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, 2023
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
20231-030 – 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, 2023, with the independent registered public accounting firm report
| 1 |
INDEX
Petróleo Brasileiro S.A. – Petrobras
| 2 |
Unaudited Consolidated Statements of Financial Position
PETROBRAS
As of March 31, 2023 and December 31, 2022 (Expressed in millions of US Dollars, unless otherwise indicated)
| Assets | Note | 03.31.2023 | 12.31.2022 |
| Cash and cash equivalents | 3.1 | 10,290 | 7,996 |
| Marketable securities | 3.2 | 2,879 | 2,773 |
| Trade and other receivables | 9.1 | 4,625 | 5,010 |
| Inventories | 10 | 7,968 | 8,779 |
| Recoverable income taxes | 12.1 | 181 | 165 |
| Other recoverable taxes | 12.2 | 1,020 | 1,142 |
| Others | 16 | 2,039 | 1,777 |
| 29,002 | 27,642 | ||
| Assets classified as held for sale | 22 | 1,939 | 3,608 |
| Current assets | 30,941 | 31,250 | |
| Trade and other receivables | 9.1 | 1,942 | 2,440 |
| Marketable securities | 3.2 | 2,642 | 1,564 |
| Judicial deposits | 14.2 | 12,026 | 11,053 |
| Deferred income taxes | 12.1 | 728 | 832 |
| Other recoverable taxes | 12.2 | 4,051 | 3,778 |
| Others | 16 | 2,025 | 1,553 |
| Long-term receivables | 23,414 | 21,220 | |
| Investments | 21 | 1,636 | 1,566 |
| Property, plant and equipment - PP&E | 17 | 133,576 | 130,169 |
| Intangible assets | 18 | 3,051 | 2,986 |
| Non-current assets | 161,677 | 155,941 | |
| Total assets | 192,618 | 187,191 |
| Liabilities | Note | 03.31.2023 | 12.31.2022 |
| Trade payables | 11 | 5,047 | 5,464 |
| Finance debt | 23.1 | 4,098 | 3,576 |
| Lease liability | 24 | 5,642 | 5,557 |
| Income taxes payable | 12.1 | 1,356 | 2,883 |
| Other taxes payable | 12.2 | 3,023 | 3,048 |
| Dividends payable | 25.2 | − | 4,171 |
| Employee benefits | 13 | 2,339 | 2,215 |
| Others | 16 | 2,737 | 3,001 |
| 24,242 | 29,915 | ||
| Liabilities related to assets classified as held for sale | 22 | 1,041 | 1,465 |
| Current liabilities | 25,283 | 31,380 | |
| Finance debt | 23.1 | 25,738 | 26,378 |
| Lease liability | 24 | 17,871 | 18,288 |
| Income taxes payable | 12.1 | 305 | 302 |
| Deferred income taxes | 12.1 | 8,380 | 6,750 |
| Employee benefits | 13 | 11,246 | 10,675 |
| Provisions for legal proceedings | 14.1 | 3,242 | 3,010 |
| Provision for decommissioning costs | 15 | 19,084 | 18,600 |
| Others | 16 | 2,065 | 1,972 |
| Non-current liabilities | 87,931 | 85,975 | |
| Current and non-current liabilities | 113,214 | 117,355 | |
| Share capital (net of share issuance costs) | 25.1 | 107,101 | 107,101 |
| Capital reserve and capital transactions | 1,144 | 1,144 | |
| Profit reserves | 73,775 | 66,434 | |
| Accumulated other comprehensive (deficit) | (102,876) | (105,187) | |
| Attributable to the shareholders of Petrobras | 79,144 | 69,492 | |
| Non-controlling interests | 260 | 344 | |
| Equity | 79,404 | 69,836 | |
| Total liabilities and equity | 192,618 | 187,191 | |
| The notes form an integral part of these unaudited consolidated interim financial statements. | |||
| 3 |
Unaudited Consolidated Statements of Income
PETROBRAS
Three-month periods ended March 31, 2023 and 2022 (Expressed in millions of US Dollars, unless otherwise indicated)
| 4 |
Unaudited Consolidated Statements of Comprehensive Income
PETROBRAS
Three-month periods ended March 31, 2023 and 2022 (Expressed in millions of US Dollars, unless otherwise indicated)
| Note | Jan-Mar/2023 | Jan-Mar/2022 | |
| Net income for the period | 7,370 | 8,648 | |
| Items that will not be reclassified to the statement of income: | |||
| Actuarial losses on post-employment defined benefit plans | 13.3 | ||
| 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 | 26.3 | ||
| Recognized in equity | 1,468 | 11,596 | |
| Reclassified to the statement of income | 1,154 | 1,380 | |
| Deferred income tax | (892) | (4,412) | |
| 1,730 | 8,564 | ||
| Translation adjustments (*) | |||
| Recognized in equity | 569 | 4,897 | |
| Share of other comprehensive income in equity-accounted investments | 21 | ||
| Recognized in equity | 89 | 250 | |
| Other comprehensive income | 2,316 | 13,711 | |
| Total comprehensive income | 9,686 | 22,359 | |
| Comprehensive income attributable to shareholders of Petrobras | 9,652 | 22,239 | |
| Comprehensive income attributable to non-controlling interests | 34 | 120 | |
| (*) It includes cumulative translation adjustments in associates and joint ventures. | |||
| The notes form an integral part of these unaudited consolidated interim financial statements. | |||
| 5 |
Unaudited Consolidated Statements of Cash Flows
PETROBRAS
Three-month periods ended March 31, 2023 and 2022 (Expressed in millions of US Dollars, unless otherwise indicated)
| Note | Jan-Mar/2023 | Jan-Mar/2022 | |
| Cash flows from operating activities | |||
| Net income for the period | 7,370 | 8,648 | |
| Adjustments for: | |||
| Pension and medical benefits - actuarial gains | 13 | 370 | 307 |
| Results of equity-accounted investments | 21 | (35) | (350) |
| Depreciation, depletion and amortization | 28.1 | 2,924 | 3,170 |
| Impairment of assets (reversals) | 3 | (1) | |
| Inventory write-back to net realizable value | 10 | (8) | (7) |
| Allowance for credit loss on trade and other receivables | 24 | 21 | |
| Exploratory expenditure write-offs | 19 | 32 | 23 |
| Disposal/write-offs of assets, remeasurement of investment retained with loss of control and reclassification of CTA | (496) | (476) | |
| Foreign exchange, indexation and finance charges | 656 | (489) | |
| Income taxes | 12.1 | 3,596 | 4,566 |
| Revision and unwinding of discount on the provision for decommissioning costs | 15 | 212 | 154 |
| Results from co-participation agreements in bid areas | (28) | − | |
| Early termination and cash outflows revision of lease agreements | (167) | (225) | |
| Losses with legal, administrative and arbitration proceedings, net | 6 | 254 | 259 |
| Decrease (Increase) in assets | |||
| Trade and other receivables | 412 | 641 | |
| Inventories | 989 | (1,917) | |
| Judicial deposits | (403) | (398) | |
| Other assets | 111 | (27) | |
| Increase (Decrease) in liabilities | |||
| Trade payables | (478) | (138) | |
| Other taxes payable | (217) | 230 | |
| Pension and medical benefits | (178) | (1,477) | |
| Provisions for legal proceedings | (85) | (52) | |
| Other employee benefits | 35 | (150) | |
| Provision for decommissioning costs | (165) | (132) | |
| Other liabilities | (101) | (297) | |
| Income taxes paid | (4,280) | (1,575) | |
| Net cash provided by operating activities | 10,347 | 10,308 | |
| Cash flows from investing activities | |||
| Acquisition of PP&E and intangible assets | (2,423) | (2,376) | |
| Investments in investees | (8) | (9) | |
| Proceeds from disposal of assets - Divestment | 1,855 | 1,753 | |
| Financial compensation from co-participation agreements | 391 | 61 | |
| Investment in marketable securities | (930) | (469) | |
| Dividends received | 11 | 52 | |
| Net cash used in investing activities | (1,104) | (988) | |
| Cash flows from financing activities | |||
| Changes in non-controlling interest | (75) | 84 | |
|
Proceeds from finance debt
|
23.3 | 51 | 150 |
| Repayment of principal - finance debt | 23.3 | (750) | (1,491) |
| Repayment of interest - finance debt | 23.3 | (570) | (567) |
| Repayment of lease liability | 24 | (1,389) | (1,321) |
| Dividends paid to Shareholders of Petrobras | (4,192) | − | |
| Dividends paid to non-controlling interests | (48) | (5) | |
| Net cash used in financing activities | (6,973) | (3,150) | |
| Effect of exchange rate changes on cash and cash equivalents | 24 | 582 | |
| Net change in cash and cash equivalents | 2,294 | 6,752 | |
| Cash and cash equivalents at the beginning of the period | 7,996 | 10,480 | |
| Cash and cash equivalents at the end of the period | 10,290 | 17,232 | |
| The notes form an integral part of these unaudited consolidated interim financial statements. | |||
| 6 |
Unaudited Consolidated Statements of Changes In Shareholders’ Equity
PETROBRAS
Three-month periods ended March 31, 2023, and 2022 (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 | Legal | Statutory | Tax incentives | Profit retention | Additional dividends proposed | Retained earnings (losses) | Equity attributable to shareholders of Petrobras | Non-controlling interests | Total consolidated equity | |
| Balance at December 31, 2021 | 107,380 | (279) | 1,143 | (75,122) | (24,169) | (11,205) | (1,152) | 9,769 | 3,084 | 1,220 | 52,050 | 6,688 | − | 69,407 | 405 | 69,812 |
| 107,101 | 1,143 | (111,648) | 72,811 | − | 69,407 | 405 | 69,812 | |||||||||
| Capital transactions | − | − | − | − | − | − | − | − | − | − | − | − | − | − | 83 | 83 |
| Net income | − | − | − | − | − | − | − | − | − | − | − | − | 8,605 | 8,605 | 43 | 8,648 |
| Other comprehensive income (loss) | − | − | − | 4,820 | 8,564 | − | 250 | − | − | − | − | − | − | 13,634 | 77 | 13,711 |
| Appropriations: | ||||||||||||||||
| Dividends | − | − | − | − | − | − | − | − | − | − | − | − | − | − | (2) | (2) |
| Balance at March 31, 2022 | 107,380 | (279) | 1,143 | (70,302) | (15,605) | (11,205) | (902) | 9,769 | 3,084 | 1,220 | 52,050 | 6,688 | 8,605 | 91,646 | 606 | 92,252 |
| 107,101 | 1,143 | (98,014) | 72,811 | 8,605 | 91,646 | 606 | 92,252 | |||||||||
| Balance at December 31, 2022 | 107,380 | (279) | 1,144 | (74,171) | (17,507) | (12,576) | (933) | 11,574 | 3,281 | 1,677 | 43,038 | 6,864 | − | 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) | 11,574 | 3,281 | 1,677 | 43,038 | 6,864 | 7,341 | 79,144 | 260 | 79,404 |
| 107,101 | 1,144 | (102,876) | 66,434 | 7,341 | 79,144 | 260 | 79,404 | |||||||||
| The notes form an integral part of these unaudited consolidated interim financial statements. | ||||||||||||||||
| 7 |
NOTES TO THE UNAUDITED 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, 2022, 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 11, 2023.
| 2. | Summary of significant 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, 2022.
Regarding the IFRS standards that became effective on January 1, 2023, their initial application did not result in material effects on these unaudited condensed consolidated interim financial statements.
| 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.
| 03.31.2023 | 12.31.2022 | |
| Cash at bank and in hand | 135 | 216 |
| Short-term financial investments | ||
| - In Brazil | ||
| Brazilian interbank deposit rate investment funds and other short-term deposits | 3,281 | 2,763 |
| Other investment funds | 130 | 244 |
| 3,411 | 3,007 | |
| - Abroad | ||
| Time deposits | 3,121 | 2,388 |
| Automatic investing accounts and interest checking accounts | 3,603 | 2,365 |
| Other financial investments | 20 | 20 |
| 6,744 | 4,773 | |
| Total short-term financial investments | 10,155 | 7,780 |
| Total cash and cash equivalents | 10,290 | 7,996 |
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 CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 3.2. | Marketable securities |
| 03.31.2023 | 12.31.2022 | |
| Fair value through profit or loss | 840 | 713 |
| Amortized cost - Bank Deposit Certificates and time deposits | 4,631 | 3,574 |
| Amortized cost - Others | 50 | 50 |
| Total | 5,521 | 4,337 |
| Current | 2,879 | 2,773 |
| Non-current | 2,642 | 1,564 |
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 |
| 9 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Domestic market | 19,653 | 19,821 |
| China | 2,493 | 1,571 |
| Americas (except United States) | 1,423 | 1,666 |
| Europe | 1,348 | 1,255 |
| Asia (except China and Singapore) | 809 | 500 |
| United States | 563 | 1,135 |
| Singapore | 481 | 1,240 |
| Others | 1 | 1 |
| Foreign market | 7,118 | 7,368 |
| Sales revenues | 26,771 | 27,189 |
In the three-month period ended on March 31, 2023, sales to two clients of the refining, transportation and marketing segment represented individually 16% and 11% of the Company’s sales revenues. In the same period of 2022, one client of the same segment represented 14% of the Company’s sales revenues.
| 5. | Costs and expenses by nature |
| 5.1. | Cost of sales |
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Raw material, products for resale, materials and third-party services (*) | (7,095) | (5,761) |
| Depreciation, depletion and amortization | (2,396) | (2,562) |
| Production taxes | (2,783) | (4,064) |
| Employee compensation | (384) | (392) |
| Total | (12,658) | (12,779) |
| (*) It Includes short-term leases and inventory turnover. |
| 5.2. | Selling expenses |
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Materials, third-party services, freight, rent and other related costs | (1,026) | (948) |
| Depreciation, depletion and amortization | (150) | (200) |
| Allowance for expected credit losses | (21) | (8) |
| Employee compensation | (24) | (22) |
| Total | (1,221) | (1,178) |
| 5.3. | General and administrative expenses |
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Employee compensation | (229) | (198) |
| Materials, third-party services, rent and other related costs | (102) | (78) |
| Depreciation, depletion and amortization | (26) | (23) |
| Total | (357) | (299) |
| 10 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 6. | Other income and expenses |
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Unscheduled stoppages and pre-operating expenses | (499) | (376) |
| Pension and medical benefits – retirees | (281) | (238) |
| Losses with legal, administrative and arbitration proceedings | (254) | (259) |
| Performance award program | (140) | (118) |
| Profit sharing | (35) | (31) |
| Impairment | (3) | 1 |
| Losses on decommissioning of returned/abandoned areas | (1) | (24) |
| Results from co-participation agreements in bid areas | 28 | - |
| Gains (losses) with commodities derivatives | 79 | (53) |
| Amounts recovered from Lava Jato investigation (*) | 89 | 12 |
| Government grants | 104 | 74 |
| Reimbursements from E&P partnership operations | 161 | 27 |
| Early termination and changes to cash flow estimates of leases | 167 | 225 |
| Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control | 496 | 476 |
| Others (**) | (382) | (37) |
| Total | (471) | (321) |
| (*) Through December 31, 2022, the amount recovered of US$ 1,618 was recognized through collaboration and leniency agreements entered into with individuals and legal entities. | ||
| (**) It includes, in 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/2023 | Jan-Mar/2022 | |
| Finance income | 465 | 262 |
| Income from investments and marketable securities (Government Bonds) | 333 | 163 |
| Other income, net | 132 | 99 |
| Finance expenses | (844) | (757) |
| Interest on finance debt | (541) | (530) |
| Unwinding of discount on lease liabilities | (358) | (290) |
| Capitalized borrowing costs | 271 | 238 |
| Unwinding of discount on the provision for decommissioning costs | (212) | (130) |
| Other finance expenses , net | (4) | (45) |
| Foreign exchange gains (losses) and indexation charges | (243) | 1,091 |
| Foreign exchange gains (losses) (*) | 797 | 2,421 |
| Reclassification of hedge accounting to the Statement of Income (*) | (1,154) | (1,380) |
| Monetary restatement of dividends payable | (32) | − |
| Recoverable taxes inflation indexation income | 64 | 21 |
| Other foreign exchange gains and indexation charges, net | 82 | 29 |
| Total | (622) | 596 |
| (*) For more information, see notes 26.3a and 26.3c. | ||
| 8. | Information by operating segment |
In 2022, Petrobras implemented changes to its financial reporting system, according to the metric approved by the Executive Board. These changes did not change the allocation of Petrobras' reportable operating segments (E&P, RT&M and G&P). However, the measurement of certain components of the operating segments and of Corporate and other businesses was changed as following:
| · | trade and other receivables, recoverable income taxes and other recoverable taxes, previously allocated to operating segments, are now presented in Corporate and other businesses. Expected credit losses are now also presented in Corporate and other businesses; |
| 11 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| · | losses with commodity derivatives (within other income and expenses, net), previously presented in Corporate and other businesses, are now presented in operating segments; |
| · | general and administrative expenses related to logistics and fuel sales, previously presented in Corporate and other businesses, are now disclosed in the RT&M segment. |
This information reflects the Company's current management model and is used by the Board of Executive Officers (Chief Operating Decision Maker - CODM) to make decisions regarding resource allocation and performance evaluation. In this context, the information by operating segment of the first quarter of 2022 has been reclassified for comparative purposes, as follows:
| 12 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 8.1. | Net income by operating segment |
| Consolidated Statement of Income by operating segment | ||||||
| Jan-Mar/2023 | ||||||
| Exploration and Production (E&P) | Refining, Transportation & Marketing (RT&M) |
Gas & Power (G&P) |
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) |
| Other income and expenses, net | 199 | (459) | (102) | (109) | - | (471) |
| 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 |
| 13 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| Jan-Mar/2022 - Reclassified | ||||||
| Exploration and Production (E&P) | Refining, Transportation & Marketing (RT&M) |
Gas & Power (G&P) |
Corporate and other businesses | Eliminations | Total | |
| Sales revenues | 19,684 | 24,685 | 3,365 | 126 | (20,671) | 27,189 |
| Intersegments | 19,374 | 433 | 861 | 3 | (20,671) | − |
| Third parties | 310 | 24,252 | 2,504 | 123 | - | 27,189 |
| Cost of sales | (7,676) | (21,547) | (2,885) | (125) | 19,454 | (12,779) |
| Gross profit (loss) | 12,008 | 3,138 | 480 | 1 | (1,217) | 14,410 |
| Income (expenses) | (35) | (613) | (882) | (608) | (4) | (2,142) |
| Selling expenses | (2) | (405) | (756) | (11) | (4) | (1,178) |
| General and administrative expenses | (12) | (61) | (16) | (210) | - | (299) |
| Exploration costs | (79) | - | - | - | - | (79) |
| Research and development expenses | (173) | (3) | (3) | (27) | - | (206) |
| Other taxes | (15) | (7) | (10) | (27) | - | (59) |
| Other income and expenses, net | 246 | (137) | (97) | (333) | - | (321) |
| Income (loss) before net finance income (expense), results of equity-accounted investments and income taxes | 11,973 | 2,525 | (402) | (607) | (1,221) | 12,268 |
| Net finance income (expense) | - | - | - | 596 | - | 596 |
| Results of equity-accounted investments | 51 | 271 | 29 | (1) | - | 350 |
| Net income / (loss) before income taxes | 12,024 | 2,796 | (373) | (12) | (1,221) | 13,214 |
| Income taxes | (4,071) | (858) | 136 | (189) | 416 | (4,566) |
| Net income (loss) for the period | 7,953 | 1,938 | (237) | (201) | (805) | 8,648 |
| Attributable to: | ||||||
| Shareholders of Petrobras | 7,954 | 1,938 | (263) | (219) | (805) | 8,605 |
| Non-controlling interests | (1) | - | 26 | 18 | - | 43 |
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 & Power (G&P) |
Corporate and other businesses | Total | |
| Jan-Mar/2023 | 2,215 | 558 | 124 | 27 | 2,924 |
| Jan-Mar/2022 | 2,470 | 572 | 108 | 20 | 3,170 |
| 8.2. | Assets by operating segment |
The segment information reflects the financial information used in the decision-making process for resource allocation and performance evaluation carried out by the Company’s Board of Executive Officers (as Chief Operating Decision Makers).
| 14 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 9. | Trade and other receivables |
| 9.1. | Trade and other receivables |
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$ 466 as of March 31, 2023 (US$ 470 as of December 31, 2022).
| 15 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 9.2. | Aging of trade and other receivables – third parties |
| 03.31.2023 | 12.31.2022 | |||
| Trade and other receivables | Expected credit losses | Trade and other receivables | Expected credit losses | |
| Current | 5,525 | (35) | 6,474 | (39) |
| Overdue: | ||||
| 1-90 days | 115 | (44) | 189 | (48) |
| 91-180 days | 96 | (31) | 30 | (27) |
| 181-365 days | 105 | (62) | 63 | (51) |
| More than 365 days | 1,585 | (1,407) | 1,535 | (1,368) |
| Total | 7,426 | (1,579) | 8,291 | (1,533) |
| 9.3. | Changes in provision for expected credit losses – third parties and related parties |
| 10. | Inventories |
| 03.31.2023 | 12.31.2022 | |
| Crude oil | 3,476 | 3,738 |
| Oil products | 2,599 | 3,278 |
| Intermediate products | 568 | 587 |
| Natural gas and Liquefied Natural Gas (LNG) | 128 | 135 |
| Biofuels | 17 | 14 |
| Fertilizers | 1 | 4 |
| Total products | 6,789 | 7,756 |
| Materials, supplies and others | 1,179 | 1,023 |
| Total | 7,968 | 8,779 |
In the three-month period ended March 31, 2023, the Company recognized a US$ 8 reversal of cost of sales, adjusting inventories to net realizable value (a US$ 7 reversal of cost of sales in the three month period ended March 31, 2022), primarily due to changes in international prices of crude oil and oil products.
At March 31, 2023, the Company had pledged crude oil and oil products volumes as collateral for the Term of Financial Commitment (TFC) related to plans PPSP-R, PPSP-R Pre-70 and PPSP-NR Pre-70 signed by Petrobras and Petros Foundation in 2008, in the estimated amount of US$ 931, after deducting the partial early settlement, made in February 2022.
| 11. | Trade payables |
| 03.31.2023 | 12.31.2022 | |
| Third parties in Brazil | 3,004 | 3,497 |
| Third parties abroad | 2,034 | 1,935 |
| Related parties | 9 | 32 |
| Total | 5,047 | 5,464 |
| 16 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 12. | Taxes |
| 12.1. | Income taxes |
| Current assets | Current liabilities | Non-current liabilities | ||||
| 03.31.2023 | 12.31.2022 | 03.31.2023 | 12.31.2022 | 03.31.2023 | 12.31.2022 | |
| Taxes in Brazil | ||||||
| Income taxes | 175 | 160 | 920 | 2,505 | − | − |
| Income taxes - Tax settlement programs | − | − | 52 | 50 | 305 | 302 |
| 175 | 160 | 972 | 2,555 | 305 | 302 | |
| Taxes abroad | 6 | 5 | 384 | 328 | − | − |
| Total | 181 | 165 | 1,356 | 2,883 | 305 | 302 |
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:
Deferred income taxes - non-current
The changes in the deferred income taxes are presented as follows:
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Opening balance | (5,918) | (625) |
| Recognized in the statement of income for the period | (672) | (1,961) |
| Recognized in shareholders’ equity | (855) | (4,412) |
| Translation adjustment | (208) | (776) |
| Use of tax loss carryforwards | − | (720) |
| Others | 1 | 4 |
| Closing balance | (7,652) | (8,490) |
The composition of deferred tax assets and liabilities is set out in the following table:
| 17 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| Nature | Realization basis | 03.31.2023 | 12.31.2022 |
| PP&E - Exploration and decommissioning costs | Depreciation, amortization and write-offs of assets | 585 | 158 |
| PP&E - Impairment | Amortization, impairment reversals and write-offs of assets | 3,478 | 3,602 |
| PP&E - depreciation methods and capitalized borrowing costs | Depreciation, amortization and write-offs of assets | (16,234) | (15,438) |
| Loans, trade and other receivables / payables and financing | Payments, receipts and considerations | (212) | 810 |
| Lease liabilities | Appropriation of the considerations | 192 | 434 |
| Provision for legal proceedings | Payments and use of provisions | 960 | 885 |
| Tax loss carryforwards | Taxable income compensation | 932 | 914 |
| Inventories | Sales, write-downs and losses | 209 | 333 |
| Employee Benefits | Payments and use of provisions | 1,615 | 1,518 |
| Others | 823 | 866 | |
| Total | (7,652) | (5,918) | |
| Deferred tax assets | 728 | 832 | |
| Deferred tax liabilities | (8,380) | (6,750) |
Uncertain tax treatments
On April 24, 2023, the Company received an additional charge from the Dutch tax authority, due to a final assessment on the calculation of the Corporate Income Tax (CIT) of subsidiaries in the Netherlands in 2018, arising from the valuation of platforms and equipment nationalized under the Repetro tax regime, in the amount of US$ 279, classified as a contingent liability (note 14.3).
Tax treatments related to 2019 to 2022 have not yet been assessed by this tax authority. Any charges by the Dutch tax authority for these years, on a similar basis to 2018, could reach the amount of US$ 301. Thus, the total amount of these uncertain tax treatments, from 2018 to 2022, is US$ 580.
The Company will continue to defend its position that the valuation of platforms and equipment was carried out in compliance with the relevant legislation, through the use of administrative appeals or by the Dutch judicial courts. Therefore, no provision was recorded in these unaudited condensed consolidated interim financial statements for the period ended March 31, 2023.
| 12.2. | Other taxes |
| 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.
| 18 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 03.31.2023 | 12.31.2022 | |
| Liabilities | ||
| Short-term employee benefits | 1,555 | 1,452 |
| Termination benefits | 171 | 192 |
| Post-employment benefits | 11,859 | 11,246 |
| Total | 13,585 | 12,890 |
| Current | 2,339 | 2,215 |
| Non-current | 11,246 | 10,675 |
| 13.1. | Short-term employee benefits |
The Company recognized the following amounts in the statement of income:
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Salaries, accrued vacations and related charges | (747) | (678) |
| Variable compensation program - PPP | (140) | (118) |
| Profit sharing | (35) | (31) |
| Management fees and charges | (2) | (3) |
| Total | (924) | (830) |
| 13.1.1. | Variable compensation programs |
Performance award program (PPP)
As of March 31, 2023, the Company had paid US$ 136 and, in April 2023, made the final payment of US$ 396, totalizing US$ 532 regarding the PPP for 2022, since the related metrics relating to the Company’s and individual performance were achieved in 2022.
Regarding the PPP for 2023, the Company is revising the model for this program. However, due to the expectation of maintaining the program with a similar nature of 2022, in the three-month period ended March 31, 2023, the Company provisioned US$ 139 referring to this program for 2023 (US$ 118 for the same period of 2022), recorded in other income and expenses.
Profit Sharing (PLR)
The Company made an advance of US$ 44 related to the PLR 2022, with final payment expected to occur on May 30, 2023, considering the current agreement for the PLR, approved by the Secretariat of Management and Governance of the State-owned Companies (SEST), which provides that only employees without managerial functions will be entitled to receive profit sharing with individual limits according to their remuneration.
In the three-month period ended March 31, 2023, the Company provisioned US$ 35 referring to PLR for 2023 (US$ 31 for the same period of 2022), recorded in other income and expenses.
| 19 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 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.
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.
For the current programs, there are 11,732 adhesions accumulated through March 31, 2023 (11,688 through December 31, 2022).
Changes to the provisions for termination benefits are presented as follows:
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Opening Balance | 192 | 349 |
| Effects in the statement of income | (4) | 3 |
| Enrollments | 3 | 4 |
| Revision of provisions | (7) | (1) |
| Effects in cash and cash equivalents | (23) | (129) |
| Terminations in the period | (23) | (129) |
| Translation adjustment | 6 | 50 |
| Closing Balance | 171 | 273 |
| Current | 70 | 147 |
| Non-current | 101 | 126 |
Recognition of the provision for expenses occur as employees enroll to the programs.
The Company disburse the severance payments in two installments, one at the time of termination and the remainder one year after the termination.
As of March 31, 2023, from the balance of US$ 171, US$ 34 refers to the second installment of 590 retired employees and US$ 137 refers to 1,319 employees enrolled in voluntary severance programs with expected termination by September 2025.
| 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), and five other major types of post-employment pension benefits (collectively referred to as “pension plans”).
The following table presents the balance of post-employment benefits:
| 03.31.2023 | 12.31.2022 | |
| Liabilities | ||
| Health Care Plan - Saúde Petrobras | 6,087 | 5,813 |
| Petros Pension Plan - Renegotiated (PPSP-R) | 3,746 | 3,606 |
| Petros Pension Plan - Non-renegotiated (PPSP-NR) | 1,080 | 1,041 |
| Petros Pension Plan - Renegotiated - Pre-70 (PPSP-R Pre 70) | 414 | 284 |
| Petros Pension Plan - Non-renegotiated - Pre-70 (PPSP-NR Pre 70) | 356 | 339 |
| Petros 2 Pension Plan (PP-2) | 176 | 163 |
| Total | 11,859 | 11,246 |
| Current | 748 | 719 |
| Non-current | 11,111 | 10,527 |
Health Care Plan
The health care plan is managed by Petrobras Health Association (Associação Petrobras de Saúde – APS), a nonprofit civil association, and includes prevention and health care programs. The plan covers all employees and retirees and is open to future employees.
| 20 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
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.
Pension plans
The management of the supplementary pension plans sponsored by the Company is under the responsibility of Fundação Petrobras de Seguridade Social – Petros, which was established by Petrobras as a non-profit, private legal entity 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 Conselho Nacional de Previdência Complementar - CNPC.
The table below presents the reconciliation of the deficit of Petros Plan registered by Petros Foundation as of December 31, 2022 with the net actuarial liability registered by the Company:
On March 29, 2023, the Deliberative Council of Petros approved the financial statements of the pension plans sponsored by the Company for the year ended December 31, 2022.
Deficit Settlement Plan 2021 referring to the PPSP-R plan
On November 10, 2022, Petros' Foundation Deliberative Council approved a plan to settle the deficit registered by the PPSP-R in 2021. On April 1, 2023, this plan was implemented, following a favorable decision held on March 17, 2023 by the SEST.
This deficit, amounting to US$ 1,676 (R$ 8,515 million) as of March 31, 2023, must be settled on an equal basis between sponsors and participants, of which US$ 790 (R$ 4,012 million) will be paid by Petrobras, during the lifetime of the plan. The deduction from the payroll of participants, relating to these extraordinary payments, began in April 2023.
| 21 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 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:
The net expense with pension and healthcare plans is presented below:
| 22 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| Pension Plans | Health Care Plan | Other Plans | Total | |||
| PPSP-R (*) | PPSP-NR (*) | Petros 2 | Saúde Petrobras | |||
| 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) |
| Related to active employees (cost of sales and expenses) | (8) | (1) | (5) | (55) | − | (69) |
| Related to retirees (other income and expenses) | (105) | (35) | (3) | (95) | − | (238) |
| Net costs for Jan-Mar/2022 | (113) | (36) | (8) | (150) | − | (307) |
| (*) 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, 2023, the Company contributed with US$ 178 (US$ 1,477 in the same period of 2022 , including US$ 1,324 related to Term of financial commitment) the defined benefit plans (reducing the balance of obligations of these plans, as presented in note 13.3.1), and with US$ 54 and US$ 0.4, respectively, to the defined contribution portions of PP-2 and PP-3 plans (US$ 46 for PP-2 and US$ 0.4 for PP-3 in the same period of 2022).
The contribution to the defined benefit portion of the PP-2, which had been suspended in July 2012, was restored in April 2023, pursuant to a decision by the Petros Foundation's Deliberative Council. Thus, a portion of the monthly contribution will be destined to risk coverage (payment of sickness allowance, reclusion allowance, lump sum death benefit and minimum guarantees) to reduce the balance of the actuarial liability.
| 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; and (iii) claims for alleged non-payment of CIDE on imports of propane and butane. |
| · | Civil claims, in particular: (i) lawsuits related to contracts; (ii) penalties applied by ANP, mainly relating to production measurement systems; and (iii) litigation involving corporate conflicts. |
| · | 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 | 03.31.2023 | 12.31.2022 |
| Labor claims | 765 | 737 |
| Tax claims | 505 | 466 |
| Civil claims | 1,678 | 1,504 |
| Environmental claims | 294 | 303 |
| Total | 3,242 | 3,010 |
| 23 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Opening Balance | 3,010 | 2,018 |
| Additions, net of reversals | 182 | 205 |
| Use of provision | (102) | (80) |
| Revaluation of existing proceedings and interest charges | 69 | 48 |
| Others | (1) | (12) |
| Translation adjustment | 84 | 376 |
| Closing Balance | 3,242 | 2,555 |
In preparing its unaudited consolidated interim financial statements for the three-month period ended March 31, 2023, 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 |
Judicial deposits are set out in the table below according to the nature of the corresponding lawsuits:
| Non-current assets | 03.31.2023 | 12.31.2022 |
| Tax | 8,497 | 7,876 |
| Labor | 938 | 907 |
| Civil | 2,410 | 2,089 |
| Environmental | 110 | 109 |
| Others | 71 | 72 |
| Total | 12,026 | 11,053 |
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Opening Balance | 11,053 | 8,038 |
| Additions | 402 | 405 |
| Use | (19) | (23) |
| Accruals and charges | 278 | 159 |
| Others | (2) | (16) |
| Translation adjustment | 314 | 1,484 |
| Closing Balance | 12,026 | 10,047 |
| 14.3. | Contingent liabilities |
The estimates of contingent liabilities are indexed to inflation and updated by applicable interest rates. Estimated contingent liabilities for which the possibility of loss is classified as possible are set out in the following table:
| Nature | 03.31.2023 | 12.31.2022 |
| Tax | 33,272 | 32,094 |
| Labor | 8,732 | 8,272 |
| Civil | 7,845 | 7,548 |
| Environmental | 1,385 | 1,257 |
| Total | 51,234 | 49,171 |
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) collection of PIS and COFINS, resulting from the payment of taxes negotiated with the Brazilian Federal Government, excluding the payment of fines; (v) collection of ICMS involving several states; and (vi) deduction from the PIS and COFINS tax base, including ship-or-pay agreements and chartering of aircraft and vessels. |
| 24 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| · | 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; and (iii) regulation agencies fines. |
| · | Environmental matters comprising indemnities for damages and fines related to the Company operation. |
| 14.4. | Minimum Compensation Based on Employee's Position and Work Schedule (Remuneração Mínima por Nível e Regime - RMNR) |
As of March 31, 2023, 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 and implemented by Petrobras in 2007 through collective bargaining with union representatives, and was approved at employee meetings, and 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 against its decision. Therefore, the Brazilian Supreme Federal Court (STF) suspended the effects of the decision issued by the TST and determined the national suspension of the ongoing proceedings related to the RMNR.
On July 29, 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 February 2022, the judgment of the appeals filed by the plaintiff and several amicus curiae was started. The judgment is currently underway in the First Panel of the Supreme Federal Court, with 3 votes in favor of the Company, confirming that there is an understanding of recognizing the merit of the collective bargaining agreement signed between Petrobras and the unions. Considering that the last minister to vote requested additional time for analysis, the trial was suspended, and is pending the presentation of the vote by this last minister.
As of March 31, 2023, the balance of provisioned proceedings regarding RMNR amounts to US$ 169, while the contingent liabilities amount to US$ 7,223.
| 14.5. | Class actions and related proceedings |
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 claims that, based on the facts revealed by Operation Lava-Jato, the defendants acted illegally before investors. On 26 May 2021, the District Court of Rotterdam decided that the class action must proceed and that the arbitration clause of Petrobras' bylaws does not prevent the Company's shareholders from having access to the Dutch Judiciary and being represented by the Stichting Petrobras Compensation Foundation (“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 action. The class action is in the merit discussion stage and a decision is expected for July 26, 2023, but it may be brought forward or postponed by the Court.
In relation to the arbitration in Argentina, the Argentine Supreme Court denied the appeal, but the Consumidores Damnificados Asociación Civil para su Defensa ("Association") filed a new appeal, which has not yet been judged. 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.
| 25 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
At the same time, the Association also filed a class action before the Civil and Commercial Court of Buenos Aires, Argentina, where Petrobras spontaneously appeared on April 10, 2023. The Association claims Petrobras' responsibility for an alleged loss of market value of its securities in Argentina, as a result of allegations made within the scope of the Lava Jato Operation and its effects on the Company's financial statements prior to 2015. Such demand does not generate immediate financial and economic effects for Petrobras. The Company denies such allegations and will vigorously defend itself against the accusations made by the author of the collective action.
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. Petrobras appealed against this decision, but the higher courts upheld the decision of the Court of Appeals, thus the immunity will have to be reassessed by the lower court. The Court of Appeals 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. Petrobras presented 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 “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 during the three-month period ended March 31, 2023.
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 are recorded 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, which is why an appeal was filed with the Federal Court of Appeals for the District of Columbia. 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, the District Court of Amsterdam granted a precautionary measure to block certain Petrobras assets in the Netherlands, at the request of EIG. 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$ 297.2, 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.
| 14.6. | Arbitrations proposed by non-controlling Shareholders in Brazil |
In the three-month period ended March 31, 2023, there were no events that changed the assessment and information on arbitrations in Brazil. For more information, see explanatory note 18.5 to the financial statements for the year ended December 31, 2022.
| 14.7. | Legal proceedings - Compulsory Loan – Eletrobrás |
In the three-month period ended March 31, 2023, there were no events that changed the assessment on this proceeding. For more information, see explanatory note 18.6 to the financial statements for the year ended December 31, 2022.
| 14.8. | Lawsuits brought by natural gas distributors and others |
In the three-month period ended March 31, 2023, there were no events that changed the assessment and information on lawsuits and arbitrations. For more information, see explanatory note 18.7 to the financial statements for the year ended December 31, 2022.
| 26 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 15. | Provision for decommissioning costs |
The following table details the amount of the provision for decommissioning costs by producing area:
| 03.31.2023 | 12.31.2022 | |
| Onshore | 430 | 418 |
| Shallow waters | 4,559 | 4,399 |
| Deep and ultra-deep post-salt | 10,156 | 9,988 |
| Pre-salt | 3,939 | 3,795 |
| 19,084 | 18,600 |
Changes in the provision for decommissioning costs are presented as follows:
| 16. | Other Assets and Liabilities |
| Assets | 03.31.2023 | 12.31.2022 | |
| Escrow account and/ or collateral | 1,312 | 1,087 | |
| Advances to suppliers | 1,909 | 1,561 | |
| Prepaid expenses | 387 | 363 | |
| Derivatives transactions | 62 | 54 | |
| Assets related to E&P partnerships | 181 | 71 | |
| Others | 213 | 194 | |
| 4,064 | 3,330 | ||
| Current | 2,039 | 1,777 | |
| Non-Current | 2,025 | 1,553 | |
| Liabilities | 03.31.2023 | 12.31.2022 | |
| Obligations arising from divestments | 1,335 | 1,355 | |
| Contractual retentions | 623 | 601 | |
| Advances from customers | 619 | 906 | |
| Provisions for environmental expenses, research and development and fines | 791 | 674 | |
| Other taxes | 340 | 293 | |
| Unclaimed dividends | 265 | 241 | |
| Derivatives transactions | 99 | 147 | |
| Various creditors | − | - | |
| Others | 730 | 756 | |
| 4,802 | 4,973 | ||
| Current | 2,737 | 3,001 | |
| Non-Current | 2,065 | 1,972 | |
| 27 |
NOTES TO THE UNAUDITED 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 (*) |
Assets under construction (**) |
Exploration and development costs (***) | Right-of-use assets | Total | |
| 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 (****) | (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 (*****) | 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 | − | (15) | (5) | − | − | (20) |
| Impairment reversal | − | 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 (****) | (1,852) | (52,629) | (8,806) | (30,817) | (11,644) | (105,748) |
| 28 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 17.2. | Estimated useful life |
The useful life of assets depreciated are shown below:
| Asset | Weighted average useful life in years |
| Buildings and improvement | 40 (between 25 and 50) |
| Equipment and other assets | 20 (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, 2023 | 9,132 | 8,401 | 1,792 | 19,325 |
| Cost | 13,040 | 15,540 | 2,389 | 30,969 |
| Accumulated depreciation and impairment | (3,908) | (7,139) | (597) | (11,644) |
| Balance at December 31, 2022 | 9,211 | 8,254 | 1,747 | 19,212 |
| Cost | 12,604 | 14,788 | 2,278 | 29,670 |
| Accumulated depreciation and impairment | (3,393) | (6,534) | (531) | (10,458) |
| 17.4. | Unitization agreements |
Petrobras has Production Individualization Agreements (AIP) signed in Brazil with partner companies in E&P consortia, as well as contracts resulting from divestment operations and strategic partnerships related to these consortia. These agreements result in reimbursements payable to (or receivable from) partners regarding expenses and production volumes mainly related to Agulhinha, Albacora Leste, Berbigão, Budião Noroeste, Budião Sudeste, Caratinga, Sururu and Tartaruga.
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/2023 | Jan-Mar/2022 | |||||
| Opening balance | 407 | 364 | ||||
| Additions/(Write-offs) on PP&E | (3) | (32) | ||||
| Other income and expenses | 17 | (26) | ||||
| Translation adjustments | 11 | 58 | ||||
| Closing balance | 432 | 364 |
| 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, 2023, the capitalization rate was 6.85% p.a. (6.01% p.a. for the three-month period ended March 31, 2022).
| 29 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 18. | Intangible assets |
| 18.1. | By class of assets |
| 19. | 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 (*) | Jan-Mar/2023 | Jan-Mar/2022 |
| Property plant and equipment | ||
| Opening Balance | 1,876 | 1,994 |
| Additions | 65 | 66 |
| Write-offs | - | (13) |
| Transfers | (43) | (9) |
| Translation adjustment | 50 | 338 |
| Closing Balance | 1,948 | 2,376 |
| Intangible Assets | 2,436 | 3,034 |
| Capitalized Exploratory Well Costs / Capitalized Acquisition Costs | 4,384 | 5,410 |
| (*) Amounts capitalized and subsequently expensed in the same period have been excluded from this table. |
| 30 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
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/2023 | Jan-Mar/2022 | |
| Exploration costs recognized in the statement of income | ||
| Geological and geophysical expenses | (125) | (53) |
| Exploration expenditures written off (includes dry wells and signature bonuses) | (32) | (23) |
| Contractual penalties on local content requirements | - | (2) |
| Other exploration expenses | - | (1) |
| Total expenses | (157) | (79) |
| Cash used in: | ||
| Operating activities | 125 | 54 |
| Investment activities | 65 | 76 |
| Total cash used | 190 | 130 |
| 20. | 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$ 1,820 (US$ 1,748 as of December 31, 2022), which is still in force as of March 31, 2023, net of commitments undertaken. As of March 31, 2023, the collateral comprises crude oil from previously identified producing fields already in production, pledged as collateral, in the amount of US$ 1,692 (US$ 1,648 as of December 31, 2022) and bank guarantees of US$ 128 (US$ 100 as of December 31, 2022).
| 21. | Investments |
| 21.1. | Investments in associates and joint ventures |
| 0 | Joint Ventures | Associates (*) | 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 |
| (*) It includes other investments. | |||
| Joint Ventures | Associates (*) | Total | |
| Balance at December 31, 2021 | 509 | 1,001 | 1,510 |
| Investments | 8 | 1 | 9 |
| Transfer to assets held for sale | (2) | − | (2) |
| Restructuring, capital decrease and others | 9 | (11) | (2) |
| Results of equity-accounted investments | 69 | 281 | 350 |
| Translation adjustment | 6 | (46) | (40) |
| Other comprehensive income | - | 250 | 250 |
| Dividends | (49) | − | (49) |
| Balance at March 31, 2022 | 550 | 1,476 | 2,026 |
| (*) It includes other investments. | |||
| 22. | Disposal of assets and other transactions |
The Company has an active portfolio, which takes into account opportunities of partnerships and disposal of non-strategic assets in several areas in which it operates, whose development of transactions also depends on conditions beyond the control of the Company.
| 31 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
On February 28, 2023, Petrobras was notified by the Ministry of Mines and Energy - MME, requesting the suspension of asset sales for 90 days, due to the reassessment of the National Energy Policy and to the new composition of the National Energy Policy Council, respecting the Company's governance rules, commitments assumed with government entities and without going against the interests of Petrobras.
On April 3, 2023, the Company’s Board of Executive Officers informed that the revision of unsigned divestment processes will be carried out within the scope of the adjustments to be made to the 2023-27 Strategic Plan.
The major classes of assets and related liabilities classified as held for sale are shown in the following table:
| 03.31.2023 | 12.31.2022 | ||||
| E&P | RT&M | Corporate and other businesses | Total | Total | |
| Assets classified as held for sale | |||||
| Inventories | - | 26 | − | 26 | 21 |
| Investments | - | − | − | - | - |
| Property, plant and equipment | 1,892 | 20 | − | 1,912 | 3,587 |
| Others | - | 1 | − | 1 | - |
| Total | 1,892 | 47 | − | 1,939 | 3,608 |
| Liabilities on assets classified as held for sale | |||||
| Finance debt | - | - | 133 | 133 | 133 |
| Provision for decommissioning costs | 908 | - | - | 908 | 1,332 |
| Total | 908 | − | 133 | 1,041 | 1,465 |
| 22.1. | Transactions pending closing at March 31, 2023 |
The assets and liabilities corresponding to the transactions signed in previous periods which are pending closing are classified as held for sale at March 31, 2023:
| i. | sale of the Company's entire interest (100%) in a set of 22 production onshore and shallow water field concessions, together with their associated infrastructure, located in the Potiguar Basin, in the state of Rio Grande do Norte, jointly called the Potiguar group of fields; |
| ii. | sale of the Company's entire interest in a set of four onshore production fields, with integrated facilities, located in the state of Espírito Santo, jointly called Norte Capixaba group of fields; |
| iii. | sale of the Lubrificantes e Derivados de Petróleo do Nordeste (LUBNOR) refinery and its associated logistics assets, located in the state of Ceará; and |
| iv. | sale of the Company's entire interest in a set of maritime concessions called Golfinho and Camarupim groups of fields, in deep waters of the post-salt layer, located in the Espírito Santo Basin. |
For more information on these transactions (which are subject to certain conditions precedent), see note 30.1 of the Company's consolidated financial statements of 2022.
From January to March 2023, no new contracts were signed.
| 22.2. | Transactions closed in the first quarter of 2023 |
| Transaction | Acquirer |
Signature date (S) Closing date (C) |
Sale amount (*) | Gain/ (loss) (**) | Further infor-mation |
| Sale of its entire interest in Albacora Leste producing field, located in the Campos Basin | Petro Rio Jaguar Petróleo LTDA (PetroRio), a subsidiary of Petro Rio S.A. |
April 2022 (S) January 2023 (C) |
1,928 | 568 | a |
| (*) The amount of "Proceeds from disposal of assets" in the Statement of Cash Flows is composed of amounts received this period, including installments of operations from previous years, and advances referring to operations not completed. | |||||
| (**) Recognized in “Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control” within other income and expenses (note 6). | |||||
| 32 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| a) | Sale of Albacora Leste concession |
The transaction was closed after the fulfillment of conditions precedent, with the receipt, in cash, of US$ 1,635, including price adjustments provided for in the contract, in addition to US$ 293 received at the transaction signing. In addition, Petrobras is expected to receive up to US$ 250 in contingent payments provided for in the contract, depending on future Brent prices.
| 22.3. | 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:
| Transaction | Closing date | Amounts subject to recognition | Assets recognized in 2023 |
Assets recognized in previous periods |
|
| Sales in previous years | |||||
| Riacho da Forquilha group of fields | December 2019 | 62 | 7 | 28 | |
| Pampo and Enchova group of fields | July 2020 | 650 | − | 180 | |
| Baúna field | November 2020 | 285 | − | 132 | |
| Frade field | February 2021 | 20 | − | − | |
| Ventura group of fields | July 2021 | 43 | − | 43 | |
| Miranga group of fields | December 2021 | 85 | − | 55 | |
| Cricare group of fields | December 2021 | 118 | − | 22 | |
| Peroá group of fields | August 2022 | 43 | − | 10 | |
| Papa-Terra field | December 2022 | 90 | 1 | 15 | |
| Sales in the period | |||||
| Albacora Leste field | January 2023 | 250 | − | − | |
| Surplus volume of the Transfer of Rights Agreement | |||||
| Sepia and Atapu | April 2022 | 5,244 | 25 | 693 | |
| Total | 33 | 1,178 | |||
| 33 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 23. | Finance debt |
| 23.1. | Balance by type of finance debt |
Current finance debt is composed of:
| 03.31.2023 | 12.31.2022 | |
| Short-term debt | 6 | − |
| Current portion of long-term debt | 3,609 | 3,111 |
| Accrued interest on short and long-term debt | 483 | 465 |
| Total | 4,098 | 3,576 |
The capital market balance is mainly composed of US$ 13,428 in global notes issued abroad by the wholly owned subsidiary PGF, as well as US$ 1,908 in debentures and US$ 900 in commercial notes issued by Petrobras in reais in Brazil.
The balance in global notes has maturities between 2024 to 2115 and does not require collateral. Such financing was carried out in dollars, euros and pounds, 87%, 2% and 11%, 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, 2023, 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, 2022.
| 23.2. | Changes in finance debt |
| 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 (*) | (182) | (282) | (464) |
| Repayment of interest (*) | (118) | (372) | (490) |
| Accrued interest (**) | 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 |
| 34 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| In Brazil | Abroad | Total | |
| Balance at December 31, 2021 | 4,517 | 31,183 | 35,700 |
| Proceeds from finance debt | - | 150 | 150 |
| Repayment of principal (*) | (149) | (1,050) | (1,199) |
| Repayment of interest (*) | (92) | (426) | (518) |
| Accrued interest (**) | 99 | 416 | 515 |
| Foreign exchange/ inflation indexation charges | 47 | (754) | (707) |
| Translation adjustment | 799 | 681 | 1,480 |
| Balance at March 31, 2022 | 5,221 | 30,200 | 35,421 |
| (*) 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 three-month period ended March 31, 2023, the Company repaid several finance debts, in the amount of US$ 1,320.
| 23.3. | Reconciliation with cash flows from financing activities |
| 23.4. | Summarized information on current and non-current finance debt |
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$ 12,966 of March 31, 2023 (US$ 13,061 of December 31, 2022); and
| 35 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
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$ 16,625 as of March 31, 2023 (US$ 16,792 as of December 31, 2022).
Regarding the Interest Rate Benchmark Reform (IBOR Reform), in order to prepare for the transition to alternative reference rates, the Company continues to monitor the pronouncements of regulatory authorities, aimed at adapting its financial instruments to the new benchmark, and the Company expects that the replacement of the LIBOR reference in the current financing agreements will be carried out under market conditions and, therefore, expects that there will be no material impacts when this process is completed. The Company has debts indexed to Libor (London Interbank Offered Rate), corresponding to 30.9% of total finance debt.
The sensitivity analysis for financial instruments subject to foreign exchange variation is set out in note 26.3.
A maturity schedule of the Company’s finance debt (undiscounted), including face value and interest payments is set out as follows:
| Maturity | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 and thereafter | 03.31.2023 | 12.31.2022 |
| Principal | 2,743 | 4,045 | 3,176 | 2,622 | 2,650 | 15,156 | 30,392 | 31,703 |
| Interest | 1,458 | 1,761 | 1,445 | 1,277 | 1,056 | 17,223 | 24,221 | 24,815 |
| Total | 4,201 | 5,806 | 4,621 | 3,899 | 3,706 | 32,379 | 54,613 | 56,518 |
A maturity schedule of the lease arrangements (nominal amounts) is set out in note 24.
| 23.5. | Lines of credit |
| 24. | Lease liabilities |
Changes in the balance of lease liabilities are presented below:
| In Brazil | Abroad | Total | |
| Balance at December 31, 2022 | 6,020 | 17,825 | 23,845 |
| Remeasurement / new contracts | 309 | 303 | 612 |
| Payment of principal and interest | (506) | (883) | (1,389) |
| Interest expenses | 112 | 252 | 364 |
| Foreign exchange losses | (75) | (456) | (531) |
| Translation adjustment | 160 | 452 | 612 |
| Balance at March 31, 2023 | 6,020 | 17,493 | 23,513 |
| Current | 5,642 | ||
| Non-current | 17,871 |
| 36 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| In Brazil | Abroad | Total | |
| Balance at December 31, 2021 | 4,604 | 18,439 | 23,043 |
| Remeasurement / new contracts | 426 | 311 | 737 |
| Payment of principal and interest | (374) | (947) | (1,321) |
| Interest expenses | 73 | 231 | 304 |
| Foreign exchange losses | (401) | (2,907) | (3,308) |
| Translation adjustment | 778 | 2,900 | 3,678 |
| Balance at March 31, 2022 | 5,106 | 18,027 | 23,133 |
| Current | 5,353 | ||
| Non-current | 17,780 |
A maturity schedule of the lease arrangements (nominal amounts) is set out as follows:
| Nominal Future Payments | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 onwards | Total |
| Balance at March 31, 2023 | 4,431 | 4,954 | 3,615 | 2,519 | 2,143 | 14,400 | 32,062 |
| Balance at December 31, 2022 | 5,710 | 4,621 | 3,380 | 2,394 | 2,122 | 14,498 | 32,725 |
In certain contracts, there are variable payments and amounts less than 1 year recognized as an expense:
| 03.31.2023 | 03.31.2022 | ||
| Variable payments | 324 | 250 | |
| Up to 1 year maturity | 18 | 67 | |
| Variable payments x fixed payments | 23% | 19% |
At March 31, 2023, the nominal amounts 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$ 81,553 (US$ 79,913 at December 31, 2022).
The sensitivity analysis of financial instruments subject to exchange variation is presented in note 26.3.
| 25. | Equity |
| 25.1. | Share capital (net of share issuance costs) |
As of March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2021, the Company held treasury shares, in the amount of US$ 2, of which 222,760 are common shares and 72,909 are preferred shares.
| 25.2. | Distributions to shareholders |
Dividends relating to 2022
On April 27, 2023, the Annual General Shareholders Meeting approved dividends relating to 2022, amounting to US$ 43,187 (US$ 3.3106 per outstanding share). This amount includes US$ 36,323 anticipated during 2022 (updated by SELIC interest rate from the date of each payment to December 31, 2022) and US$ 6,864 of complementary dividends (US$ 0.5262 per outstanding share) which was accounted for as additional dividends proposed as of December 31, 2022.
These complementary dividends were reclassified from shareholders' equity to liabilities on the date of approval on the Annual General Shareholders Meeting and will be paid in 3 installments on May 19, June 16 and December 27, 2023, including the update by the SELIC interest rate from December 31, 2022 to the date of each payment.
| 37 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
Dividends payable
As of March 31, 2023, there is no balance of dividends payable within current liabilities, as set out below:
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Changes in dividends payable | ||
| Opening balance | 4,169 | − |
| Payments made | (4,192) | − |
| Monetary restatement | 30 | − |
| Transfers to unclaimed dividends | (17) | − |
| Withholding income taxes over interest on capital and monetary restatement | (3) | − |
| Translation adjustment | 13 | − |
| Closing balance | − | − |
On January 19, 2023, Petrobras paid the second installment of anticipated dividends approved by the Board of Directors on November 3, 2022, in the amount of US$ 4,169, net of withholding income taxes over interest on capital. This installment was monetarily restated based on the SELIC interest rate from December 31, 2022 to the payment date.
Unclaimed dividends
As of March 31, 2023, the balance of dividends not claimed by shareholders of Petrobras is US$ 265 recorded as other current liabilities, as described in note 16 (US$ 241 as of December 31, 2022). The payment of these dividends was not carried out due to the lack of registration data for which the shareholders are responsible with the custodian bank for the Company's shares and with Petrobras.
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Changes in unclaimed dividends | ||
| Opening balance | 241 | 81 |
| Transfers from dividends payable | 17 | − |
| Translation adjustment | 7 | 5 |
| Closing Balance | 265 | 86 |
| 25.3. | Earnings per share |
Basic earnings per share are calculated by dividing the net income attributable to shareholders of Petrobras by the weighted average number of outstanding shares during the period.
Diluted earnings per share are calculated by adjusting the net income 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 are identical as the Company has no potentially dilutive shares.
| 38 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 26. | Risk management |
The Company presents a sensitivity analysis of factors relating to its corporate risk management process. The possible and remote scenarios are related to events with low and very low probability of occurrence, respectively. The period of application of the sensitivity analysis is one year, except for operations with commodity derivatives, for which a three-month period is applied, due to the short-term nature of these transactions.
| 26.1. | Derivative financial instruments |
A summary of the positions of the derivative financial instruments held by the Company and recognized in other current assets and liabilities as of March 31, 2023 , as well as the amounts recognized in the statement of income and other comprehensive income and the guarantees given is set out as follows:
|
|
Gains/ (losses) recognized in the statement of income | |
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Commodity derivatives | ||
| Other commodity derivative transactions - Note 26.2 (b) | 79 | (53) |
| Recognized in Other Income and Expenses | 79 | (53) |
| Currency derivatives | ||
| Swap Pounds Sterling x Dollar - Note 26.3 (b) | − | (30) |
| Swap CDI x Dollar - Note 26.3 (b) | 16 | 169 |
| Others | (1) | − |
| 15 | 139 | |
| Interest rate derivatives | ||
| Swap - CDI X IPCA - Note 26.3 (b) | 7 | (1) |
| 7 | (1) | |
| Cash flow hedge on exports -Note 26.3 (a) | (1,154) | (1,380) |
| Recognized in Net finance income (expense) | (1,132) | (1,242) |
| Total | (1,053) | (1,295) |
| Gains/ (losses) recognized in other comprehensive income | ||
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Cash flow hedge on exports - Note 26.3 (a) | 2,622 | 12,976 |
| 39 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| Guarantees given as collateral | ||
| 03.31.2023 | 12.31.2022 | |
| Commodity derivatives | 21 | 96 |
| Total | 21 | 96 |
A sensitivity analysis of the derivative financial instruments for the different types of market risks as of March 31, 2023 is set out as follows:
The probable scenario uses market references, used in pricing models for oil, oil products and natural gas markets, and takes into account the closing price of the asset on March 31, 2023. Therefore, no variation is considered arising from outstanding operations in this scenario. The reasonably possible and remote scenarios reflect the potential effects on the statement of income from outstanding transactions, considering a variation in the closing price of 20% and 40%, respectively. To simulate the most unfavorable scenarios, the variation was applied to each asset according to open transactions: price decrease for long positions and increase for short positions.
| 26.2. | Risk management of 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.
| a) | 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.
| 26.3. | Foreign exchange risk management |
| a) | Cash Flow Hedge involving the Company’s future exports |
The carrying amounts, the fair value as of March 31, 2023, 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$ 5,084 exchange rate are set out below:
|
Present value of hedging instrument notional value at 03.31.2023 | |||||
| Hedging Instrument | Hedged Transactions |
Nature of the Risk |
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 of highly probable future monthly exports revenues |
Foreign Currency – Real vs U.S. Dollar Spot Rate |
April 2023 to March 2033 | 61,711 | 313,516 |
| 40 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| Changes in the present value of hedging instrument notional value | US$ million | R$ million |
| Amounts designated as of December 31, 2022 | 62,119 | 324,121 |
| Additional hedging relationships designated, designations revoked and hedging instruments re-designated | 6,035 | 31,083 |
| Exports affecting the statement of income | (1,792) | (9,264) |
| Principal repayments / amortization | (4,651) | (24,223) |
| Foreign exchange variation | - | (8,201) |
| Amounts designated as of March 31, 2023 | 61,711 | 313,516 |
| Nominal value of hedging instrument (finance debt and lease liability) at March 31, 2023 | 71,293 | 362,195 |
In the three-month period ended March 31, 2023 the Company recognized a US$ 98 loss within foreign exchange gains (losses) due to ineffectiveness (a US$ 62 gain in the same period of 2022).
The average ratio of future exports for which cash flow hedge accounting was designated to the highly probable future exports is 48.13%.
A roll-forward schedule of cumulative foreign exchange losses recognized in other comprehensive income as of March 31, 2023 is set out below:
| Exchange rate variation | Tax effect | Total | |
| Balance at December 31, 2022 | (26,527) | 9,020 | (17,507) |
| Recognized in Other comprehensive income | 1,468 | (499) | 969 |
| Reclassified to the statement of income - occurred exports | 1,154 | (393) | 761 |
| Balance at March 31, 2023 | (23,905) | 8,128 | (15,777) |
| Exchange rate variation | Tax effect | Total | |
| Balance at December 31, 2021 | (36,621) | 12,452 | (24,169) |
| Recognized in Other comprehensive income | 11,596 | (3,943) | 7,653 |
| Reclassified to the statement of income - occurred exports | 1,380 | (469) | 911 |
| Balance at March 31, 2022 | (23,645) | 8,040 | (15,605) |
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 the Strategic Plan 2023-2027, would not indicate a reclassification from equity to the statement of income.
A schedule of expected reclassification of cumulative foreign exchange losses recognized in other comprehensive income to the statement of income as of March 31, 2023 is set out below:
| 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 a 2032 | Total | |
| Expected realization | (5,807) | (5,916) | (3,582) | (2,929) | (3,268) | (2,141) | (262) | (23,905) |
| b) | Information on ongoing contracts |
As of March 31, 2023, the Company has outstanding swap contracts - IPCA x CDI and CDI x Dollar.
Swap contracts – IPCA x CDI and CDI x Dollar
In September 2019, Petrobras contracted a cross currency swap aiming to protect against exposure arising from the 7th issuance of debentures, settled on October 9, 2019, for the total notional amount of US$ 367 for IPCA x CDI operations, maturing in September 2029 and September 2034, and US$ 240 for CDI x U.S. Dollar operations, maturing in September 2024 and September 2029.
| 41 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
In July 2022, the Company approved a repurchase plan for these debentures, to hold them in treasury or resell them. At March 31, 2023, only an immaterial amount of this debt had been effectively repurchased. Thus, the position in this swap remains unchanged.
Changes in interest rate forward curves (CDI interest rate) may affect the Company's results, due to the market value of these swap contracts. In preparing a sensitivity analysis for these curves, a parallel shock on this curve was estimated based on the average maturity of these swap contracts, in the scope of the Company’s Risk Management Policy. For possible and remote scenarios, the effects of 40% (500 b.p.) and 80% (1,000 b.p.) variations, respectively, on the interest rate forward curves were estimated. The effects of this sensitivity analysis, keeping all other variables remaining constant, are shown in the following table:
| Possible Result | Remote Result | |
| SWAP cambial (IPCA x USD) | (10) | (19) |
The methodology used to calculate the fair value of this swap operation consists of calculating the future value of the operations, using rates agreed in each contract and the projections of the forward curves, IPCA coupon and foreign exchange coupon, discounting to present value using the risk-free rate. Curves are obtained from Bloomberg based on forward contracts traded in stock exchanges.
The mark-to-market is adjusted to the credit risk of the financial institutions, which is not relevant in terms of financial volume, since the Company deals in contracts with highly rated banks.
| 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 reasonably possible and remote scenarios (20% and 40% changes in the foreign exchange rates prevailing on March 31, 2023, respectively), except for assets and liabilities of foreign subsidiaries, when transacted in a currency equivalent to their respective functional currencies. This analysis only covers the exchange rate variation and maintains all other variables constant.
| 42 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| Risk | Financial Instruments | Exposure at 03.31.2023 | Probable Scenario (*) |
Reasonably possible scenario |
Remote Scenario |
| Dollar/Real | Assets | 7,511 | 251 | 1,502 | 3,004 |
| Liabilities | (96,309) | (3,215) | (19,262) | (38,523) | |
| Exchange rate - Cross currency swap | (592) | (20) | (118) | (237) | |
| Cash flow hedge on exports | 61,711 | 2,060 | 12,342 | 24,684 | |
| Total | (27,679) | (924) | (5,536) | (11,072) | |
| Euro/Dollar | Assets | 953 | 30 | 191 | 381 |
| Liabilities | (1,874) | (58) | (375) | (750) | |
| Total | (921) | (28) | (184) | (369) | |
| Pound/Dollar | Assets | 1,509 | 29 | 302 | 603 |
| Liabilities | (2,909) | (56) | (582) | (1,163) | |
| Total | (1,400) | (27) | (280) | (560) | |
| Pound/Real | Assets | 2 | − | − | 1 |
| Liabilities | (32) | (2) | (6) | (13) | |
| Total | (30) | (2) | (6) | (12) | |
| Euro/Real | Assets | 4 | − | 1 | 2 |
| Liabilities | (13) | (1) | (3) | (5) | |
| Total | (9) | (1) | (2) | (3) | |
| Total at March 31, 2023 | (30,039) | (982) | (6,008) | (12,016) | |
| (*) At , the probable scenario was computed based on the following risks: R$ x U.S. Dollar - a 3,34% depreciation of the Real; Euro x Dollar: a 3% appreciation of the Euro; Pound Sterling x U.S. Dollar: a 1.88% appreciation of the Pound Sterling; Real x Euro: a 6.5% depreciation of the Real; and Real x Pound Sterling - a 5.3% depreciation of the Real. Source: Focus and Thomson Reuters. | |||||
| 26.4. | Interest rate risk management |
The Company considers that interest rate risk does not create a significant exposure and therefore, preferably does not use derivative financial instruments to manage interest rate risk, except for specific situations faced by certain subsidiaries of Petrobras.
The sensitivity analysis of interest rate risk presented in the table below is carried out for a twelve-month term. Amounts referring to reasonably possible and remote scenarios mean the total floating interest expense if there is a variation of 40% and 80% in these interest rates, respectively, maintaining all other variables constant.
The following table presents the amounts to be disbursed by Petrobras with the payment of interest related to debts with floating interest rates at March 31, 2023:
| 43 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 26.5. | Liquidity risk management |
The possibility of a shortage of cash or other financial assets in order to settle the Company’s obligations on the agreed dates is managed by the Company.
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 subsidiaries, 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.
| 26.6. | Fair value of financial assets and liabilities |
| Level I | Level II | Level III |
Total fair value recorded | |
| Assets | ||||
| Commodity derivatives | 4 | - | - | 4 |
| Foreign currency derivatives | - | - | - | - |
| Interest rate derivatives | - | 19 | - | 19 |
| Balance at March 31, 2023 | 4 | 19 | - | 23 |
| Balance at December 31, 2022 | − | − | − | − |
| Liabilities | ||||
| Foreign currency derivatives | - | (79) | - | (79) |
| Balance at March 31, 2023 | − | (79) | - | (79) |
| Balance at December 31, 2022 | (40) | (81) | − | (121) |
The fair value of other financial assets and liabilities is presented in the respective notes: 3 – Marketable securities; 9 – Trade and other receivables; and 23 – Finance debt (estimated amount).
The fair values of cash and cash equivalents, current debt and other financial assets and liabilities are equivalent or do not differ significantly from their carrying amounts.
| 44 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 27. | Related party transactions |
The Company has a policy for related party transactions, which is annually revised and approved by the Board of Directors in accordance with the Company’s by-laws.
| 27.1. | 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:
| 03.31.2023 | 12.31.2022 | |||
| Assets | Liabilities | Assets | Liabilities | |
| Joint ventures and associates | ||||
| Petrochemical companies (associates) | 19 | 7 | 21 | 10 |
| Other associates and joint ventures | 75 | 2 | 72 | 21 |
| Subtotal | 94 | 9 | 93 | 31 |
| Brazilian government – Parent and its controlled entities | ||||
| Government bonds | 1,706 | − | 1,689 | − |
| Banks controlled by the Brazilian Government | 12,647 | 1,267 | 11,811 | 1,567 |
| Petroleum and alcohol account - receivables from the Brazilian Government | 629 | − | 602 | − |
| Brazilian Federal Government (*) | − | 307 | − | 1,422 |
| Pré-Sal Petróleo S.A. – PPSA | − | 54 | − | 57 |
| Others | 161 | 36 | 58 | 71 |
| Subtotal | 15,143 | 1,664 | 14,160 | 3,117 |
| Petros | 78 | 193 | 56 | 301 |
| Total | 15,315 | 1,866 | 14,309 | 3,449 |
| Current | 2,568 | 521 | 2,603 | 2,119 |
| Non-Current | 12,747 | 1,345 | 11,706 | 1,330 |
| (*) It includes amounts related to lease liabilities. | ||||
The income/expenses of significant transactions are set out in the following table:
| 45 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| 2023 | 2022 | |||
| Jan-Mar | Jan-Mar | |||
| Joint ventures and associates | ||||
| State-controlled gas distributors (joint ventures) (*) | − | 574 | ||
| Petrochemical companies (associates) | 889 | 1,125 | ||
| Other associates and joint ventures | 9 | 29 | ||
| Subtotal | 898 | 1,728 | ||
| Brazilian government – Parent and its controlled entities | ||||
| Government bonds | 53 | 42 | ||
| Banks controlled by the Brazilian Government | 6 | 21 | ||
| Petroleum and alcohol account - receivables from the Brazilian Government | 11 | 19 | ||
| Brazilian Federal Government | (17) | − | ||
| Pré-Sal Petróleo S.A. – PPSA | (110) | (39) | ||
| Others | (39) | 11 | ||
| Subtotal | (96) | 54 | ||
| Petros | (4) | − | ||
| Total | 798 | 1,782 | ||
| Revenues, mainly sales revenues | 894 | 1,781 | ||
| Purchases and services | 2 | 4 | ||
| Income (expenses) | (148) | (89) | ||
| Foreign exchange and inflation indexation charges, net | (43) | 12 | ||
| Finance income (expenses), net | 93 | 74 | ||
| Total | 798 | 1,782 | ||
| (*) In July 2022, the Company disposed its entire interest in Gaspetro. | ||||
The liability related to pension plans of the Company's employees and managed by the Petros Foundation, including debt instruments, is presented in note 13.
| 27.2. | Compensation of key management personnel |
The criteria for compensation of members of the Board of Directors and the Board Executive Officers is based on the guidelines established by the Secretariat of Management and Governance of the State-owned Companies (SEST) of the Ministry of Management and Innovation in Public Services, and by the MME. The total compensation is set out as follows:
In the three-month period ended March 31, 2023, expenses related to compensation of the board members and executive officers of Petrobras amounted to US$ 2.4 (US$ 2.9 for the same period of 2022).
The compensation of the Advisory Committees to the Board of Directors is separate 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 Statutory Audit Committees are only compensated with respect to their Audit Committee duties. The total compensation concerning these members was US$ 119 thousand for the three-month period ended March 31, 2023 (US$ 143 thousand with tax and social security costs). For the same period of 2022, the total compensation concerning these members was US$ 153 thousand (US$ 183 thousand with tax and social security costs).
| 46 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
On April 27, 2023, the Company’s Annual Shareholders’ Meeting set the threshold for the overall compensation for executive officers and board members at US$ 8.9, R$ 44.99 million, from April 2023 to March 2024 (US$ 7.6, R$ 39.59 million, from April 2022 to March 2023, approved on April 13, 2022).
| 28. | Supplemental information on statement of cash flows |
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Amounts paid/received during the period: | ||
| Withholding income tax paid on behalf of third-parties | 201 | 162 |
| Transactions not involving cash | ||
| Lease | 923 | 975 |
| Provision for decommissioning costs | 7 | 10 |
| Use of tax credits and judicial deposit for the payment of contingency | 19 | 720 |
The balance of Cash and cash equivalents in the Statements of Cash Flows includes amounts related to assets classified as held for sale, as shown in the reconciliation below:
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Reconciliation of the balance at the beginning of the period | ||
| Cash and cash equivalents in statements of financial position | 7,996 | 10,467 |
| Cash and cash equivalents classified as assets held for sale | − | 13 |
| Cash and cash equivalents according to Statements of Cash Flows (opening balance) | 7,996 | 10,480 |
| Reconciliation of the balance at the end of the period | ||
| Cash and cash equivalents in statements of financial position | 10,290 | 17,223 |
| Cash and cash equivalents classified as assets held for sale | − | 9 |
| Cash and cash equivalents according to Statements of Cash Flows (closing balance) | 10,290 | 17,232 |
| 28.1. | Reconciliation of Depreciation, depletion and amortization with Statements of Cash Flows |
| Jan-Mar/2023 | Jan-Mar/2022 | |
| Depreciation of Property, plant and equipment | 3,436 | 3,548 |
| Amortization of Intangible assets | 23 | 18 |
| Capitalized depreciation | (497) | (367) |
| Depreciation of right of use - recovery of PIS/COFINS | (38) | (29) |
| Depreciation, depletion and amortization in the Statements of Cash Flows | 2,924 | 3,170 |
| 29. | Subsequent events |
Sale of Norte Capixaba group of fields
On April 12, 2023, after fulfilling all the conditions precedent, the Company completed the sale of its entire interest (100%) in a set of 4 concessions in onshore production fields, with integrated facilities, located in the state of Espírito Santo, for the company Seacrest Petróleo SPE Norte Capixaba Ltda (Seacrest).
The operation was completed with the receipt of US$ 427 in cash, including price adjustments provided for in the contract. This amount is added to US$ 36 received when the contract was signed. In addition to these amounts, Petrobras expects to receive up to US$ 66 in contingent payments, depending on future Brent prices.
The result of this operation will be accounted for in the three-month period ended June 30, 2023.
Distribution of remuneration to shareholders
On May 11, 2023, Petrobras’s Board of Directors approved the distribution of remuneration to shareholders in the amount of US$ 4,970, or R$ 24,700 million (US$ 0,3810 per outstanding preferred and common shares, or R$ 1.8936), based on the net income for the three-month period ended March 31, 2023, as presented in the following table:
| 47 |
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS PETROBRAS (Expressed in millions of US Dollars, unless otherwise indicated) |
| Date of approval | Date of record | Amount per Share | Amount | |
| Interim dividends | 05.11.2023 | 06.12.2023 | 0.2465 | 3,215 |
| Interim interest on capital | 05.11.2023 | 06.12.2023 | 0.1345 | 1,755 |
| Total distribution to shareholders | 0.3810 | 4,970 |
These dividends and interest on capital will be paid in two equal installments, on August 18, 2023 and September 20, 2023, and will be deducted from the remuneration that will be distributed to shareholders relating to the fiscal year 2023. The amounts will be adjusted by the SELIC rate from the date of payment of each installment until the end of the referred fiscal year, on December 31, 2023.
| 48 |
Report
of Independent Registered Public Accounting Firm
KPMG Auditores Independentes Ltda.
Rua do Passeio, 38 - Setor 2 - 17º andar - Centro
20021-290 - Rio de Janeiro/RJ - Brasil
Caixa Postal 2888 - CEP 20001-970 - Rio de Janeiro/RJ - Brasil
Telefone +55 (21) 2207-9400
kpmg.com.br
Report of independent registered public accounting firm
The Shareholders and Board of Directors of
Petróleo Brasileiro S.A. - Petrobras
Results of review of condensed consolidated interim financial statements
We have reviewed the consolidated interim statement of financial position of Petróleo Brasileiro S.A. - Petrobras and subsidiaries (the “Company”) as of March 31, 2023, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the three-month periods ended March 31, 2023 and 2022, and the related notes (collectively, the condensed consolidated interim financial statements). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for it to be in accordance with IAS 34 - Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB).
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of financial position of the Company as of December 31, 2022, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 29, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of financial position as of December 31, 2022, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.
Basis for review results
These condensed consolidated interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of condensed consolidated interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ KPMG Auditores Independentes Ltda.
Rio de Janeiro - RJ
May 11, 2023
| KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative (“KPMG International”), uma entidade suíça. | KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. |
| 49 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 11, 2023
PETRÓLEO BRASILEIRO S.A–PETROBRAS
By: /s/ Sergio Caetano Leite
______________________________
Sergio Caetano Leite
Chief Financial Officer and Investor Relations Officer