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 May, 2024

 

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 Henrique Valadares, 28 – 19th floor 
20241-030 – 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____

 

 

 
 

 

 

 

 

Unaudited Condensed

Consolidated Interim

Financial Statements

PETRÓLEO BRASILEIRO S.A. – PETROBRAS

 

As of March 31, 2024, with the independent registered public accounting firm report

 
 

INDEX

Petróleo Brasileiro S.A. – Petrobras

 
Unaudited Condensed Consolidated Statements of Financial Position 3
Unaudited Condensed Consolidated Statements of Income 4
Unaudited Condensed Consolidated Statements of Comprehensive Income 5
Unaudited Condensed Consolidated Statements of Cash Flows 6
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity 7
1.   Basis of preparation 8
2.   Material accounting policies 8
3.   Cash and cash equivalents and marketable securities 8
4.   Sales revenues 9
5.   Costs and expenses by nature 10
6.   Other income and expenses, net 11
7.   Net finance income (expense) 11
8.   Information by operating segment 12
9.   Trade and other receivables 14
10.   Inventories 15
11.   Trade payables 16
12.   Taxes 16
13.   Employee benefits 18
14.   Provisions for legal proceedings, judicial deposits and contingent liabilities 22
15.   Provision for decommissioning costs 26
16.   Other assets and liabilities 27
17.   Property, plant and equipment 28
18.   Intangible assets 30
19.   Impairment 30
20.   Exploration and evaluation of oil and gas reserves 31
21.   Collateral for crude oil exploration concession agreements 31
22.   Investments 32
23.   Disposal of assets and other transactions 32
24.   Finance debt 33
25.   Lease liability 36
26.   Equity 37
27.   Financial risk management 38
28.   Related party transactions 44
29.   Supplemental information on statement of cash flows 46
30.   Subsequent events 47
Report of Independent Registered Public Accounting Firm 48

 

 

2 
 

Unaudited Condensed Consolidated Statements of Financial Position

PETROBRAS

As of March 31, 2024 and December 31, 2023 (Expressed in millions of US Dollars, unless otherwise indicated)

 

 

Assets Note 03.31.2024 12.31.2023
       
Cash and cash equivalents 3 11,547 12,727
Marketable securities 3 4,818 2,819
Trade and other receivables 9 5,041 6,135
Inventories 10 8,176 7,681
Recoverable income taxes 12 362 218
Other recoverable taxes 12 1,179 960
Others 16 1,761 1,570
    32,884 32,110
Assets classified as held for sale 23 335 335
Current assets   33,219 32,445
       
Trade and other receivables 9 1,462 1,847
Marketable securities 3 1,880 2,409
Judicial deposits 14 14,821 14,746
Deferred income taxes 12 1,167 965
Other recoverable taxes 12 4,417 4,516
Others 16 2,245 2,315
Long-term receivables   25,992 26,798
Investments 22 1,235 1,358
Property, plant and equipment - PP&E 17 150,211 153,424
Intangible assets 18 2,966 3,042
Non-current assets   180,404 184,622
       
Total assets   213,623 217,067

 

Liabilities Note 03.31.2024 12.31.2023
       
Trade payables 11 5,164 4,813
Finance debt 24 4,914 4,322
Lease liability 25 7,455 7,200
Income taxes payable 12 1,007 1,300
Other taxes payable 12 3,954 4,166
Dividends payable 26 20 3,539
Provision for decommissioning costs 15 2,054 2,032
Employee benefits 13 2,796 2,932
Others 16 2,912 3,015
    30,276 33,319
Liabilities related to assets classified as held for sale 23 523 541
Current liabilities   30,799 33,860
       
Finance debt 24 22,824 24,479
Lease liability 25 26,645 26,599
Income taxes payable 12 279 299
Deferred income taxes 12 10,040 10,910
Employee benefits 13 15,310 15,579
Provisions for legal proceedings 14 3,369 3,305
Provision for decommissioning costs 15 20,378 21,171
Others 16 1,930 1,890
Non-current liabilities   100,775 104,232
Current and non-current liabilities   131,574 138,092
       
Share capital (net of share issuance costs) 26 107,101 107,101
Capital reserve and capital transactions   178 410
Profit reserves 26 77,423 72,641
Accumulated other comprehensive deficit   (103,112) (101,569)
Attributable to the shareholders of Petrobras   81,590 78,583
Non-controlling interests   459 392
Equity   82,049 78,975
       
Total liabilities and equity   213,623 217,067
The notes form an integral part of these unaudited condensed consolidated interim financial statements.

 

3 
 

Unaudited Condensed Consolidated Statements of Income

PETROBRAS

For the three-month periods ended March 31, 2024 and 2023 (Expressed in millions of US Dollars, unless otherwise indicated)

 

 

 

  Note Jan-Mar/2024 Jan-Mar/2023
Sales revenues 4 23,768 26,771
Cost of sales 5 (11,511) (12,658)
Gross profit   12,257 14,113
       
Income (expenses)      
Selling expenses 5 (1,333) (1,221)
General and administrative expenses 5 (447) (357)
Exploration costs 20 (135) (157)
Research and development expenses   (183) (154)
Other taxes   (140) (200)
Impairment (losses) reversals, net 19 9 (3)
Other income and expenses, net 6 (1,044) (468)
    (3,273) (2,560)
       
Income before net finance income (expense), results of equity-accounted investments and income taxes   8,984 11,553
       
Finance income   552 465
Finance expenses   (1,072) (844)
Foreign exchange gains (losses) and inflation indexation charges   (1,419) (243)
Net finance income (expense) 7 (1,939) (622)
       
Results of equity-accounted investments 22 (93) 35
       
Net income before income taxes   6,952 10,966
       
Income taxes 12 (2,147) (3,596)
       
Net income for the period   4,805 7,370
Net income attributable to shareholders of Petrobras   4,782 7,341
Net income attributable to non-controlling interests   23 29
Basic and diluted earnings per common and preferred share - in U.S. dollars 26 0.37 0.56
       
The notes form an integral part of these unaudited condensed consolidated interim financial statements.

 

4 
 

Unaudited Condensed Consolidated Statements of Comprehensive Income

PETROBRAS

For the three-month periods ended March 31, 2024 and 2023 (Expressed in millions of US Dollars, unless otherwise indicated)

 

 

  Note Jan-Mar/2024 Jan-Mar/2023
Net income for the period   4,805 7,370
       
Items that will not be reclassified to the statement of income:      
       
Actuarial gains (losses) on post-employment defined benefit plans 13    
Recognized in equity   (109)
Deferred income tax   37
    (72)
       
Items that may be reclassified subsequently to the statement of income:      
       
Unrealized gains (losses) on cash flow hedge - highly probable future exports 27    
Recognized in equity   (2,022) 1,468
Reclassified to the statement of income   697 1,154
Deferred income tax   451 (892)
    (874) 1,730
       
Translation adjustments (1)      
Recognized in equity   (672) 569
       
Share of other comprehensive income (loss) in equity-accounted investments 22    
Recognized in equity   (9) 89
       
Other comprehensive income (loss)   (1,555) 2,316
       
Total comprehensive income   3,250 9,686
Comprehensive income attributable to shareholders of Petrobras   3,239 9,652
Comprehensive income attributable to non-controlling interests   11 34
(1) It includes cumulative translation adjustments in associates and joint ventures.
The notes form an integral part of these unaudited condensed consolidated interim financial statements.

 

 

 

5 
 

Unaudited Condensed Consolidated Statements of Cash Flows

PETROBRAS

For the three-month periods ended March 31, 2024 and 2023 (Expressed in millions of US Dollars, unless otherwise indicated)

 
  Note Jan-Mar/2024 Jan-Mar/2023
Cash flows from operating activities      
Net income for the period   4,805 7,370
Adjustments for:      
Pension and medical benefits 13 433 370
Results of equity-accounted investments 22 93 (35)
Depreciation, depletion and amortization 29 3,362 2,924
Impairment of assets (reversals), net 19 (9) 3
Inventory write down (write-back) to net realizable value 10 (44) (8)
Allowance (reversals) for credit loss on trade and other receivables, net   30 24
Exploratory expenditure write-offs 20 50 32
Gain on disposal/write-offs of assets 6 (162) (496)
Foreign exchange, indexation and finance charges     1,935 656
Income taxes 12 2,147 3,596
Revision and unwinding of discount on the provision for decommissioning costs   280 212
Results from co-participation agreements in bid areas 6 (48) (28)
Early termination and cash outflows revision of lease agreements   (69) (167)
Losses with legal, administrative and arbitration proceedings, net 6 281 254
Decrease (Increase) in assets      
Trade and other receivables   604 412
Inventories   (627) 989
Judicial deposits   (288) (403)
Other assets   34 111
Increase (Decrease) in liabilities      
Trade payables   407 (478)
Other taxes payable   (520) (217)
Pension and medical benefits   (203) (178)
Provisions for legal proceedings   (78) (85)
Other employee benefits   (59) 35
Provision for decommissioning costs   (263) (165)
Other liabilities   (82) (101)
Income taxes paid   (2,623) (4,280)
Net cash provided by operating activities   9,386 10,347
Cash flows from investing activities      
Acquisition of PP&E and intangible assets   (2,838) (2,423)
Acquisition of equity interests   (1) (8)
Proceeds from disposal of assets - Divestment   569 1,855
Financial compensation from co-participation agreements   397 391
Divestment (Investment) in marketable securities   (1,475) (930)
Dividends received   24 11
Net cash (used in) provided by investing activities   (3,324) (1,104)
Cash flows from financing activities      
Changes in non-controlling interest   93 (75)

Proceeds from finance debt

 

24 2 51
Repayment of principal - finance debt 24 (1,007) (750)
Repayment of interest - finance debt 24 (594) (570)
Repayment of lease liability 25 (1,918) (1,389)
Dividends paid to Shareholders of Petrobras 26 (3,455) (4,192)
Share repurchase program 26 (232)
Dividends paid to non-controlling interests   (57) (48)
Net cash used in financing activities   (7,168) (6,973)
Effect of exchange rate changes on cash and cash equivalents   (74) 24
Net change in cash and cash equivalents   (1,180) 2,294
Cash and cash equivalents at the beginning of the period   12,727 7,996
       
Cash and cash equivalents at the end of the period   11,547 10,290
The notes form an integral part of these unaudited condensed consolidated interim financial statements.

 

 

6 
 

Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity

PETROBRAS

For the three-month periods ended March 31, 2024 and 2023 (Expressed in millions of US Dollars, unless otherwise indicated)

 
  Share capital (net of share issuance costs)   Accumulated other comprehensive income (deficit) and deemed cost Profit Reserves        
  Share Capital Share issuance costs Capital reserve, Capital Transactions and Treasury shares Cumulative translation adjustments Cash flow hedge - highly probable future exports Actuarial gains (losses) on defined benefit pension plans  Other comprehensive income (loss) and deemed cost Profit Reserves Retained earnings (losses) Equity attributable to shareholders of Petrobras Non-controlling interests Total consolidated equity
Balance at December 31, 2022 107,380 (279) 1,144 (74,171) (17,507) (12,576) (933) 66,434 69,492 344 69,836
    107,101 1,144       (105,187) 66,434 69,492 344 69,836
Capital transactions (74) (74)
Net income 7,341 7,341 29 7,370
Other comprehensive income (loss) 564 1,730 (72) 89 2,311 5 2,316
Appropriations:                        
Dividends (44) (44)
Balance at March 31, 2023 107,380 (279) 1,144 (73,607) (15,777) (12,648) (844) 66,434 7,341 79,144 260 79,404
    107,101 1,144       (102,876) 66,434 7,341 79,144 260 79,404
                         
Balance at December 31, 2023 107,380 (279) 410 (73,004) (12,020) (15,879) (666) 72,641 78,583 392 78,975
    107,101 410       (101,569)   78,583 392 78,975
Treasury shares (232) (232) (232)
Capital transactions 94 94
Net income 4,782 4,782 23 4,805
Other comprehensive income (loss) (660) (874) (9) (1,543) (12) (1,555)
Expired unclaimed dividends
Appropriations:                        
Dividends (38) (38)
Balance at March 31, 2024 107,380 (279) 178 (73,664) (12,894) (15,879) (675) 72,641 4,782 81,590 459 82,049
    107,101 178       (103,112) 72,641 4,782 81,590 459 82,049
                         
The notes form an integral part of these unaudited condensed consolidated interim financial statements.

 

 

7 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
1.Basis of preparation
1.1.Statement of compliance and authorization of unaudited condensed consolidated interim financial statements

These unaudited condensed consolidated interim financial statements of Petróleo Brasileiro S.A. (“Petrobras” or “Company”) have been prepared and presented in accordance with IAS 34 – “Interim Financial Reporting” as issued by the International Accounting Standards Board (IASB). They present the significant changes in the period, avoiding repetition of certain notes to the annual consolidated financial statements previously reported. Hence, they should be read together with the Company’s audited annual consolidated financial statements for the year ended December 31, 2023, which include the full set of notes.

These unaudited condensed consolidated interim financial statements were approved and authorized for issue by the Company’s Board of Directors in a meeting held on May 13, 2024.

1.2.New standards and interpretations

On January 1, 2024, amendments to standards issued by the IASB came into force and were adopted by the Company, as disclosed in note 6 of the financial statements of December 31, 2023. According to the assessment carried out by Management, there were no material impacts on the initial application of these amendments in these unaudited condensed consolidated interim financial statements.

2.Material accounting policies

The accounting policies and methods of computation followed in these unaudited condensed consolidated interim financial statements are the same as those followed in the preparation of the annual financial statements of the Company for the year ended December 31, 2023.

3.Cash and cash equivalents and marketable securities
3.1.Cash and cash equivalents

They include cash, available bank deposits and short-term financial investments with high liquidity, which meet the definition of cash equivalents.

  03.31.2024 12.31.2023
Cash at bank and in hand 723 103
Short-term financial investments    
- In Brazil    
Brazilian interbank deposit rate investment funds and other short-term deposits 555 1,742
Other investment funds 133 279
  688 2,021
- Abroad    
Time deposits 6,469 7,737
Automatic investing accounts and interest checking accounts 3,652 2,852
Other financial investments 15 14
  10,136 10,603
Total short-term financial investments 10,824 12,624
Total cash and cash equivalents 11,547 12,727

 

 

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.

 

8 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
3.2.Marketable securities
  03.31.2024 12.31.2023
Fair value through profit or loss 934 926
Amortized cost - Bank Deposit Certificates and time deposits 5,711 4,249
Amortized cost - Others 53 53
Total 6,698 5,228
Current 4,818 2,819
Non-current 1,880 2,409

 

 

Marketable securities classified as fair value through profit or loss refer mainly to investments in Brazilian Federal Government Bonds (amounts determined by level 1 of the fair value hierarchy). These financial investments have maturities of more than three months.

Securities classified as amortized cost refer to investments in Brazil in post-fixed Bank Deposit Certificates with daily liquidity, with maturities between one and two years, and to investments abroad in time deposits with maturities of more than three months from the contracting date.

4.Sales revenues
  Jan-Mar/2024 Jan-Mar/2023
Diesel 7,076 8,305
Gasoline 3,205 3,694
Liquefied petroleum gas 758 929
Jet fuel 1,184 1,406
Naphtha 427 478
Fuel oil (including bunker fuel) 344 286
Other oil products 1,019 1,084
Subtotal oil products 14,013 16,182
Natural gas 1,322 1,526
Crude oil 1,229 1,350
Renewables and nitrogen products 31 21
Breakage 140 220
Electricity 128 110
Services, agency and others 247 244
Domestic market 17,110 19,653
     
Exports 6,398 6,741
Crude oil 4,911 5,547
Fuel oil (including bunker fuel) 1,322 1,034
Other oil products and other products 165 160
Sales abroad (1) 260 377
Foreign market 6,658 7,118
Sales revenues 23,768 26,771
(1) Sales revenues from operations outside of Brazil, including trading and excluding exports.

 

 

 

 

9 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

   
  Jan-Mar/2024 Jan-Mar/2023
Domestic market 17,110 19,653
China 1,481 2,493
Americas (except United States) 1,051 1,423
Europe 1,213 1,348
Asia (except China and Singapore) 483 475
United States 1,475 563
Singapore 950 815
Others 5 1
Foreign market 6,658 7,118
Sales revenues 23,768 26,771

 

 

In the three-month period ended March 31, 2024, sales to one client of the refining, transportation and marketing segment represented individually 15% of the Company’s sales revenues; in the same period of 2023, sales to two clients of the same segment represented individually 16% and 11% of the Company’s sales revenues.

5.Costs and expenses by nature
5.1.Cost of sales
  Jan-Mar/2024 Jan-Mar/2023
Raw material, products for resale, materials and third-party services (1) (5,391) (7,095)
Depreciation, depletion and amortization (2,649) (2,396)
Production taxes (3,030) (2,783)
Employee compensation (441) (384)
Total (11,511) (12,658)
(1) It Includes short-term leases and inventory turnover.    

 

 

5.2.Selling expenses
  Jan-Mar/2024 Jan-Mar/2023
Materials, third-party services, freight, rent and other related costs (1,120) (1,026)
Depreciation, depletion and amortization (173) (150)
Allowance for expected credit losses (10) (21)
Employee compensation (30) (24)
Total (1,333) (1,221)

 

 

5.3.General and administrative expenses
  Jan-Mar/2024 Jan-Mar/2023
Employee compensation (292) (229)
Materials, third-party services, rent and other related costs (120) (102)
Depreciation, depletion and amortization (35) (26)
Total (447) (357)

 

 

10 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
6.Other income and expenses, net
  Jan-Mar/2024 Jan-Mar/2023
Stoppages for asset maintenance and pre-operating expenses (652) (499)
Pension and medical benefits - retirees (309) (281)
Losses with legal, administrative and arbitration proceedings (281) (254)
Profit sharing (176) (35)
Variable compensation programs (79) (140)
Operating expenses with thermoelectric power plants (66) (41)
Institutional relations and cultural projects (27) (22)
Expenses with contractual fines received (17) (62)
Amounts recovered from Lava Jato investigation (1) 5 89
Gains (losses) with commodities derivatives 5 79
Ship/take or pay agreements and fines imposed to suppliers 47 33
Results from co-participation agreements in bid areas 48 28
Fines imposed on suppliers 56 43
Early termination and changes to cash flow estimates of leases 69 167
Government grants 78 104
Reimbursements from E&P partnership operations 156 161
Results on disposal/write-offs of assets 162 496
Others (2) (63) (334)
Total (1,044) (468)
(1) The total amount recovered from the Lava Jato Investigation through December 31, 2023 was US$ 1,727, recognized through collaboration and leniency agreements entered into with individuals and legal entities.
(2) It includes, in the first quarter of 2023, expenses with compensation for the termination of a vessel charter agreement in the amount of US$ 317.

 

7.Net finance income (expense)
  Jan-Mar/2024 Jan-Mar/2023
Finance income 552 465
Income from investments and marketable securities (Government Bonds) 432 333
Other finance income 120 132
Finance expenses (1,072) (844)
Interest on finance debt (554) (541)
Unwinding of discount on lease liability (547) (358)
Capitalized borrowing costs 376 271
Unwinding of discount on the provision for decommissioning costs (272) (212)
Other finance expenses (75) (4)
Foreign exchange gains (losses) and indexation charges (1,419) (243)
Foreign exchange gains (losses) (1) (881) 797
Reclassification of hedge accounting to the Statement of Income (1) (697) (1,154)
Indexation to the Selic interest rate of anticipated dividends and dividends payable (70) (32)
Recoverable taxes inflation indexation income   49 64
Other foreign exchange gains and indexation charges, net 180 82
Total (1,939) (622)
(1) For more information, see notes 27.2.2 a and 27.2.2 c.
 

 

 

11 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
8.Information by operating segment
8.1.Net income by operating segment
Consolidated statement of income by operating segment
Jan-Mar/2024
  Exploration and Production (E&P) Refining, Transportation & Marketing (RT&M) Gas and Low Carbon Energies (G&LCE) Corporate and other businesses Eliminations Total
Sales revenues 16,077 22,190 2,422 78 (16,999) 23,768
    Intersegments 15,974 303 720 2 (16,999)
    Third parties 103 21,887 1,702 76 - 23,768
Cost of sales (6,614) (19,983) (1,177) (74) 16,337 (11,511)
Gross profit (loss) 9,463 2,207 1,245 4 (662) 12,257
Income (expenses) (630) (836) (889) (918) (3,273)
  Selling expenses (1) (551) (768) (13) - (1,333)
  General and administrative expenses (20) (84) (28) (315) - (447)
  Exploration costs (135) - - - - (135)
  Research and development expenses (139) (2) - (42) - (183)
  Other taxes (20) (7) (5) (108) - (140)
  Impairment (losses) reversals, net (4) - - 13 - 9
  Other income and expenses, net (311) (192) (88) (453) - (1,044)
Income (loss) before net finance income (expense), results of equity-accounted investments and income taxes 8,833 1,371 356 (914) (662) 8,984
  Net finance income (expense) - - - (1,939) - (1,939)
  Results of equity-accounted investments 17 (130) 21 (1) - (93)
Net income / (loss) before income taxes 8,850 1,241 377 (2,854) (662) 6,952
  Income taxes (3,005) (466) (120) 1,218 226 (2,147)
Net income (loss) for the period 5,845 775 257 (1,636) (436) 4,805
Attributable to:            
Shareholders of Petrobras 5,846 775 242 (1,645) (436) 4,782
Non-controlling interests (1) - 15 9 - 23

 

 

 

12 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

 

Jan-Mar/2023
  Exploration and Production (E&P) Refining, Transportation & Marketing (RT&M) Gas and Low Carbon Energies (G&LCE) Corporate and other businesses Eliminations Total
Sales revenues 15,730 24,842 2,854 76 (16,731) 26,771
    Intersegments 15,450 474 805 2 (16,731)
    Third parties 280 24,368 2,049 74 - 26,771
Cost of sales (6,379) (21,868) (1,467) (77) 17,133 (12,658)
Gross profit (loss) 9,351 2,974 1,387 (1) 402 14,113
Income (expenses) (123) (1,178) (779) (475) (5) (2,560)
  Selling expenses (7) (533) (652) (24) (5) (1,221)
  General and administrative expenses (16) (78) (15) (248) - (357)
  Exploration costs (157) - - - - (157)
  Research and development expenses (124) (2) (1) (27) - (154)
  Other taxes (18) (106) (9) (67) - (200)
  Impairment (losses) reversals, net 13 (16) - - - (3)
  Other income and expenses, net 186 (443) (102) (109) - (468)
Income (loss) before net finance income (expense), results of equity-accounted investments and income taxes 9,228 1,796 608 (476) 397 11,553
  Net finance expense - - - (622) - (622)
  Results of equity-accounted investments 17 14 4 - - 35
Net income / (loss) before income taxes 9,245 1,810 612 (1,098) 397 10,966
  Income taxes (3,138) (611) (206) 494 (135) (3,596)
Net income (loss) for the period 6,107 1,199 406 (604) 262 7,370
Attributable to:            
Shareholders of Petrobras 6,108 1,199 388 (616) 262 7,341
Non-controlling interests (1) - 18 12 - 29

 

 

The amount of depreciation, depletion and amortization by segment is set forth as follows:

  Exploration and Production (E&P) Refining, Transportation & Marketing (RT&M) Gas and Low Carbon Energies (G&LCE) Corporate and other businesses Total
 
 
Jan-Mar/2024 2,530 648 153 31 3,362
Jan-Mar/2023 2,215 558 124 27 2,924
           

 

 

 

13 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
8.2.Assets by operating segment
  Exploration and Production (E&P) Refining, Transportation & Marketing (RT&M) Gas and Low Carbon Energies (G&LCE) Corporate and other business Elimina-tions Total
             
Consolidated assets by operating segment - 03.31.2024
             
Current assets 2,450 11,742 433 24,205 (5,611) 33,219
Non-current assets 133,252 22,964 6,771 17,417 180,404
Long-term receivables 9,088 2,090 81 14,733 25,992
Investments 339 687 153 56 1,235
Property, plant and equipment 121,455 20,052 6,461 2,243 150,211
Operating assets 104,258 17,212 3,927 1,706 127,103
Under construction 17,197 2,840 2,534 537 23,108
Intangible assets 2,370 135 76 385 2,966
Total Assets 135,702 34,706 7,204 41,622 (5,611) 213,623
             
Consolidated assets by operating segment - 12.31.2023
             
Current assets 2,804 11,002 370 23,547 (5,278) 32,445
Non-current assets 136,064 23,800 6,406 18,352 184,622
Long-term receivables 9,028 2,068 83 15,619 26,798
Investments 344 811 145 58 1,358
Property, plant and equipment 124,254 20,786 6,101 2,283 153,424
Operating assets 108,405 18,128 3,605 1,770 131,908
Under construction 15,849 2,658 2,496 513 21,516
Intangible assets 2,438 135 77 392 3,042
Total Assets 138,868 34,802 6,776 41,899 (5,278) 217,067

 

 

9.Trade and other receivables
9.1.Trade and other receivables
  03.31.2024 12.31.2023
Receivables from contracts with customers    
Third parties 5,428 6,038
Related parties    
Investees (note 28.1) 148 140
Subtotal 5,576 6,178
Other trade  receivables    
Third parties    
Receivables from divestments and Transfer of Rights Agreement 1,481 2,162
Lease receivables 341 352
Other receivables 449 627
Related parties    
Petroleum and alcohol accounts - receivables from Brazilian Federal Government 274 278
Subtotal 2,545 3,419
Total trade and other receivables, before ECL 8,121 9,597
Expected credit losses (ECL) - Third parties (1,615) (1,613)
Expected credit losses (ECL) - Related parties (3) (2)
Total trade and other receivables 6,503 7,982
Current 5,041 6,135
Non-current 1,462 1,847

 

 

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, amounting to US$ 359 as of March 31, 2024 (US$ 503 as of December 31, 2023).

 

14 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

The balance of receivables from divestment and Transfer of Rights Agreement is mainly related to the Earn Out of the Atapu and Sépia fields, totaling US$ 292 (US$ 611 as of December 31, 2023), from the sale of the Roncador field for US$ 362 (US$ 360 as of December 31, 2023), and the Potiguar group of fields for US$ 271 (US$ 265 as of December 31, 2023).

The second and final installment of Petroleum and Alcohol Accounts in the amount of US$ 274 is in a judicial account and awaits court clearance to work as a guarantee in a tax enforcement proceeding.

9.2.Aging of trade and other receivables – third parties
  03.31.2024 12.31.2023
  Trade and other receivables Expected credit losses Trade and other receivables Expected credit losses
Current 5,749 (45) 6,948 (34)
Overdue:        
1-90 days (1) 200 (45) 472 (43)
91-180 days 32 (18) 19 (10)
181-365 days 42 (35) 63 (57)
More than 365 days 1,676 (1,472) 1,677 (1,469)
Total 7,699 (1,615) 9,179 (1,613)
(1) On January 10, 2024, Petrobras received US$ 298  from Carmo Energy as the last installment relating to the sale of the Carmópolis cluster, which was due on December 20, 2023.

 

 

9.3.Changes in provision for expected credit losses – third parties and related parties
 

2024

Jan-Mar

2023

Jan-Mar

Opening balance 1,615 1,536
Additions 58 43
Write-offs (2)
Reversals (24) (21)
Translation adjustment (29) 24
Closing balance 1,618 1,582
Current 309 267
Non-current 1,309 1,315

 

 

10.Inventories
  03.31.2024 12.31.2023
Crude oil 3,296 3,375
Oil products 2,729 2,196
Intermediate products 586 635
Natural gas and Liquefied Natural Gas (LNG) 119 78
Biofuels 14 13
Fertilizers 1 1
Total products 6,745 6,298
Materials, supplies and others 1,431 1,383
Total 8,176 7,681
 

 

 

In the three-month period ended March 31, 2024, the Company recognized a US$ 44 reversal of cost of sales, adjusting inventories to net realizable value (a US$ 8 reversal of cost of sales in the three-month period ended March 31, 2023), primarily due to changes in international prices of crude oil and oil products.

At March 31, 2024, the Company had pledged crude oil and oil products volumes as collateral for the Term of Financial Commitment (TFC) related to Pension Plans PPSP-R, PPSP-R Pre-70 and PPSP-NR Pre-70 signed by Petrobras and Fundação Petrobras de Seguridade Social – Petros Foundation in 2008, in the estimated amount of US$ 901.

 

15 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
11.Trade payables
  03.31.2024 12.31.2023
Third parties in Brazil 3,294 3,624
Third parties abroad 1,859 1,176
Related parties (note 28.1) 11 13
Total 5,164 4,813
     

 

 

Forfaiting

The Company has a program to encourage the development of the oil and gas production chain called “Mais Valor” (More Value), operated by a partner company on a 100% digital platform.

By using this platform, the suppliers who want to anticipate their receivables may launch a reverse auction, in which the winner is the financial institution which offers the lowest discount rate. The financial institution becomes the creditor of invoices advanced by the supplier, and Petrobras pays the invoices on the same date and under the conditions originally agreed with the supplier.

Invoices are advanced in the “Mais Valor” program exclusively at the discretion of the suppliers and do not change the terms, prices and commercial conditions contracted by Petrobras with such suppliers, as well as it does not add financial charges to the Company, therefore, the classification is maintained as Trade payables in Statements of Cash Flows (Cash flows from operating activities).

As of March 31, 2024, the balance advanced by suppliers, within the scope of the program, is US$ 135 (US$ 110 as of December 31, 2023) and has a payment term from 7 to 92 days and a weighted average term of 55 days (payment term from 7 to 92 days and a weighted average term of 57 days in 2023), after the contracted commercial conditions have been met.

12.Taxes
12.1.Income taxes
  Current assets Current liabilities Non-current liabilities
  03.31.2024 12.31.2023 03.31.2024 12.31.2023 03.31.2024 12.31.2023
Taxes in Brazil            
Income taxes 356 199 656 989
Income taxes - Tax settlement programs 58 58 279 299
  356 199 714 1,047 279 299
Taxes abroad 6 19 293 253
Total 362 218 1,007 1,300 279 299
             

 

 

Reconciliation between statutory income tax rate and effective income tax rate

The following table provides the reconciliation of Brazilian statutory tax rate to the Company’s effective rate on income before income taxes:

 

16 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

  Jan-Mar/2024 Jan-Mar/2023
Net income before income taxes 6,952 10,966
Nominal income taxes computed based on Brazilian statutory corporate tax rates (34%) (2,363) (3,729)
Adjustments to arrive at the effective tax rate:    
Different jurisdictional tax rates for companies abroad 287 246
Brazilian income taxes on income of companies incorporated outside Brazil (1) (50) (101)
Tax incentives 31 43
Tax loss carryforwards (unrecognized tax losses) (2) 56 (5)
Non-taxable income (non-deductible expenses), net 25 6
Post-employment benefits (121) (77)
Results of equity-accounted investments in Brazil and abroad (35) 11
Non-incidence of income taxes on indexation (SELIC interest rate) of undue paid taxes 21 9
Others 2 1
Income taxes (2,147) (3,596)
Deferred income taxes 335 (672)
Current income taxes (2,482) (2,924)
Effective tax rate of income taxes 30.9% 32.8%
(1) It relates to Brazilian income taxes on earnings of offshore investees, as established by Law No. 12,973/2014.
(2) The Company adhered to a program established by the Federal Revenue of Brazil (under the terms of Federal Law No. 14,740/23 and Normative Instruction No. 2,168/23) which encourages tax settlement. Thus, the Company settled debts amounting to US$ 112, of which US$ 53 by means of tax loss carryforwards and negative basis of the CSLL of a subsidiary, and US$ 59  in cash payment. PPSP-NE pre-70 plans.

 

 

Deferred income taxes - non-current

The changes in the deferred income taxes are presented as follows:

  Jan-Mar/2024 Jan-Mar/2023
Opening balance (9,945) (5,918)
Recognized in the statement of income for the period 335 (672)
Recognized in shareholders’ equity 451 (855)
Translation adjustment 307 (208)
Use of tax loss carryforwards -
Others (21) 1
Closing balance (8,873) (7,652)
 

 

 

The composition of deferred tax assets and liabilities is set out in the following table:

Nature Realization basis 03.31.2024 12.31.2023
PP&E - Exploration and decommissioning costs Depreciation, amortization and write-offs of assets (5,892) (6,296)
PP&E - Impairment Amortization, impairment reversals and write-offs of assets 3,984 4,203
PP&E - Right-of-use assets Depreciation, amortization and write-offs of assets (9,274) (9,369)
PP&E - depreciation methods and capitalized borrowing costs Depreciation, amortization and write-offs of assets (18,686) (18,784)
Loans, trade and other receivables / payables and financing Payments, receipts and considerations (1,760) (2,479)
Leasings Appropriation of the considerations 9,414 9,240
Provision for decommissioning costs Payments and use of provisions 7,742 8,010
Provision for legal proceedings Payments and use of provisions 978 954
Tax loss carryforwards Taxable income compensation 1,160 1,140
Inventories Sales, write-downs and losses 580 411
Employee Benefits Payments and use of provisions 1,943 2,036
Others   938 989
Total   (8,873) (9,945)
Deferred tax assets   1,167 965
Deferred tax liabilities   (10,040) (10,910)

 

 

 

17 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

Uncertain treatments on Corporate Income Tax (CIT)

In 2023 and the three-month period ended March 31, 2024, the Company received additional charges from the Dutch tax authority, due to a final assessment on the calculation of the Corporate Income Tax (CIT) of subsidiaries in the Netherlands from 2018 to 2020, arising from the valuation for tax purposes of platforms and equipment nationalized under the Repetro tax regime, in the amount of US$ 601, updated through March 31, 2024 by applicable interest rates.

Tax treatments of certain subsidiaries from 2020 to 2022 have not yet been assessed by this tax authority. Any charges by the Dutch tax authority for those years, on a similar basis to the periods already assessed, could reach the amount of US$ 248. Thus, the total amount of these uncertain tax treatments is US$ 849, updated through March 31, 2024 by applicable interest rates.

The Company continues to defend its position but understands that it is not probable that the tax authority will fully accept this tax treatment. Thus, a liability was recognized with a corresponding effect in income taxes within the statement of income in 2023, by means of the expected value method, constituted by the sum of amounts weighted by the probability of loss.

12.2.Other taxes
  Current assets Non-current assets Current liabilities Non-current liabilities (1)
  03.31.2024 12.31.2023 03.31.2024 12.31.2023 03.31.2024 12.31.2023 03.31.2024 12.31.2023
Taxes in Brazil                
Current / Non-current ICMS (VAT) 681 592 626 607 1,128 1,032
Current / Non-current PIS and COFINS 434 304 2,793 2,876 468 265 147 141
Claim to recover PIS and COFINS 716 733
Production taxes 1,776 2,094 138 145
Withholding income taxes 119 272
Others 57 58 272 290 385 443 90 90
Total in Brazil 1,172 954 4,407 4,506 3,876 4,106 375 376
Taxes abroad 7 6 10 10 78 60
Total 1,179 960 4,417 4,516 3,954 4,166 375 376
(1) Other non-current taxes are classified within other non-current liabilities in the statement of financial position.

 

13.Employee benefits

Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment. It also includes expenses with directors and management. Such benefits include salaries, post-employment benefits, termination benefits and other benefits.

  03.31.2024 12.31.2023
Liabilities    
Short-term employee benefits 1,885 1,986
Termination benefits 119 143
Post-employment benefits 16,102 16,382
Total 18,106 18,511
Current 2,796 2,932
Non-current 15,310 15,579

 

 

 

18 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
13.1.Short-term employee benefits
  03.31.2024 12.31.2023
Variable compensation programs 439 464
Accrued vacation and 13th salary 645 574
Salaries and related charges and other provisions 230 343
Profit sharing 571 605
Total 1,885 1,986
Current 1,843 1,944
Non-current (1) 42 42
(1) Remaining balance relating to the four-year deferral of 40% of the PPP portion of executive officers and the upper management.

 

 

The Company recognized the following amounts in the statement of income:

Expenses recognized in the statement of income Jan-Mar/2024 Jan-Mar/2023
Salaries, accrued vacations and related charges (924) (747)
Variable compensation programs  (1) (79) (140)
Profit sharing (1) (176) (35)
Management fees and charges (3) (2)
Total (1,182) (924)
(1) It includes adjustments to provisions related to previous years.

 

 

13.1.1.Variable compensation programs

Performance award programs (Programa de Prêmio por Desempenho - PRD and Programa de Prêmio por Performance - PPP)

In the three-month period ended March 31, 2024, the Company:

·paid US$ 88 relating the PPP for 2023, since the related metrics relating to the Company’s and individual performance were achieved in 2023; and
·provisioned US$ 79 relating to the PRD for 2024 (US$ 139 for the same period of 2023), recorded in other income and expenses, including variable compensation programs from consolidated companies.

On April 30, 2024, the Company paid US$ 295 relating the remaining balance of the PPP for 2023.

Profit Sharing (Participações nos lucros ou resultados - PLR)

In the three-month period ended March 31, 2024, the Company:

·paid US$ 192 relating to the PLR for 2023, with final payment expected to occur on May 31, 2024, considering the current agreement for the PLR, which provides individual limits according to employee remuneration; and
·provisioned US$  176 relating to the PLR for 2024 (US$ 35 for the same period of 2023), recorded in other income and expenses.
13.2.Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of labor contract as a result of either: i) the Company’s decision to terminate the labor contract before the employee’s normal retirement date; or ii) an employee’s decision to accept an offer of benefits in exchange for the termination of their employment.

Voluntary severance programs

The Company has voluntary severance programs (PDV), specific for employees of the corporate segment and of divestment assets, which provide for the same legal and indemnity advantages. These programs are currently closed for enrollment.

 

19 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

Recognition of the liability and the expense for termination benefits occur as employees enroll to the programs.

The Company disburses the severance payments in two installments, one at the time of termination and the remainder one year after the termination.

As of March 31, 2024, from the balance of US$ 119, US$ 11 refers to the second installment of 213 retired employees and US$ 108 refers to 980 employees enrolled in voluntary severance programs with expected termination by 2026.

13.3.Employee benefits (post-employment)

The Company maintains a health care plan for its employees in Brazil (active and retiree) and their dependents (“Saúde Petrobras”), through five major post-employment pension plans (collectively referred to as “pension plans”).

The following table presents the balance of post-employment benefits:

  03.31.2024 12.31.2023
Liabilities    
Health Care Plan - Saúde Petrobras - AMS 9,547 9,662
Petros Pension Plan - Renegotiated (PPSP-R) 4,105 4,221
Petros Pension Plan - Non-renegotiated (PPSP-NR) 1,306 1,338
Petros Pension Plan - Renegotiated - Pre-70 (PPSP-R Pre 70) 513 519
Petros Pension Plan - Non-renegotiated - Pre-70 (PPSP-NR Pre 70) 456 461
Petros 2 Pension Plan (PP-2) 175 181
Total 16,102 16,382
Current 891 907
Non-current 15,211 15,475

 

 

Health Care Plan

The health care plan Saúde PetrobrasAMS is managed and run by Petrobras Health Association (Associação Petrobras de Saúde – APS), a nonprofit civil association, and includes prevention and health care programs. The plan offers assistance to all employees, retirees, pensioners and eligible family members, according to the rules of the plan, and is open to new employees.

Benefits are paid by the Company based on the costs incurred by the participants. The financial participation of the Company and the beneficiaries on the expenses are provided for in the Collective Bargaining Agreement (ACT), being 60% by the Company and 40% by the participants.

As provided in clause 37, paragraph 2 of the Collective Bargaining Agreement 2023-2025, if the resolutions No. 42/2022 and No. 49/2023 of the Commission on Corporate Governance and the Administration of Corporate Holdings of the Brazilian Federal Government (Comissão de Governança Corporativa e de Administração de Participações Societárias da União – CGPAR) were revoked or amended, allowing adjustments in the cost-sharing of health care plans, the Company and the labor unions would discuss a new cost-sharing arrangement, in order to minimize the impact on the income of its beneficiaries.

The aforementioned resolutions were revoked on April 26, 2024 and, for this reason, the Company and the unions began to discuss a new costing relationship.

Pension plans

The Company’s post-retirement plans are managed by Petros Foundation (Fundação Petrobras de Seguridade Social), a nonprofit legal entity governed by private law with administrative and financial autonomy.

The net obligation with pension plans recorded by the Company is measured in accordance with the requirements of IFRS which has a different measurement methodology to that applicable to pension funds, regulated by the Post-Retirement Benefit Federal Council (Conselho Nacional de Previdência Complementar – CNPC).

On March 28, 2024, the Deliberative Council of Petros Foundation approved the financial statements of the pension plans for the year ended December 31, 2023, sponsored by the Company.

The following table below presents the reconciliation of the deficit of Petros Plan registered by Petros Foundation as of December 31, 2023 with the net actuarial liability registered by the Company at the same date:

 

20 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

  PPSP-R (1) PPSP-NR (1)
Deficit registered by Petros 353 101
Ordinary and extraordinary future contributions - sponsor 4,735 1,392
Contributions related to the TFC - sponsor 791 477
Financial assumptions (interest rate and inflation), changes in fair value of plan assets and actuarial valuation method (1,139) (171)
Net actuarial liability recorded by the Company 4,740 1,799
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.

 

 

Sponsor Contributions – in the calculation of the obligation, Petros considers the future cash flow of ordinary and extraordinary sponsor and participants contributions, discounted to present value, according to the CNPC criteria, while the Company only considers them as they are made.

Financial Assumptions - the main difference is the definition of the real interest rate established by Petros, which is according to the expected profitability of the current investment portfolios and the parameters published by the CNPC, considering a moving average of recent years in setting safety limits. On the other hand, the Company determines the real interest rates through an equivalent rate that combines the maturity profile of pension and healthcare obligations with the future yield curve of long-term Brazilian Federal Government securities (“Tesouro IPCA”, formerly known as NTN).

Changes in the fair value of plan assets – Petros measures government securities based on its curve, with a portfolio immunization strategy, while in the Company measures at market value.

13.3.1.Changes in the actuarial liabilities recognized in the statement of financial position

Net actuarial liabilities represent the obligations of the Company, net of the fair value of plan assets (when applicable), at present value.

Changes in the actuarial liabilities related to pension and healthcare plans with defined benefit characteristics is presented as follows:

          2024
  Pension Plans Health Care Plan Total
  PPSP-R (1) PPSP-NR (1) Petros 2 Saúde Petrobras-AMS  
Balance at December 31, 2023 4,740 1,799 181 9,662 16,382
Recognized in the Statement of Income 107 41 4 281 433
Current service cost 2 1 59 62
Net interest 105 40 4 222 371
Cash effects (83) (22) (4) (94) (203)
Contributions paid (2) (83) (22) (4) (94) (203)
Other changes (146) (56) (6) (302) (510)
Translation Adjustment (146) (56) (6) (302) (510)
Balance at March 31, 2024 4,618 1,762 175 9,547 16,102
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
(2) It includes the extraordinary contributions relating to the deficit settlement plans of PPSP-R and PPSP-NR.

 

 

 

21 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

          2023
  Pension Plans

Health

Care Plan

Total
  PPSP-R (1) PPSP-NR (1) Petros 2

Saúde

Petrobras-AMS

 
Balance at December 31, 2022 3,890 1,380 163 5,813 11,246
Recognized in the Statement of Income 118 40 7 205 370
Current service cost 3 1 2 35 41
Net interest 115 39 5 170 329
Recognized in Equity - other comprehensive income 109 109
Remeasurement effects (2) 109 109
Cash effects (66) (22) (90) (178)
Contributions paid (3) (66) (22) (90) (178)
Other changes 109 38 6 159 312
Others 1 1
Translation Adjustment 109 38 6 158 311
Balance at March 31, 2023 4,160 1,436 176 6,087 11,859
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
(2) It relates to a complement of 2022.
(3) It includes the extraordinary contributions relating to the deficit settlement plans of PPSP-R and PPSP-NR.

 

 

The net expense with pension and healthcare plans is presented below:

    Pension Plans Health Care Plan Total
  PPSP-R (1) PPSP-NR (1) Petros 2 Saúde Petrobras
Related to active employees (cost of sales and expenses) (8) (2) (1) (113) (124)
Related to retirees (other income and expenses) (99) (39) (3) (168) (309)
Net costs for Jan-Mar/2024 (107) (41) (4) (281) (433)
Related to active employees (cost of sales and expenses) (12) (2) (3) (72) (89)
Related to retirees (other income and expenses) (106) (38) (4) (133) (281)
Net costs for Jan-Mar/2023 (118) (40) (7) (205) (370)
(1) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.

 

 

13.3.2.Contributions

In the three-month period ended March 31, 2024, the Company contributed with US$ 203 (US$ 178 in the same period of 2023), to the defined benefit plans (reducing the balance of obligations of these plans, as presented in note 13.3.1), and with US$ 61 and US$ 0.6, respectively, to the defined contribution portions of PP-2 and PP-3 plans (US$ 54 for PP-2 and US$ 0.4 for PP-3 in the same period of 2023).

14.Provisions for legal proceedings, judicial deposits and contingent liabilities
14.1.Provisions for legal proceedings

The Company recognizes provisions for legal, administrative and arbitral proceedings based on the best estimate of the costs 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) several individual and collective labor claims; (ii) 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; and (iii) actions of outsourced employees.
·Tax claims including: (i) tax notices for alleged non-compliance with ancillary obligations; (ii) claims relating to benefits previously taken for Brazilian federal tax credits applied that were subsequently alleged to be disallowable; (iii) claims for alleged non-payment of CIDE on imports of propane and butane; and (iv) claims for alleged non-payment of social security contributions on allowances and bonuses.

 

22 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
·Civil claims, in particular: (i) lawsuits related to contracts; (ii) legal and administrative proceedings involving fines applied by the ANP - Brazilian Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional de Petróleo, Gás Natural e Biocombustíveis), mainly relating to production measurement systems; and (iii) collective and individual claims that discuss topics related to pension plans managed by Petros.
·Environmental claims, specially: (i) fines relating to an environmental accident in the State of Paraná in 2000; (ii) fines relating to the Company’s offshore operation; and (iii) public civil action for oil spill in 2004 in Serra do Mar-São Paulo State Park.

Provisions for legal proceedings are set out as follows:

Non-current liabilities 03.31.2024 12.31.2023
Labor claims 802 806
Tax claims 554 544
Civil claims 1,668 1,614
Environmental claims 345 341
Total 3,369 3,305

 

 

 

  Jan-Mar/2024 Jan-Mar/2023
Opening Balance 3,305 3,010
Additions, net of reversals 152 182
Use of provision (117) (102)
Revaluation of existing proceedings and interest charges 131 69
Others 2 (1)
Translation adjustment (104) 84
Closing Balance 3,369 3,242

 

 

In preparing its unaudited condensed consolidated interim financial statements for the three-month period ended March 31, 2024, 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.

14.2.Judicial deposits

The Company makes deposits in judicial phases, mainly to suspend the chargeability of the tax debt and to maintain its tax compliance. Judicial deposits are set out in the table below according to the nature of the corresponding lawsuits:

Non-current assets 03.31.2024 12.31.2023
Tax 10,598 10,607
Labor 948 979
Civil 3,090 2,977
Environmental 108 115
Others 77 68
Total 14,821 14,746

 

 

  Jan-Mar/2024 Jan-Mar/2023
Opening Balance 14,746 11,053
Additions 288 402
Use (37) (19)
Accruals and charges 277 278
Others 9 (2)
Translation adjustment (462) 314
Closing Balance 14,821 12,026

 

 

The Company maintains a Negotiated Legal Proceeding (NJP) agreement with the Brazilian National Treasury Attorney General's Office (PGFN), aiming to postpone judicial deposits related to federal tax lawsuits with values exceeding US$ 40 (R$ 200 million), which allows judicial discussion without the immediate disbursement.

 

23 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

To achieve this, the Company makes production capacity available as a guarantee from the Tupi, Sapinhoá, and Roncador fields. As the judicial deposits are made, the mentioned capacity is released for other processes that may be included in the NJP.

The Company’s management understands that the mentioned NJP provides greater cash predictability and ensures the maintenance of federal tax regularity. As of March 31, 2024, the balance of production capacity held in guarantee in the NJP is US$ 7,686.

14.3.Contingent liabilities

The estimates of contingent liabilities are indexed to inflation and updated by applicable interest rates. As of March 31, 2024, estimated contingent liabilities for which the possibility of loss is classified as possible are set out in the following table:

Nature 03.31.2024 12.31.2023
Tax 36,565 37,189
Labor 10,099 10,150
Civil 11,453 11,455
Environmental 1,381 1,427
Total 59,498 60,221

 

 

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) collection of customs taxes and fines related to imports under the Repetro regime in the Frade consortium; (iv) disapproval of federal tax compensation; (v) collection of IRPJ and CSLL on transfer price; (vi) collection of ICMS involving several states; (vii) collection of PIS and COFINS, resulting from the payment of taxes negotiated with the Brazilian Federal Government, excluding the payment of fines; and (viii) deduction from the PIS and COFINS tax base, comprising ship-or-pay agreements and chartering of aircraft and vessels.
·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 mainly: (i) lawsuits related to contracts; (ii) administrative and legal proceedings challenging an ANP order requiring Petrobras to pay additional special participation fees and royalties (production taxes) with respect to several fields, including unitization; (iii) regulation agencies fines, mainly ANP; (iv) collective and individual claims that discuss topics related to pension plans managed by Petros; and (v) judicial and arbitration proceedings that discuss disposal of assets carried out by Petrobras.
·Environmental matters comprising indemnities for damages and fines related to the Company operations.
14.3.1.Minimum Compensation Based on Employee's Position and Work Schedule (Remuneração Mínima por Nível e Regime - RMNR)

There are lawsuits related to the Minimum Compensation Based on Employee's Position and Work Schedule (RMNR), with the objective of reviewing its calculation criteria.

The RMNR consists of a minimum remuneration guaranteed to employees, based on salary level, work schedule and geographic location. This policy was created through collective bargaining with union entities and was approved at employee meetings, being finally put into practice by Petrobras in 2007, but started being the subject of lawsuits three years after its implementation.

In 2018, the Brazilian Superior Labor Court (TST) ruled against the Company, which filed extraordinary appeals to the Brazilian Supreme Federal Court (STF) which suspended the effects of the decision issued by the TST and determined the national suspension of the ongoing proceedings related to the RMNR.

In July 2021, a monocratic decision was published in which the STF’s Judge-Rapporteur granted an extraordinary appeal filed, accepting the Company's thesis and recognizing the validity of the collective bargaining agreement freely signed between Petrobras and the unions, reversing the decision of the TST.

In November 2023, the First Panel of the Supreme Federal Court decided in favor of the Company (with 3 votes against 1), confirming that there is an understanding of recognizing the merit of the collective bargaining agreement signed between the companies and the unions. In January 2024, the ruling was published by the STF. Against this ruling, the complainant and union entities filed an appeal for clarification, which were not recognized by unanimous decision of the first Panel of the Supreme Court, maintaining the decision in favor of Petrobras. This decision was published in March 2024, becoming final and unappealable. The Company monitors the application of the Supreme Federal Court decision in the lower courts.

 

24 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

As of March 31, 2024, the balance of provisions for legal proceedings regarding RMNR amounts to US$ 135, while the contingent liabilities amount to US$ 8,314.

14.4.Class action and related proceedings
14.4.1.Class action in the Netherlands

On January 23, 2017, Stichting Petrobras Compensation Foundation ("Foundation") filed a class action in the Netherlands, at the District Court of Rotterdam, against Petróleo Brasileiro S.A. – Petrobras, Petrobras International Braspetro B.V. (PIB BV), Petrobras Global Finance B.V. (PGF), Petrobras Oil & Gas B.V. (PO&G) and some former Petrobras managers. The Foundation alleges that it represents the interests of an unidentified group of investors and asserts that, based on the facts revealed by the Lava-Jato Operation, the defendants acted illegally before the investors. On May 26, 2021, the District Court of Rotterdam decided that the class action should proceed and that the arbitration clause of Petrobras' bylaws does not prevent the Company's shareholders from having access to the Dutch Judiciary and have their interests represented by the “Foundation”. However, investors who have already started arbitration against Petrobras or who are parties to legal proceedings in which the applicability of the arbitration clause has been definitively recognized are excluded from the scope of the action. The collective action moved to the discussion phase of merit issues.

On July 26, 2023, the Court issued an intermediary decision on the merits, ordering the production of evidence, in relation to which the parties may express their views before the publication of the decision on the merits, which is appealable. In addition, the Court expressed in advance some understanding, which must be included in the decision on the merits, among which: (i) the requests made against PIB BV, PO&G and certain former members of the Company’s management were rejected; (ii) the Court declared that Petrobras and the PGF acted illegally in relation to their investors, although the Court expressed it does not consider itself sufficiently informed about relevant aspects of Brazilian, Argentine and Luxembourger laws to definitively decide on the merits of the action; and iii) the alleged rights under Spanish legislation are prescribed.

The Foundation cannot claim compensation under the class action, which will depend not only on a result favorable to the interests of the investors in the class action, but also on the filing of subsequent actions by or on behalf of the investors by the Foundation itself, an opportunity in which Petrobras will be able to offer all the defenses already presented in the class action and others that it deems appropriate, including in relation to the occurrence and quantification of any damages that must be proven. Any compensation for the alleged damages will only be determined by court decisions in subsequent actions mentioned above.

This class action involves complex issues and the outcome is subject to substantial uncertainties, which depend on factors such as: the scope of the arbitration clause of the Petrobras Bylaws, the jurisdiction of the Dutch courts, the scope of the agreement that ended the Class Action in the United States, the Foundation's legitimacy to represent the interests of investors, the several laws applicable to the case, the information obtained from the production phase of evidence, the expert analyses, the timetable to be defined by the Court and the judicial decisions on key issues of the process, possible appeals, including before the Dutch Supreme Court, as well as the fact that the Foundation seeks only a declaratory decision in this class action.

The Company, based on the assessments of its advisors, considers that there are not enough indicative elements to qualify the universe of potential beneficiaries of a possible final decision unfavorable to Petrobras' interests, nor to quantify the supposedly compensable damages.

Thus, it is currently not possible to predict whether the Company will be liable for the effective payment of damages in any future individual claims, as this analysis will depend on the outcome of these complex procedures. In addition, it is not possible to know which investors will be able to bring subsequent individual actions related to this matter against Petrobras.

Furthermore, the claims formulated are broad, cover a multi-year period and involve a wide variety of activities and, in the current scenario, the impacts of such claims are highly uncertain. The uncertainties inherent in all of these issues affect the value and duration of final resolution of this action. As a result, Petrobras is unable to estimate an eventual loss resulting from this action. However, Petrobras reiterates its condition as a victim of the corruption scheme revealed by the Lava-Jato operation and intends to present and prove this condition before the Dutch court.

Petrobras and its subsidiaries deny the allegations made by the Foundation and will continue to defend themselves vigorously.

 

25 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
14.4.2.Arbitration and other legal proceedings in Argentina

In relation to the arbitration in Argentina, the Argentine Supreme Court denied the appeal, but the Consumidores Damnificados Asociación Civil para su Defensa (formerly Consumidores Financieros Asociación Civil, "Association") filed a new appeal to the Argentine Supreme Court, which was also denied, thus the arbitration was sent to the Arbitration Court. This arbitration discusses Petrobras' liability for an alleged loss of market value of Petrobras' shares in Argentina, as a result of the Lava Jato Operation. The Company is unable to provide a reliable estimate of the potential loss in this arbitration.

In parallel to such arbitration, the Association also initiated a collective action before the Civil and Commercial Court of Buenos Aires, in Argentina, with Petrobras appearing spontaneously on April 10, 2023, within the scope of which it alleges Petrobras' responsibility for an alleged loss of the market value of Petrobras' securities in Argentina, as a result of allegations made within the scope of Lava Jato Operation and their impact on the company's financial statements prior to 2015. Petrobras presented its defense on August 30, 2023. Petrobras denies the allegations presented by the Association and will vigorously defend itself against the accusations made by the author of the class action. The Company is unable to provide a reliable estimate of the potential loss in this arbitration.

Regarding criminal proceeding in Argentina 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 Court of Appeals revoked, on October 21, 2021, the lower court decision that had recognized Petrobras' immunity from jurisdiction and recommended that the lower court judge take steps to certify whether the Company could be considered criminally immune in Argentina for further reassessment of the issue. After carrying out the steps determined by the Court of Appeals, on May 30, 2023, the lower court denied the recognition of immunity from jurisdiction to Petrobras. Petrobras filed an appeal against this decision, which was recognized by the Court of Appeals on April 18, 2024. The Court of Appeals had already recognized that the Association could not act as a representative of financial consumers, due to the loss of its registration with the competent Argentine bodies, which was also the subject of an appeal upheld by the Court of Appeals on September 15, 2022, recognizing the Association the right to represent financial consumers. The Company presented its defense, as well as other procedural defenses, still subject to assessment by the Argentine Court of Appeals. This criminal action is being processed before the Economic Criminal Court No. 2 of the City of Buenos Aires.

As for the other criminal action for alleged non-compliance with the obligation to publish a “press release” in the Argentine market about the existence of a class action filed by Consumidores Damnificados Asociación Civil para su Defensa before the Commercial Court, there are no developments in the three-month period ended March 31, 2024.

14.4.3.Lawsuit in United States regarding Sete Brasil Participações S.A (“Sete”)

The EIG Energy Fund XIV, L.P. and affiliates (“EIG”) filed a lawsuit against Petrobras, before the District Court of Columbia, United States, to recover alleged losses related to its investment in Sete Brasil Participações S.A. On August 8, 2022, the judge upheld EIG's claim as to Petrobras' responsibility for the alleged losses (which was recorded in 2022 as provisions for legal proceedings) but denied the motion for summary judgment with respect to damages, whereby the award of compensation will be subject to the proof of damages by EIG at a hearing and to the consideration of the defenses by the Company. In the same decision, the judge denied the request to dismiss the case based on Petrobras' immunity from jurisdiction, when an appeal was filed with the Federal Court of Appeals for the District of Columbia, which is still pending judgement. Considering the filing of the appeal, Petrobras requested the suspension of the process, which was granted by the lower court judge on October 26, 2022.

On August 26, 2022, on another procedural front initiated by the EIG, the District Court of Amsterdam granted a precautionary measure to block certain Petrobras assets in the Netherlands. This granting was based on the decision of the District Court of Columbia, on August 8, 2022, and was intended to ensure the satisfaction of EIG's claims contained in the aforementioned US lawsuit. For the purpose of this injunction, the District Court of Amsterdam limited EIG's claims to a total of US$ 297, although the US Court ruled that any award of damages would depend on evidence of damages by EIG at a trial hearing. There are some discussions about the scope of the assets blocked by EIG, but there is no related lawsuit pending in the Netherlands. This precautionary block does not prevent Petrobras and its subsidiaries from complying with their obligations to third parties.

14.4.4.Arbitrations proposed by non-controlling shareholders in Brazil

In the three-month period ended March 31, 2024, there were no events that changed the assessment and information of arbitrations proposed by non-controlling shareholders in Brazil. For more information, see explanatory note 19.5 to the financial statements for the year ended December 31, 2023.

15.Provision for decommissioning costs

The following table details the amount of the provision for decommissioning costs by producing area:

 

26 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

  03.31.2024 12.31.2023
Onshore 430 447
Shallow waters 6,078 6,253
Deep and ultra-deep post-salt 10,414 10,872
Pre-salt 5,510 5,630
Total 22,432 23,202

 

 

Changes in the provision for decommissioning costs are presented as follows:

Non-current liabilities

2024

Jan-Mar

2023

Jan-Mar

Opening balance 23,202 18,600
Adjustment to provision 71 7
Use of provisions (393) (224)
Interest accrued 267 202
Others 4 (3)
Translation adjustment (719) 502
Closing balance 22,432 19,084
Current 2,054
Non-current 20,378 19,084

 

 

16.Other assets and liabilities
     
Assets   03.31.2024 12.31.2023
Escrow account and/ or collateral   1,226 1,009
Advances to suppliers   1,776 1,814
Prepaid expenses   440 453
Derivatives transactions   96 92
Assets related to E&P partnerships   224 255
Others   244 262
    4,006 3,885
Current   1,761 1,570
Non-Current   2,245 2,315
       
     
Liabilities   03.31.2024 12.31.2023
Obligations arising from divestments   1,164 1,200
Contractual retentions   856 716
Advances from customers   520 692
Provisions for environmental expenses, research and development and fines   738 708
Other taxes   375 376
Unclaimed dividends   339 337
Derivatives transactions   102 62
Obligations arising from acquisition of equity interests   155 156
Various creditors   71 138
Others   522 520
    4,842 4,905
Current   2,912 3,015
Non-Current   1,930 1,890
       

 

 

 

27 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
17.Property, plant and equipment
17.1.By class of assets
 

Land, buildings

and

improvement

Equipment and other assets (1)

Assets under

construction (2)

Exploration and development costs (3) Right-of-use assets Total
Balance at December 31, 2023 2,687 58,409 21,516 40,432 30,380 153,424
Cost 4,634 118,173 31,467 74,809 44,829 273,912
Accumulated depreciation and impairment (4) (1,947) (59,764) (9,951) (34,377) (14,449) (120,488)
Additions 87 2,930 4 2,005 5,026
Decommissioning costs - Additions to / review of estimates 63 63
Capitalized borrowing costs 374 374
Write-offs (3) (12) (67) (3) (19) (104)
Transfers (5) 17 626 (954) 426 115
Transfers to assets held for sale 2 (5) (3)
Depreciation, amortization and depletion (20) (1,301) (1,057) (1,558) (3,936)
Impairment reversal (note 19) 13 13
Translation adjustment (83) (1,805) (686) (1,243) (944) (4,761)
Balance at March 31, 2024 2,598 56,006 23,108 38,622 29,877 150,211
Cost 4,511 114,773 32,753 73,020 45,127 270,184
Accumulated depreciation and impairment (4) (1,913) (58,767) (9,645) (34,398) (15,250) (119,973)
             
Balance at December 31, 2022 2,538 55,147 14,838 38,434 19,212 130,169
Cost 4,343 105,429 23,938 67,581 29,670 230,961
Accumulated depreciation and impairment (4) (1,805) (50,282) (9,100) (29,147) (10,458) (100,792)
Additions 111 2,071 945 3,127
Decommissioning costs - Additions to / review of estimates 6 6
Capitalized borrowing costs 268 268
Write-offs               (55) (10) (33) (150) (248)
Transfers (5) 40 207 (122) 104 (8) 221
Transfers to assets held for sale (1) (20) (4) (12) (37)
Depreciation, amortization and depletion (21) (1,139) (1,091) (1,185) (3,436)
Impairment recognition (note 19) (15) (5) (20)
Impairment reversal (note 19) 17 17
Translation adjustment 68 1,467 453 1,010 511 3,509
Balance at March 31, 2023 2,624 55,720 17,489 38,418 19,325 133,576
Cost 4,476 108,349 26,295 69,235 30,969 239,324
Accumulated depreciation and impairment (4) (1,852) (52,629) (8,806) (30,817) (11,644) (105,748)
(1) It is composed of production platforms, refineries, thermoelectric power plants, natural gas processing plants, pipelines, and other operating, storage and production plants, including subsea equipment for the production and flow of oil and gas, depreciated based on the units of production method.
(2) See note 8 for assets under construction by operating segment.
(3) It is composed of exploration and production assets related to wells, abandonment and dismantling of areas, signature bonuses associated with proved reserves and other costs directly associated with the exploration and production of oil and gas.
(4) In the case of land and assets under construction, it refers only to impairment losses.
(5) It mainly includes transfers between classes of assets and transfers from advances to suppliers.

 

 

Additions to assets under construction are mainly due to investments in the production development of the Búzios field and other fields in the Espírito Santo, Santos, and Campos basins. As for additions to right-of-use assets, they are related to the chartering of drilling rigs for E&P operations and to the chartering of the Regasification Vessel Sequoia, operating at the LNG Terminal in Bahia.

17.2.Estimated useful life

The useful life of assets depreciated are shown below:

 

28 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

Asset Weighted average useful life in years
Buildings and improvement 40  (between 25 and 50)
Equipment and other assets 20 (between 3 to 31) - except assets by the units of production method
Exploration and development costs Units of production method
Right-of-use 8 (between 2 and 47)

 

 

17.3.Right-of-use assets

The right-of-use assets comprise the following underlying assets:

  Platforms Vessels Properties Total
Balance at March 31, 2024 18,718 8,932 2,227 29,877
Cost 23,845 18,201 3,081 45,127
Accumulated depreciation and impairment (5,127) (9,269) (854) (15,250)
Balance at December 31, 2023 19,056 9,204 2,120 30,380
Cost 23,859 18,000 2,970 44,829
Accumulated depreciation and impairment (4,803) (8,796) (850) (14,449)

 

 

17.4.Unitization agreements

Petrobras has Production Individualization Agreements (AIP) signed in Brazil with partner companies in E&P consortia. These agreements result in reimbursements payable to (or receivable from) partners regarding expenses and production volumes mainly related to Agulhinha, Albacora Leste, Brava, Berbigão, Budião Noroeste, Budião Sudeste, Caratinga and Sururu.

The table below presents changes in the reimbursements payable relating to the execution of the AIP submitted to the approval of the ANP:

          Jan-Mar/2024 Jan-Mar/2023
Opening balance         462 407
Additions/(Write-offs) on PP&E         18 (3)
Other income and expenses         10 17
Translation adjustments         (15) 11
Closing balance (1)         475 432
(1) Notably Berbigão, Sururu, Brava and Agulhinha.

 

 

17.5.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 three-month period ended March 31, 2024, the capitalization rate was 7.22% p.a. (6.85% p.a. for the three-month period ended March 31, 2023).

 

29 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
18.Intangible assets
18.1.By class of assets
  Rights and Concessions (1) Software Goodwill Total
Balance at December 31, 2023 2,425 592 25 3,042
Cost 2,489 1,891 25 4,405
Accumulated amortization and impairment (64) (1,299) (1,363)
Addition 49 49
Capitalized borrowing costs 2 2
Transfers 2 2
Amortization (1) (33) (34)
Translation adjustment (75) (20) (95)
Balance at March 31, 2024 2,349 592 25 2,966
Cost 2,412 1,886 25 4,323
Accumulated amortization and impairment (63) (1,294) (1,357)
Estimated useful life in years (2) 5 Indefinite  
         
Balance at December 31, 2022 2,523 439 24 2,986
Cost 2,578 1,560 24 4,162
Accumulated amortization and impairment (55) (1,121) (1,176)
Addition 1 38 39
Capitalized borrowing costs 3 3
Write-offs (35) (35)
Transfers 1 1
Amortization (1) (22) (23)
Translation adjustment 67 13 80
Balance at March 31, 2023 2,555 472 24 3,051
Cost 2,613 1,644 24 4,281
Accumulated amortization and impairment (58) (1,172) (1,230)
Estimated useful life in years (2) 5 Indefinite  
(1) It comprises mainly signature bonuses (amounts paid in concession and production sharing contracts for oil or natural gas exploration), in addition to public service concessions, trademarks and patents and others.
(2) 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.
19.Impairment
Statement of income Jan-Mar/2024 Jan-Mar/2023
Impairment (losses) reversals 9 (3)
Impairment of equity-accounted investments 17 2
Net effect within the statement of income 26 (1)
Losses (5) (21)
Reversals 31 20
     
Statement of financial position Jan-Mar/2024 Jan-Mar/2023
Property, plant and equipment 13 (3)
Assets classified as held for sale 8
Investments 5 2
Net effect within the statement of financial position 26 (1)

 

 

The Company tests annually its assets for impairment or when there is an indication that their carrying amount may not be recoverable.

 

30 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

In the three-month period ended March 31, 2024, net impairment reversals were recognized in the amount of US$ 26, mainly due to a US$ 13 impairment reversal of property, plant and equipment following the increase of the occupied area of building Torre Pituba, as well as a US$ 12 impairment reversal of equity-accounted investments, following the approval for the sale of the Company’s 18.8% interest in the share capital of UEG Araucária S.A., resulting in the reclassification of this equity-accounted investment to assets classified as held for sale and its registration at fair value less costs to sell.

20.Exploration and evaluation of oil and gas 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 (1) Jan-Mar/2024 Jan-Mar/2023
Property plant and equipment    
Opening Balance 1,512 1,876
Additions 89 65
Write-offs (23)
Transfers - (43)
Translation adjustment (45) 50
Closing Balance 1,533 1,948
Intangible assets    
Opening Balance 2,313 2,406
Write-offs (36)
Translation adjustment (72) 66
Closing Balance 2,241 2,436
Capitalized Exploratory Well Costs / Capitalized Acquisition Costs 3,774 4,384
(1) Amounts capitalized and subsequently expensed in the same period have been excluded from this 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:

  Jan-Mar/2024 Jan-Mar/2023
Exploration costs recognized in the statement of income    
Geological and geophysical expenses (82) (125)
Exploration expenditures written off (includes dry wells and signature bonuses) (50) (32)
Contractual penalties on local content requirements (2) -
Other exploration expenses (1) -
Total expenses (135) (157)
Cash used in:    
Operating activities 83 125
Investment activities 127 65
Total cash used 210 190

 

 

21.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$ 1,715 (US$ 1,770 as of December 31, 2023), which is still in force as of March 31, 2024, net of commitments undertaken. As of March 31, 2024, the collateral comprises future crude oil production capacity from Marlim and Buzios producing fields, already in production, pledged as collateral, in the amount of US$ 1,701 (US$ 1,756 as of December 31, 2023) and bank guarantees of US$ 14 (US$ 14 as of December 31, 2023).

 

31 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
22.Investments
22.1.Investments in associates and joint ventures
0 Joint Ventures Associates (1) Total
Balance at December 31, 2023 481 877 1,358
Investments 1 1
Transfer to assets held for sale (11) (11)
Restructuring, capital decrease and others (3) (3)
Results of equity-accounted investments 22 (115) (93)
Translation adjustment (1) 17 16
Other comprehensive income (9) (9)
Dividends (23) (1) (24)
Balance at March 31, 2024 480 755 1,235
(1) It includes other investments.

 

 

  Joint Ventures Associates (1) Total
Balance at December 31, 2022 546 1,020 1,566
Investments 5 3 8
Restructuring, capital decrease and others (2) (2)
Results of equity-accounted investments 24 11 35
Translation adjustment 1 (51) (50)
Other comprehensive income 89 89
Dividends (10) (10)
Balance at March 31, 2023 566 1,070 1,636
(1) It includes other investments.

 

 

23.Disposal of assets and other transactions

The major classes of assets and related liabilities classified as held for sale are shown in the following table:

        03.31.2024 12.31.2023
   E&P G&LCE Corporate and other businesses Total Total
Assets classified as held for sale          
Investments 11 11
Property, plant and equipment 324 324 335
Total 324 11 335 335
Liabilities on assets classified as held for sale          
Finance debt - 90 90 99
Provision for decommissioning costs 433 - 433 442
Total 433 90 523 541

 

 

23.1.Contingent assets from disposed investments and other transactions

Some disposed assets and other agreements provide for receipts subject to contractual clauses, especially related to the Brent variation in transactions related to E&P assets.

The transactions that may generate revenue recognition, accounted for within other income and expenses, are presented below:

 

 

 

 

32 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 

 

Transaction Closing date Contingent assets at the closing date Assets recognized in 2024

Assets

recognized in previous periods

Balance of contingent assets as of March 31, 2024  
 
 
Sales in previous years            
Riacho da Forquilha cluster December 2019 62 58 4  
Pampo and Enchova cluster July 2020 650 21 246 383  
Baúna field November 2020 285 21 196 68  
Miranga cluster December 2021 85 15 70  
Cricare cluster December 2021 118 76 42  
Peroá cluster August 2022 43 10 33  
Papa-Terra field December 2022 90 16 16 58  
Albacora Leste field January 2023 250 83 58 109  
Norte Capixaba cluster April 2023 66 22 44  
Golfinho and Camarupim clusters August 2023 60 20 40  
Surplus volume of the Transfer of Rights Agreement            
Sepia and Atapu April 2022 5,244 47 948 4,249  
Total   6,953 203 1,720 5,030  

 

 

24.Finance debt
24.1.Balance by type of finance debt
In Brazil 03.31.2024 12.31.2023
Banking market 2,093 2,262
Capital market 3,052 3,130
Development banks (1) 664 698
Others 1 1
Total 5,810 6,091
Abroad    
Banking market 6,409 6,303
Capital market 13,667 14,384
Export credit agency 1,705 1,870
Others 147 153
Total 21,928 22,710
Total finance debt 27,738 28,801
Current 4,914 4,322
Non-current 22,824 24,479
(1) It includes BNDES, FINAME and FINEP.

 

 

Current finance debt is composed of:

  03.31.2024 12.31.2023
Short-term debt 3 4
Current portion of long-term debt 4,435 3,776
Accrued interest on short and long-term debt 476 542
Total 4,914 4,322

 

 

The capital market balance is mainly composed of US$ 13,057 in global notes issued abroad by the wholly owned subsidiary PGF, as well as US$ 1,988 in debentures and US$ 942 in commercial notes issued by Petrobras in reais in Brazil.

The balance in global notes has maturities between 2025 to 2115 and does not require collateral. Such financing was carried out in dollars, euros and pounds, 86%, 2% and 12%, of the total global notes, respectively.

The debentures and the commercial notes, with maturities between 2024 and 2037, do not require collateral and are not convertible into shares or equity interests.

On March 31, 2024, there were no default, breach of covenants or adverse changes in clauses that would result in changes to the payment terms of loan and financing agreements. There was no change in the guarantees required in relation to December 31, 2023. Petrobras fully, unconditionally and irrevocably guarantees its global notes issued in the capital markets by its wholly-owned subsidiary PGF and the loans agreements of its wholly-owned subsidiary PGT.

 

33 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
24.2.Changes in finance debt
  In Brazil Abroad Total
Balance at December 31, 2023 6,090 22,711 28,801
Proceeds from finance debt 2 2
Repayment of principal (1) (143) (724) (867)
Repayment of interest (1) (132) (425) (557)
Accrued interest (2) 125 400 525
Foreign exchange/ inflation indexation charges 57 46 103
Translation adjustment (190) (79) (269)
Balance at March 31, 2024 5,809 21,929 27,738

 

 

  In Brazil Abroad Total
Balance at December 31, 2022 4,907 25,047 29,954
Proceeds from finance debt 2 49 51
Repayment of principal (1) (182) (282) (464)
Repayment of interest (1) (118) (372) (490)
Accrued interest (2) 106 436 542
Foreign exchange/ inflation indexation charges 54 (29) 25
Translation adjustment 130 88 218
Balance at March 31, 2023 4,899 24,937 29,836
(1) It includes pre-payments.
(2) It includes premium and discount over notional amounts, as well as gains and losses by modifications in contractual cash flows.

 

 

In the three-month period ended, the Company repaid several finance debts, in the amount of US$ 1,601.

24.3.Reconciliation with cash flows from financing activities
      Jan-Mar/2024     Jan-Mar/2023
  Proceeds from finance debt Repayment of principal Repayment of interest Proceeds from finance debt Repayment of principal Repayment of interest
Changes in finance debt 2 (867) (557) 51 (464) (490)
Deposits linked to finance debt (1)   (140) (37)   (286) (80)
Net cash used in financing activities 2 (1,007) (594) 51 (750) (570)
(1) Deposits linked to finance debt with China Development Bank, with semiannual settlements in June and December.

 

 

 

34 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

PETROBRAS

(Expressed in millions of US Dollars, unless otherwise indicated)

 
24.4.Summarized information on current and non-current finance debt
<
Maturity in 2024 2025 2026 2027 2028 2029 onwards Total (1) Fair Value
                 
Financing in U.S.Dollars (US$): 2,967 2,670 1,459 2,149 1,533 9,048 19,826 19,774
Floating rate debt (2) 2,967 1,916 1,119 1,468 524 427 8,421  
Fixed rate debt 754 340 681 1,009 8,621 11,405  
Average interest rate p.a. 6.7%