28 | 3.78 |
At December 31, 2019, average Brent prices and Brazilian real/U.S. dollar average exchange rates used were:
2020 | 2021 | 2022 | 2023 | 2024 | Long term Average | |
Average Brent (US$/bbl) | 65 | 65 | 65 | 65 | 65 | 65 |
Average Brazilian Real (excluding inflation) - Real /U.S. dollar exchange rate (2018 prices) | 3.85 | 3.79 | 3.75 | 3.72 | 3.70 | 3.60 |
The company changed its set of macroeconomic planning assumptions, presented in the table above, as it considers, among other factors, that there will be a slow recovery in demand, with a moderate change in habits in developed economies, in which it is believed that long-term equilibrium occurs at a lower level of demand. This assessment considers that:
· | structural change in the world economy, with permanent effects arising from this economic shock, including changes observed in consumer habits, which tend to be permanent; |
· | increased world oil inventories, slowing down the rebalancing of supply and demand; and |
· | oil consuming industries, given the new scenario, will not keep their previously projected demands in the long-term, reducing consumption levels. |
20.1.3. Main results of the tests for impairment of assets:
Information on the main impairment losses and reversals of property, plant and equipment and intangible assets recorded in the first quarter of 2020, and without additional records or reversals in the second quarter, are described below:
a) Producing properties in Brazil – Jan-Jun/2020
Our valuations of assets linked to oil and gas production fields in Brazil resulted in the recognition of net losses in the amount of R$ 64,244. The post-tax discount rate in constant currency applied to the exploration and production sector in Brazil was 7.3% p.a (6.7% p.a. on December 31, 2019). This amount is mainly due to:
· | Losses in the amount of R$ 57,619, mainly related to the CGUs and corporate assets that provide services in the fields below, reflecting the new set of key planning assumptions for the medium and long term vision, in particular, a drop in Brent price, devaluation of the Real against the Dollar and retractions in GDP and demand. The main losses were: |
CGU | Basin | Area | Impairment |
Roncador | Campos Basin | Post-Salt | (16,650) |
Marlim Sul | Campos Basin | Post-Salt | (11,717) |
Polo Norte | Campos Basin | Post-Salt | (9,952) |
Albacora Leste | Campos Basin | Post-Salt | (3,033) |
Polo Berbigão-Sururu | Santos Basin | Pre-Salt | (2,195) |
Polo CVIT | Espírito Santo Basin | Post-Salt | (1,556) |
Mexilhão | Santos Basin | Post-Salt | (1,009) |
Polo Parque das Baleias | Campos Basin | Post-Salt | (913) |
Polo Sapinhoá | Santos Basin | Pre-Salt | (704) |
Papa-Terra | Campos Basin | Post-Salt | (687) |
Araçás | Reconcavo Basin | Land and Shallow Waters | (599) |
Carmópolis | Sergipe Basin | Land and Shallow Waters | (586) |
Polo Uruguá | Santos Basin | Post-Salt | (506) |
Others | (7,512) | ||
Total | (57,619) | ||
For these CGUs, the impairment assessment carried out on December 31, 2019 for Polo CVIT, Papa-Terra and Polo Uruguá resulted in the recognition of losses, while Roncador, Mexilhão and Araçás presented recoverable values close to the respective book values.
43
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
· | Losses in the amount of R$ 6,625, resulting from hibernation in the production of fields in shallow waters, mainly affecting the Ubarana oil and gas production fields (R$ 2,114); Namorado (R$ 1,140), Cherne (R$ 563), Malhado (R$ 507), Congro (R$ 461) and Viola (R$ 281). |
a1) Producing properties relating to oil and gas activities in Brazil (several CGUs) – Jan-Jun/2019
On June 30, 2019, in our recoverability assessments, the company recognized reversals of impairment losses R$ 1,508 due to two factors: (i) approval of the sale of 10 concessions located in shallow waters in the Campos Basin (Rio de Janeiro). As a result of this operation, the company assessed the recoverability of the book value of the assets of these concessions, considering the net fair value of selling expenses, which resulted in a reversal of an impairment loss in the amount of R$ 1,936; and (ii) review of the composition of the Parque das Baleias pole, excluding the Cachalote and Pirambu fields, which started to be tested individually, resulting in the recognition of losses due to devaluation in the amount of R$ 428.
b) Others – Jan-Jun/2020
Corporate asset
The company decided to hibernate an administrative building, in the state of Bahia, as a result of the vacancy of the facilities, resulting in the recognition of loss of the right to use asset in the amount of R$ 788.
SIX – shale plant
The Company recognized a R$ 208 impairment loss on this asset, due to the drop in the estimates for fuel oil prices, which are linked to the Brent prices, whose projections were revised by the Company. The post-tax discount rate in constant currency applied to the refining sector in Brazil is 6.2% p.a.
c) Comperj – Jan-Jun/2019
In the first half of 2019, in addition to the investments made in the utilities of the Comperj Train 1, which are part of the joint infrastructure necessary for the flow and processing of natural gas from the Santos Basin pre-salt pole, investments in environmental licensing were recognized, resulting from a conduct adjustment term to end a public civil action that questions the environmental licensing of Comperj, in the amount of R$ 814. Since in the last business plan approved by the Management, the decision on the resumption of the works related to Train 1 remains subject to the identification of partners for their continuity, such amounts resulted in additional losses recognized in the first half of 2019, totaling R$ 996, considering that there is no expectation of future cash flows that return the respective investments.
d) NS-30 drill ship - Jan-Jun/2019
After approval of the sale of the asset by the company's management, Drill Ship International BV (DSI), a subsidiary of PIB BV, recognized impairment losses of R$ 683 due to the difference between the expected sale value and the book value of the asset.
20.2 | Book values of assets close to their recoverable values |
The amount of impairment loss is based on the difference between the carrying amount of the asset or CGU and its respective recoverable amount. The following table contains information about the assets or CGUs that presented estimated recoverable values close to their book values and, therefore, would be more susceptible to the recognition of impairment losses in the future, considering the assessments made in the first quarter of 2020. The sensitivity presented below considers the estimated impairment loss if there was a 10% reduction in the recoverable value of the aforementioned CGUs:
Consolidated | ||||
06.30.2020 | ||||
Assets close to their recoverable values
|
Business segment |
Carrying amount |
Recoverable amount | Sensitivity |
Producing properties relating to oil and gas activities in Brazil (2 CGUs) | E&P | 89,466 | 91,622 | (7,006) |
20.3 | Assets classified as held for sale |
In the first half of 2020, the Company recognized an R$ 8 impairment reversal, following the Board of Directors approval on the sale of Tucano Sul group of fields, arising from its fair value, net of selling expenses.
44
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
In the first half of 2019, the company recognized reversals related to assets held for sale of R$ 91, mainly the production field of Maromba and Pasadena Refinery.
20.4 | Investments in associates and joint ventures (including goodwill) |
Value in use is generally used for impairment test of investments in associates and joint ventures (including goodwill). The basis for estimates of cash flow projections includes: (i) projections covering a period of 5 to 12 years, zero-growth rate perpetuity, budgets; (ii) forecasts and assumptions approved by management; and (iii) a post-tax discount rate derived from the WACC or the CAPM models, when applicable.
20.4.1 Investment in publicly traded associate (Petrobras Distribuidora S.A. - BR)
In July 2019, with the additional sale of the Company’s interest in the subsidiary Petrobras Distribuidora (BR Distribuidora), carried out through a secondary public offering (follow-on), BR Distribuidora became an associate. Considering the fair value as the market value of its shares, at December 31, 2019, the Company estimated this investment was recoverable. However, in the first quarter of 2020, the fair value was below the equity-accounted investment, demanding the calculation of the value in use. The post-tax discount rate in constant currency applied was 6.6% p.a. In the second quarter of 2020, valuations have not changed from the previous quarter, when the share price had a significant increase.
As the value in use is higher than the investment accounted for the period, the Company estimate this investment is recoverable.
20.4.2 Impairment losses on equity-method investments
The company recognized, in results of equity-accounted investments, net losses due to devaluation, concentrated in the first quarter of 2020, in the total of R$ 258 (reversal of R$ 8 in 2019). This loss was mainly due to the recognition of a loss due to devaluation on investment in a jointly controlled venture abroad, MP Gulf of Mexico, in the amount of R$ 287, due to the revision of the price assumptions resulting from the drop in market prices. International. The real post-tax discount rate, applied to the exploration and production sector in the USA, was 6.0% p.a.
21 | Exploration and evaluation of oil and gas reserves |
The exploration and evaluation activities include the search for oil and gas reserves from obtaining the legal rights to explore a specific area to the declaration of the technical and commercial viability of the reserves.
Changes in the balances of capitalized costs directly associated with exploratory wells pending determination of proved reserves and the balance of amounts paid for obtaining rights and concessions for exploration of oil and natural gas (capitalized acquisition costs) are set out in the following table:
Exploration costs recognized in the statement of income and cash used in oil and gas exploration and evaluation activities are set out in the following table:
45
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated | ||||
2020 | 2019 | |||
Exploration costs recognized in the statement of income | Apr-Jun | Jan-Jun | Apr-Jun | Jan-Jun |
Geological and geophysical expenses | 254 | 574 | 336 | 732 |
Exploration expenditures written off (includes dry wells and signature bonuses) | 65 | 182 | 54 | 243 |
Contractual penalties | 24 | 52 | − | 54 |
Other exploration expenses | 7 | 10 | 4 | 19 |
350 | 818 | 394 | 1,048 | |
Cash used in: | ||||
Operating activities | 261 | 584 | 340 | 751 |
Investment activities | 685 | 1,347 | 409 | 764 |
946 | 1,931 | 749 | 1,515 | |
22 | Collateral for crude oil exploration concession agreements |
The Company has granted collateral to ANP in connection with the performance of the Minimum Exploration Programs established in the concession agreements for petroleum exploration areas in the total amount of R$ 7,098 of which R$ 6,640 were still in force as of June 30, 2020, net of commitments undertaken. The collateral comprises crude oil from previously identified producing fields, pledged as collateral, amounting to R$ 6,529 and bank guarantees of R$ 111.
23 | Investments |
23.1 | Investments in associates and joint ventures (Parent Company) |
Balance at 12.31.2019 | Investments | Restructuring, capital decrease and others | Results of equity-accounted investments | CTA | OCI | Dividends | Balance at 06.30.2020 | |
Subsidiaries | 164,831 | 620 | (2,760) | 12,850 | 58,967 | 799 | (884) | 234,423 |
Joint operations | 186 | − | − | 37 | − | − | (58) | 165 |
Joint ventures | 337 | 16 | (15) | 13 | − | 2 | (35) | 318 |
Associates (*) | 17,293 | − | (10) | (1,775) | 1,699 | (2,658) | (269) | 14,280 |
Total | 182,647 | 636 | (2,785) | 11,125 | 60,666 | (1,857) | (1,246) | 249,186 |
Other investments | 19 | − | − | − | − | − | − | 19 |
Total of Investments | 182,666 | 636 | (2,785) | 11,125 | 60,666 | (1,857) | (1,246) | 249,205 |
Results of companies classified as held for sale | 134 | 7 | ||||||
11,259 | (1,850) | |||||||
(*) Includes Petrobras Distribuidora and Braskem S / A, highlighting the result with hedge for future exports and sales of Braskem S/A. |
23.2 | Changes in investment (Consolidated) |
24 | Disposal of assets and other changes in organizational structure |
At June 30, 2020, assets and related liabilities are classified as held for sale whenever the closing of the transactions are highly probable, according to our portfolio management, still subject to some conditions precedent as provided for in the agreements.
To date, buyers have not indicated any intention to breach or review the signed contractual terms and conditions.
The major classes of assets and related liabilities classified as held for sale are shown in the following table:
46
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated | |||||
06.30.2020 | 12.31.2019 | ||||
E&P | RT&M | Corporate and other businesses | Total | Total | |
Assets classified as held for sale | |||||
Cash and Cash Equivalents | 4 | 17 | − | 21 | 18 |
Trade receivables | 3 | 267 | − | 270 | 277 |
Inventories | − | 57 | − | 57 | 52 |
Investments | − | 13 | − | 13 | 1,429 |
Property, plant and equipment | 9,240 | 1,216 | − | 10,456 | 8,248 |
Others | − | 320 | − | 320 | 309 |
Total | 9,247 | 1,890 | − | 11,137 | 10,333 |
Liabilities on assets classified as held for sale | |||||
Trade Payables | 17 | 110 | − | 127 | 108 |
Finance debt | − | 157 | 619 | 776 | 572 |
Provision for decommissioning costs | 12,026 | − | − | 12,026 | 11,934 |
Others | − | 378 | − | 378 | 470 |
Total | 12,043 | 645 | 619 | 13,307 | 13,084 |
As of June 30, 2020, the assets and liabilities transferred after approval of sale include: (i) Liquigás Distribuidora S.A .; (ii) the fields belonging to the Pampo and Enchova hubs in the Campos Basin; (iii) the Baúna field (concession area BM-S-40); (iv) 30% of the Frade field; and (v) assignment of the remaining rights in the concession area called Lapa (referring to the exercise of the put option for the remaining 10% of its interest).
The description of these operations that are classified as assets held for sale was presented in note 30 to the financial statements of December 31, 2019, except for the divestment of Petrobras Oil & Gas B.V. and for the sale of fields in the Potiguar Basin, detailed below.
24.1 | Closed transactions |
a) | Sale of Petrobras’s interest in Petrobras Oil & Gas B.V. (PO&GBV) |
On October 31, 2018, Petrobras International Braspetro BV (“PIBBV”) signed a contract for the full sale of its 50% equity interest in Petrobras Oil & Gas BV (“PO & GBV”), with the company Petrovida Holding BV (PETROVIDA ). PO & GBV is a joint venture in the Netherlands, with assets located in Nigeria.
On December 31, 2019, the company recognized impairment of R$ 366 (in 2018, reversal of R$ 181 recognized as equity-accounted investments).
On January 14, 2020, the transaction was completed and involved a total amount of US$ 1.530 billion, adjusted to US$ 1.454 billion, reflecting the incidence of interest on the acquisition price and the deduction of the portion that fell to Petrobras from the payment of fees for approval of the transaction by the Nigerian Government. Of the total of US$ 1.454 billion, Petrobras received US$ 1.030 billion in the form of dividends paid by PO & GBV since the base date of the transaction (January 1, 2018). At the closing date, it received US$ 276 million, and US$ 25 million in June 2020, leaving US$ 123 million (face value) that will be received after the completion of the Abgami field redetermination process and in up to 5 years from the closing of the transaction. The gain from the operation was R$ 7, recognized in other operating income.
b) | Sale of fields in the Potiguar Basin |
On August 9, 2019, Petrobras signed an agreement to sell all of its interest in a set of production fields, land and sea, called Polo Macau, in the Potiguar Basin, located in the State of Rio Grande do Norte, with SPE 3R Petroleum S.A., wholly owned subsidiary of 3R Petroleum e Participações S.A.
Polo Macau includes the fields of Aratum, Macau, Serra, Salina Cristal, Lagoa Aroeira, Porto Carão and Sanhaçu. Petrobras holds a 100% interest in all concessions, with the exception of the Sanhaçu concession, in which it is the operator with a 50% interest, while the remaining 50% is held by Petrogal.
On May 29, 2020, the transaction was concluded after the fulfillment of all precedent conditions, for the amount of R$ 862, including the adjustments provided for in the contract and the portion received on August 9, 2019, upon signing the contract, referring to the first installment. The gain from the operation was R$ 433, recognized in other operating income.
c) | Merger of Petrobras Negócios Eletrônicos S.A. (E-Petro) |
On March 4, 2020, the Petrobras Board of Directors approved the merger of E-Petro, with its consequent extinction, without increasing Petrobras' share capital.
47
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
24.2 | Cash flows from sales of interest with loss of control |
The sales of equity interest that resulted in loss of control and the cash flows arising from these transactions are shown below:
Cash received | Cash in subsidiary before losing control | Net Proceeds | |
Jan-Mar/2020 | |||
Petrobras Oil & Gas B.V.(PO&GBV) (*) | 1,144 | − | 1,144 |
Jan-Mar/2019 | |||
Petrobras Paraguay | 1,474 | 303 | 1,171 |
(*) Amount of US$ 276 received on the closing date of the transaction.
25 | Assets by operating segment |
The segmented information reflects the evaluation structure of senior management in relation to performance and the allocation of resources to the business.
Consolidated assets by operating segment - 06.30.2020 | ||||||
Exploration and Production | Refining, Transportation & Marketing |
Gas & Power |
Corporate | Eliminations | Total | |
Current assets | 23,981 | 43,946 | 7,691 | 144,704 | (18,396) | 201,926 |
Non-current assets | 550,009 | 122,485 | 42,500 | 98,324 | (102) | 813,216 |
Long-term receivables | 26,519 | 14,124 | 5,295 | 78,509 | 2 | 124,449 |
Investments | 2,237 | 1,308 | 3,961 | 11,501 | − | 19,007 |
Property, plant and equipment | 444,727 | 106,541 | 32,600 | 7,535 | (104) | 591,299 |
Operating assets | 385,703 | 93,080 | 21,587 | 7,450 | (104) | 507,716 |
Under construction | 59,024 | 13,461 | 11,013 | 85 | − | 83,583 |
Intangible assets | 76,526 | 512 | 644 | 779 | − | 78,461 |
Total Assets | 573,990 | 166,431 | 50,191 | 243,028 | (18,498) | 1,015,142 |
Consolidated assets by operating segment - 12.31.2019 | ||||||
Exploration and Production | Refining, Transportation & Marketing |
Gas & Power |
Corporate | Eliminations | Total | |
Current assets | 23,114 | 49,467 | 7,789 | 51,186 | (19,455) | 112,101 |
Non-current assets | 598,746 | 125,951 | 43,451 | 45,911 | (149) | 813,910 |
Long-term receivables | 26,022 | 13,296 | 5,517 | 26,471 | − | 71,306 |
Investments | 2,387 | 4,472 | 4,299 | 11,008 | − | 22,166 |
Property, plant and equipment | 493,746 | 107,659 | 32,975 | 7,718 | (149) | 641,949 |
Operating assets | 428,589 | 95,245 | 22,593 | 7,191 | (149) | 553,469 |
Under construction | 65,157 | 12,414 | 10,382 | 527 | − | 88,480 |
Intangible assets | 76,591 | 524 | 660 | 714 | − | 78,489 |
Total Assets | 621,860 | 175,418 | 51,240 | 97,097 | (19,604) | 926,011 |
26 | Finance debt |
26.1 | Balance by type of finance debt |
The amount classified in current liabilities comprises:
48
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated | ||
06.30.2020 | 12.31.2019 | |
Short-term financing | 13,346 | 8,891 |
Portion of long-term financing | 18,569 | 5,550 |
Accrued interest (current and long-term) | 4,731 | 3,572 |
Current | 36,646 | 18,013 |
As of June 30, 2020, there were no defaults, breaches of covenants or adverse changes in clauses that resulted in changes in the payment terms of loans and financing contracts. There was no change in the guarantees required in relation to December 31, 2019.
26.2 | Changes in finance debt and reconciliation with cash flows from financing activities |
Balance at 12.31.2018 | Additions | Principal amorti zation (*) | Interest amorti zation (*) | Accrued interest (**) | Foreign exchange/ inflation indexation charges | CTA | Modification of contractual cash flows | Transfer to liabilities classified as held for sale | Balance at 12.31.2019 | ||||||
In Brazil | 62,971 | 8,565 | (21,665) | (2,925) | 3,246 | 439 | − | − | (7,380) | 43,251 | |||||
Abroad | 263,190 | 20,894 | (82,197) | (15,138) | 15,261 | 2,129 | 7,474 | 118 | − | 211,731 | |||||
Total | 326,161 | 29,459 | (103,862) | (18,063) | 18,507 | 2,568 | 7,474 | 118 | (7,380) | 254,982 | |||||
In the first half of 2020, loans and financing were mainly used to settle old debts and manage liabilities, aiming at improving the debt profile and better adapting to the maturity terms of long-term investments and the cash reserve, aimed at maintaining the company's liquidity.
In the period from January to June 2020, the company raised R$ 78,670, notably: (i) funding in the national and international banking market, in the amount of R$ 15,356, and (ii) draw down of R$ 38,628 in committed lines (Revolving Credit Facilities) with national and international banks; and (iii) proceeds from financing through the offering of bonds in the international capital market (Global Notes) in the amount of R$ 16,666, of which R$ 7,771 with the issuance of a new bond maturing in 2031 and R$ 8,895 with the issuance of a new bond maturing in 2050.
The company settled several loans and financing, in the amount of R$ 42,830, notably: (i) the prepayment of R$ 13,013 of loans in the national and international banking market and ii) repurchases in the open market of bonds in the international capital market in the amount of R$ 6,761, with the payment of goodwill in the amount of R$ 1,257.
Additionally, the company carried out debt swap operations that did not involve financial settlements in the international banking market, in the total amount of R$ 10,719.
49
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
26.3 | Summarized information on current and non-current finance debt |
Consolidated | ||||||||||
Maturity in | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 onwards | Total (**) | Fair value | ||
Financing in U.S.Dollars (US$)(*): | 7,171 | 29,280 | 15,035 | 46,151 | 45,369 | 170,206 | 313,212 | 349,481 | ||
Floating rate debt | 3,341 | 17,655 | 11,629 | 38,642 | 37,291 | 35,342 | 143,900 | |||
Fixed rate debt | 3,830 | 11,625 | 3,406 | 7,509 | 8,078 | 134,864 | 169,312 | |||
Average interest rate | 4.4% | 4.4% | 4.5% | 4.4% | 4.8% | 6.5% | 5.7% | |||
Financing in Brazilian Reais (R$): | 1,404 | 3,627 | 6,086 | 9,125 | 8,048 | 14,642 | 42,932 | 48,907 | ||
Floating rate debt | 396 | 2,466 | 4,832 | 8,275 | 6,223 | 6,129 | 28,321 | |||
Fixed rate debt | 1,008 | 1,161 | 1,254 | 850 | 1,825 | 8,513 | 14,611 | |||
Average interest rate | 3.7% | 3.2% | 3.8% | 4.9% | 4.6% | 4.5% | 4.1% | |||
Financing in Euro (€): | 298 | 1,090 | 2,128 | 2,218 | 74 | 7,698 | 13,506 | 16,669 | ||
Fixed rate debt | 298 | 1,090 | 2,128 | 2,218 | 74 | 7,698 | 13,506 | |||
Average interest rate | 4.7% | 4.8% | 4.8% | 4.6% | 4.7% | 4.7% | 4.7% | |||
Financing in Pound Sterling (£): | 335 | − | − | − | − | 9,561 | 9,896 | 10,324 | ||
Fixed rate debt | 335 | − | − | − | − | 9,561 | 9,896 | |||
Average interest rate | 6.3% | − | − | − | − | 6.3% | 6.3% | |||
Financing in other currencies: | 5 | − | − | − | − | − | 5 | 5 | ||
Fixed rate debt | 5 | − | − | − | − | − | 5 | |||
Average interest rate | 9,9% | − | − | − | − | − | 9.9% | |||
Total on June 30, 2020 | 9,213 | 33,997 | 23,249 | 57,494 | 53,491 | 202,107 | 379,551 | 425,386 | ||
Average interest rate | 4.4% | 4.3% | 4.5% | 4.5% | 4.9% | 6.4% | 5.6% | |||
Total on December 31, 2019 | 18,013 | 16,002 | 18,904 | 32,392 | 34,410 | 135,261 | 254,982 | 305,044 | ||
Average interest rate | 5.1% | 5.2% | 5.3% | 5.3% | 5.3% | 6.3% | 5.9% | |||
(*) Includes debt raised in Brazil (in Brazilian reais) indexed to the U.S. dollar. | ||||||||||
(**)The average maturity of outstanding debt as of June 30, 2020 is 10.12 years (10.80 years as of December 31, 2019). | ||||||||||
As of June 30, 2020, the fair values of financing are mainly determined by using:
Level 1 - prices quoted in active markets, when applicable, in the amount of R$ 209,286 (R$ 152,397, on December 31, 2019); and
Level 2 - cash flow method discounted by the spot rates interpolated from the indexes (or proxies) of the respective financing, observed to the pegged currencies, and by the credit risk of Petrobras, in the amount of R$ 216,100 (R$ 152,647, on December 31, 2019).
The sensitivity analysis for financial instruments subject to foreign exchange variation is set out in note 30.2.
The nominal (undiscounted) flow of principal and interest on financing, by maturity, is shown below:
Consolidated | ||||||||
Maturity | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 onwards | 06.30.2020 | 12.31.2019 |
Principal | 4,091 | 34,365 | 23,832 | 57,291 | 55,104 | 212,108 | 386,791 | 263,147 |
Interest | 8,711 | 16,226 | 15,270 | 13,890 | 12,414 | 166,162 | 232,673 | 176,783 |
Total (*) | 12,802 | 50,591 | 39,102 | 71,181 | 67,518 | 378,270 | 619,464 | 439,930 |
(*)The nominal flow of leases is found in note 27. . |
26.4 Lines of credit
Amount | |||||||
Company | Financial institution | Date | Maturity |
Available (Lines of Credit) |
Used | Balance | |
Abroad (in US$ million) | |||||||
PGT BV | Syndicate of banks | 3/7/2018 | 2/7/2023 | 4,350 | 4,350 | − | |
PGT BV | Syndicate of banks | 3/27/2019 | 2/27/2024 | 3,250 | 3,250 | − | |
PGT BV | BNP Paribas | 12/22/2016 | 1/9/2021 | 350 | 336 | 14 | |
PGT BV | The Export - Import Bank of China | 12/23/2019 | 12/27/2021 | 750 | 714 | 36 | |
Petrobras | New Development Bank | 8/27/2018 | 8/27/2022 | 200 | 200 | − | |
Total | 8,900 | 8,850 | 50 | ||||
In Brazil | |||||||
Petrobras | Banco do Brasil | 3/23/2018 | 1/26/2023 | 2,000 | − | 2,000 | |
Petrobras | Bradesco | 6/1/2018 | 5/31/2023 | 2,000 | 2,000 | − | |
Petrobras | Banco do Brasil | 10/4/2018 | 9/5/2025 | 2,000 | − | 2,000 | |
Transpetro | Caixa Econômica Federal | 11/23/2010 | Undefined | 329 | − | 329 | |
Total | 6,329 | 2,000 | 4,329 | ||||
50
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
On March 20, 2020, Petrobras requested the disbursement of committed credit lines (Revolving Credit Lines), in the amount of US$ 7.6 billion and R$ 2.0 billion. The disbursement is consistent with the strategy of strengthening its liquidity, in order to protect itself within the current crisis context, due to the pandemic of COVID-19 (coronavirus) and the shock of oil prices.
27 | Lease liabilities |
The leases mainly include oil and natural gas production units, drilling rigs and other exploration and production equipment, ships, support vessels, helicopters, land and buildings. The movement of lease contracts recognized as liabilities is shown below:
Consolidated | |||||||||
Balance at 12.31.2019 | Remeasurement / new contracts | Payment of principal and interest | Interest expenses | Foreign exchange gains and losses | Cumulative translation adjustment | Transfers | Balance at 06.30.2020 | ||
Brazil | 22,183 | 1,401 | (3,973) | 729 | 4,454 | − | (30) | 24,764 | |
Abroad | 73,996 | 3,487 | (10,476) | 2,483 | 14,204 | 11,546 | − | 95,240 | |
Total | 96,179 | 4,888 | (14,449) | 3,212 | 18,658 | 11,546 | (30) | 120,004 | |
Payments relating to liabilities held for sale | (180) | ||||||||
Cash Flow | (14,629) |
As of June 30, 2020, the value of the lease liability of Petrobras Parent Company is R$ 222,033 (R$ 188,204 on December 31, 2019), including leases and sub-leases with investees, mainly platforms with PNBV and vessels with Transpetro.
As of June 30, 2020, the nominal flow (not discounted) without considering future inflation projected in the lease contract flows, by maturity, is shown below:
Consolidated | |||||||
Maturity | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 onwards | Total |
Balance at June 30, 2020 | 15,572 | 28,695 | 20,099 | 14,370 | 11,719 | 71,514 | 161,969 |
Balance at December 31, 2019 | 23,785 | 20,086 | 14,155 | 10,628 | 8,723 | 52,631 | 130,008 |
Payments in certain lease agreements vary due to changes in facts or circumstances occurring after their inception other than the passage of time. Such payments are not included in the measurement of the lease obligations. Variable lease payments in the first half of 2020 amounted to R$ 1,788, representing 12% in relation to fixed payments (R$ 1,749 and 20% related to fixed payments in the same period of 2019).
Extension options were considered when measuring lease obligations.
The sensitivity analysis of financial instruments subject to exchange rate variation is presented in note 30.2.
In the first half of 2020, the company recognized lease expenses in the amount of R$ 386 (R$ 1,671 in the first half of 2019), referring to contracts with a term of less than one year.
As of June 30, 2020, the balances of lease agreements that had not yet been initiated due to the related assets being under construction or not being made available for use, represent the amount of R$ 279,284 (R$ 200,788 on December 31, 2019).
28 | Equity |
28.1 | Share capital (net of share issuance costs) |
As of June 30, 2020, subscribed and fully paid share capital, net of issuance costs, was R$ 205,432, represented by 7,442,454,142 common shares and 5,602,042,788 preferred shares, all of which are registered, book-entry shares with no par value.
Preferred shares have priority on returns of capital, do not grant any voting rights and are non-convertible into common shares.
There are treasury shares, constituted since 2018, with 222,760 common shares and 72,909 preferred shares.
28.2 Distributions to shareholders
As a result of the COVID-19 (coronavirus) pandemic and restrictions imposed or recommended by the World Health Organization (WHO) and Brazilian authorities in relation to travel and meetings of people, the General Shareholders’ Meeting occurred on July 22, 2020, as the deadlines were extended by the Brazilian Securities and Exchange Commission, which led to the cancellation of all dates referring to the payment of dividends based on the annual result of 2019.
51
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
After the General Shareholders’ Meeting, the company will pay the remaining balance of dividends and interest on shareholders’ equity payable for the year 2019, updated by SELIC, in the parent company, in the amount of R$ 1,791, on December 15, 2020.
The postponement of the payment of dividends was one of the measures adopted by the company to preserve its cash, due to the pandemic of COVID-19 (coronavirus) and the shock of oil prices.
28.3 Earnings per share
Consolidated and Parent Company | ||||
2020 | 2019 | |||
Apr-Jun | Jan-Jun | Apr-Jun | Jan-Jun | |
Basic and diluted numerator | ||||
Net income from continuing operations | ||||
Common | (1,548) | (29,232) | 10,641 | 12,747 |
Preferred | (1,165) | (22,004) | 8,010 | 9,595 |
(2,713) | (51,236) | 18,651 | 22,342 | |
Net income from discontinued operations | ||||
Common | − | − | 123 | 317 |
Preferred | − | − | 92 | 238 |
− | − | 215 | 555 | |
Net income of the period | ||||
Common | (1,548) | (29,232) | 10,764 | 13,064 |
Preferred | (1,165) | (22,004) | 8,102 | 9,833 |
(2,713) | (51,236) | 18,866 | 22,897 | |
Basic and diluted denominator - Weighted average number of common and preferred shares outstanding | ||||
Common | 7,442,231,382 | 7,442,231,382 | 7,442,231,382 | 7,442,231,382 |
Preferred | 5,601,969,879 | 5,601,969,879 | 5,601,969,879 | 5,601,969,879 |
13,044,201,261 | 13,044,201,261 | 13,044,201,261 | 13,044,201,261 | |
Basic and diluted income per share (R$ per share) from continuing operations | ||||
Common | (0.21) | (3.93) | 1.43 | 1.71 |
Preferred | (0.21) | (3.93) | 1.43 | 1.71 |
Basic and diluted income per share (R$ per share) from discontinued operations | ||||
Common | − | − | 0.02 | 0.05 |
Preferred | − | − | 0.02 | 0.05 |
Basic and diluted income per share (R$ per share) | ||||
Common | (0.21) | (3.93) | 1.45 | 1.76 |
Preferred | (0.21) | (3.93) | 1.45 | 1.76 |
Basic earnings per share are calculated by dividing the net income (loss) attributable to shareholders of Petrobras by the weighted average number of outstanding shares during the period.
Diluted earnings (losses) per share are calculated by adjusting the net income (loss) attributable to shareholders of Petrobras and the weighted average number of outstanding shares during the period taking into account the effects of all dilutive potential shares (equity instrument or contractual arrangements that are convertible into shares).
Basic and diluted earnings (losses) are identical as the Company has no potential share in issue.
29 | Fair value of financial assets and liabilities |
Fair value measured based on | ||||
Level I | Level II | Level III |
Total fair value recorded |
|
Assets | ||||
Marketable securities | 2,906 | − | − | 2,906 |
Balance at June 30, 2020 | 2,906 | − | − | 2,906 |
Balance at December 31, 2019 | 3,556 | 235 | − | 3,791 |
Liabilities | ||||
Foreign currency derivatives | (3,179) | − | (3,179) | |
Commodity derivatives | (1,157) | (207) | − | (1,364) |
Interest rate derivatives | − | (7) | − | (7) |
Balance at June 30, 2020 | (1,157) | (3,393) | − | (4,550) |
Balance at December 31, 2019 | (112) | (445) | − | (557) |
52
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
The estimated fair value for the Company’s long-term debt, computed based on the prevailing market rates, is set out in note 26.
Certain receivables are classified as fair value through profit or loss, according to note 10.
The fair values of cash and cash equivalents, short-term debt and other financial assets and liabilities are equivalent or do not differ significantly from their carrying amounts.
30 | Risk management |
A summary of the positions of the derivative financial instruments held by the Company and recognized in other current assets and liabilities as of June 30, 2020 , as well as the amounts recognized in the statement of income and other comprehensive income and the guarantees given is set out as follows:
Guarantees given as colateral | ||
06.30.2020 | 12.31.2019 | |
Commodity derivatives | 2,300 | 244 |
Currency derivatives | 1,902 | 637 |
4,202 | 881 |
In order to reduce exposure to foreign exchange risk arising from financial instruments denominated in currencies other than the U.S. dollar, derivative transactions were carried out in the period. The depreciation of the pound sterling, associated with the expressive depreciation of the real, explains the increased amounts of collateral associated with currency derivatives. As of June 30, 2020, the position of these guarantees was accounted for as other current assets (R$ 384) and other non-current assets (R$ 1,518).
In order to preserve the company's liquidity, there was an increase in future contract operations related to crude oil exports, according to note 30.1 (Oil), and a consequent increase in commodity collaterals. As of June 30, 2020, the collateral position is recorded in Other Current Assets.
A sensitivity analysis of the derivative financial instruments for the different types of market risks as of June 30, 2020 is set out as follows:
53
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated | |||||||
Financial Instruments | Risk | Probable Scenario (*) |
Reasonably possible scenario |
Remote Scenario |
|||
Derivatives not designated for hedge accounting | |||||||
Future contracts and forward contracts (swap) | Crude oil and oil products - price changes | − | (1,384) | (2,769) | |||
− | (1,384) | (2,769) |
⁽*⁾ The probable scenarios were calculated considering the following variations for risks: Oil and Derivatives Prices: fair value as of June 30, 2020 / Real x Dollar - 4.3% appreciation of the real. Source: Focus. Reasonably possible and remote scenarios consider 25% and 50% deterioration in the associated risk variables, respectively.
.
30.1 | Risk management of crude oil and oil products prices |
Petrobras has a preference for exposure to the price cycle, to the systematic protection of transactions for the purchase or sale of goods, whose objective is to meet its operational needs, using derivative financial instruments. However, subject to the analysis of the business environment and the prospects for carrying out the Strategic Plan, the execution of an occasional hedging strategy with derivatives may be applicable.
Crude oil
In March 2020, in order to preserve the Company's liquidity, Petrobras approved a protection strategy for systemic oil operations in order to protect the revenue flows arising from these transactions against uncertainties in the prices of exports of oil feedstock already loaded, but not priced, due to the high volatility of the current context, generated both by the effects of falling oil prices and by the effects of the COVID-19 pandemic on world consumption of oil and oil products.
As a result of this strategy, as of April 2020, forward (swap) and future transactions were carried out. Forward transactions (swap) do not require an initial disbursement, whereas future transactions require margin deposits, depending on the volume contracted. In the period from April to June 2020, for forward (swap) operations, there was a loss of R$ 1,138, and for future operations there was a loss of R$ 1,450.
Protection Strategy adopted in 2019
In the period from January to June 2019, there was a loss of R$ 906 resulting from the mark-to-market of oil put options and the appreciation of the commodity in the international market, which ended in September 2019, in addition to diesel and gasoline operations (NDF - Non Deliverable Forward), with a loss of R$ 31 and a gain of R$ 27, respectively, recorded in other operating expenses. In the period from April to June 2019 there was a loss of R$ 550, a gain of R$ 38 and R$ 15, respectively, for oil, diesel and gasoline.
For more information on these operations, see note 36.1 of Petrobras financial statements of December 31, 2019.
Other commodity derivative transactions
Petrobras, by use of its assets, positions and market knowledge from its operations in Brazil and abroad, occasionally seeks to optimize some of its commercial operations in the international market, with the use of commodity derivatives to manage price risk. Changes in operations contracted for other commodities derivatives resulted in a R$ 905 gain in the six-month period ended June 30, 2020 (a R$ 539 loss in the same period of 2019). In the period from April to June 2020 there was a negative result of R$ 132 (loss of R$ 104 in the period from April to June 2019).
30.2 Foreign exchange risk management
a)Cash Flow Hedge involving the Company’s future exports
The carrying amounts, the fair value as of June 30, 2020, and a schedule of expected reclassifications to the statement of income of cumulative losses recognized in other comprehensive income (shareholders’ equity) based on a US$ 1.00 / R$ 5.4760 exchange rate are set out below:
54
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
Present value of hedging instrument notional value at June 30, 2020 | |||||||||||||||
Hedging Instrument | Hedged Transactions |
Nature of the Risk |
Maturity Date |
US$ million |
R$ | ||||||||||
Foreign exchange gains and losses on proportion of non-derivative financial instruments cash flows | Foreign exchange gains and losses on a portion of highly probable future monthly exports revenues |
Foreign Currency – Real vs U.S. Dollar Spot Rate |
From jul/2020 to jun/2030 | 54,407 | 297,933 | ||||||||||
.
Changes in the present value of hedging instrument notional value | US$ millon | R$ |
Amounts designated as of December 31, 2019 | 87,651 | 353,295 |
Additional hedging relationships designated, designations revoked and hedging instruments re-designated | (11,987) | (69,457) |
Exports affecting the statement of income | (7,300) | (33,732) |
Principal repayments / amortization | (13,957) | (66,613) |
Foreign exchange variation | − | 114,440 |
Amount on June 30, 2020 | 54,407 | 297,933 |
Nominal value of hedging instrument (finance debt and lease liability) on June 30, 2020 | 59,614 | 326,446 |
.
In the first half of 2020, the expected export values and consequently the highly probable export values were impacted by the effects of the oil price war and the coronavirus pandemic (COVID-19).
Thus, the value of exports designated for hedge relationships are no longer considered highly probable, but are still expected to occur, and as a consequence the hedge relationships were revoked at March 31, 2020, in the amount of US$ 35,774 (R$ 185,982). The foreign exchange variation accounted for these operations within other comprehensive income up to the end of the quarter remains in shareholders' equity, and will be reclassified to the statement of income when exports occur. These revocations were responsible for the relevant increase in Dollar/Real exposure, which at the end of this half was negative by R$ 204,004, according to the table 30.2 c - “Sensitivity analysis for foreign exchange risk on financial instruments”.
In addition, exports designated for hedge relationships from April to December 2020 and from August to December/2021 are no longer expected to occur, and were recycled from shareholder’s equity to the statement of income in the first half of 2020, in the amount of R$ 2,570, mainly in March 2020.
In the first half of 2020, the Company also recognized a R$ 5 loss within foreign exchange gains (losses) due to ineffectiveness (a R$ 18 loss in the first half of 2019).
The ratio of future exports for which cash flow hedge accounting was designated to the highly probable future exports is 100% (91.2% on December 31, 2019).
A roll-forward schedule of cumulative foreign exchange losses recognized in other comprehensive income as of June 30, 2020 is set out below:
Exchange rate | Tax effect | Total | |
Balance at January 1,2019 | (50,414) | 17,141 | (33,273) |
Recognized in shareholders' equity | (13,469) | 4,580 | (8,889) |
Reclassified to the statement of income - occurred exports | 12,397 | (4,215) | 8,182 |
Balance at December 31, 2019 | (51,486) | 17,506 | (33,980) |
Recognized in shareholders' equity | (114,440) | 38,910 | (75,530) |
Reclassified to the statement of income - occurred exports | 9,457 | (3,215) | 6,242 |
Reclassified to the statement of income - exports no longer expected to occur | 2,570 | (874) | 1,696 |
Balance at June 30, 2020 | (153,899) | 52,327 | (101,572) |
Changes in expectations regarding the realization of export prices and volumes in future revisions of the business plans may determine the need for additional reclassifications of the exchange variation accumulated in shareholders' equity to results. A sensitivity analysis with an average Brent oil price of US$ 10/barrel lower than that considered in the revised projections of the corporate scenarios in the year 2020 and within the horizon of the 2020-2024 Strategic Plan would indicate the need to reclassify the deferred exchange variation and stored in shareholders' equity for exports of July 2020 and from July 2021 to December 2022, in the amount of R$ 5.3 billion..
A schedule of expected reclassification of cumulative foreign exchange losses recognized in other comprehensive income to the statement of income as of June 30, 2020 is set out below:
55
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
Consolidated | |||||||||
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 to 2030 | Total | |
Expected realization | (12,661) | (25,155) | (26,379) | (22,598) | (17,757) | (12,661) | (11,107) | (25,581) | (153,899) |
b) Open contracts
Cross currency swap – Pounds Sterling x Dollar
In the period from January to June 2020, the variation in contracted operations presented a loss of R$ 1,291, recorded in finance expense (loss of R$ 375 in the period from January to June 2019). In the period from April to June 2020, the gain was R$ 203 (loss of R$ 548 in the same period of 2019). The company has no intention of settling such contracts before the maturity.
Non Deliverable Forward (NDF) – Euro x Dollar and Pounds Sterling x Dollar
The variation in contracted operations presented a loss of R$ 142 in the period from January to June 2020 (loss of R$ 314 in the period from January to June 2019), recorded in finance expense. In the period from April to June 2020, the gain was R$ 289 (R$ 8 in the same period of 2019). The company has no intention of settling such contracts before the maturity.
Swap contracts – National consumer price index (IPCA) x Brazilian interbank offering rate (CDI) and CDI x Dollar
The mark-to-market of contracted swap operations IPCA x CDI had a loss of R$ 45 in the period from January to June 2020, while the mark-to-market of contracted swap operations CDI x USD had an accumulated loss of R$ 1,427 in the same period, both recorded in financial results (in the period from April to June 2020, mark-to-market had a gain of R$ 202 and a loss of R$ 327, respectively). The company has no intention of settling such contracts before the maturity.
Changes in future interest rate curves (CDI) may have an impact on the company's results, due to the market value of these swap contracts. A sensitivity analysis on future interest rate curves (CDI) with a constant increase (parallel shock) of 100 basis points, keeping all other variables constant, would result in a positive impact on the result of approximately R$ 13, while a constant reduction (parallel shock) of 100 basis points, keeping all other variables constant, would result in a negative impact of approximately R$ 6.
For more information on such contracts, see note 36.2 of Petrobras financial statements of December 31, 2019.
c)Sensitivity analysis for foreign exchange risk on financial instruments
A sensitivity analysis is set out below, showing the probable scenario for foreign exchange risk on financial instruments, computed based on external data along with stressed scenarios (a 25% and a 50% change in the foreign exchange rates), except for assets and liabilities of foreign subsidiaries, when transacted in a currency equivalent to their respective functional currencies.
Financial Instruments | Exposure at 06.30.2020 | Risk | Probable Scenario (*) |
Possible Scenario (∆ of 25%) |
Remote Scenario (∆ of 50%) |
Assets | 23,831 | Dollar / Real | (1,027) | 5,958 | 11,916 |
Liabilities | (522,760) | 22,529 | (130,690) | (261,379) | |
Exchange rate - Cross currency swap | (3,008) | 130 | (752) | (1,504) | |
Cash flow hedge on exports | 297,933 | (12,840) | 74,483 | 148,967 | |
(204,004) | 8,792 | (51,001) | (102,000) | ||
Assets | 23 | Euro / Real | (1) | 6 | 12 |
Liabilities | (87) | 4 | (22) | (44) | |
(64) | 3 | (16) | (32) | ||
Assets | 13,404 | Euro / Dollar | (43) | 3,351 | 6,702 |
Liabilities | (27,451) | 89 | (6,863) | (13,726) | |
(14,047) | 46 | (3,512) | (7,024) | ||
Assets | 17 | Pound Sterling/ Real | (1) | 4 | 9 |
Liabilities | (111) | 4 | (28) | (56) | |
(94) | 3 | (24) | (47) | ||
Assets | 9,913 | Pound Sterling / Dollar | 100 | 2,478 | 4,957 |
Liabilities | (19,893) | (200) | (4,973) | (9,947) | |
Exchange rate - Cross currency swap | 8,232 | 83 | 2,058 | 4,116 | |
Non Deliverable Forward (NDF) | 1,681 | 17 | 420 | 841 | |
(67) | − | (17) | (33) | ||
Total | (218,276) | 8,844 | (54,570) | (109,136) |
(*) On June 30, 2020, the probable scenario was computed based on the following risks: R$ x U.S. Dollar - a 4.3% appreciation of the Real; Euro x U.S. Dollar: a 0.3% depreciation of the Euro; Pound Sterling x U.S. Dollar: a 1.05% appreciation of the Pound Sterling; Real x Euro: a 4.6% appreciation of the Real; and Real x Pound Sterling - a 3.3% appreciation of the Real . Source: Focus and Bloomberg.
56
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
30.3 Interest rate risk management
The table below informs, in the probable scenario, the amount to be disbursed by Petrobras with the payment of interest related to the debts with floating interest rate on June 30, 2020. The possible and remote scenarios express a sensitivity analysis in which there is an increase of 25% and 50%, respectively, in the interest rates of these debts (Libor, TJLP, CDI, TR and IPCA). The results presented for the probable scenario and the sensitivity scenarios are associated with a period of 12 months.
30.4 | Liquidity risk |
The company regularly evaluates market conditions and can carry out repurchase transactions for its securities or its subsidiaries in the international capital market, by various means, including tender offers, securities redemptions and / or open market operations, provided they are in line with the company's liabilities management strategy, which aims to improve the amortization profile and the cost of debt.
Measures to protect the Company's liquidity
As a result of the abrupt reduction on the demand and prices of oil and fuel, caused by the impact of the escalation of the COVID-19 pandemic all over the world, in the same time of an increase in oil supply, the Company adopted a set of measures to reduce cash outflows and cash preservation in a scenario of uncertainty, in order to ensure its financial strength and the resilience of its businesses.
The measures adopted by the Company to protect liquidity are described in note 3.
31 | Related-party transactions |
The Company has a related-party transactions policy, which is annually revised and approved by the Board of Directors, in accordance with the Company’s by-laws.
31.1 | Transactions with entities of Petrobras group (Parent Company) |
06.30.2020 | 12.31.2019 | |||||
Current | Non-current | Total | Current | Non-current | Total | |
Assets | ||||||
Trade and other receivables | ||||||
Trade and other receivables, mainly from sales | 16,615 | − | 16,615 | 17,774 | − | 17,774 |
Dividends receivable | 923 | − | 923 | 397 | − | 397 |
Intercompany loans | − | 3 | 3 | − | 10 | 10 |
Advance for capital increase | − | 10 | 10 | − | − | − |
Amounts related to construction of natural gas pipeline | − | 910 | 910 | − | 750 | 750 |
Leases | − | − | − | 163 | − | 163 |
Other operations | 858 | 490 | 1,348 | 871 | 421 | 1,292 |
Advances to suppliers | 113 | 1,697 | 1,810 | 108 | 572 | 680 |
Total | 18,509 | 3,110 | 21,619 | 19,313 | 1,753 | 21,066 |
Liabilities | ||||||
Lease liabilities (*) | (111,135) | (35,602) | (146,737) | (21,188) | (104,585) | (125,773) |
Intercompany loans | (15,594) | − | (15,594) | (28,555) | − | (28,555) |
Prepayment of exports | (60,429) | (274,334) | (334,763) | (56,066) | (159,769) | (215,835) |
Accounts payable to suppliers | (18,260) | − | (18,260) | (22,936) | − | (22,936) |
Purchases of crude oil, oil products and others | (16,342) | − | (16,342) | (19,125) | − | (19,125) |
Affreightment of platforms | (1,169) | − | (1,169) | (2,022) | − | (2,022) |
Advances from clientes | (749) | − | (749) | (1,789) | − | (1,789) |
Other operations | (137) | (447) | (584) | (263) | (470) | (733) |
Total | (205,555) | (310,383) | (515,938) | (129,008) | (264,824) | (393,832) |
(*) Includes amounts referring to lease and sub-lease transactions between investees required by IFRS 16.
57
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
2020 | 2019 | |||
Apr-Jun | Jan-Jun | Apr-Jun | Jan-Jun | |
Profit or Loss | ||||
Revenues, mainly sales revenues | 32,163 | 73,296 | 42,663 | 80,676 |
Foreign exchange and inflation indexation charges (**) | (19,634) | (54,346) | (951) | (3,735) |
Financial income (expenses), net (**) | (8,044) | (15,080) | (6,479) | (11,978) |
Total | 4,485 | 3,870 | 35,233 | 64,963 |
(**) Includes the amounts of R$ 42,174 of passive exchange variation and R$ 4,744 of financial expenses related to leasing and sub-leasing operations required by IFRS 16.
31.2 | Annual rates for intercompany loans |
Parent Company | ||||
Asset | Liability | |||
06.30.2020 | 12.31.2019 | 06.30.2020 | 12.31.2019 | |
From 3.01 to 4% | − | − | − | (17,075) |
From 4.01 to 5% | − | − | (15,594) | (11,480) |
More than 9.01% | 3 | 10 | − | − |
Total | 3 | 10 | (15,594) | (28,555) |
31.3 | Non standardized receivables investment fund (FIDC-NP) |
The parent company maintains funds invested in the FIDC-NP that are mainly used for the acquisition of performing and / or non-performing credit rights for operations carried out by affiliates. The amounts invested are recorded in accounts receivable.
Assigned and non-performed credit rights assignments are recorded as financing in current liabilities.
Parent Company | ||
06.30.2020 | 12.31.2019 | |
Accounts receivable, net | 31,741 | 52,550 |
Credit rights assignments | (33,305) | (61,142) |
2020 | 2019 | |||
Apr-Jun | Jan-Jun | Apr-Jun | Jan-Jun | |
Financial Income FIDC-NP | 529 | 1,228 | 564 | 799 |
Financial Expenses FIDC-NP | (549) | (1,313) | (673) | (1,056) |
Net finance income (expense) | (20) | (85) | (109) | (257) |
31.4 | Guarantees |
Petrobras has the procedure of granting guarantees to subsidiaries and controlled companies for some financial operations carried out in Brazil and abroad, with no significant variations in guarantees compared to December 31, 2019.
The guarantees offered by Petrobras, mainly personal, are made based on contractual clauses that support the financial transactions between the subsidiaries / controlled companies and third parties, ensuring assumption of compliance with the third party's obligation, in case the original debtor does not do so.
The financial transactions carried out by the subsidiaries and guaranteed by Petrobras are presented in note 37.6 to Petrobras' financial statements as of December 31, 2019.
31.5 | Investment fund of subsidiaries abroad |
As of June 30, 2020, a subsidiary of PIB BV maintained resources invested directly or through an investment fund abroad that held, among others, debt securities of PGF and a consolidated structured entity related to the CDMPI project, equivalent to R$ 5,541 (R$ 3,967, as of December 31, 2019).
58
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
31.6 | Transactions with joint ventures, associates, government entities and pension plans |
The company does, and expects to continue to do, business in the normal course of various transactions with its joint ventures, affiliates, pension funds, as well as with its controlling shareholder, the Brazilian federal government, which includes transactions with banks and other entities under its control, such as financing and banking services, asset management and others.
Significant transactions resulted in the following balances:
Consolidated | ||||
06.30.2020 | 12.31.2019 | |||
Asset | Liabilty | Asset | Liabilty | |
Joint ventures and associates | ||||
Petrobras Distribuidora (BR) | 645 | 257 | 904 | 191 |
Natural Gas Transportation Companies | 622 | 3,097 | 605 | 2,889 |
State-controlled gas distributors (joint ventures) | 1,678 | 428 | 1,361 | 421 |
Petrochemical companies (associates) | 398 | 8 | 188 | 116 |
Other associates and joint ventures | 186 | 402 | 143 | 818 |
Subtotal | 3,529 | 4,192 | 3,201 | 4,435 |
Brazilian government – Parent and its controlled entities | ||||
Government bonds | 5,809 | − | 6,367 | − |
Banks controlled by the Brazilian Government | 38,823 | 18,993 | 34,600 | 19,765 |
Receivables from the Electricity sector | 1,171 | 28 | 1,347 | − |
Petroleum and alcohol account - receivables from the Brazilian Government (note 31.7) | 1,236 | − | 1,226 | − |
Brazilian Federal Government – dividends | − | 514 | − | 1,679 |
Empresa Brasileira de Administração de Petróleo e Gás Natural – Pré-Sal Petróleo S.A. – PPSA | − | 28 | − | 80 |
Others | 75 | 203 | 185 | 176 |
Subtotal | 47,114 | 19,766 | 43,725 | 21,700 |
Pension plans | 610 | 174 | 240 | 443 |
Total | 51,253 | 24,132 | 47,166 | 26,578 |
Current assets | 12,241 | 6,589 | 11,485 | 7,676 |
Non-current assets | 39,012 | 17,543 | 35,681 | 18,902 |
The income/expenses of significant transactions are set out in the following table:
Consolidated | ||||
2020 | 2019 | |||
Apr-Jun | Jan-Jun | Apr-Jun | Jan-Jun | |
Joint ventures and associates | ||||
Petrobras Distribuidora (BR) | 10,384 | 24,589 | − | − |
Natural Gas Transportation Companies | (2,430) | (4,758) | (1,073) | (2,205) |
State-controlled gas distributors (joint ventures) | 2,033 | 4,534 | 2,560 | 5,261 |
Petrochemical companies (associates) | 2,395 | 6,769 | 3,085 | 5,847 |
Other associates and joint ventures | (455) | (38) | 450 | 1,025 |
Subtotal | 11,927 | 31,096 | 5,022 | 9,928 |
Brazilian government – Parent and its controlled entities | ||||
Government bonds | 52 | 108 | 93 | 202 |
Banks controlled by the Brazilian Government | (1,201) | (1,611) | (1,422) | (1,618) |
Receivables from the Electricity sector | 54 | 114 | 561 | 806 |
Petroleum and alcohol account - receivables from the Brazilian Government | 4 | 10 | − | 9 |
Brazilian Federal Government – dividends | (4) | (15) | (14) | (33) |
Empresa Brasileira de Administração de Petróleo e Gás Natural – Pré-Sal Petróleo S.A. – PPSA | (29) | (206) | (165) | (272) |
Others | (49) | (48) | (149) | (105) |
Subtotal | (1,173) | (1,648) | (1,096) | (1,011) |
Total | 10,754 | 29,448 | 3,926 | 8,917 |
Revenues, mainly sales revenues | 15,551 | 37,767 | 6,151 | 12,162 |
Purchases and services | (3,674) | (6,865) | (1,376) | (2,515) |
Foreign exchange and inflation indexation charges, net | (1,042) | (1,307) | (401) | (824) |
Finance income (expenses), net | (81) | (147) | (448) | 94 |
Total | 10,754 | 29,448 | 3,926 | 8,917 |
The liability with pension plans of the company's employees and managed by the Petros Foundation is presented in note 14.1. - Pension and health plans.
31.7 | Petroleum and alcohol account - receivables from the Brazilian Government |
On March 11, 2020, the Federal Union filed a Challenge to the Compliance with the Judgment and was determined to Petrobras to express its opinion on this challenge.
After the company's statement, through which Petrobras recognized the excess of execution, the judge partially accepted the Union's challenge, only with regard to the update (interest and monetary correction) of the principal amount, since June 30, 2004. Other federal claims, such as compensation and prescription, were rejected.
59
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
On June 23, 2020, the judge approved the calculations presented by the Federal Union on the base date of February 2020 and with which Petrobras agreed. However, the Union filed an appeal for a declaration embargo.
The update regarding the IPCA-E claimed by the company remains classified as a contingent asset and totals R$ 1,196 as of June 30, 2020.
As of June 30, 2020, the amount to be reimbursed by the Federal Government, plus interest and adjusted by the TR is R$ 1,236 (R$ 1,226 on December 31, 2019), and is classified in non-current accounts receivable.
31.8 | Compensation of key management personnel |
The compensations of Executive Officers and Board Members of Petrobras parent company are governed by the Secretariat of Management and Governance for the State-owned Companies (Secretaria de Coordenação e Governança das Empresas Estatais – SEST), Ministry of Economy and Ministry of Mines and Energy of Brazil, and are set out as follows:
In the first half of 2020, the consolidated expense with the total compensation of the company's officers and directors totaled R$ R$ 28.7 (R$ 37.5 in the first half of 2019, excluding discontinued operations).
The remuneration of the members of the Advisory Committees to the Board of Directors must be considered in addition to the global remuneration limit set for the managers, that is, the perceived values are not classified as management remuneration.
The members of the Board of Directors who participate in the Statutory Audit Committee waive the remuneration of the Board Member, as established in art. 38, § 8 of Decree No. 8,945, of December 27, 2016 and they were entitled to a total remuneration of R$ 905 thousand in the period from January to June 2020 (R$ 1,086 thousand, considering social charges). On June 30, 2019, the total remuneration was R$ 754 thousand (R$ 905 thousand, considering social charges).
On July 22, 2020, the Annual Shareholders' Meeting set the remuneration of the administrators (Executive Board and Board of Directors) at up to R$ 43.3 as the global compensation limit to be paid in the period between April 2020 and March 2021. In relation to what was approved by the Extraordinary General Meeting (AGE) 2019, no adjustment in monthly fees was proposed.
32 | Supplemental information on statement of cash flows |
Consolidated | ||
2020 | 2019 | |
Jan-Jun | Jan-Jun | |
Amounts paid/received during the period: | ||
Withholding income tax paid on behalf of third-parties | 2,094 | 2,524 |
Capital expenditures and financing activities not involving cash | ||
Purchase of property, plant and equipment on credit | − | 291 |
Lease | 5,545 | 5,027 |
Provision/(reversals) for decommissioning costs | 64 | (70) |
Use of deferred tax and judicial deposit for the payment of contingency | 3 | 7 |
33 | Subsequent events |
Sale of the Pampo and Enchova Poles
On July 24, 2019, Petrobras signed a contract for the total sale of its interest (100%) in exploration and production assets in shallow waters in the Campos Basin, on the coast of Rio de Janeiro, relating to the Pampo and Enchova Poles, which encompass the fields of Enchova, Enchova Oeste, Marimbá, Piraúna, Bicudo, Bonito, Pampo, Trilha, Linguado and Badejo, for Trident Energy do Brasil LTDA, a subsidiary of Trident Energy L.P.
On July 15, 2020, Petrobras concluded the sale of its entire interest in the ten fields that comprise the Poles Pampo and Enchova to Trident Energy do Brasil LTDA, a subsidiary of Trident Energy L.P, after all the precedent conditions were met.
60
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
The transaction was concluded with the payment of US$ 365.4 million to Petrobras, considering the adjustments provided for in the contract and other conditions subsequently agreed between the parties, which provide for the payment of conditioned amounts of up to US$ 650 million classified as assets contingent and will only be recognized when the agreed conditions are met.
The amount received at the closing of the transaction adds up to the amount of US$ 53.2 million paid to Petrobras at the signing of the sales agreements, totaling US$ 418.6 million.
Sale of 10% interest in Transportadora Associada de Gás
On July 20, 2020, Petrobras entered into a share purchase and sale agreement, referring to its remaining 10% interest in Transportadora Associada de Gás SA (TAG), with the group formed by ENGIE and the Canadian fund Caisse de Dépôt et Placement du Québec (CDPQ).
Of the total transaction amount of R$ 1,116, Petrobras received R$ 110 in the form of dividends in June 2020 and after the other adjustments provided for in the agreement, the transaction was concluded for the amount of R$ 1,006, fully settled on the date of the celebration.
Sale of the Baúna field
On July 24, 2019, Petrobras signed an agreement to sell 100% of its interest in the Baúna field (concession area BM-S-40), located in shallow waters in the Santos Basin, to Karoon Petróleo & Gás Ltda, subsidiary of Karoon Energy Ltd in the amount of US$ 665 million. Due to the impact caused by the COVID-19 pandemic and the consequent difficulty in meeting the precedent conditions initially defined, the parties defined adjustments to the terms of the contract and the division of the transaction value in two installments, being: (i) a portion of US$ 380 million, consisting of: US$ 49.9 million already paid by Karoon on July 24, 2019, US$ 150 million to be paid on the closing date with the price adjustments due and US$ 180 million in 18 months after the transaction is completed; and (ii) a contingent installment of US$ 285 million to be paid by 2026.
The conclusion of the transaction is subject to compliance with the precedent conditions, such as approval by the ANP.
Revolving Credit Lines
On July 27, 2020, Petrobras made a partial prepayment of its committed credit lines (Revolving Credit Lines), in the amount of US$ 3.5 billion. These funds will be available for new withdrawals, if necessary.
Arbitration involving Sete Brasil
On July 29, 2020, the Board of Directors approved the agreement with the Petrobras Social Security Foundation (Fundação Petrobras de Seguridade Social) (Petros), which aims to end the arbitral dispute proposed by Petros in order to obtain compensation from Petrobras for alleged material damage related to the investment at Sete Brasil.
As a result of the agreement, the terms of which are protected by confidentiality, Petrobras will pay Petros R$ 950, an amount recorded in the financial statements of June 30, 2020, through note 15.1 - Provisions for legal proceedings, judicial deposits and contingent liabilities
61
NOTES TO THE FINANCIAL STATEMENTS
PETROBRAS
This interim financial information should be read together with the Company’s audited annual financial statements
(Expressed in millions of reais, unless otherwise indicated)
34 | Correlation between the notes disclosed in the complete annual financial statements as of December 31, 2019 and the interim statements as of June 30, 2020 |
Number of notes | ||
Notes to the Financial Statements |
Annual for 2019 |
Quarterly information for 2Q-20 |
Basis of preparation and presentation of financial statements | 2 | 1 |
Summary of significant accounting policies | 3 | 2 |
Cash and cash equivalents and Marketable securities | 7 | 4 |
Sales revenues | 8 | 5 |
Costs and Expenses by nature | 9 | 6 |
Other income and expenses | 10 | 7 |
Net finance income (expense) | 11 | 8 |
Segment information – Statement of Income | 12 | 9 |
Trade and other receivables | 13 | 10 |
Inventories | 14 | 11 |
Taxes | 16 | 12 |
Short-term benefits | 17 | 13 |
Employee benefits (Post-Employment) | 18 | 14 |
Provisions for legal proceedings | 19 | 15 |
Provision for decommissioning costs | 20 | 16 |
The “Lava Jato (Car Wash) investigation” and its effects on the Company | 21 | 17 |
Property, plant and equipment | 23 | 18 |
Intangible assets | 24 | 19 |
Impairment | 25 | 20 |
Exploration and evaluation of oil and gas reserves | 26 | 21 |
Collateral for crude oil exploration concession agreements | 27 | 22 |
Investments | 29 | 23 |
Disposal of Assets and other changes in organizational structure | 30 | 24 |
Segment information – Asset | 31 | 25 |
Finance debt | 32 | 26 |
Leases | 33 | 27 |
Equity | 34 | 28 |
Fair value of financial assets and liabilities | 35 | 29 |
Risk management | 36 | 30 |
Related-party transactions | 37 | 31 |
Supplemental information on statement of cash flows | 38 | 32 |
The notes to the annual report 2019 that were suppressed in the Quarterly Financial Statements of June 30, 2020 because they do not have significant changes and / or may not be applicable to interim financial information are:
62
STATEMENT OF DIRECTORS ON INTERIM ACCOUNTING INFORMATION AND REPORT ON THE REVIEW OF QUARTERLY INFORMATION
PETROBRAS
In compliance with the provisions of items V and VI of article 25 of CVM Instruction No. 480, of December 7, 2009, the Chief Executive Officer and directors of Petróleo Brasileiro S.A. - Petrobras, a publicly-held company, headquartered at Avenida República do Chile, 65, Rio de Janeiro, RJ, registered with CNPJ under number 33.000.167/0001-01, declare that the financial statements were prepared in accordance with the law or the bylaws and that:
(i) reviewed, discussed and agreed with Petrobras' interim financial information for the period ended June 30, 2020;
(ii) reviewed, discussed and agreed with the opinions expressed in the KPMG Auditores Independentes report, regarding Petrobras' interim financial information for the period ended June 30, 2020.
Rio de Janeiro, July 30, 2020.
Roberto Castello Branco | Andrea Marques de Almeida | |
Chief Executive Officer |
Chief Financial Investor Relations Officer |
|
Anelise Quintão Lara | Carlos Alberto Pereira de Oliveira | |
Chief Refining and Natural Gas Executive Officer | Chief Exploration and Production Executive Officer | |
André Barreto Chiarini | Roberto Furian Ardenghy | |
Chief Logistics Executive Officer |
Chief Institutional Relations Executive Officer | |
Rudimar Andreis Lorenzatto
|
Marcelo Barbosa de Castro Zenkner |
|
Chief Production Development Executive Officer
|
Chief Governance and Compliance Executive Officer |
|
Nicolás Simone | ||
Chief Digital Transformation and Innovation Officer |
63
Rua do Passeio, 38 - Setor 2 - 17º andar - Centro
20021-290 - Rio de Janeiro/RJ - Brasil
Caixa Postal 2888 - CEP 20001-970 - Rio de Janeiro/RJ - Brasil
Telefone +55 (21) 2207-9400
kpmg.com.br
Report on the review of quarterly information - ITR
(A free translation of the original report in Portuguese, as filed with the Brazilian Securities and Exchange Commission (CVM), prepared in accordance with the accounting practices adopted in Brazil, rules of the CVM and of the International Financial Reporting Standards - IFRS)
To the Board of Directors and Shareholders of
Petróleo Brasileiro S.A. - Petrobras
Rio de Janeiro - RJ
Introduction
We have reviewed the interim accounting information, individual and consolidated, of Petróleo Brasileiro S.A. - Petrobras (“the Company”), identified as Parent Company and Consolidated, respectively, included in the quarterly information form - ITR for the quarter ended June 30, 2020, which comprises the balance sheet as of June 30, 2020 and the respective statements of income and comprehensive income for the three-months and six-months period then, and statements of changes in shareholders' equity and of cash flows for the six-months period then ended, including the explanatory notes.
The Company`s Management is responsible for the preparation of these interim accounting information in accordance with the CPC 21(R1) and the IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, as well as the presentation of these information in accordance with the standards issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of quarterly information - ITR. Our responsibility is to express our conclusion on this interim accounting information based on our review.
Scope of the review
We conducted our review in accordance with Brazilian and International Interim Information Review Standards (NBC TR 2410 - Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries primarily of the management responsible for financial and accounting matters and applying analytical procedures and other review procedures. The scope of a review is significantly less than an audit conducted in accordance with auditing standards and, accordingly, it did not enable us to obtain assurance that we were aware of all the material matters that would have been identified in an audit. Therefore, we do not express an audit opinion.
KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative (“KPMG International”), uma entidade suíça
|
KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. |
64
Conclusion on the individual and consolidated interim accounting information
Based on our review, we are not aware of any fact that might lead us to believe that the individual and consolidated interim accounting information included in the aforementioned quarterly information was not prepared, in all material respects, in accordance with CPC 21(R1) and IAS 34, issued by the IASB, applicable to the preparation of the quarterly review - ITR, and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission.
Other matters - Statements of added value
The individual and consolidated statements of value added for the six-months period ended June 30, 2020, prepared under the responsibility of the Company's management, and presented as supplementary information for the purposes of IAS 34, were submitted to the same review procedures followed together with the review of the Company's interim financial information. In order to form our conclusion, we evaluated whether these statements were reconciliated to the interim financial information and to the accounting records, as applicable, and whether their form and content are in accordance with the criteria set on Technical Pronouncement CPC 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added were not prepared, in all material respects, in accordance with the individual and consolidated interim financial information taken as a whole.
Rio de Janeiro, July 30, 2020
KPMG Auditores Independentes
CRC SP-014428/O-6 F-RJ
Original report in Portuguese signed by
Marcelo Gavioli
Accountant CRC 1SP201409/O-1
KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative (“KPMG International”), uma entidade suíça.
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KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. |
65
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: July 31, 2020
PETRÓLEO BRASILEIRO S.A–PETROBRAS
By: /s/ Andrea Marques de Almeida
______________________________
Andrea Marques de Almeida
Chief Financial Officer and Investor Relations Officer
1 Year Petroleo Brasileiro ADR Chart |
1 Month Petroleo Brasileiro ADR Chart |
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