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Petrobras announces US $236.7 billion business plan for 2013 – 2017

E&P will take up the biggest portion of Petrobras’ 2013-2017 Business and Management Plan budget, at US $147.5 billion, or 62% of the total $236.7 billion.
E&P will take up the biggest portion of Petrobras’ 2013-2017 Business and Management Plan budget, at US $147.5 billion, or 62% of the total $236.7 billion.

Petrobras has announced a US $236.7 billion budget under a 2013-2017 Business & Management Plan (2013-17 BP) that has been approved by the company’s Board of Directors. The largest share of the total – an estimated 62%, or $147.5 billion – is earmarked for E&P.

Continuing the 2012-2016 BP, the new plan was determined based on four principles:

• Maintaining the same production targets for oil and natural gas;

• No additional projects, except those related to oil and natural gas exploration and production in Brazil;

• Incorporating the results of the structural support programs (PROCOP, PROEF, PRCPoço and INFRALOG); and

• Expanding the scope of the divestment program PRODESIN.

The 2013-17 BP maintains the project management practice of separating projects into four phases according to their maturity. The portfolio of projects under implementation amounts to $207.1 billion and includes all Phase IV projects that have been contracted and all E&P projects in Brazil. The portfolio under evaluation, with $29.6 billion, encompasses projects of other business areas that are currently in Phase I (opportunity identification), II (conceptual project) and III (basic project). These projects must have their technical and economic feasibility confirmed (Phase III approval) before proceeding to the implementation phase.

The analysis of the 2013-17 BP portfolio resulted in the maintenance of 2012-16 BP projects, without including or excluding new projects in the portfolio under implementation. Exceptions were E&P project exceptions in Brazil, where there were inclusions and exclusions, as well as accelerations and postponements of projects, to meet planned production goals.

BP management actions

The 2013-2017 BP also continues with supporting programs initiated in 2012 and incorporates five new programs:

• Campos Basin Operational Efficiency Improvement Program (Proef) – Increases reliability of achieving the oil production curve by improving operational efficiency and integrity of older Campos Basin production systems and reducing risks of efficiency losses of newer production systems;

• Operating Expenses Optimization Program (Procop) – Increases cash flow generation and productivity and strengthens management model geared toward cost excellence, with operating expenses savings target of R$32 billion from 2013 to 2016.

• Divestment Program (Prodesin) – Contributes to financing the plan through the sale of assets in Brazil and overseas with cash proceeds estimated at US $9.9 billion in 2013, largely;

• Logistical Infrastructure Optimization Program (Infralog) – Integrated planning, monitoring and management of projects and actions to meet Petrobras’ logistical infrastructure needs by 2020. By seeking simpler logistical solutions and capturing synergies among the company’s business areas, investment reductions have been incorporated into the 2013-17 BP, notably US $2.6 billion in E&P;

• Well Cost Reduction Program (PRC-Poço) – Reduces well costs (CAPEX) optimizes project scopes and productivity gains through 23 initiatives due to the significant increase of the drilling rig fleet under operation and the relevance of well construction CAPEX in the E&P budget from 2013 to 2017 (38%). Identified gains of US $1.4 billion, already incorporated into the 2013-17 BP, from initiatives related to decreasing well construction time and optimizing operational sequencing.

Oil and natural gas production

Oil and NGL (natural gas liquids) production target in Brazil is 2.5 million bbl/day in 2016, 2.75 million bbl/day in 2017 and 4.2 million bbl/day in 2020. As in 2012, the target for 2013 is to maintain production in line with 2011 levels (+/- 2%). From 2013 to 2015, 11 new production units will go on-stream, representing a capacity increase of 1.45 million bbl/day for Petrobras. In 2016 and 2017, most pre-salt and Transfer of Rights projects are expected to start up, leading to production growth acceleration. Pre-salt is expected to account for 35% of total production in 2017.

The production target for oil, NGL and natural gas in Brazil is 3.0 million bbl/day of oil equivalent for 2016, 3.4 million bbl/day of oil equivalent for 2017 and 5.2 million bbl/day of oil equivalent for 2020.


The E&P segment in Brazil will invest US $147.5 billion, which represents an increase of US $15.9 billion from the 2012-16 BP, mainly due to the inclusion of 2017 investments that reflect the acceleration of planned production between 2016 and 2020. Of the investment total, 73% will be allocated to production development, 16% to exploration and 11% to infrastructure. Pre-salt and Transfer of Rights investments correspond to 68% of the total amount invested in production development.

In addition to these investments, the execution of projects during the 2013-17 BP will demand US $39.7 billion from Petrobras partners for E&P activities in Brazil.


In evaluating the capacity to finance the plan, the company based cash flow generation on a long-term Brent price of US $100/bbl and an exchange rate ranging between R$2.00/US$ and R$1.85/US$.

The resources necessary to finance projects under implementation will come from operating cash flow generation (US $164.7 billion), use of surplus cash (US$10.7 billion), divestment and financial restructuring (US $9.9 billion) and debt (US $61.3 billion gross, US $21.4 billion net).

Petrobras expects to experience higher annual investment combined with less operating cash flow generation in 2013; however, this situation will be reverted during the Business Plan period, with free cash flow before dividends becoming positive by 2015.

The increase of cash flow generation due to production growth and investments maturation will reduce the need for financing during 2013-17.

Financial leverage will not exceed 35%, keeping within the target of 25% to 35%.

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