Main financial highlights 3Q-2016 x 2Q-2016
• Net loss of R$ 16,458 million, compared to net income of R$ 370 million in the 2Q-2016, as a result of:
- Impairment of assets and investment in associates of R$ 15,709 million, due to the review of assumptions, such as Brent prices and long term exchange rates, and the portfolio of investments in the context of the 2017-2021 Business and Management Plan, finalized and approved in 3Q-2016 , as well as the appreciation of the real and the increase in discount rates;
- Reclassification of foreign exchange losses, due to the sale of Petrobras Argentina (PESA);
- Higher expenses with the new Voluntary Separation Incentive Plan;
- Provision for expenses with settlements of individual securities actions against Petrobras in New York;
- Provision for assumption of debts and losses related to advance for suppliers for the construction of FPSO hulls; and
- These facts were partially offset by the positive effect of the revision of decommissioning costs in oil and gas production areas, lower expenses with drilling rigs idleness and capital gains with the sale of PESA.
• Positive free cash flow* for six quarters in a row, amounting to R$ 16,448, 52% above 2Q-2016, due to the increase in operating cash generation in 22% and the reduction in investments in 8%, and 3.6x higher, on an accumulated basis, than the Jan-Sep/2015 period.
• Adjusted EBITDA* of R$ 21,603 million in the 3Q-2016, 6 % above the 2Q-2016, due to the increase in production and exports of oil and lower expenditures with imports, amounting R$ 63.011 million on Jan-Sep/2016, 11% superior compared to Jan-Sep/2015.
• Gross debt decreased 19%, from R$ 493,023 million in December 31, 2015 to R$ 398,165 million in September 30, 2016 (a R$ 94,858 million decrease), mainly due to the appreciation of the real. Net debt* decreased from R$ 392,136 million in December 31, 2015 to US$ 325,563 million in September 30, 2016, a 17% drop.
• Net debt / LTM adjusted EBITDA* decreased from 5.31 as of December 31, 2015 to 4.07 as of September 30, 2016 and leverage decreased from 60% to 55%.
• Sales, general and administrative expenses decreased 2%, despite the provision for higher labor costs due to wage increases related to the 2016 Collective Bargaining Agreement.
Main operating highlights 3Q-2016 x 2Q-2016
• Total crude oil and natural gas production was 2,869 thousand barrels of oil equivalent per day (boed), an increase of 2% compared to the 2Q-2016.
• In September, we broke several production records, among which oil and gas production in Brazil (2,753 kboed) and operated oil and gas production in the pre-salt (1,464 kboed).
• Domestic oil products output decreased 3% to 1,862 thousand barrels per day (bpd), while domestic sales decreased 1% to 2,088 thousand bpd.
• Crude oil and oil products exports increased 9%, to 562 thousand bpd.