The US$ 1,713 net actuarial gain on the financial
assumption arises from the increase of the discount rate on the actuarial liabilities (a US$ 3,133 gain), net of a US$ 1,420
loss resulting from the return rate of assets below the discount rate, mainly PPSP-R and PPSP-NR.
Pension and medical benefit expenses, net recognized
in the statement of income are set out as follows:
For the first half of 2020, the Company's contribution
to the defined contribution portion of the Petros Plan 2 was US$ 85 (US$ 117 for the same period of 2019) recognized
in the statement of income. For the second quarter of 2020, the contribution was US$ 35 (US$ 56 for the same period of
2019).
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:
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.
The main changes in provisions for legal proceedings
in the first half of 2020 relate to: (i) use of provision amounting to US$ 172 due to agreements relating to the company Sete
Brasil litigations; (ii) use of provision amounting to US$ 74 referring to the agreement approved
by the STF in claim for compensation of loss of profit in a lawsuit filed by Sergás and the state of Sergipe; offset mainly
by (iii) US$ 80 relating to a provision for lawsuits involving refinery engineering contracts; (iv) US$ 37 relating
to a VAT collection action in domestic bunker oil consumption operations for chartered vessels; and (v) US$ 83 in fines for
non-compliance with accessory state tax obligation.
In the first half of 2020, the Company made judicial
deposits in the amount of US$ , including: (i) US$ related to the chartering of platforms due to the legal dispute
related to the IRRF; (ii) US$ 162 referring to IRPJ and CSLL for not adding the profits of subsidiaries and affiliates domiciled
abroad to the IRPJ and CSLL calculation basis; and (iii) US$ 78 deposit as guarantee for a ship seizure operation.
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:
In the six-month period ended June 30, 2020, the main
changes in the balance of contingent liabilities are related to the following reductions: (i) US$ 599 of civil matters involving
contractual issues; and (ii) a US$ 447 reduction related to differences in ICMS rates on sales of jet fuel, for which the
likelihood of losses is now deemed remote,.
As of June 30, 2020, Petrobras is a defendant in certain
lawsuits classified as possible loss in the amount of US$ 759 (US$ 613 as of December 31, 2019) arising from the sale
of its 90% interest in Transportadora Associada de Gás (TAG) in April 2019. The increase in the period is mainly due to
the new administrative proceedings, pending decision by the Federal Revenue of Brazil, which question authorization for the use
of certain credit taxes.
Regarding the class action in the Netherlands, after
the Court decision on January 29, 2020, the Foundation presented a petition regarding the questions raised by that Court on May
6, 2020.
In relation to the arbitration in Argentina, the Argentine
Supreme Court has not yet judged the appeal filed by the Association.
As for the criminal actions in Argentina, the preliminary
defenses presented by Petrobras were rejected. The Company filed appeals against such decisions, which are pending judgment. As
for the action related to an alleged fraudulent offer of securities, in which Petrobras allegedly declared false information in
its financial statements prior to 2015, the responsible judge revoked one of its decisions. On July 23, 2020, based on 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 this matter.
These claims involve complex issues that are subject
to substantial uncertainties and depend on a number of factors such as the novelty of the legal theories, the timing of the Chamber
of Arbitration decisions, the information produced in discovery and analysis by retained experts.
Moreover, the claims asserted are broad and span a
multi-year period. The uncertainties inherent in all such matters affect the amount and timing of their ultimate resolution. As
a result, the Company is unable to make a reliable estimate of eventual loss arising from such arbitrations asserted.
Depending on the outcome of these complaints, the Company
may have to pay substantial amounts, which may cause a significant effect on its consolidated financial position, financial performance
and cash flows in a certain period. However, Petrobras does not recognize responsibility for the losses alleged by investors in
these arbitrations.
Most of these arbitrations are still in the preliminary
stages and a final decision is not expected in the near future. However, in relation to one of the arbitrations, proposed by two
institutional investors, on May 26, 2020, a partial arbitral award was issued indicating the Company's responsibility, but not
determining the payment of amounts by Petrobras, nor ending 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 of 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 confidential and only available to those involved in the original arbitration proceeding.
The revision of the key assumptions of the Company's
Strategic Plan, at March 31, 2020, according to note 3.3, did not result in material changes in the provision for the decommissioning
costs, given the composition of its cost structure, basically in dollars.
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 US$ 85,
accounted for as other income and expenses (no funds received in the same period of 2019). Thus, the total cumulative amount recovered
from the “Lava Jato” investigation through June 30, 2020 is US$ 1,217 (US$ 1,132 through December 31, 2019).
In May 2019, the U.S. Commodity Futures Trading Commission
(“CFTC”) contacted Petrobras with an inquiry regarding trading activities related to the Lava Jato Operation. Petrobras
reiterates that it continues to cooperate with the regulatory authorities, including the CFTC, regarding any inquiry.
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.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
18.
|
Property, plant and equipment
|
|
Land, buildings
and
improvement
|
Equipment and other assets (*)
|
Assets under
construction (**)
|
Exploration and development costs (oil and gas producing properties) (***)
|
Right-of-use assets
|
Total
|
Balance at January 1, 2019
|
5,210
|
76,028
|
28,926
|
47,219
|
-
|
157,383
|
Adoption of IFRS 16
|
-
|
-
|
-
|
-
|
26,575
|
26,575
|
Additions
|
-
|
2,784
|
5,269
|
145
|
2,332
|
10,530
|
Additions to / review of estimates of decommissioning costs
|
-
|
-
|
-
|
5,497
|
-
|
5,497
|
Capitalized borrowing costs
|
-
|
-
|
1,336
|
-
|
-
|
1,336
|
Reimbursement under the Transfer of Rights Agreement
|
-
|
-
|
-
|
(8,319)
|
-
|
(8,319)
|
Write-offs
|
(3)
|
(92)
|
(293)
|
(407)
|
(21)
|
(816)
|
Transfers
|
478
|
6,055
|
(10,466)
|
4,879
|
126
|
1,072
|
Transfers to assets held for sale
|
(803)
|
(4,942)
|
(621)
|
(1,204)
|
(1,339)
|
(8,909)
|
Depreciation, amortization and depletion
|
(231)
|
(6,106)
|
-
|
(4,756)
|
(5,019)
|
(16,112)
|
Impairment recognition
|
(2)
|
(1,298)
|
(1,453)
|
(743)
|
(161)
|
(3,657)
|
Impairment reversal
|
-
|
236
|
80
|
459
|
-
|
775
|
Cumulative translation adjustment
|
(199)
|
(2,287)
|
(826)
|
(1,873)
|
(905)
|
(6,090)
|
Balance at December 31, 2019
|
4,450
|
70,378
|
21,952
|
40,897
|
21,588
|
159,265
|
Cost
|
6,856
|
119,993
|
21,952
|
70,647
|
26,440
|
245,888
|
Accumulated depreciation, amortization, depletion and impairment
|
(2,406)
|
(49,615)
|
-
|
(29,750)
|
(4,852)
|
(86,623)
|
Balance at December 31, 2019
|
4,450
|
70,378
|
21,952
|
40,897
|
21,588
|
159,265
|
Additions
|
-
|
2,829
|
1,702
|
2
|
1,093
|
5,626
|
Additions to / review of estimates of decommissioning
costs (note 16)
|
-
|
-
|
-
|
12
|
-
|
12
|
Capitalized borrowing costs
|
-
|
-
|
494
|
-
|
-
|
494
|
Write-offs
|
-
|
(15)
|
(76)
|
15
|
(2)
|
(78)
|
Transfers
|
(308)
|
1,305
|
(704)
|
(72)
|
(44)
|
177
|
Transfers to assets held for sale
|
-
|
(142)
|
113
|
(567)
|
-
|
(596)
|
Depreciation, amortization and depletion
|
(79)
|
(2,511)
|
-
|
(2,112)
|
(2,048)
|
(6,750)
|
Impairment recognition (note 20)
|
(5)
|
(6,824)
|
(2,895)
|
(3,318)
|
(331)
|
(13,373)
|
Cumulative translation adjustment
|
(1,134)
|
(14,876)
|
(5,322)
|
(10,203)
|
(5,262)
|
(36,797)
|
Balance at June 30, 2020
|
2,924
|
50,144
|
15,264
|
24,654
|
14,994
|
107,980
|
Cost
|
5,152
|
101,093
|
24,981
|
54,332
|
20,745
|
206,303
|
Accumulated depreciation, amortization, depletion and impairment
|
(2,228)
|
(50,949)
|
(9,717)
|
(29,678)
|
(5,751)
|
(98,323)
|
Balance at June 30, 2020
|
2,924
|
50,144
|
15,264
|
24,654
|
14,994
|
107,980
|
Weighted average useful life in years
|
40
(25 to 50)
(except land)
|
20
(3 to 31)
|
|
Units of production method
|
8
(2 to 47)
|
|
(*) It is composed of platforms, refineries, thermoelectric power plants, natural gas processing plants, pipelines, rights of use and other operating, storage and production plants, also including exploration and production assets depreciated based on the units of production method.
|
(**) See note 25 for assets under construction by operating segment.
|
(***) It is composed of exploration and production assets related to wells, abandonment and dismantling of areas, signature bonuses associated to proved reserves and other costs directly associated with the exploration and production of oil and gas.
|
|
The rights-of-use at June 30, 2020 comprise the following
underlying assets:
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
Platforms
|
Vessels
|
Properties
|
Total
|
Balance at June 30, 2020
|
8,200
|
6,144
|
650
|
14,994
|
Cost
|
10,708
|
8,861
|
1,176
|
20,745
|
Accumulated depreciation, amortization and depletion
|
(2,508)
|
(2,717)
|
(526)
|
(5,751)
|
Balance at December 31, 2019
|
12,196
|
8,335
|
1,057
|
21,588
|
Cost
|
14,542
|
10,698
|
1,364
|
26,604
|
Accumulated depreciation, amortization and depletion
|
(2,346)
|
(2,363)
|
(307)
|
(5,016)
|
Agreements for the Equalization of Expenses and
Volumes
On April 30, 2020, Petrobras and partner companies
in E&P consortiums in Tupi, Sépia and Atapu fields signed the Agreements for the Equalization of Expenses and Volumes
(Acordos para a Equalização de Gastos e Volumes - AEGV), relating to the expenses incurred and the entitled
revenues from the volume produced by each partner from the beginning of the concession until the date of effectiveness of the Production
Individualization Agreements (Acordos de Individualização da Produção - AIP) of these shared
deposits.
On May 29, 2020, as a result of the equalization arising
from the increase in interest in the three deposits, Petrobras received from the partner companies in these fields the amount of
US$ 416, in addition to US$ 265 in PP&E, totaling US$ 681 within other income and expenses.
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, for US$ 84 million,
and an additional interest of 47.613% at Iara BV (Atapu) for US$ 805 million, subject to price adjustments. The computation of
the acquisition price was based on the fair value of the acquired assets and related liabilities, bringing a net increase of US$
889 mainly in PP&E.
|
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).
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
|
|
|
|
|
Rights and Concessions
|
Software
|
Goodwill
|
Total
|
Balance at January 1, 2019
|
2,330
|
272
|
203
|
2,805
|
Addition
|
1,339
|
74
|
-
|
1,413
|
Concession for exploration of oil and natural gas - Oil Surplus on the Transfer of Rights Agreement
|
15,341
|
-
|
-
|
15,341
|
Capitalized borrowing costs
|
-
|
4
|
-
|
4
|
Write-offs
|
(11)
|
(6)
|
-
|
(17)
|
Transfers
|
(83)
|
(47)
|
(137)
|
(267)
|
Amortization
|
(10)
|
(60)
|
-
|
(70)
|
Impairment recognition
|
(1)
|
-
|
-
|
(1)
|
Cumulative translation adjustment
|
263
|
5
|
(3)
|
265
|
Balance at December 31, 2019
|
19,168
|
242
|
63
|
19,473
|
Cost
|
19,290
|
1,469
|
63
|
20,822
|
Accumulated amortization
|
(122)
|
(1,227)
|
-
|
(1,349)
|
Balance at December 31, 2019
|
19,168
|
242
|
63
|
19,473
|
Addition
|
2
|
30
|
-
|
32
|
Write-offs
|
(12)
|
(1)
|
-
|
(13)
|
Transfers
|
(2)
|
(4)
|
-
|
(6)
|
Amortization
|
(4)
|
(30)
|
-
|
(34)
|
Cumulative translation adjustment
|
(5,053)
|
(63)
|
(8)
|
(5,124)
|
Balance at June 30, 2020
|
14,099
|
174
|
55
|
14,328
|
Cost
|
14,177
|
1,124
|
55
|
15,356
|
Accumulated amortization
|
(78)
|
(950)
|
-
|
(1,028)
|
Balance at June 30, 2020
|
14,099
|
174
|
55
|
14,328
|
Estimated useful life in years
|
(*)
|
5
|
Indefinite
|
|
|
|
|
|
|
(*) 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.
|
(**) It includes the amount of US$ 6.058, reclassified from Intangible Assets to Property, Plant and Equipment, due to the declaration of commerciality of areas linked to the Transfer of Rights Agreement.
|
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 half of 2020, two events triggered
significant and adverse effects on the oil and oil products market: (i) the outbreak of the COVID-19 pandemic, with a sharp reduction
in the circulation of people and in the world economic activity, causing a shock on demand of these products, and (ii) failure
in negotiations between members of Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, to define
production levels, which contributed to an increase in the global oil supply with a reduction in price in early March.
These events led the Company to adopt a set of measures
aiming at preserving cash generation, in order to reinforce its financial strength and resilience of its businesses, as well as
to revise, with the approval of its Board of Directors, the key assumptions of its current Strategic Plan, such as Brent prices,
exchange rates, oil product spreads, among others. For the second quarter of 2020, the assumptions remain the same after the revision
occurred in the first quarter.
Estimates of oil and gas reserves are prepared reflecting,
in an integrated manner, the projects in the Company's Strategic Plan portfolio, technical uncertainties and assumptions such as
prices and costs. At June 30, 2020, there was no change in the Company's Strategic Plan portfolio or in the Company’s reserves
that affect these unaudited consolidated interim financial statements.
Under this scenario, the Company assessed the recoverability
of the carrying amounts of its assets in the first quarter of 2020, when impairment losses were recognized in the amount of US$ 13,371,
primarily due to:
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
(i)
|
US$ 11,798 relating to the effect of updated assumptions in the estimation of the recoverable
amount of several E&P fields, notably in the following Cash Generating Units (CGU): Roncador, Marlim Sul, North group, Albacora
Leste, Berbigão-Sururu group, CVIT group and Mexilhão; and
|
|
(ii)
|
US$ 1,356 relating to the hibernation of fields and platforms in shallow waters, affecting
CGUs North group, Ceará-Mar group and Ubarana group, as well as Caioba, Guaricema and Camorim fields.
|
For the second quarter of 2020, there is no indication
that the carrying amount of the Company’s assets is not recoverable.
The table below shows the impairment losses recognized
within the statement of income in the first half of 2020 and 2019:
Asset or CGU by nature (*)
|
Carrying
amount
|
Recoverable amount (**)
|
Impairment
|
Business
segment
|
Comments
|
|
|
|
|
|
06.30.2020
|
Property, plant and equipment and intangible assets
|
|
|
|
|
|
Producing properties relating to oil and gas activities in Brazil (several CGUs)
|
35,001
|
22,562
|
(13,155)
|
E&P - Brazil
|
item (a)
|
Others
|
209
|
−
|
(218)
|
Several
|
item (b)
|
|
|
|
(13,373)
|
|
|
|
|
|
|
|
|
Assets classified as held for sale
|
|
|
|
|
|
Producing property relating to oil and gas activities - Tucano Sul group
|
−
|
3
|
2
|
E&P - Brazil
|
item 20.3
|
Total
|
|
|
(13,371)
|
|
|
|
Carrying
amount
|
Recoverable amount (**)
|
Impairment
|
Business
segment
|
Comments
|
|
|
|
|
|
06.30.2019
|
Property, plant and equipment and intangible assets
|
|
|
|
|
|
Producing properties relating to oil and gas activities in Brazil (several CGUs)
|
946
|
1,186
|
385
|
E&P - Brazil
|
item (a1)
|
Comperj
|
255
|
−
|
(255)
|
RTM - Brazil
|
item (c)
|
Drillship NS-30
|
343
|
169
|
(174)
|
E&P - Abroad
|
item (d)
|
Others
|
1
|
−
|
(1)
|
Several
|
|
|
|
|
(45)
|
|
|
Assets classified as held for sale
|
|
|
|
|
|
Others
|
503
|
527
|
25
|
Several
|
|
Total
|
|
|
(20)
|
|
|
(*) It only includes carrying amounts and recoverable amounts of impaired assets or assets for which reversals were recognized.
|
(**) The recoverable amounts of assets for impairment computation were their value in use, except for oil and gas production and drilling equipment that were based on their fair value.
|
|
20.1.
|
Impairment of property, plant and equipment and intangible assets
|
20.1.1.
Revision of Cash Generating Units
During the first quarter of 2020, management identified
and assessed change in CGU North group (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,
and they were assessed for impairment, as set out in note 20.1.3. Currently, this CGU is formed by Marlim, Albacora and Voador
fields and remaining platforms.
20.1.2.
Planning assumptions used in impairment testing
The cash flow projections used to measure the value
in use of the CGUs at March 31, 2020, approved by the Company’s Board of Directors, were mainly based on the following updated
assumptions for average Brent prices and Brazilian real/U.S. dollar average exchange rates:
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
2021
|
2022
|
2023
|
2024
|
2025
|
Long term Average
|
Average Brent (US$/bbl)
|
25
|
30
|
35
|
40
|
45
|
50
|
Average Brazilian Real (excluding inflation ) - Real /U.S. dollar exchange rate
|
5.09
|
5.04
|
4.69
|
4.46
|
4.28
|
3.78
|
At December 31, 2019, average Brent prices and Brazilian
real/U.S. dollar average exchange rates used were:
|
2020
|
2021
|
2022
|
2023
|
2024
|
Long term Average
|
Average Brent (US$/bbl)
|
65
|
65
|
65
|
65
|
65
|
65
|
Average Brazilian Real (excluding inflation ) - Real /U.S. dollar exchange rate
|
3.85
|
3.79
|
3.75
|
3.72
|
3.7
|
3.6
|
|
|
|
|
|
|
|
Changes in these assumptions consider a slow recovery
in demand and a moderate change in habits in developed economies, among other variables. The Company expects a lower level of demand
in the long-term, taking into account:
|
·
|
structural change in the world economy, with permanent effects arising from this economic shock,
including changes observed in consumer habits, which the Company believes may become 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.
Information on the main impairment losses
Information on the main impairment losses and reversals
of property, plant and equipment and intangible assets are described below:
a1) Producing properties in Brazil – Jan-Jun/2020
Impairment assessment for producing properties in Brazil
resulted in US$ 13,154 impairment losses. Cash flow projections were based on financial budgets/forecasts approved by management
in the first quarter of 2020, and the post-tax discount rates (excluding inflation) derived from the WACC for the E&P business
of 7.3% p.a. at March 31, 2020 (6.7% p.a. at December 31, 2019). This amount comprises:
|
(i)
|
Impairment losses in the amount of US$11,798 mainly related to the following CGUs and corporate
assets that provide service in these fields, reflecting the new key assumptions for the medium and long-term vision, mainly drop
in Brent prices, depreciation of the Brazilian real against the U.S. dollar and retractions in Brazilian GDP and oil demand;
|
CGU
|
Basin
|
Area
|
Impairment
|
Roncador
|
Campos basin
|
Post-Salt
|
(3,409)
|
Marlim Sul
|
Campos basin
|
Post-Salt
|
(2,399)
|
North group
|
Campos basin
|
Post-Salt
|
(2,038)
|
Albacora Leste
|
Campos basin
|
Post-Salt
|
(621)
|
Berbigão-Sururu group
|
Santos basin
|
Pre-Salt
|
(449)
|
CVIT group
|
Espírito Santo basin
|
Post-Salt
|
(319)
|
Mexilhão
|
Santos basin
|
Post-Salt
|
(207)
|
Parque das Baleias group
|
Santos basin
|
Pre-Salt
|
(187)
|
Sapinhoá group
|
Santos basin
|
Pre-Salt
|
(144)
|
Papa-Terra
|
Campos basin
|
Post-Salt
|
(141)
|
Araçás
|
Recôncavo basin
|
Onshore and shallow-water
|
(123)
|
Carmópolis
|
Sergipe basin
|
Onshore and shallow-water
|
(120)
|
Uruguá group
|
Santos basin
|
Post-Salt
|
(104)
|
Others
|
Several
|
Several
|
(1,537)
|
Total
|
|
|
(11,798)
|
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
From these CGUs, CVIT group, Papa-Terra and Uruguá
group had additional impairments to the ones accounted for at December 31, 2019, and Roncador, Mexilhão and Araçás
were sensitive to impairment as presented in the sensitivity analyses in the financial statement of December 31, 2019 as it had
its recoverable amount within a 10% range of their carrying amount at December 31, 2019.
|
(ii)
|
Impairment losses in the amount of US$ 1,356, arising from the hibernation of producing assets
in shallow waters, mainly the following fields: Ubarana (US$ 433); Namorado (US$ 233), Cherne (US$ 115), Malhado
(US$ 104), Congro (US$ 94) and Viola (US$ 58).
|
a2) Producing properties in Brazil – Jan-Jun/2019
On June 30, 2019, the Company reviewed the composition
of the Parque das Baleias complex, excluding Cachalote and Pirambu fields, which were separately tested for impairment, resulting
in a US$ 109 impairment loss.
b) Other assets - Jan-Jun/2020
Corporate asset
The Company decided to hibernate a corporate building,
in the state of Bahia, due to its vacancy in the quarter, resulting in a US$ 161 impairment loss in the right of use.
SIX – shale plant
The Company recognized a US$ 43 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 in the first quarter of 2020. 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 regular
investments made in the first refining unit facilities of Comperj, which were part of the infrastructure for transporting and processing
natural gas from the pre-salt layer in the Santos Basin, the Company also made investments, in the amount of US$ 208, relating
to environmental licensing of this project, as set out in note 27.3. As described in the 2019-2023 Business and Management Plan
approved by the Board of Directors (in force in the second quarter of 2019), the resumption of this project still depended on new
partnerships, thus additional impairment losses were recognized in the first half of 2019, totaling US$ 255, since future
cash flows were not expected to return from investments.
d) Drillship NS-30 - Jan-Jun/2019
After the Board of Directors approved the sale of the
drillship NS-30 (which was owned by Drill Ship International B.V. - DSI, a subsidiary of PIB BV), in the second quarter of 2019,
a US$ 174 impairment loss was recognized on this transaction.
|
20.2.
|
Assets most sensitive to future impairment
|
Whenever the recoverable amount of an asset or CGU
falls below the carrying amount, an impairment loss is recognized to reduce the carrying amount to the recoverable amount. The
following table presents the assets and CGUs most sensitive to future impairment losses at March 31, 2020 (when there was indication
that their carrying amount might not be recoverable), presenting recoverable amounts close to their current carrying amounts. The
analysis presented below considers the estimated impairment loss if there was a 10% reduction in the recoverable value of the CGUs,
arising from changes in material assumptions:
|
|
|
|
06.30.2020
|
|
Business
segment
|
Carrying
amount
|
Recoverable amount
|
Sensitivity
|
Producing properties relating to oil and gas activities in Brazil (2 CGUs)
|
E&P
|
17,209
|
17,624
|
(1,348)
|
|
20.3.
|
Assets classified as held for sale
|
In the first half of 2020, the Company recognized an
US$ 2 impairment reversal, following the Board of Directors approval on the sale of Tucano Sul group of fields, arising from
its fair value, net of disposal expenses.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
In the same period of 2019, the Company recognized
US$ 519 of impairment reversals relating to the reassessment of assets classified as held for sale, mainly related to Badejo,
Bicudo, Linguado, Pampo e Trilha fields (US$ 494).
|
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:
projections covering a period of 5 to 12 years, zero-growth rate perpetuity, budgets, forecasts and assumptions approved by management
and a post-tax discount rate derived from the WACC or the CAPM models, when applicable.
20.4.1.
Investment in publicly traded associate
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, at March 31, 2020, the market value was below the equity-accounted investment,
requiring the calculation of the value in use. The post-tax discount rate in constant currency applied was 6.6% p.a. As the value
in use of BR Distribuidora was higher than the equity-accounted investment at March 31, 2020, no impairment loss was accounted
for in that period.
In the second quarter of 2020, the assumptions were
not changed since the market value of the shares had a significant increase in relation to the first quarter. Hence, no impairment
loss was accounted for in this period.
20.4.2.
Impairment losses on equity-method investments
In the first half of 2020, the Company recognized impairment
losses amounting to US$ 53 from equity-accounted investments (a US$ 2 impairment reversal in the same period of 2019),
mainly in joint venture MP Gulf of Mexico (US$ 59), due to the revised Brent prices projections. The post-tax discount rate
in constant currency applied for the E&P segment in the USA was 6.0% p.a.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
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:
Capitalized Exploratory Well Costs / Capitalized Acquisition Costs (*)
|
Jan-Jun/2020
|
Jan-Dec/2019
|
Property plant and equipment
|
|
|
Opening Balance
|
4,262
|
4,132
|
Additions
|
253
|
510
|
Write-offs
|
(3)
|
(216)
|
Transfers
|
(89)
|
-
|
Cumulative translation adjustment
|
(1,121)
|
(164)
|
Closing Balance
|
3,302
|
4,262
|
Intangible Assets (**)
|
13,918
|
18,919
|
Capitalized Exploratory Well Costs / Capitalized Acquisition Costs
|
17,220
|
23,181
|
|
|
|
(*) Amounts capitalized and subsequently expensed in the same period have been excluded from this table.
|
|
|
(**) The signature bonuses related to the results of the 16th ANP bidding round and Surplus Oil of Transfer of Rights Agreement, in the amount of US$ 15.341, are described in note 24.1 to the consolidated financial statements for the year ended December 31, 2019.
|
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:
|
2020
|
2019
|
2020
|
2019
|
|
Jan-Jun
|
Jan-Jun
|
Apr-Jun
|
Apr-Jun
|
Exploration costs recognized in the statement of income
|
|
|
|
|
Geological and geophysical expenses
|
119
|
191
|
47
|
86
|
Exploration expenditures written off (includes dry wells and signature bonuses)
|
38
|
64
|
12
|
14
|
Contractual penalties
|
10
|
14
|
4
|
-
|
Other exploration expenses
|
2
|
5
|
1
|
1
|
Total expenses
|
169
|
274
|
64
|
101
|
Cash used in :
|
|
|
|
|
Operating activities
|
120
|
196
|
48
|
87
|
Investment activities
|
276
|
198
|
127
|
104
|
Total cash used
|
396
|
394
|
175
|
191
|
|
|
|
|
|
|
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 US$ 1,296 of which US$ 1,213 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 US$ 1,192
and bank guarantees of US$ 21.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
23.1.
|
Investments in associates and joint ventures
|
|
Balance at 12.31.2019
|
Investments
|
Restructuring, capital decrease and others
|
Results of equity-accounted investments
|
CTA
|
OCI
|
Dividends
|
Balance at
06.30.2020
|
Joint Ventures
|
1,192
|
5
|
(4)
|
(134)
|
(145)
|
-
|
(68)
|
846
|
Associates (*)
|
4,302
|
5
|
17
|
(375)
|
(693)
|
(603)
|
(32)
|
2,621
|
Other investments
|
5
|
-
|
-
|
−
|
(1)
|
-
|
−
|
4
|
Total
|
5,499
|
10
|
13
|
(509)
|
(839)
|
(603)
|
(100)
|
3,471
|
(*) It includes Petrobras Distribuidora and Braskem.
|
|
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, purchasers have not indicated any intention
to 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:
|
Operating segment
|
06.30.2020
|
12.31.2019
|
|
E&P
|
RT&M
|
Corporate and other business
|
Total
|
Total
|
Assets classified as held for sale
|
|
|
|
|
|
Cash and Cash Equivalents
|
1
|
3
|
−
|
4
|
5
|
Trade receivables
|
1
|
49
|
−
|
50
|
68
|
Inventories
|
-
|
10
|
−
|
10
|
13
|
Investments
|
-
|
2
|
−
|
2
|
355
|
Property, plant and equipment
|
1,688
|
222
|
−
|
1,910
|
2,046
|
Others
|
-
|
58
|
−
|
58
|
77
|
Total
|
1,690
|
344
|
−
|
2,034
|
2,564
|
Liabilities on assets classified as held for sale
|
|
|
|
|
|
Trade Payables
|
3
|
20
|
-
|
23
|
27
|
Finance debt
|
-
|
29
|
113
|
142
|
142
|
Provision for decommissioning costs
|
2,196
|
-
|
-
|
2,196
|
2,961
|
Dividends
|
-
|
-
|
-
|
-
|
-
|
Pension and medical benefits
|
-
|
-
|
-
|
-
|
-
|
Others
|
-
|
69
|
-
|
69
|
116
|
Total
|
2,199
|
118
|
113
|
2,430
|
3,246
|
|
|
|
|
|
|
As of June 30, 2020, the amounts refer to (i) Liquigás
Distribuidora S.A; (ii) Pampo and Enchova groups of fields, (iii) Baúna field (awarded area BM-S-40), (iv) 30% working
interest in Frade field and (v) the remaining 10% interest in Lapa field.
|
24.1.
|
Closed transaction at June 30, 2020
|
a)
Sale of Petrobras’s interest in Petrobras Oil & Gas B.V. (PO&GBV)
On October 31, 2018, the wholly owned subsidiary Petrobras
International Braspetro BV (PIBBV) entered into an agreement to sell its 50% interest in PO&GBV to Petrovida Holding B.V. PO&GBV
is a joint venture in the Netherlands consisting of assets located in Nigeria. PO&GBV does not operate any of these fields.
In 2019, an US$ 89 impairment loss was accounted
for within equity-accounted investments.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
On January 14, 2020, the transaction was closed, in
the amount of US$ 1,454, reflecting price adjustments and the deduction of Petrobras’ portion from the payment of fees
to the Nigerian Government for approval of the transaction. Cumulative amounts of dividends received from PO&GBV since inception
of investment (January 1, 2018) have totaled US 1,030. At the closing, the Company received US$ 276, additional US$ 25
was received in June 2020, and the remaining US$ 123 to be received as soon as the Abgami field redetermination process is implemented,
within five years from the closing of the transaction. As a result, the Company recorded a US$ 2 gain within other income
and expenses.
b)
Sale of producing fields in Macau group of fields in the Potiguar Basin
On August
9, 2019, Petrobras signed a contract for the sale of its interest in a set of onshore and offshore producing fields in the Potiguar
Basin, denominated the Macau group of fields, located in the state of Rio Grande do Norte, to SPE 3R Petroleum S.A., a wholly owned
subsidiary of 3R Petroleum e Participações S.A.
The
Macau group comprises the Aratum, Macau, Serra, Salina Cristal, Lagoa Aroeira, Porto Carão and Sanhaçu fields. Petrobras
holds a 100% interest in all these concessions, except for the Sanhaçu field, in which it is the operator with a 50% interest,
and the remaining 50% interest belongs to Petrogal.
On May
29, 2020, the transaction was closed after the fulfilment of all conditions precedent, in the amount of US$ 127, including
price adjustments provided for in the contract and the installment received on August 9, 2019, in the signing of the contract.
In the second quarter, 2020, the gain on this operation was US$ 77, accounted for as other income and expenses.
|
24.2.
|
Cash flows from sales of interest with loss of control
|
In 2020 and 2019, the Company disposed of its interest
in certain subsidiaries over which control was lost. The following table summarizes cash flows arising from losing control in subsidiaries:
|
Cash received
|
Cash in subsidiary before losing control
|
Net Proceeds
|
2020
|
|
|
|
Petrobras Oil & Gas B.V.(PO&GBV) (*)
|
276
|
−
|
276
|
Total
|
276
|
−
|
276
|
2019
|
|
|
|
Petrobras Paraguay
|
381
|
(45)
|
336
|
Total
|
381
|
(45)
|
336
|
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
25.
|
Assets by operating segment
|
|
Exploration and Production
|
Refining, Transportation & Marketing
|
Gas
&
Power
|
Corporate and other business
|
Elimina-tions
|
Total
|
|
|
|
|
|
|
|
Consolidated assets by operating segment - 06.30.2020
|
|
|
|
|
|
|
|
Current assets
|
4,379
|
8,025
|
1,404
|
26,426
|
(3,359)
|
36,875
|
Non-current assets
|
100,441
|
22,367
|
7,761
|
17,955
|
(19)
|
148,505
|
Long-term receivables
|
4,843
|
2,579
|
967
|
14,337
|
−
|
22,726
|
Investments
|
409
|
239
|
723
|
2,100
|
−
|
3,471
|
Property, plant and equipment
|
81,214
|
19,456
|
5,953
|
1,376
|
(19)
|
107,980
|
Operating assets
|
70,435
|
16,998
|
3,942
|
1,360
|
(19)
|
92,716
|
Under construction
|
10,779
|
2,458
|
2,011
|
16
|
−
|
15,264
|
Intangible assets
|
13,975
|
93
|
118
|
142
|
−
|
14,328
|
Total Assets
|
104,820
|
30,392
|
9,165
|
44,381
|
(3,378)
|
185,380
|
|
|
|
|
|
|
|
Consolidated assets by operating segment - 12.31.2019
|
|
|
|
|
|
|
|
Current assets
|
5,734
|
12,273
|
1,932
|
12,700
|
(4,827)
|
27,812
|
Non-current assets
|
148,546
|
31,248
|
10,781
|
11,390
|
(37)
|
201,928
|
Long-term receivables
|
6,456
|
3,299
|
1,369
|
6,567
|
−
|
17,691
|
Investments
|
592
|
1,109
|
1,067
|
2,731
|
−
|
5,499
|
Property, plant and equipment
|
122,496
|
26,710
|
8,181
|
1,915
|
(37)
|
159,265
|
Operating assets
|
106,331
|
23,630
|
5,605
|
1,784
|
(37)
|
137,313
|
Under construction
|
16,165
|
3,080
|
2,576
|
131
|
−
|
21,952
|
Intangible assets
|
19,002
|
130
|
164
|
177
|
−
|
19,473
|
Total Assets
|
154,280
|
43,521
|
12,713
|
24,090
|
(4,864)
|
229,740
|
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
26.1.
|
Balance by type of finance debt
|
|
|
|
|
|
In Brazil
|
06.30.2020
|
12.31.2019
|
Banking Market
|
4,893
|
5,322
|
Capital Market
|
2,416
|
3,468
|
Development banks
|
1,350
|
1,927
|
Others
|
10
|
13
|
Total
|
8,669
|
10,730
|
Abroad
|
|
|
Banking Market
|
22,394
|
16,555
|
Capital Market
|
34,147
|
32,476
|
Development banks
|
202
|
40
|
Export Credit Agency
|
3,686
|
3,233
|
Others
|
214
|
226
|
Total
|
60,643
|
52,530
|
Total finance debt
|
69,312
|
63,260
|
Current
|
6,692
|
4,469
|
Non-current
|
62,620
|
58,791
|
Current finance debt is composed of:
|
06.30.2020
|
06.30.2019
|
Short-term debt
|
2,437
|
2,206
|
Current portion of long-term debt
|
3,391
|
1,377
|
Acruedd interest
|
864
|
886
|
Total
|
6,692
|
4,469
|
At June 30, 2020, there was no default, breach of covenants
or change in collateral provided or clauses that would result in change in payment terms compared December 31, 2019.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
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
|
Cumulative translation adjustment (CTA)
|
Modification of contractual cash flows
|
Transfer to liabilities classified as held for sale
|
Balance at 12.31.2019
|
In Brazil
|
16,251
|
2,181
|
(5,663)
|
(745)
|
829
|
111
|
(352)
|
−
|
(1,882)
|
10,730
|
Abroad
|
67,924
|
5,362
|
(20,788)
|
(3,853)
|
3,878
|
538
|
(560)
|
29
|
-
|
52,530
|
|
84,175
|
7,543
|
(26,451)
|
(4,598)
|
4,707
|
649
|
(912)
|
29
|
(1,882)
|
63,260
|
|
Balance at
12.31.2019
|
Additions
|
Principal amorti zation (*)
|
Interest amorti zation (*)
|
Accrued interest (**)
|
Foreign exchange/ inflation indexation charges
|
Cumulative translation adjustment (CTA)
|
Modification of contractual cash flows
|
Transfer to liabilities classified as held for sale
|
Balance at 06.30.2020
|
In Brazil
|
10,730
|
1,488
|
(745)
|
(209)
|
224
|
119
|
(2,939)
|
-
|
-
|
8,668
|
Abroad
|
52,530
|
14,308
|
(6,196)
|
(1,466)
|
1,587
|
1,647
|
(1,552)
|
(214)
|
-
|
60,644
|
|
63,260
|
15,796
|
(6,941)
|
(1,675)
|
1,811
|
1,766
|
(4,491)
|
(214)
|
−
|
69,312
|
Debt restructuring
|
|
|
(281)
|
-
|
|
|
|
|
|
|
Deposits linked to financing
|
|
|
-
|
(22)
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
(7,222)
|
(1,697)
|
|
|
|
|
|
|
(*) It includes pre-payments.
|
(**) It includes premium and discount over notional amounts, as well as gains and losses by modifications in contractual cash flows.
|
In the first half of 2020, new borrowings were destined
mainly, to repay older debts, aiming at improving the debt repayment profile taking into account its alignment with investments
returns over the long run, as well as preserving cash levels to maintain the Company’s liquidity.
In the first half of 2020, proceeds from financing
amounted to US$ 15,796, principally reflecting: (i) funds raised from banking market (in Brazil and abroad), in the amount
of US$ 3,044, and (ii) use of revolving credit lines, in the amount of US$ 8,010 and (iii) global notes issued in the capital
market in the amount of US$ 3,207, of which US$ 1,495 relates to the issue of new bonds maturing in 2031 and US$ 1,712 the remaining
relates to new bonds issued maturing in 2050.
The Company repaid several finance debts, in the amount
of US$ 8,919 notably: (i) pre-payment of banking loans in the domestic and international market totaling US$ 2,885; and
(ii) US$ 1,404 relating to repurchase of bonds previously issued by the Company in the open market, with net premium paid
to bond holders amounting to US$ 262.
In addition, the Company carried out, in the international
banking market, operations to improve its debt profile and to extend its maturity, not involving financial settlements, in the
total amount of US$ 2,490.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
26.3.
|
Summarized information on current and non-current finance debt
|
Maturity in
|
2020
|
2021
|
2022
|
2023
|
2024
|
2025 onwards
|
Total (**)
|
Fair Value
|
|
|
|
|
|
|
|
|
|
Financing in U.S.Dollars (US$)(*):
|
1,309
|
5,347
|
2,746
|
8,428
|
8,285
|
31,083
|
57,198
|
63,820
|
Floating rate debt
|
610
|
3,224
|
2,124
|
7,057
|
6,810
|
6,454
|
26,279
|
|
Fixed rate debt
|
699
|
2,123
|
622
|
1,371
|
1,475
|
24,629
|
30,919
|
|
Average interest rate
|
4.4%
|
4.4%
|
4.5%
|
4.4%
|
4.8%
|
6.5%
|
5.7%
|
|
Financing in Brazilian Reais (R$):
|
256
|
662
|
1,111
|
1,666
|
1,469
|
2,675
|
7,839
|
8,931
|
Floating rate debt
|
72
|
450
|
882
|
1,511
|
1,136
|
1,119
|
5,170
|
|
Fixed rate debt
|
184
|
212
|
229
|
155
|
333
|
1,556
|
2,669
|
|
Average interest rate
|
3.7%
|
3.2%
|
3.8%
|
4.9%
|
4.6%
|
4.5%
|
4.1%
|
|
Financing in Euro (€):
|
54
|
199
|
389
|
405
|
14
|
1,406
|
2,467
|
3,044
|
Floating rate debt
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Fixed rate debt
|
54
|
199
|
389
|
405
|
14
|
1,406
|
2,467
|
|
Average interest rate
|
4.7%
|
4.8%
|
4.8%
|
4.6%
|
4.7%
|
4.7%
|
4.7%
|
|
Financing in Pound Sterling (£):
|
61
|
-
|
-
|
-
|
-
|
1,746
|
1,807
|
1,885
|
Floating rate debt
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Fixed rate debt
|
61
|
-
|
-
|
-
|
-
|
1,746
|
1,807
|
|
Average interest rate
|
6.3%
|
-
|
-
|
-
|
-
|
6.3%
|
6.3%
|
|
Financing in other currencies:
|
1
|
-
|
-
|
-
|
-
|
-
|
1
|
1
|
Floating rate debt
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Fixed rate debt
|
1
|
-
|
-
|
-
|
-
|
-
|
1
|
|
Average interest rate
|
9.9%
|
-
|
-
|
-
|
-
|
-
|
9.9%
|
|
Total as of June 30, 2020
|
1,681
|
6,208
|
4,246
|
10,499
|
9,768
|
36,910
|
69,312
|
77,681
|
Average interest rate
|
4.4%
|
4.3%
|
4.5%
|
4.5%
|
4.9%
|
6.4%
|
5.6%
|
|
Total as of December 31, 2019
|
4,469
|
3,971
|
4,689
|
8,036
|
8,537
|
33,558
|
63,260
|
72,801
|
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 (10.79 years as of December 31, 2019).
|
|
|
|
|
|
|
|
|
|
The fair value of the Company's finance debt is mainly
determined and categorized into a fair value hierarchy as follows:
Level 1- quoted prices in active markets for identical
liabilities, when applicable, amounting to US$ 38,219 as of June 30, 2020 (US$ 39,057 as of December 31, 2019); and
Level 2 – discounted cash flows based on discount
rate determined by interpolating spot rates considering financing debts indexes proxies, taking into account their currencies and
also Petrobras’ credit risk, amounting to US$ 37,536 as of June 30, 2020 (US$ 46,872 as of December 31, 2019).
The sensitivity analysis for financial instruments
subject to foreign exchange variation is set out in note 30.2.
A maturity schedule of the Company’s finance
debt (undiscounted), including face value and interest payments is set out as follows:
Maturity
|
2020
|
2021
|
2022
|
2023
|
2024
|
2025 and thereafter
|
Balance at June 30, 2020
|
Balance at December 31, 2019
|
Principal
|
747
|
6,276
|
4,352
|
10,462
|
10,063
|
38,734
|
70,634
|
65,284
|
Interest
|
1,591
|
2,963
|
2,789
|
2,537
|
2,267
|
30,344
|
42,490
|
43,859
|
Total
|
2,338
|
9,239
|
7,141
|
12,999
|
12,330
|
69,078
|
113,124
|
109,143
|
|
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
|
|
|
|
|
Amount
|
Company
|
Financial
institution
|
Date
|
Maturity
|
Available
(Lines of Credit)
|
Used
|
Balance
|
Abroad
|
|
|
|
|
|
|
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
|
365
|
−
|
365
|
Petrobras
|
Bradesco
|
6/1/2018
|
5/31/2023
|
410
|
410
|
−
|
Petrobras
|
Banco do Brasil
|
10/4/2018
|
9/5/2025
|
365
|
−
|
365
|
Transpetro
|
Caixa Econômica Federal
|
11/23/2010
|
Not defined
|
60
|
−
|
60
|
Total
|
|
|
|
1,200
|
410
|
790
|
|
|
|
|
|
|
|
The Company is the lessee in agreements primarily including
oil and gas producing units, drilling rigs and other exploration and production equipment, vessels and support vessels, helicopters,
lands and buildings.
Changes in the balance of lease liabilities are presented
below:
|
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
|
In Brazil
|
5,504
|
289
|
(809)
|
148
|
968
|
(1,571)
|
(7)
|
4,522
|
Abroad
|
18,357
|
663
|
(2,130)
|
505
|
3,090
|
(3,104)
|
11
|
17,392
|
Total
|
23,861
|
952
|
(2,939)
|
653
|
4,058
|
(4,675)
|
4
|
21,914
|
|
|
|
|
|
|
|
|
|
Payments relating to liabilities held for sale
|
|
|
-32
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(2,971)
|
|
|
|
|
|
A maturity schedule of the lease arrangements (nominal
amounts) is set out as follows:
Maturity
|
2020
|
2021
|
2022
|
2023
|
2024
|
2025 onwards
|
Total
|
|
|
|
|
|
|
|
|
Balance at June 30, 2020
|
2,844
|
5,240
|
3,670
|
2,624
|
2,140
|
13,060
|
29,578
|
Balance at December 31, 2019
|
5,900
|
4,984
|
3,511
|
2,636
|
2,164
|
13,057
|
32,252
|
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 US$ 368, representing
13% in relation to fixed payments (US$ 455 and 20% in the same period of 2019).
All extension options were included in the measurement
of lease obligations.
The sensitivity analysis of financial instruments subject
to exchange variation is presented in note 30.2.
In the first half of 2020, the Company recognized lease
expenses in the amount of US$ 82 relating to short-term leases (US$ 437 in the same period of 2019).
At June 30, 2020, the balance of lease agreements for
which the lease term has not commenced, as they relate to assets under construction or not yet available for use, is US$ 51,001
(US$ 50,130 at December 31, 2019).
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
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 US$ 107,101, 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.
As of June 30, 2020 and December 31, 2019, the Company
held treasury shares, of which 222,760 are common shares and 72,909 are preferred shares.
|
28.2.
|
Distributions to shareholders
|
As a result of the COVID-19 pandemic and restrictions
recommended by the World Health Organization and imposed by authorities regarding agglomerations and meetings, the Company’s
Board of Directions approved the postponement of the General Shareholders Meeting to July 22, 2020 and the payment of the remaining
dividends based on the 2019 earnings. This postponement is one of the measures adopted by the Company to preserve its cash, due
to the pandemic of COVID-19 and the shock of oil prices.
As of June 30, 2020, the consolidated balance of dividends
payable, within consolidated statement of financial position, based on the 2019 earnings, bearing interest at Selic rate (Brazilian
short-term interest rate), is US$ 360.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
|
Jan-Jun/2020
|
|
Jan-Jun/2019
|
|
|
|
|
|
|
|
|
Common
|
Preferred
|
Total
|
Common
|
Preferred
|
Total
|
Net income (loss) attributable to shareholders of Petrobras
|
(5,781)
|
(4,351)
|
(10,132)
|
3,355
|
2,526
|
5,881
|
Continuing operations
|
(5,781)
|
(4,351)
|
(10,132)
|
3,272
|
2,463
|
5,735
|
Discontinued operations
|
−
|
−
|
−
|
83
|
63
|
146
|
|
|
|
|
|
|
|
Weighted average number of outstanding shares
|
7,442,231,382
|
5,601,969,879
|
13,044,201,261
|
7,442,231,382
|
5,601,969,879
|
13,044,201,261
|
|
|
|
|
|
|
|
Basic and diluted earnings (losses) per share - in U.S. dollars
|
(0.78)
|
(0.78)
|
(0.78)
|
0.45
|
0.45
|
0.45
|
Continuing operations
|
(0.78)
|
(0.78)
|
(0.78)
|
0.44
|
0.44
|
0.44
|
Discontinued operations
|
−
|
−
|
−
|
0.01
|
0.01
|
0.01
|
Basic and diluted earnings (losses) per ADS equivalent - in U.S. dollars (*)
|
(1.56)
|
(1.56)
|
(1.56)
|
0.90
|
0.90
|
0.90
|
Continuing operations
|
(1.56)
|
(1.56)
|
(1.56)
|
0.88
|
0.88
|
0.88
|
Discontinued operations
|
−
|
−
|
−
|
0.02
|
0.02
|
0.02
|
|
|
Apr-Jun/2020
|
Apr-Jun/2019
|
|
|
|
|
|
|
|
|
Common
|
Preferred
|
Total
|
Common
|
Preferred
|
Total
|
Net income (loss) attributable to shareholders of Petrobras
|
(238)
|
(179)
|
(417)
|
2,744
|
2,067
|
4,811
|
Continuing operations
|
(238)
|
(179)
|
(417)
|
2,713
|
2,043
|
4,756
|
Discontinued operations
|
−
|
−
|
−
|
31
|
24
|
55
|
|
|
|
|
|
|
|
Weighted average number of outstanding shares
|
7,442,231,382
|
5,601,969,879
|
13,044,201,261
|
7,442,231,382
|
5,601,969,879
|
13,044,201,261
|
|
|
|
|
|
|
|
Basic and diluted earnings (losses) per share - in U.S. dollars
|
(0.03)
|
(0.03)
|
(0.03)
|
0.37
|
0.37
|
0.37
|
Continuing operations
|
(0.03)
|
(0.03)
|
(0.03)
|
0.36
|
0.36
|
0.36
|
Discontinued operations
|
−
|
−
|
−
|
0.01
|
0.01
|
0.01
|
Basic and diluted earnings (losses) per ADS equivalent - in U.S. dollars (*)
|
(0.06)
|
(0.06)
|
(0.06)
|
0.74
|
0.74
|
0.74
|
Continuing operations
|
(0.06)
|
(0.06)
|
(0.06)
|
0.72
|
0.72
|
0.72
|
Discontinued operations
|
−
|
−
|
−
|
0.02
|
0.02
|
0.02
|
(*) Petrobras' ADSs are equivalent to two shares.
|
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 shares in issue.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
29.
|
Fair value of financial assets and liabilities
|
|
|
|
|
Level I
|
Level II
|
Level III
|
Total fair
value
recorded
|
Assets
|
|
|
|
|
Marketable securities
|
531
|
-
|
-
|
531
|
Foreign currency derivatives
|
-
|
-
|
-
|
-
|
Balance at June 30, 2020
|
531
|
-
|
-
|
531
|
Balance at December 31, 2019
|
882
|
58
|
−
|
940
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Foreign currency derivatives
|
-
|
(581)
|
-
|
(581)
|
Commodity derivatives
|
(211)
|
(38)
|
-
|
(249)
|
Interest rate derivatives
|
−
|
(1)
|
-
|
(1)
|
Balance at June 30, 2020
|
(211)
|
(620)
|
-
|
(831)
|
Balance at December 31, 2019
|
(28)
|
(110)
|
−
|
(138)
|
|
|
|
|
|
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.
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:
|
|
Statement of Financial Position
|
|
|
|
|
Fair value
|
|
|
Notional value
|
Asset Position (Liability)
|
Maturity
|
|
06.30.2020
|
12.31.2019
|
06.30.2020
|
12.31.2019
|
|
Derivatives not designated for hedge accounting
|
|
|
|
|
|
Future contracts - total (*)
|
(19,167)
|
(10,383)
|
(211)
|
(28)
|
|
Long position/Crude oil and oil products
|
9,551
|
9,865
|
-
|
-
|
2020
|
Short position/Crude oil and oil products
|
(28,718)
|
(20,248)
|
-
|
-
|
2020
|
Forward contracts (*)
|
|
|
|
|
|
Short position/Crude oil and oil products
|
(3,900)
|
-
|
(38)
|
-
|
2020
|
Forward contracts
|
|
|
|
|
|
Long position/Foreign currency forwards (BRL/USD) (**)
|
-
|
US$ 273
|
-
|
-
|
2020
|
Long position/Foreign currency forwards (EUR/USD) (**)
|
-
|
EUR 2.245
|
-
|
(45)
|
2020
|
Long position/Foreign currency forwards (GPB/USD) (**)
|
GBP 388
|
GBP 388
|
(24)
|
11
|
2020
|
Short position/Foreign currency forwards (GPB/USD) (**)
|
GBP 140
|
GBP 224
|
(10)
|
(14)
|
2020
|
Swap
|
|
|
|
|
|
Foreign currency / Cross-currency Swap (**)
|
GBP 615
|
GBP 700
|
(54)
|
32
|
2026
|
Foreign currency / Cross-currency Swap (**)
|
GBP 600
|
GBP 600
|
(238)
|
(50)
|
2034
|
Swap - IPCA (**)
|
R$ 3008
|
R$ 3008
|
(1)
|
6
|
2029/2034
|
Foreign currency / Cross-currency Swap (**)
|
US$ 729
|
US$ 729
|
(255)
|
11
|
2024/2029
|
Total recognized in the Statement of Financial Position
|
|
|
(831)
|
(77)
|
|
|
|
|
|
|
|
(*) Notional value in thousands of bbl.
|
|
|
|
|
|
(**) Amounts in US$, EUR, GBP and R$ are presented in million.
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
Gains/ (losses) recognized in the statement of income
|
|
Gains/(losses) recognized in Shareholders’ Equity (*)
|
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
|
Jan-Jun
|
Jan-Jun
|
Apr-Jun
|
Apr-Jun
|
Jan-Jun
|
Jan-Jun
|
Apr-Jun
|
Apr-Jun
|
Commodity derivatives
|
(253)
|
(378)
|
(476)
|
(153)
|
−
|
−
|
−
|
−
|
Currency derivatives
|
(648)
|
(171)
|
31
|
(139)
|
−
|
−
|
−
|
−
|
Interest rate derivatives
|
(17)
|
−
|
38
|
−
|
−
|
−
|
−
|
−
|
|
(918)
|
(549)
|
(407)
|
(292)
|
−
|
−
|
−
|
−
|
Cash flow hedge on exports (**)
|
(2,443)
|
(1,494)
|
(1,043)
|
(739)
|
(22,596)
|
2,372
|
(1,637)
|
2,256
|
Total
|
(3,361)
|
(2,043)
|
(1,450)
|
(1,031)
|
(22,596)
|
2,372
|
(1,637)
|
2,256
|
|
|
|
|
|
|
|
|
|
(*) Amounts recognized as other comprehensive income in the period.
|
(**) Using non-derivative financial instruments as designated hedging instruments, as set out in note 30.2.
|
|
|
|
|
|
|
|
Guarantees given as collateral
|
|
|
|
|
|
|
06.30.2020
|
12.31.2019
|
Commodity derivatives
|
|
|
|
|
|
420
|
57
|
Currency derivatives
|
|
|
|
|
|
347
|
230
|
Total
|
|
|
|
|
|
|
767
|
287
|
|
|
|
|
|
|
|
|
|
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 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 (US$ 70) and other non-current assets (US$ 277).
Aiming at preserving the Company's liquidity, there
was an increase in operations with future contracts related to oil exports (as set out in note 30.1), consequently increasing commodity
collateral, which are accounted for as other current assets as of June 30, 2020.
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:
Financial Instruments
|
Risk
|
Probable Scenario (*)
|
Reasonably possible
scenario (*)
|
Remote
Scenario (*)
|
Derivatives not designated for hedge accounting
|
|
|
|
|
Future and forward contracts
|
Crude oil and oil products - price changes
|
-
|
(253)
|
(506)
|
|
|
−
|
(253)
|
(506)
|
(*) The probable scenario was computed based on the fair value of oil and oil products prices at June 30, 2020. 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
|
The Company is usually exposed to commodity price cycles,
although it may use derivative instruments to hedge exposures related to prices of products purchased and sold to fulfill operational
needs and in specific circumstances depending on business environment analysis and assessment of whether the targets of the Strategic
Plan are being met.
Crude oil
In March 2020, in order to preserve the Company's liquidity,
Petrobras approved a hedge strategy for exported oil already shipped but not priced mainly due to the high volatility of the current
context, both due to the effects of the oil price drop and the effects of the COVID-19 pandemic on the global oil consumption.
As a result of this strategy, from April 2020, transactions
using forward and futures contracts were carried out. Forward transactions do not require initial disbursement, whereas future
transactions require margin deposits, depending on the volume contracted. In the second quarter of 2020, there was a US$ 211
loss in the forward transactions and a US$ 269 loss in the futures operations.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
In the first half of 2019, the Company
recognized a a US$ 235 loss relating to over-the-counter put options referenced in Brent oil prices, due to the increase
in the commodity price in the international market; an US$ 8 loss on hedges related to diesel prices by using
non-deliverable forwards (NDF); and a US$ 7 gain on hedges related to gasoline prices also by using NDF. In the second
quarter of 2020, there was US$ 140 loss, US$ 10 gain and US$ 3 gain for Brent, diesel and gasoline, respectively.
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 US$ 207 gain in the six-month period ended June 30, 2020 (a US$ 142 loss in the same period of 2019). In
the second quarter of 2020, there was a US$ 25 loss (a US$ 27 loss in the same period of 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:
|
|
|
|
|
|
|
|
|
|
Present value of hedging instrument
notional value at
06.30.2020
|
Hedging Instrument
|
Hedged Transactions
|
Nature
of theRisk
|
Maturity
Date
|
(US$ million)
|
(R$ million)
|
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
|
July 2020 to June 2030
|
54,407
|
297,933
|
Changes in the present value of hedging instrument notional value
|
US$
|
R$ million
|
Amounts designated as of January 1, 2020
|
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
|
Amounts designated as of June 30, 2020
|
54,407
|
297,933
|
Nominal value of hedging instrument (finance debt and lease liability) at June 30, 2020
|
59,614
|
326,446
|
In the first half of 2020, highly probable future exports
were impacted by the effects of the oil price war and the COVID-19 pandemic.
Thus, a portion 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. 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 quarter was negative by US$ 37,212 (as presented in item (c) below).
In addition, a portion of exports designated for hedge
relationships, from April to December 2020 and from August to December 2020, are no longer expected to occur, and the corresponding
foreign exchange variation were recycled from shareholder’s equity to the statement of income the first half of 2020, in
the amount of US$ 551.
In the first half of 2020, the Company also recognized
a US$ 1 loss within foreign exchange gains (losses) due to ineffectiveness (a US$ 5 loss in the same period of 2019).
As of June 30, 2020, the ratio of future exports for
which cash flow hedge accounting was designated to the highly probable future exports is 100% (91.2% as of December 31, 2019).
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
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 variation
|
Tax effect
|
Total
|
Balance at January 1,2019
|
(20,143)
|
6,851
|
(13,292)
|
Recognized in Other comprehensive income
|
(3,510)
|
1,192
|
(2,318)
|
Reclassified to the statement of income - occurred exports
|
3,136
|
(1,066)
|
2,070
|
Balance at December 31, 2019
|
(20,517)
|
6,977
|
(13,540)
|
Recognized in Other comprehensive income
|
(24,421)
|
8,303
|
(16,118)
|
Reclassified to the statement of income - occurred exports
|
1,892
|
(644)
|
1,248
|
Reclassified to the statement of income - exports no longer expected to occur
|
551
|
(187)
|
364
|
Balance at June 30, 2020
|
(42,495)
|
14,449
|
(28,046)
|
Additional hedging relationships may be revoked or
additional reclassification adjustments from equity to the statement of income may occur as a result of changes in forecasted export
prices and export volumes following a revision of the Company’s strategic plan. Based on a sensitivity analysis considering
a US$ 10/barrel decrease in Brent prices stress scenario, when compared to the Brent price projections in our Strategic Plan
2020-2024 revised in the first quarter of 2020, would indicate a reclassification adjustment from equity to the statement of income
in the amount of US$ 913.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
2021
|
2022
|
2023
|
2024
|
2025
|
2026
|
2027 to 2029
|
Total
|
Expected realization
|
(3,496)
|
(6,946)
|
(7,284)
|
(6,240)
|
(4,903)
|
(3,496)
|
(3,067)
|
(7,063)
|
(42,495)
|
|
|
|
|
|
|
|
|
|
|
|
b)
|
Foreign exchange contracts
|
Cross currency swap – Pounds Sterling x Dollar
The Company recognized a US$ 297 loss in the six-month
period ended June 30, 2020 (a US$ 94 loss in the same period of 2019) arising from this strategy, recorded in finance income (expense).
In the second quarter of 2020 there was a US$ 38 gain (a US$ 140 loss in the same period of 2019). The Company does not
expect to settle these swaps before their expiration dates.
Non Deliverable Forward (NDF) – Euro x Dollar
and Pounds Sterling x Dollar
The Company recognized a US$ 43 loss in the six-month
period ended June 30, 2020 (a US$ 83 loss in the same period of 2019) arising from this strategy, recorded in finance income (expense).
In the second quarter of 2020 there was a US$54 gain (a US$ 2 loss in the same period of 2019). The Company does not expect to
settle these NDFs before their expiration dates.
Swap contracts – National consumer price index
(IPCA) x Brazilian interbank offering rate (CDI) and CDI x Dollar
The mark to market of IPCA x CDI swap operations registered
a US$ 18 loss in the six-month period ended June 30, 2020, while the mark to market of CDI x USD swap operations presented a US$ 307
loss in the same period, both recorded as finance income (expense). In the second quarter of 2020 there was a US$ 38 gain
and a US$ 61 loss, respectively. The Company does not expect to settle these swaps before their expiration dates.
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 CDI with a constant
increase (parallel shock) of 100 basis points, all other variables remaining constant, would result in a US$ 3 gain, while
a constant reduction (parallel shock) of 100 basis points, would result in a US$ 1 loss.
|
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.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
Financial Instruments
|
Exposure at 06.30.2020
|
Risk
|
Probable Scenario (*)
|
Reasonably possible
scenario
|
Remote
Scenario
|
|
|
|
|
|
|
Assets
|
4,352
|
|
(188)
|
1,088
|
2,176
|
Liabilities
|
(95,464)
|
Dollar/Real
|
4,114
|
(23,866)
|
(47,732)
|
Exchange rate - Cross currency swap
|
(549)
|
|
24
|
(137)
|
(275)
|
Cash flow hedge on exports
|
54,407
|
|
(2,345)
|
13,602
|
27,204
|
|
(37,254)
|
|
1,605
|
(9,313)
|
(18,627)
|
Assets
|
4
|
Euro/Real
|
−
|
1
|
2
|
Liabilities
|
(16)
|
|
1
|
(4)
|
(8)
|
|
(12)
|
|
1
|
(3)
|
(6)
|
Assets
|
2,448
|
Euro/Dollar
|
(8)
|
612
|
1,224
|
Liabilities
|
(5,013)
|
|
16
|
(1,253)
|
(2,507)
|
Non Deliverable Forward (NDF)
|
−
|
|
−
|
−
|
−
|
|
(2,565)
|
|
8
|
(641)
|
(1,283)
|
Assets
|
3
|
Pound Sterling/Real
|
−
|
1
|
2
|
Liabilities
|
(20)
|
|
1
|
(5)
|
(10)
|
|
(17)
|
|
1
|
(4)
|
(8)
|
Assets
|
1,810
|
Pound Sterling
/Dollar
|
18
|
453
|
905
|
Liabilities
|
(3,633)
|
|
(37)
|
(908)
|
(1,816)
|
Derivative - cross currency swap
|
1,503
|
|
15
|
376
|
752
|
Non Deliverable Forward (NDF)
|
307
|
|
3
|
77
|
154
|
|
(13)
|
|
(1)
|
(2)
|
(5)
|
Total at June 30, 2020
|
(39,861)
|
|
1,614
|
(9,963)
|
(19,929)
|
Total at December 31, 2019
|
950
|
|
16
|
285
|
570
|
|
|
|
|
|
|
(*) At 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% apreciation 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 .
|
|
30.3.
|
Interest rate risk management
|
The table below presents, in the probable scenario,
the amount to be disbursed by Petrobras with interests related to debts with floating interest rate at June 30, 2020. The reasonably
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 are associated with a period of 12 months.
Financial Instruments
|
Risk
|
Probable Scenario (*)
|
Reasonably possible
scenario
|
Remote
Scenario
|
Derivatives not designated for hedge accounting
|
|
|
|
|
Finance debt
|
Floating rates
|
943
|
1,110
|
1,278
|
|
|
943
|
1,110
|
1,278
|
(*) The probable scenario was calculated considering the quotations of currencies and floating rates to which the debts are indexed.
|
Following its liability management strategy, the Company
regularly evaluates market conditions and may enter into transactions to repurchase its own securities or those of its affiliates,
through a variety of means, including tender offers, make whole exercises and open market repurchases, in order to improve its
debt repayment profile and cost of debt.
Measures to protect the Company's liquidity
As a result of the abrupt reduction in 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 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.
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
31.
|
Related-party transactions
|
The Company has a related-party transactions policy,
which is annually revised and approved by the Board of Directors, and is applicable to all the Petrobras Group, in accordance with
the Company’s by-laws.
|
31.1.
|
Transactions with joint ventures, associates, government entities and pension plans
|
The Company has engaged, and expects to continue to
engage, in the ordinary course of business in numerous transactions with joint ventures, associates, pension plans, as well as
with the Company’s controlling shareholder, the Brazilian Federal Government, which include transactions with banks and other
entities under its control, such as financing and banking, asset management and other transactions.
The balances of significant transactions are set out
in the following table:
|
|
06.30.2020
|
|
12.31.2019
|
|
|
|
|
|
|
Assets
|
Liabilities
|
Assets
|
Liabilities
|
Joint ventures and associates
|
|
|
|
|
Petrobras Distribuidora (BR)
|
118
|
47
|
224
|
47
|
Natural Gas Transportation Companies
|
99
|
542
|
150
|
717
|
State-controlled gas distributors (joint ventures)
|
306
|
78
|
338
|
104
|
Petrochemical companies (associates)
|
73
|
1
|
47
|
29
|
Other associates and joint ventures
|
34
|
73
|
35
|
203
|
Subtotal
|
630
|
741
|
794
|
1,100
|
Brazilian government – Parent and its controlled entities
|
|
|
|
|
Government bonds
|
1,061
|
-
|
1,580
|
-
|
Banks controlled by the Brazilian Government
|
7,090
|
3,468
|
8,584
|
4,904
|
Receivables from the Electricity sector
|
214
|
5
|
334
|
−
|
Petroleum and alcohol account - receivables from the Brazilian Government
|
226
|
-
|
304
|
-
|
Brazilian Federal Government - dividends
|
−
|
94
|
−
|
417
|
Empresa Brasileira de Administração de Petróleo e Gás Natural – Pré-Sal Petróleo S.A. – PPSA
|
-
|
5
|
−
|
20
|
Others
|
13
|
39
|
45
|
43
|
Subtotal
|
8,604
|
3,611
|
10,847
|
5,384
|
Pension plans
|
111
|
32
|
60
|
110
|
Total
|
9,345
|
4,384
|
11,701
|
6,594
|
Current
|
2,221
|
1,180
|
2,849
|
1,904
|
Non-Current
|
7,124
|
3,204
|
8,852
|
4,690
|
Total
|
9,345
|
4,384
|
11,701
|
6,594
|
|
The income/expenses of significant transactions are
set out in the following table:
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
|
Jan-Jun
|
Jan-Jun
|
Apr-Jun
|
Apr-Jun
|
|
|
|
|
|
Joint ventures and associates
|
|
|
|
|
Petrobras Distribuidora (BR)
|
5,109
|
−
|
1,928
|
−
|
Natural Gas Transportation Companies
|
(972)
|
−
|
(451)
|
−
|
State-controlled gas distributors (joint ventures)
|
938
|
1,370
|
378
|
653
|
Petrochemical companies (associates)
|
1,424
|
1,520
|
445
|
787
|
Other associates and joint ventures
|
9
|
(307)
|
(84)
|
(159)
|
Subtotal
|
6,508
|
2,583
|
2,216
|
1,281
|
Brazilian government – Parent and its controlled entities
|
|
|
|
|
Government bonds
|
23
|
53
|
10
|
24
|
Banks controlled by the Brazilian Government
|
(315)
|
(414)
|
(223)
|
(362)
|
Receivables from the Electricity sector (note 5.4)
|
23
|
208
|
10
|
143
|
Petroleum and alcohol account - receivables from the Brazilian Government
|
3
|
2
|
1
|
−
|
Brazilian Federal Government - dividends
|
(3)
|
(9)
|
(1)
|
(4)
|
Empresa Brasileira de Administração de Petróleo e Gás Natural – Pré-Sal Petróleo S.A. – PPSA
|
(45)
|
(70)
|
(5)
|
(42)
|
Others
|
(10)
|
(27)
|
(10)
|
(39)
|
Subtotal
|
(324)
|
(258)
|
(218)
|
(280)
|
Total
|
6,184
|
2,325
|
1,998
|
1,001
|
Revenues, mainly sales revenues
|
7,863
|
3,163
|
2,888
|
1,568
|
Purchases and services
|
(1,397)
|
(653)
|
(682)
|
(351)
|
Foreign exchange and inflation indexation charges, net
|
(252)
|
(214)
|
(193)
|
(102)
|
Finance income (expenses), net
|
(30)
|
30
|
(15)
|
(114)
|
Total
|
6,184
|
2,325
|
1,998
|
1,001
|
|
|
|
|
|
The liability related to pension plans of the company's
employees and managed by the Petros Foundation is presented in note 14.1. Pension and health plans.
|
31.2.
|
Petroleum and alcohol account - receivables from the Brazilian Government
|
On March 11, 2020, the Brazilian Federal Government
filed an Objection to the Judicial Sentence on this case. Thus, Petrobras was demanded to express its opinion on this matter.
After the Company's statement, the judge partially
accepted the Brazilian Federal Government's appeal, only with regard to interest and inflation indexation charges of the principal
amount, since June 30, 2004. The other allegations of the Brazilian Federal Government, such as compensation and prescription,
were rejected.
On June 23, 2020, the judge approved the calculations
presented by the Brazilian Federal Government at February 2020, which Petrobras agreed with. However, the Brazilian Federal Government
presented a Motion for Clarification on this decision.
The inflation indexation based on IPCA-E, claimed by
the Company, remains classified as a contingent asset (unrecognized), amounting to US$ 218 as of June 30, 2020.
As of June 30, 2020, the balance of receivables related
to the Petroleum and Alcohol accounts is US$ 226 (US$ 304 as of December 31, 2019), recorded within non-current assets.
|
31.3.
|
Compensation of key management personnel
|
The total compensation of Executive Officers and Board Members of Petrobras
is set out as follows:
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
|
|
Jan-Jun/2020
|
|
Jan-Jun/2019
|
|
Officers
|
Board members
|
Total
|
Officers
|
Board members
|
Total
|
Wages and short-term benefits
|
1.3
|
−
|
1.3
|
1.3
|
0.2
|
1.5
|
Social security and other employee-related taxes
|
0.4
|
-
|
0.4
|
0.6
|
-
|
0.6
|
Post-employment benefits (pension plan)
|
−
|
-
|
−
|
0.2
|
-
|
0.2
|
Variable compensation
|
−
|
-
|
−
|
0.9
|
-
|
0.9
|
Benefits due to termination of tenure
|
−
|
-
|
−
|
0.3
|
-
|
0.3
|
Total compensation recognized in the statement of income
|
1.7
|
−
|
1.7
|
3.3
|
0.2
|
3.5
|
Total compensation paid
|
1.7
|
-
|
1.7
|
4.0
|
-
|
4.0
|
Average number of members in the period (*)
|
9.00
|
9.17
|
18.17
|
7.00
|
9.50
|
16.50
|
Average number of paid members in the period (**)
|
9.00
|
4.00
|
13.00
|
7.00
|
6.00
|
13.00
|
|
|
|
|
|
|
|
(*) Monthly average number of members.
|
(**) Monthly average number of paid members.
|
For the six-month period ended June 30, 2020, charges
related to compensation of the board members and executive officers of the Petrobras group amounted to US$ 6 (US$ 10
for the same period of 2019).
On September 30, 2019, the Company’s Extraordinary
General Meeting approved a change in the overall compensation for executive officers and board members, given the creation of the
Executive Office of Digital Transformation and Innovation, setting the total compensation threshold at US$ 6.6 (R$ 34.2
million) from April 2019 to March 2020.
The compensation of the Advisory Committees to the
Board of Directors is apart from the fixed compensation set for the Board Members and, therefore, has not been classified under
compensation of Petrobras’ key management personnel.
In accordance with Brazilian regulations applicable
to companies controlled by the Brazilian Federal Government, Board members who are also members of the Audit Committee or Audit
Committee of the Petrobras Conglomerate are only compensated with respect to their Audit Committee duties. The total compensation
concerning these members was US$ 189 thousand for the first half of 2020 (US$ 227 thousand with tax and social security
costs). For the same period of 2019, the total compensation concerning these members was US$ 195 thousand (US$ 234 thousand
with tax and social security costs).
|
32.
|
Supplemental information on statement of cash flows
|
|
Jan-Jun/2020
|
Jan-Jun/2019
|
Additional information on cash flows:
|
|
|
Amounts paid/received during the period:
|
|
|
Withholding income tax paid on behalf of third-parties
|
464.0
|
669.8
|
Capital expenditures and financing activities not involving cash
|
|
|
Purchase of property, plant and equipment on credit
|
-
|
77.2
|
Lease
|
1,105.0
|
1,334.0
|
Provision/(reversals) for decommissioning costs
|
12.0
|
(18.6)
|
Use of deferred tax and judicial deposit for the payment of contingency
|
1.0
|
1.9
|
NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED
PETROBRAS
(Expressed in millions of US Dollars, unless otherwise indicated)
|
Sale of Pampo and Enchova groups
On July 24, 2019, Petrobras signed with Trident Energy
do Brasil LTDA, a subsidiary of Trident Energy LP, an agreement for the total sale of its interest (100%) in Pampo and Enchova
groups, in the Campos basin, on the coast of Rio de Janeiro, comprising Enchova, Enchova Oeste, Marimbá, Piraúna,
Bicudo, Bonito, Pampo, Trilha, Linguado and Badejo fields.
On July 15, 2020, Petrobras concluded the sale of these
fields after the fulfillment of the conditions precedent, with the payment of US$ 366 to Petrobras, including price adjustments
provided for in the contract and other conditions subsequently agreed between the parties, which provide for the payment of up
to US$ 650 to be classified as contingent assets if and when agreed conditions are met.
The total amount received was US$ 419, including
US$ 53 paid to Petrobras at the transaction signing.
Sale of 10% stake in Transportadora Associada de
Gás
On July 20, 2020, Petrobras entered into a share purchase
and sale agreement, referring to its remaining 10% stake in Transportadora Associada de Gás S.A. (TAG), with the group formed
by ENGIE and the Canadian fund Caisse de Dépôt et Placement du Québec (CDPQ).
From the total transaction amount of US$ 204, Petrobras
received US$ 21 as dividends in June 2020 and, after the other adjustments provided for in the contract, the transaction was
concluded for US$ 225, fully settled on the date of the contract signing.
Sale of Baúna field
On July 24, 2019, Petrobras signed a contract for the
sale of 100% of its interest in the Baúna field (awarded area BM-S-40), located in shallow waters in the Santos Basin, to
Karoon Petróleo & Gás Ltda., a subsidiary of Karoon Energy Ltd.
Due to the impact caused by the COVID-19 pandemic and
the consequent difficulty in meeting the conditions precedent originally set, the parties defined adjustments to the terms of the
contract and the payment of the transaction value according to the following schedule: (i) US$ 380 consisting of: US$ 50
already paid by Karoon on July 24, 2019, US$ 150 to be paid at the transaction closing, including price adjustments, and US$ 180
in 18 monthly installments after the transaction closing; and (ii) a contingent installment of US$ 285 to be paid by 2026.
The transaction closing is subject to the fulfillment
of some conditions precedent, such as the approval by the ANP.
Revolving Credit Lines
On July 27, 2020, Petrobras made a partial prepayment
of its revolving credit lines, in the amount of US$ 3,500. The Company has funds available for new draw downs, if necessary.
Arbitration involving Sete Brasil
On July 29, 2020, the Board of Directors approved the
agreement with Petros Foundation (Petros), which intends to end the arbitral dispute proposed by Petros in order to obtain compensation
from Petrobras for alleged material damage related to the investment in Sete Brasil.
As a result of the agreement, which is confidential,
Petrobras will pay Petros US$ 173 (R$ 950 million), an amount recorded in the financial statements of June 30, 2020 (note
15.1).
|
34.
|
Information related to guaranteed securities issued by subsidiaries
|
|
34.1.
|
Petrobras Global Finance B.V. (PGF)
|
Petróleo Brasileiro S.A. - Petrobras
fully and unconditionally guarantees the debt securities issued by Petrobras Global Finance B.V. (PGF), a 100-percent-owned finance
subsidiary of Petrobras. There are no significant restrictions on the ability of Petrobras to obtain funds from PGF