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First Quarter 2016 Results

Read our announcement:

Petrobras posted losses of R$1.2 billion in 1Q16, mainly due to:

• higher interest costs, and negative monetary and exchange rate variations;

• 7% reduction in oil and natural gas production (in Brazil and abroad);

• 8% decline in sales of oil products in the domestic market;

• an increase in depreciation costs; and

• higher spending on idle equipment, especially drilling rigs.

Main Highlights of Results

• Adjusted EBITDA of R$21.1 billion in 1Q16, down from R$21.5 billion in 1Q15. The EBITDA margin was 30% in 1Q16.

• Fourth consecutive quarter of positive free cash flow (R$2.4 billion), due to higher diesel and gasoline margins in the domestic market, lower spending on royalties and imports, and reduced investments.

• The net debt to adjusted EBITDA ratio (last 12 months) fell from 5.31 on December 31, 2015 to 5.03 on March 31, 2016.

• Leverage decreased from 60% at the end of 2015 to 58% in 1Q16.

• Gross debt fell by R$42.8 billion (from R$492.8 billion in 4Q15 to R$450.0 billion in 1Q16).

• Net debt in US dollars increased 3% compared with 4Q15.

• Investment in the quarter amounted to R$15.6 billion, down 13% from 1Q15. In US dollars, investment totaled US$4.0 billion, down 36%. The Exploration and Production segment represented 88% of investment.

Main Operational Highlights

• Petrobras’ total output of oil and natural gas amounted to 2,616,000 barrels of oil equivalent per day (boed), down 7% from 1Q15. In the pre-salt layer, oil production operated by Petrobras totaled 859,000 barrels per day (bpd), up 29% from 1Q15, while production of oil and natural gas has remained above 1 million boed since July 2015.

• Production of oil products in Brazil remained stable, totaling 1,958,000 bpd, while sales in the domestic market were 2,056,000 bpd, down 8% from 1Q15.

• Exports of oil and oil products rose 14% and the average price of Brent crude fell 37% in relation to 1Q15.

• 21% reduction in extraction costs in US dollars in Brazil, compared with 1Q15.

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