6-K 1 pbrafs1q21usd_6k.htm PBRAFS1Q21USD_6K

 

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, 2021

 

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 República do Chile, 65 
20031-912 – 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

Consolidated

Interim

Financial

Statements

 

March 31, 2021 and 2020 with report of independent registered public accounting firm

 

 

 
 

INDEX

PETROBRAS

 

 

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 4
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME 5
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 6
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS 7
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 8
1.   Basis of preparation 9
2.   Summary of significant accounting policies 9
3.   Cash and cash equivalents and Marketable securities 9
4.   Sales revenues 10
5.   Costs and expenses by nature 10
6.   Other income and expenses 11
7.   Net finance income (expense) 12
8.   Net  income by operating segment 13
9.   Trade and other receivables 15
10.   Inventories 16
11.   Taxes 16
12.   Employee benefits 19
13.   Employee benefits (post-employment) 20
14.   Provisions for legal proceedings 23
15.   Provision for decommissioning costs 26
16.   The “Lava Jato (Car Wash) Operation” and its effects on the Company 26
17.   Property, plant and equipment 27
18.   Intangible assets 28
19.   Impairment 29
20.   Exploration and evaluation of oil and gas reserves 29
21.   Collateral for crude oil exploration concession agreements 30
22.   Investments 31
23.   Disposal of assets and other changes in organizational structure 31
24.   Assets by operating segment 34
25.   Finance debt 35
26.   Lease liabilities 37
27.   Equity 38
28.   Fair value of financial assets and liabilities 39
29.   Risk management 39
30.   Related-party transactions 44
31.   Supplemental information on statement of cash flows 46
32.   Subsequent events 46
33.   Information related to guaranteed securities issued by subsidiaries 48

 

2 
 

 

 

KPMG Auditores Independentes

Rua do Passeio, 38, setor 2, 17º andar - Centro/RJ

Edifício Passeio Corporate

20021-290 - Rio de Janeiro/RJ - Brasil

Telefone +55 (21) 2207-9400, Fax +55 (21) 2207-9000

kpmg.com.br

 

Report of Independent Registered Public Accounting Firm

 

To the Shareholders and Board of Directors of

Petróleo Brasileiro S.A. - Petrobras

 

Results of Review of Interim Financial Information

We have reviewed the consolidated statement of financial position of Petróleo Brasileiro S.A. - Petrobras and subsidiaries (the “Company”) as of March 31, 2021, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the three-month periods ended March 31, 2021 and 2020 and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information 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, 2020, 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 24, 2021, 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, 2020, 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

This consolidated interim financial information is 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 consolidated interim financial information 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

 

 

 

Rio de Janeiro - RJ

May 13, 2021

 
3 
 

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

PETROBRAS

As of March 31, 2021 and December 31, 2020 (Expressed in millions of US Dollars, unless otherwise indicated)

 

 

Assets Note 03.31.2021 12.31.2020   Liabilities Note 03.31.2021 12.31.2020
Current assets         Current liabilities      
Cash and cash equivalents 3.1 11,963 11,711   Trade payables   5,100 6,859
Marketable securities 3.2 579 659   Finance debt 25.1 3,292 4,186
Trade and other receivables 9.1 2,358 4,731   Lease liability 26 5,370 5,698
Inventories 10 6,973 5,677   Income taxes payable 11.1 146 198
Recoverable income taxes 11.1 393 418   Other taxes payable 11.1 2,554 2,636
Other recoverable taxes 11.1 1,108 2,177   Dividends payable 27.2 787 858
Others   1,606 1,230   Short-term employee benefits 12 1,695 1,953
    24,980 26,603   Pension and medical benefits 13 646 1,549
Assets classified as held for sale 23 2,045 785   Others   1,561 1,603
    27,025 27,388       21,151 25,540
          Liabilities related to assets classified as held for sale 23 696 685
              21,847 26,225
                 
Non-current assets                
Long-term receivables         Non-current liabilities      
Trade and other receivables 9.1 2,574 2,631   Finance debt 25.1 47,025 49,702
Marketable securities 3.2 41 44   Lease liability 26 15,279 15,952
Judicial deposits 14.2 6,824 7,281   Income taxes payable 11.1 316 357
Deferred income taxes 11.4 7,163 6,451   Deferred income taxes 11.4 212 195
Other recoverable taxes 11.1 2,919 3,158   Pension and medical benefits 13 13,393 14,520
Others   483 635   Provisions for legal proceedings 14.1 1,814 2,199
    20,004 20,200   Provision for decommissioning costs 15 16,962 18,780
          Others   2,162 2,204
              97,163 103,909
          Total liabilities   119,010 130,134
                 
          Equity      
Investments 22 3,167 3,273   Share capital (net of share issuance costs) 27.1 107,101 107,101
Property, plant and equipment 17 111,406 124,201   Capital reserve and capital transactions   373 1,064
Intangible assets 18 13,618 14,948   Profit reserves   66,097 65,917
    148,195 162,622   Accumulated other comprehensive (deficit)   (118,562) (114,734)
          Attributable to the shareholders of Petrobras   55,009 59,348
          Non-controlling interests   1,201 528
              56,210 59,876
Total assets   175,220 190,010   Total liabilities and equity   175,220 190,010
The notes form an integral part of these interim financial statements.                
4 
 

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

PETROBRAS

Periods ending March 31, 2021 and 2020 (Expressed in millions of US Dollars, unless otherwise indicated)

 

 

 

  Note Jan-Mar/2021 Jan-Mar/2020
       
Sales revenues 4 15,698 17,143
Cost of sales 5.1 (7,691) (9,879)
Gross profit   8,007 7,264
       
Income (expenses)      
Selling expenses 5.2 (948) (1,335)
General and administrative expenses 5.3 (273) (411)
Exploration costs 20 (214) (104)
Research and development expenses   (117) (95)
Other taxes   (106) (118)
Impairment of assets 19 (90) (13,371)
Other income and expenses 6 (284) (257)
    (2,032) (15,691)
       
Income (loss) before finance expense, results of equity-accounted investments and income taxes   5,975 (8,427)
       
Finance income   122 174
Finance expenses   (1,208) (1,622)
Foreign exchange gains (losses) and inflation indexation charges   (4,553) (3,103)
Net finance expense 7 (5,639) (4,551)
       
Results of equity-accounted investments 22.2 183 (298)
       
Net income (loss) before income taxes   519 (13,276)
       
Income taxes 11.3 (319) 3,300
       
Net income (loss)  for the period   200 (9,976)
Net income (loss) attributable to shareholders of Petrobras   180 (9,715)
Net income (loss) attributable to non-controlling interests   20 (261)
       
Basic and diluted earnings (losses) per common and preferred share - in U.S. dollars 27.3 0.01 (0.74)
The notes form an integral part of these interim financial statements.      
5 
 

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

PETROBRAS

Periods ending March 31, 2021 and 2020 (Expressed in millions of US Dollars, unless otherwise indicated)

 

 

  Jan-Mar/2021 Jan-Mar/2020
Net income (loss) for the period 200 (9,976)
     
Items that will not be reclassified to the statement of income:    
     
Actuarial gains (losses) on post-employment defined benefit plans    
Recognized in equity (3)
Deferred income tax
  (3)
     
Unrealized gains  (losses) on equity instruments measured at fair value through other comprehensive income    
Recognized in equity (3)
Deferred income tax 1
  (2)
     
Share of other comprehensive income (losses) in equity-accounted investments (29)
     
Items that may be reclassified subsequently to the statement of income:    
     
Unrealized gains  (losses) on cash flow hedge - highly probable future exports    
Recognized in equity (5,591) (21,715)
Reclassified to the statement of income 1,113 1,400
Deferred income tax 1,523 6,906
  (2,955) (13,409)
     
Cumulative translation adjustments (*)    
Recognized in equity (813) (4,963)
Reclassified to the statement of income 34
  (779) (4,963)
     
Share of other comprehensive income in equity-accounted investments    
Recognized in equity (112) (604)
Reclassified to the statement of income
  (112) (604)
     
Other comprehensive income (loss) (3,849) (19,007)
     
Total comprehensive income (loss) (3,649) (28,983)
Comprehensive income (loss) attributable to shareholders of Petrobras (3,648) (28,730)
Comprehensive income (loss) attributable to non-controlling interests (1) (253)
(*) It includes cumulative translation adjustments in associates and joint ventures.
The notes form an integral part of these interim financial statements.    

 

 

6 
 

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

PETROBRAS

Periods ending March 31, 2021 and 2020 (Expressed in millions of US Dollars, unless otherwise indicated)

 

 

  Jan-Mar/2021 Jan-Mar/2020
Cash flows from operating activities    
Net income (loss) for the period 200 (9,976)
Adjustments for:    
Pension and medical benefits (actuarial expense) 315 444
Results of equity-accounted investments (183) 298
Depreciation, depletion and amortization 2,856 3,543
Impairment of assets (reversal) 90 13,371
Allowance (reversals) for credit loss on trade and other receivables (15) 97
Exploratory expenditure write-offs 131 26
Foreign exchange, indexation and finance charges   5,544 3,969
Deferred income taxes, net 200 (3,470)
Revision and unwinding of discount on the provision for decommissioning costs 194 193
Inventory write-down (write-back) to net realizable value (1) 342

Disposal/write-offs of assets, remeasurement of investment retained with loss of control and

reclassification of CTA

(15) 94
Early termination and cash outflows revision of lease agreements (70) (94)
Decrease (Increase) in assets    
Trade and other receivables, net (128) 973
Inventories (1,973) 446
Judicial deposits (151) (449)
Other assets 51 (301)
Increase (Decrease) in liabilities    
Trade payables 616 (830)
Other taxes payable 1,105 (576)
Pension and medical benefits (976) (334)
Provisions for legal proceedings (205) (158)
Short-term benefits (91) (91)
Provision for decommissioning costs (163) (127)
Other liabilities 41 618
Income taxes paid (128) (231)
Net cash provided by operating activities 7,244 7,777
Cash flows from investing activities    
Acquisition of PP&E and intangible assets (1,650) (1,869)
Investments in investees (2) 3
Proceeds from disposal of assets - Divestment 201 281
Divestment (Investment) in marketable securities 25 60
Dividends received 67 44
Net cash used in investing activities (1,359) (1,481)
Cash flows from financing activities    
Investments by non-controlling interest (19) (19)
Proceeds from financing 54 10,173
Repayment of principal - finance debt (3,063) (4,343)
Repayment of  interest - finance debt (1,079) (1,128)
Repayment of lease liability (1,467) (1,523)
Dividends paid to Shareholders of Petrobras (1,020)
Dividends paid to non-controlling interests (8)
Net cash provided by (used in) financing activities (5,574) 2,132
Effect of exchange rate changes on cash and cash equivalents (72) (337)
Net increase in cash and cash equivalents 239 8,091
Cash and cash equivalents at the beginning of the period 11,725 7,377
     
Cash and cash equivalents at the end of the period 11,964 15,468
     
The notes form an integral part of these interim financial statements.

 

7 
 

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

PETROBRAS

Periods ending March 31, 2021 and 2020 (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 adjustment 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
  107,380 (279) 1,064 (68,721) (13,540) (17,322) (886) 8,745 2,702 1,102 53,078 73,323 892 74,215
Balance at January 1, 2020   107,101 1,064       (100,469)         65,627 73,323 892 74,215
Capital transactions (43) (43)
Net income (9,715) (9,715) (261) (9,976)
Other comprehensive income (4,971) (13,409) (635) (19,015) 8 (19,007)
Balance at March 31, 2020 107,380 (279) 1,064 (73,692) (26,949) (17,322) (1,521) 8,745 2,702 1,102 53,078 (9,715) 44,593 596 45,189
    107,101 1,064       (119,484)         65,627 (9,715) 44,593 596 45,189
                                 
  107,380 (279) 1,064 (73,936) (24,590) (15,034) (1,174) 8,813 2,900 1,102 51,974 1,128 59,348 528 59,876
Balance at January 1, 2021   107,101 1,064       (114,734)         65,917 59,348 528 59,876
Capital increase with reserves 2 2
Capital transactions (691) (691) 675 (16)
Net income 180 180 20 200
Other comprehensive income (loss) (758) (2,955) (3) (112) (3,828) (21) (3,849)
Appropriations:                                
Dividends (3) (3)
Balance at March 31, 2021 107,380 (279) 373 (74,694) (27,545) (15,037) (1,286) 8,813 2,900 1,102 51,974 1,128 180 55,009 1,201 56,210
    107,101 373       (118,562)         65,917 180 55,009 1,201 56,210
                                 
The notes form an integral part of these interim financial statements.
8 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

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

These unaudited consolidated interim financial statements 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, 2020, which include the full set of notes (2020 Financial Statements).

These unaudited consolidated interim financial statements were approved and authorized for issue by the Company’s Board of Directors in a meeting held on May 13, 2021.

2.Summary of significant accounting policies

The accounting policies and methods of computation followed in these 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, 2020.

3.Cash and cash equivalents and Marketable securities
3.1.Cash and cash equivalents
  03.31.2021 12.31.2020
Cash at bank and in hand 662 552
Short-term financial investments    
- In Brazil    
Brazilian interbank deposit rate investment funds and other short-term deposits 3,130 2,592
Other investment funds 110 28
  3,240 2,620
- Abroad    
Time deposits 2,097 2,574
Automatic investing accounts and interest checking accounts 5,633 5,633
Other financial investments 331 332
  8,061 8,539
Total short-term financial investments 11,301 11,159
Total cash and cash equivalents 11,963 11,711

 

 

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.

3.2.Marketable securities
  03.31.2021 12.31.2020
     
Fair value through profit or loss 575 652
Amortized cost 45 51
Total 620 703
Current 579 659
Non-current 41 44

 

 

Marketable securities classified as fair value through profit or loss refer mainly to investments in Brazilian Federal Government Bonds. These financial investments have maturities of more than three months and are generally classified as current assets due to their maturity or the expectation of their realization in the short term.

9 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
4.Sales revenues
  2021 2020
  Jan-Mar Jan-Mar
Diesel 4,578 4,086
Gasoline 2,022 1,899
Liquefied petroleum gas 916 902
Jet fuel 426 850
Naphtha 331 672
Fuel oil (including bunker fuel) 335 266
Other oil products 878 692
Subtotal oil products 9,486 9,367
Natural gas 1,037 1,211
 Renewables  and nitrogen products 13 26
Breakage 67 91
Electricity 543 292
Services, agency and others 214 159
Domestic market 11,360 11,146
Exports 4,137 5,620
Oil 2,801 4,335
Fuel oil (including bunker fuel) 1,201 1,048
Other oil products 135 237
Sales  abroad (*) 201 377
Foreign market 4,338 5,997
Sales revenues (**) 15,698 17,143
(*) Sales revenues from operations outside of Brazil, including trading and excluding exports.    
(**) Sales revenues by business segment are set out in note 8.    

 

 

In the three-month periods ended March 31, 2021 and 2020, the sales to the associate BR Distribuidora represent more than 10% of the Company’s sales revenues, mainly associated with the refining, transportation and marketing segment.

5.Costs and expenses by nature
5.1.Cost of sales
  2021 2020
  Jan-Mar Jan-Mar
Raw material, products for resale, materials and third-party services (*) (2,660) (4,438)
Depreciation, depletion and amortization (2,239) (2,895)
Production taxes (2,354) (1,846)
Employee compensation (438) (700)
Total (7,691) (9,879)
(*) It Includes short-term leases and inventory turnover.

 

 

5.2.Selling expenses
  2021 2020
  Jan-Mar Jan-Mar
Materials, third-party services, freight, rent and other related costs (784) (1,155)
Depreciation, depletion and amortization (149) (123)
Allowance for expected credit losses 5 (9)
Employee compensation (20) (48)
Total (948) (1,335)
 

 

 

10 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
5.3.General and administrative expenses
  2021 2020
  Jan-Mar Jan-Mar
Employee compensation (185) (288)
Materials, third-party services, freight, rent and other related costs (64) (94)
Depreciation, depletion and amortization (24) (29)
Total (273) (411)
     

 

 

6.Other income and expenses
  2021 2020
  Jan-Mar Jan-Mar
Unscheduled stoppages and pre-operating expenses (300) (353)
Pension and medical benefits - retirees (218) (299)
Variable compensation program (94) 29
Equalization of expenses - Production Individualization Agreements (43) 23
Reclassification of comprehensive income (loss) due to the disposal of equity-accounted investments (33) -
Profit sharing (28) (6)
Gains/(losses) with Commodities Derivatives (23) 223
Gains / (losses) on decommissioning of returned/abandoned areas (6) -
Voluntary Separation Plan - PDV 3 (41)
Fines imposed on suppliers 29 49
Results on disposal/write-offs of assets and on remeasurement of investment retained with loss of control 48 (94)
Losses with legal, administrative and arbitration proceedings 51 (50)
Early termination and cash outflows revision of lease agreements 69 94
Reimbursements from E&P partnership operations 100 197
Amounts recovered from Lava Jato investigation 141 21
Others 20 (50)
Total (284) (257)

 

 

7.Net finance income (expense)
  2021 2020
  Jan-Mar Jan-Mar
Finance income 122 174
Income from investments and marketable securities (Government Bonds) 29 67
Other income, net 93 107
Finance expenses (1,208) (1,622)
Interest on finance debt (752) (1,008)
Unwinding of discount on lease liabilities (295) (342)
Discount and premium on repurchase of debt securities (183) (260)
Capitalized borrowing costs 212 279
Unwinding of discount on the provision for decommissioning costs (189) (192)
Other finance expenses and income, net (1) (99)
Foreign exchange gains (losses) and indexation charges (4,553) (3,103)
Foreign exchange gains (losses) (*) (3,442) (1,767)
Reclassification of hedge accounting to the Statement of Income (*) (1,113) (1,400)
Other foreign exchange gains (losses) and indexation charges, net 2 64
Total (5,639) (4,551)
(*) For more information, see notes 29.3c and 29.3a.

 

 

11 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
8.Net income by operating segment
Consolidated Statement of Income by operating segment            
  Jan-Mar/2021
 

Exploration

and

Production

Refining,

Transportation

& Marketing

Gas

&

Power

Corporate and other business Eliminations Total
Sales revenues 11,666 13,973 2,208 155 (12,304) 15,698
    Intersegments 11,453 235 552 64 (12,304)
    Third parties 213 13,738 1,656 91 - 15,698
Cost of sales (5,234) (11,837) (1,332) (150) 10,862 (7,691)
Gross profit (loss) 6,432 2,136 876 5 (1,442) 8,007
Income (expenses) (521) (399) (746) (360) (6) (2,032)
  Selling - (335) (603) (4) (6) (948)
  General and administrative (32) (32) (17) (192) - (273)
  Exploration costs (214) - - - - (214)
  Research and development (85) (3) (5) (24) - (117)
  Other taxes (17) (40) (23) (26) - (106)
  Impairment of assets (95) - - 5 - (90)
  Other income and expenses (78) 11 (98) (119) - (284)
Income (loss) before finance expense, results of equity-accounted investments and income taxes 5,911 1,737 130 (355) (1,448) 5,975
  Net finance income (expenses) - - - (5,639) - (5,639)
  Results in equity-accounted investments 23 108 40 12 - 183
Net income / (loss) before income taxes 5,934 1,845 170 (5,982) (1,448) 519
  Income taxes (2,010) (590) (45) 1,833 493 (319)
Net income (loss) for the period 3,924 1,255 125 (4,149) (955) 200
Attributable to:            
Shareholders of Petrobras 3,925 1,255 104 (4,149) (955) 180
Non-controlling interests (1) 21 20

 

 

 

12 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

 

  Jan-Mar/2020
 

Exploration

and

Production

Refining,

Transportation

& Marketing

Gas

&

Power

Corporate and other business Eliminations Total
Sales revenues 10,877 15,480 2,370 198 (11,782) 17,143
    Intersegments 10,667 302 753 60 (11,782)
    Third parties 210 15,178 1,617 138 - 17,143
Cost of sales (5,907) (15,397) (1,345) (193) 12,963 (9,879)
Gross profit (loss) 4,970 83 1,025 5 1,181 7,264
Income (expenses) (13,528) (914) (673) (568) (8) (15,691)
  Selling - (650) (674) (4) (7) (1,335)
  General and administrative (47) (61) (27) (276) - (411)
  Exploration costs (104) - - - - (104)
  Research and development (62) (3) (3) (27) - (95)
  Other taxes (16) (42) (9) (51) - (118)
  Impairment of assets (13,167) (43) - (161) - (13,371)
  Other income and expenses (132) (115) 40 (49) (1) (257)
Income (loss) before finance expense, results of equity-accounted investments and income taxes (8,558) (831) 352 (563) 1,173 (8,427)
  Net finance income (expenses) - - - (4,551) - (4,551)
  Results in equity-accounted investments (155) (185) (2) 44 - (298)
Net income / (loss) before income taxes (8,713) (1,016) 350 (5,070) 1,173 (13,276)
  Income taxes 2,909 283 (120) 626 (398) 3,300
Net income (loss) for the period (5,804) (733) 230 (4,444) 775 (9,976)
Attributable to:            
Shareholders of Petrobras (5,804) (702) 214 (4,198) 775 (9,715)
Non-controlling interests (31) 16 (246) (261)

 

 

 

9.Trade and other receivables
9.1.Trade and other receivables, net
  03.31.2021 12.31.2020
Receivables from contracts with customers    
Third parties 2,933 3,081
Related parties    
Investees (note 30.5) 522 664
Receivables from the electricity sector 167 205
Subtotal 3,622 3,950
Other trade  receivables    
Third parties    
Receivables from divestments (*) 1,492 1,523
Lease receivables 463 467
Other receivables (**) 412 2,536
Related parties    
Petroleum and alcohol accounts - receivables from Brazilian Government (note 30.5) 450 482
Subtotal 2,817 5,008
Total trade and other receivables, before ECL 6,439 8,958
Expected credit losses (ECL) - Third parties (1,456) (1,528)
Expected credit losses (ECL) - Related parties (51) (68)
Total trade and other receivables 4,932 7,362
Current 2,358 4,731
Non-current 2,574 2,631
(*) It comprises receivable from the divestment of NTS and contingent payments from the sale of interest in Roncador field.
(**) As of December 31, 2020, it mainly includes amounts related to the purchase and sale of production platforms and equipment from our partners in E&P consortia, with financial settlement in the first quarter of 2021.

 

 

13 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

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$ 777 as of March 31, 2021 (US$ 507 as of December 31, 2020).

9.2.Aging of trade and other receivables – third parties
  03.31.2021 12.31.2020
  Trade and other receivables Expected credit losses Trade and other receivables Expected credit losses
Current 3,792 (122) 5,850 (130)
Overdue:        
1-90 days 24 (5) 205 (8)
91-180 days 8 (4) 15 (9)
181-365 days 20 (9) 42 (28)
More than 365 days 1,456 (1,316) 1,495 (1,353)
Total 5,300 (1,456) 7,607 (1,528)
         

 

 

9.3.Changes in provision for expected credit losses
  Jan-Mar/2021 Jan-Dec/2020
Opening balance 1,596 2,331
Additions 20 209
Write-offs - (667)
Reversals (34) (31)
Transfer of assets held for sale - (3)
Cumulative translation adjustment (75) (243)
Closing balance 1,507 1,596
  - -
Current 178 218
Non-current 1,329 1,378

 

 

In 2020, the write-offs primarily relate to the write-off of receivables from suppliers, relating to the construction and renovation of platforms.

10.Inventories
  03.31.2021 12.31.2020
Crude oil 3,069 2,242
Oil products 2,280 1,925
Intermediate products 469 396
Natural gas and Liquefied Natural Gas (LNG) 264 122
Biofuels 11 30
Fertilizers 15 8
Total products 6,108 4,723
Materials, supplies and others 865 954
Total 6,973 5,677

 

 

In the first quarter of 2021, the Company recognized a US$ 1 gain within cost of sales, adjusting inventories to net realizable value (a US$ 342 loss within cost of sales in the first quarter of 2020) primarily due to changes in international prices of crude oil and oil products.

At March 31, 2021, the Company had pledged crude oil and oil products volumes as collateral for the Terms of Financial Commitment (TFC) signed by Petrobras and Petros in 2008, amounting to US$ 1,718, considering the prepayments made in January 2021, whose procedures for updating public records are ongoing.

14 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
11.Taxes
11.1.Income taxes and other taxes
Income taxes            
  Current assets Current liabilities Non-current liabilities
  03.31.2021 12.31.2020 03.31.2021 12.31.2020 03.31.2021 12.31.2020
Taxes in Brazil            
Income taxes 363 391 17 111 - -
Income taxes - Tax settlement programs - - 41 45 316 357
  363 391 58 156 316 357
Taxes abroad 30 27 88 42 - -
Total 393 418 146 198 316 357
(*) See note 20.2 for detailed information.            

 

 

Other taxes                
  Current assets Non-current assets Current liabilities Non-current liabilities (*)
  03.31.2021 12.31.2020 03.31.2021 12.31.2020 03.31.2021 12.31.2020 03.31.2021 12.31.2020
Taxes in Brazil                
Current / Non-current ICMS (VAT) 629 507 269 293 504 642 - -
Current / Non-current PIS and COFINS 366 340 1,907 2,055 204 544 34 37
Claim to recover PIS and COFINS - - 622 681 - - - -
PIS and COFINS - exclusion of ICMS (VAT tax) from the basis of calculation 65 1,230 - - - - - -
CIDE 2 4 - - 27 41 - -
Production taxes - - - - 1,655 1,173 60 94

Withholding

income taxes

- - - - 48 106 - -
Others 38 87 112 119 102 117 221 275
Total in Brazil 1,100 2,168 2,910 3,148 2,540 2,623 315 406
Taxes abroad 8 9 9 10 14 13 - -
Total 1,108 2,177 2,919 3,158 2,554 2,636 315 406
(*) Other non-current taxes are classified as other non-current liabilities.

 

 

Exclusion of ICMS (VAT tax) from the basis of calculation of PIS and COFINS

In 2020, the Company obtained a favorable and definitive court decision regarding the exclusion of ICMS (VAT tax) in the basis of calculation of sales taxes PIS and COFINS, recognizing US$ 3,226 (R$ 16,764 million) as other recoverable taxes. These sales taxes credits refer to the ICMS included in the basis of calculation of PIS and COFINS, from October 2001 to August 2020, inappropriately paid during this period.

The Company has already realized US$ 2,878 (of which US$ 1,857 was in 2020) of this credit in payment of federal taxes.

As of March 31, 2021, the unused credit, updated by the SELIC interest rate, amounts to US$ 65 (R$ 369 million).

11.2.Tax amnesty programs – State Tax

Petrobras, based on the risk management of litigations, taking into account its value generation strategy, adhered to state amnesty programs of the states of Rio de Janeiro and Bahia, generating a US$ 158 gain arising from the reversal of part of the related provisions, of which a US$ 120 gain as other income and expenses, and a US$ 38 gain as finance income.

State of Rio de Janeiro

The State of Rio de Janeiro instituted a settlement program called PEP-ICMS, under the terms of state law 189/2000, which allowed a 90% reduction of amounts due as a fine and interest.

15 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

The adhesion to the program creates conditions for the settlement of ICMS disputes involving tax credits, due to the cancellation of a plant of Gaslub (former Comperj), in the total amount of US$ 266, through estimated disbursement of US$ 97. As a result, for these unaudited interim consolidated financial statements as of March 31, 2021, the Company reassessed expected disbursements and reversed US$ 169 of the respective provisions.

In April 2021, the Company joined the program and will make the full payment of the remaining obligations by June 2021.

State of Bahia

The adhesion to the remission and amnesty program with the state of Bahia, entered into under the terms of state law 14,286/2020, allowed a 50% remission and a 90% reduction of fines and interest. The tax debts, arisen from the disallowance of tax credits, were settled after the payment of US$ 21.

11.3.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:

  Jan-Mar/2021 Jan-Mar/2020
Net income before income taxes 519 (13,276)
Nominal income taxes computed based on Brazilian statutory corporate tax rates (34%) (176) 4,513
·    Different jurisdictional tax rates for companies abroad 23 (735)
.     Brazilian income taxes on income of companies incorporated outside Brazil (*) (205) (259)
·    Tax incentives - (143)
·    Tax loss carryforwards (unrecognized tax losses) (30) 25
·    Non-taxable income (non-deductible expenses), net (**) 39 (107)
·     Expenses with post-employment medical benefits (44) (88)
·     Results of equity-accounted investments in Brazil and abroad 74 (112)
·    Others - 205
Income taxes (319) 3,300
Deferred income taxes (200) 3,470
Current income taxes (119) (170)
Effective tax rate of income taxes (61.5)% (24.9)%
(*) It relates to Brazilian income taxes on earnings of offshore investees, as established by Law No. 12,973/2014.
(**) It includes provisions for legal proceedings.
 

 

 

11.4.Deferred income taxes - non-current

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

  2021 2020
Balance at January 1 6,256 (372)
Recognized in the statement of income for the period (200) 1,743
Recognized in shareholders’ equity 1,523 5,564
Cumulative translation adjustment (631) (623)
Use of tax credits - (60)
Others 3 4
Balance at March 31, 6,951 6,256
Deferred tax assets 7,163 6,451
Deferred tax liabilities (212) (195)
     

 

 

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

16 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

 

Nature Realization basis 03.31.2021 12.31.2020
PP&E - Exploration and decommissioning costs Depreciation, amortization and write-offs of assets (2,646) (3,205)
PP&E - Impairment Amortization, impairment reversals and write-offs of assets 6,091 6,626
PP&E – Others (*) Depreciation, amortization and write-offs of assets (9,872) (8,690)
Loans, trade and other receivables / payables and financing Payments and receipts 5,515 3,913
Finance leases Payments 1,595 1,190
Provision for legal proceedings Payments and use of provisions 592 664
Tax loss carryforwards 30% of taxable income compensation 2,694 2,501
Inventories Sales, write-downs and losses 318 158
Employee Benefits, mainly pension plans Payments and use of provisions 2,617 2,882
Others   47 217
Total   6,951 6,256
(*) It includes accelerated depreciation, difference between units of production method and straightline method, as well as capitalized borrowing costs.

 

12.Employee benefits
  03.31.2021 12.31.2020
Voluntary Severance Program (PDV) 719 900
Employees variable compensation program 455 522
Accrued vacation pay 456 470
Salaries and related charges 177 204
Profit sharing 30 4
Total 1,837 2,100
Current 1,695 1,953
Non-current (*) 141 147
(*) Amount classified in other liabilities    

 

 

12.1.       Voluntary Severance Programs

Recognition of the provision for expenses occur as employees enroll to the programs. Changes in the provision for expenses relating to voluntary severance programs are set out as follows:

  03.31.2021 12.31.2020
Opening Balance 900 140
Enrollments 22 1,076
Revision of provisions (25) (59)
Separations in the period (103) (245)
Cumulative translation adjustment (75) (12)
Closing Balance 719 900
Current 579 754
Non-current 140 146

 

 

The Company chose to disburse the severance payments in two installments, one at the time of termination and the remainder one year after the termination, and expects to disburse US$ 719, of which US$ 579 in 2021, US$ 100 in 2022 and US$ 40 in 2023.

The Company reopened the voluntary termination program for retired employees under the Brazilian Social Security Institute (INSS) until the enactment of the pension reform for new enrollments during January 2021 for employees not yet enrolled or who have canceled enrollment for any reason until December 29, 2020. During January 2021, 195 employees enrolled in this program.

On March 29, 2021, the Company opened the sixth opportunity for the separation of corporate employees, with application deadline on April 19, 2021, and 35 employees enrolled in this program.

17 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
12.2.Variable compensation program - Performance award program (PPP)

On January 26, 2021, the Company’s Board of Administration approved changes in the criteria for granting PPP 2020 to employees (in relation to regulation approved on April 28, 2020).

The regulation for this variable compensation program establishes that, in order to trigger this payment, it is necessary to have net income for the year, excluding impairment losses and foreign exchange gains (losses) from this calculation, associated with the achievement of the Company’s performance metrics and the individual performance of employees and results of the departments.

The PPP for 2020 was fully paid by April 2021, in the amount of US$ 113. The PPP expense for the first quarter of 2021 amounts to US$ 94 (a US$ 29 net reversal for the same period of 2020), accounted for within other income and expenses.

12.3.Profit sharing (PLR)

At December 29, 2020, the 17 unions representing onshore employees of Petrobras had signed the agreement for the PLR for the next two years before the deadline determined by the Collective Labor Agreement (ACT). Among the offshore employees, only one union had signed the agreement within the period defined by the ACT.

The current agreement for the PLR provides that only employees without managerial functions will be entitled to receive profit sharing, and it will be cumulative to the payment of the PPP.

In order for the PLR to be paid in the next two years, the following requirements must be met: (i) dividend distribution to shareholders approved at the Annual General Shareholders Meeting, (ii) net income for the year, and iii) achievement of the weighted average percentage of at least 80% of a set of indicators.

The maximum amount of PLR to be distributed is limited to 6.25% of net income and 25% of dividends distributed to shareholders, in each year. The PLR expense for the first quarter of 2021 amounts to US$ 28 (US$ 6 for the same period of 2020).

13.           Employee benefits (post-employment)

  03.31.2021 12.31.2020
Liabilities    
AMS Medical Plan 4,956 5,356
Petros Pension Plan - Renegotiated (PPSP-R) (*) 5,528 6,016
Petros Pension Plan - Non-renegotiated (PPSP-NR) (*) 1,488 1,621
Petros Pension Plan - Renegotiated - Pre-70 966 1,508
Petros Pension Plan - Non-renegotiated - Pre-70 633 1,075
Petros 2 Pension Plan 452 477
Other plans 16 16
Total 14,039 16,069
Current 646 1,549
Non-current 13,393 14,520
Total 14,039 16,069
(*) It includes obligations with contribution for the revision of the lump sum death benefit.    

 

 

Changes in the actuarial liabilities recognized in the statement of financial position:

18 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

 

 

Pension

Plans

Medical

Plan

   
  Petros Renegotiated (*) Petros Non-renegotiated (*) Petros 2 AMS

Other

plans

Total
Changes in the net actuarial liability            
Balance as of January 1, 7,524 2,696 477 5,356 16 16,069
Recognized in the Statement of Income 124 43 18 130 315
Costs incurred in the period 2 10 41 53
Service cost 112 41 8 89 250
Interest on the obligations with contribution for the revision of the lump sum death benefit 10 2 12
Recognized in Equity - other comprehensive income 2 1 3
Remeasurement effects recognized in other comprehensive income 2 1 3
Cash effects (515) (403) (58) (976)
Contributions paid (51) (16) (58) (125)
Payments of obligations with contribution for the revision of the lump sum death benefit (12) (4) (16)
Payments related to Term of financial commitment (TFC) (452) (383) (835)
Other changes (641) (216) (43) (472) (1,372)
Others
Cumulative Translation Adjustment (641) (216) (43) (472) (1,372)
Total obligation for pension and medical benefits as of March 31, 6,494 2,121 452 4,956 16 14,039
Balance of actuarial liability 6,198 2,033 452 4,956 15 13,654
Obligations with contribution for the revision of the lump sum death benefit 296 88 384
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.
 
             

 

 

 

Pension

Plans

Medical

Plan

   
  Petros Renegotiated (*) Petros Non-renegotiated (*) Petros 2  AMS

Other

plans

Total
Changes in the net actuarial liability            
Balance as of January 1, 10,231 3,264 989 11,986 24 26,494
Recognized in the Statement of Income 84 40 131 (1,672) 2 (1,415)
Costs incurred in the period (298) (93) 64 (2,348) (2,675)
Service cost 382 133 67 676 2 1,260
Recognized in Equity - other comprehensive income (344) 285 (391) (1,957) (8) (2,415)
Remeasurement effects recognized in other comprehensive income (344) 285 (391) (1,957) (8) (2,415)
Cash effects (474) (265) (308) (1) (1,048)
Contributions paid (255) (80) (308) (1) (644)
Payments related to Term of financial commitment (TFC) (219) (185) (404)
Other changes (2,300) (726) (252) (2,693) (3) (5,974)
Discontinued operations
Others 2 2
Cumulative Translation Adjustment (2,300) (726) (252) (2,693) (5) (5,976)
Balance of actuarial liability as of December 31, 7,197 2,598 477 5,356 14 15,642
Obligations with contribution for the revision of the lump sum death benefit 315 99 414
Cumulative Translation Adjustment 12 (1) 2 13
Total obligation for pension and medical benefits as of December 31, 7,524 2,696 477 5,356 16 16,069
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.

 

 

Pension and medical benefit expenses, net recognized in the statement of income are set out as follows:

19 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

 

      Pension Plans Medical Plan      
  Petros Renegotiated (*) Petros Non-renegotiated (*) Petros 2 AMS

Other

Plans

Jan-Mar/2021 Jan-Mar/2020
Present value of obligations (VPO) 114 41 18 130 303 444
Obligations with contribution for the revision of the lump sum death benefit 10 2 12
Net costs 124 43 18 130 315 444
Related to active employees 13 2 15 67 97 145
Related to retired employees 111 41 3 63 218 299
Net costs 124 43 18 130 315 444
(*) It includes the balance of PPSP-R pre-70 and PPSP-NR pre-70.  

 

 

13.1.Pension plans

Net actuarial liabilities are computed based on annual review carried out by an independent actuary and were already considered in the Company’s audited financial statements ended December 31, 2020.

On March 29, 2021, the Deliberative Council of Petros approved the financial statements of the PPSP-R and PPSP-NR plans, which presented a surplus in the fiscal year 2020, reversing the scenario of successive deficits in the two largest defined benefit plans managed by the Foundation .

The table below presents the reconciliation of the surplus of Petros Plan registered by Petros Foundation as of December 31, 2020 with the net actuarial liability registered by the Company:

     
  PPSP-R PPSP-NR
Surplus registered by Petros (170) (94)
Financial assumptions 3,351 1,023
Ordinary and extraordinary sponsor contributions 2,422 699
Changes in fair value of plan assets (*) 1,886 839
Others (including Actuarial valuation method) (924) (97)
Net actuarial liability registered by the Company 6,565 2,370
(*) It includes balance of accounts receivable arising from the Term of Financial Commitment - TFC signed with Petrobras, which Petros recognizes as equity.

 

 

13.2.Petros 2 Plan (PP2)

For the first quarter of 2021, the Company's contribution to the defined contribution portion of the Petros Plan 2 was US$ 40 (US$ 50 for the first quarter of 2020) recognized in the statement of income.

13.3.Petros 3 Plan (PP3)

On October 1, 2020, the Board of Directors approved the submission of the PP-3 for analysis by the Secretariat of Management and Governance of the State-owned Companies (SEST) and to the Superintendency of Post-retirement benefits (PREVIC), which approved it on January 27, 2021.

The PP-3 is a new pension plan with defined contribution characteristics and will be an exclusive option for voluntary migration of participants from the PPSP-R and PPSP-NR plans, not including pre-70.

20 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

Registrations to this plan were made until April 30, 2021 and, after validation and completion of the technical and administrative feasibility study, the Company will carry out an actuarial review of the original plans. This plan is expected to begin operating in the second half of 2021.

13.4.Medical Plan

The Company’s Board of Directors approved in 2020 a new management model for its medical plan, which started operating on April 1, 2021. The management of this plan is carried out by a nonprofit civil association, nominated Associação Petrobras de Saúde (APS), also through the self-management type, in accordance with the requirements of the National Supplementary Health Agency (Agência Nacional de Saúde Suplementar - ANS).

The new model will generate no change in benefit, coverage or scope on the plan, as well as no accounting effects.

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

The Company recognizes provisions based on the best estimate of the costs of proceedings 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) 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 (ii) actions of outsourced employees;
·Tax claims including: (i) claims relating to Brazilian federal tax credits applied that were disallowed; (ii) alleged misappropriation of VAT (ICMS) tax credits; and (iii) fines for non-compliance with accessory tax obligations;
·Civil claims, in particular: (i) lawsuits related to contracts; (ii) royalties and special participation charges, including royalties over shale extraction; and (iii) penalties applied by ANP relating to measurement systems.
·Environmental claims, specially: (i) compensation and fines relating to an environmental accident in the State of Paraná in 2000; and (ii) fines relating to the Company’s offshore operation.

Provisions for legal proceedings are set out as follows:

Current and Non-current liabilities 03.31.2021 12.31.2020
Labor claims 645 706
Tax claims 310 488
Civil claims 599 713
Environmental claims 260 292
Total 1,814 2,199

 

 

 

  Jan-Mar/2021 Jan-Dec/2020
Opening Balance 2,199 3,113
  Additions, net of reversals (83) 464
  Use of provision (116) (744)
  Revaluation of existing proceedings and interest charges (12) 28
  Others 12 20
  Cumulative translation adjustment (186) (682)
Closing Balance 1,814 2,199

 

 

In preparing its consolidated interim financial statements for the three-month period ended March 31, 2021, 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.

21 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
14.2.Judicial deposits
Non-current assets 03.31.2021 12.31.2020
Tax 4,941 5,154
Labor 771 831
Civil 922 1,095
Environmental 103 113
Others 87 88
Total 6,824 7,281

 

 

  Jan-Mar/2021 Jan-Dec/2020
Opening Balance 7,281 8,236
Additions 165 937
Use (12) (86)
Accruals and charges 30 90
Others 7 (4)
Cumulative translation adjustment (647) (1,892)
Closing Balance 6,824 7,281

 

 

In the three-month period ended March 31, 2021, the Company made judicial deposits in the amount of US$ 165, including: (i) US$ 86 referring to IRPJ and CSLL for not adding profits of subsidiaries and affiliates domiciled abroad to the IRPJ and CSLL calculation basis; (ii) US$ 53 relating to the unification of Fields (Cernambi, Tupi, Tartaruga Verde and Tartaruga Mestiça); (iii) US$ 51 related to the chartering of platforms due to the legal dispute related to the IRRF; (iv) US$ 48 referring to IRPJ and CSLL in the deduction of Petros' expenses; and (v) US$ 31 referring to several judicial deposits of a tax nature, mainly offset by (vi) US$ 132 referring to the redemption of the deposit of IPI credits used to offset debts with the Federal Revenue of Brazil.

14.3.Contingent liabilities

The estimates of contingent liabilities for legal proceedings are indexed to inflation and updated by applicable interest rates. Estimated contingent liabilities for which the possibility of loss is possible are set out in the following table:

Nature 03.31.2021 12.31.2020
Tax 22,578 24,511
Labor 6,645 8,179
Civil - General 4,713 4,621
Civil - Environmental 1,387 1,465
Total 35,323 38,776

 

 

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) tax on services provided offshore (ISS); (iv) requests to compensate federal taxes disallowed by the Brazilian Federal Tax Authority; (v) collection and crediting of ICMS by several states; and (vi) collection of social security contributions over payments of bonuses.
·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) litigations regarding Sete Brasil; (ii) administrative proceedings challenging an ANP order requiring Petrobras to pay additional special participation fees and royalties (production taxes) with respect to several fields; (iii) a public civil action that discusses the alleged illegality of the gas supply made by the Company to its Nitrogen Fertilizer Production Unit; (iv) regulation agencies fines; and (v) lawsuits related to contracts.
·Environmental matters comprising indemnities for material and collective moral damages to the environment and environmental fines related to the Company operation.

In the three-month period ended March 31, 2021, the main changes in the balance of contingent liabilities are related to: (i) a US$ 847 reduction in collective labor lawsuits in which unions question the formula for calculating the RMNR Complement, based on the published minutes on the decision of the Supreme Federal Court in relation to the financial update indexes applied to labor debts; partially offset by: (ii) a US$ 410 increase related to civil matters involving contractual issues; (iii) a US$ 142 increase referring to ICMS collection on inventories and value added; (iv) a US$ 87 increase related to requests for offsetting federal taxes not approved by the Federal Revenue of Brazil; and (v) US$ 53 referring to the collection of tax on services provided offshore (ISS).

22 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

14.4.Class action and related proceedings

Regarding the class action in the Netherlands, on January 29, 2020, the District Court in Rotterdam determined that shareholders who understand Portuguese and / or who bought shares through intermediaries or other agents who understand that language, among other shareholders, are subject to the arbitration clause provided for in the Company's Bylaws, remaining out of the collective action proposed by the Stichting Petrobras Compensation Foundation (“Foundation”). The Court also considered the binding effect of the agreement signed to close the United States' Class action. In this way, the Foundation needs to demonstrate that it represents a sufficient number of investors to justify pursuing collective action in the Netherlands. The Foundation and the Company presented the oral arguments at a hearing held on January 26, 2021, which is pending judgment. See note 20.4.1 to the annual 2020 Financial Statements for more information.

In relation to the arbitration in Argentina, the Argentine Supreme Court has not yet judged the appeal filed by the Association.

As for the criminal actions in Argentina, related to an alleged fraudulent offer of securities, on September 14, 2020, the judge accepted the defense presented by the Company and decided that Petrobras could not be sued in a criminal case before the Argentine Justice. The Association appealed this decision, and the appeal is pending judgment. Regarding the action related to the alleged nonobservance of the obligation to disclose a press release, on March 4, 2021, the Court decided that the competence to judge this criminal action should be transferred from the Criminal Economic Court No. 3 of Buenos Aires to the Criminal Economic Court No. 2 in the same city.

14.5.Arbitrations in Brazil

In the three-month period ended March 31, 2021 there were no events that changed the assessment and judgment of arbitration in Brazil.

For more information, see note 20.4.2 to the 2020 Financial Statements.

14.6.Tax recoveries under dispute
14.6.1.Deduction of VAT tax (ICMS) from the basis of calculation of PIS and COFINS

The Company filed complaints against Brazilian Federal Government challenging the constitutionality of the inclusion, from 2001 to 2020, of ICMS within the calculation basis of PIS and COFINS. In 2020, the Company obtained a favorable and definitive court decision on this claim, and the Company recognized the corresponding credit. The tax credit relates to the exclusion of the ICMS effectively collected when included in the basis of calculation of PIS and COFINS, as deliberated by the Federal Revenue of Brazil, as set out in note 11.1.

In relation to the amounts corresponding to the difference between the criterion established in the regulation and the ICMS amount reported in the invoices, these were not recognized as tax credit, since it is still pending final decision of the STF.

15.Provision for decommissioning costs
Non-current liabilities Jan-Mar/2021 Jan-Dec/2020
Opening balance 18,780 17,460
Adjustment to provision 5 5,720
Transfers related to liabilities held for sale (*) (205) (519)
Payments made (162) (446)
Interest accrued 180 571
Others 7 15
Cumulative translation adjustment (1,643) (4,021)
Closing balance 16,962 18,780
(*) In the first quarter of 2021, it includes transfers to held for sale mainly related to US$ 109 in the concessions of Peroá Group in Espírito Santo state and US$ 97 in Miranga Group in Bahia state.  In 2020, it includes transfers to held for sale mainly related to US$ 301 in the concessions in Rio Grande do Norte state and US$204 in Bahia state, as set out in note 24 to the 2020 Financial Statements.

 

23 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
16.The “Lava Jato (Car Wash) Operation” and its effects on the Company

The Company has monitored the progress of investigations under the “Lava Jato” Operation and, in the preparation of these unaudited consolidated interim financial statements for the period ended March 31, 2021, did not identify any additional information that would affect the adopted calculation methodology to write off, in the third quarter of 2014, amounts overpaid for the acquisition of property, plant and equipment. The Company will continue to monitor these investigations for additional information in order to assess their potential impact on the adjustment made.

In addition, the Company has fully cooperated with the Brazilian Federal Police (Polícia Federal), the Brazilian Public Prosecutor’s Office (Ministério Público Federal), the Federal Auditor’s Office (Tribunal de Contas da União – TCU) and the General Federal Inspector’s Office (Controladoria Geral da União) in the investigation of all crimes and irregularities.

During the period ended March 31, 2021, new leniency and plea agreements entitled the Company to receive funds with respect to compensation for damages, in the amount of US$ 141 (US$ 21 in the same period of 2020), accounted for as other income and expenses. Thus, the total amount recovered from Lava Jato investigation through March 31, 2021 is US$ 1,428.

16.1.Investigations involving the Company
16.1.1.U.S. Commodity Futures Trading Commission - CFTC

In May 2019, the U.S. Commodity Futures Trading Commission (“CFTC”) contacted Petrobras with an inquiry regarding trading activities related to the Lava Jato Operation. Petrobras reiterates that it continues to cooperate with the regulatory authorities, including the CFTC, regarding any inquiry.

16.1.2.Order of civil inquiry - Brazilian Public Prosecutor’s Office

On December 15, 2015, the State of São Paulo Public Prosecutor’s Office issued the Order of Civil Inquiry 01/2015, establishing a civil proceeding to investigate the existence of potential damages caused by Petrobras to investors in the Brazilian stock market. The Brazilian Attorney General’s Office (Procuradoria Geral da República) assessed this civil proceeding and determined that the São Paulo Public Prosecutor’s Office has no authority over this matter, which must be presided over by the Brazilian Public Prosecutor’s Office. The Company has provided all relevant information requested by the authorities.

24 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

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 (oil and gas producing properties) (***) Right-of-use assets Total
Balance at January 1, 2020 4,450 70,378 21,952 40,897 21,588 159,265
Additions - 4,587 3,090 365 4,338 12,380
Additions to / review of estimates of decommissioning costs - - - 5,421 - 5,421
Capitalized borrowing costs - - 941 - - 941
Write-offs               (4) (438) (461) (187) (1,271) (2,361)
Transfers (258) 2,676 (3,175) 1,336 (21) 558
Transfers to assets held for sale (8) (226) 27 (848) (13) (1,068)
Depreciation, amortization and depletion (142) (4,298) - (3,864) (4,022) (12,326)
Impairment recognition (14) (7,293) (2,855) (4,603) (337) (15,102)
Impairment reversal - 5,542 482 1,612 124 7,760
Cumulative  translation adjustment (981) (12,248) (4,558) (8,963) (4,517) (31,267)
Balance at December 31, 2020 3,043 58,680 15,443 31,166 15,869 124,201
Cost 5,450 107,199 27,544 60,902 23,780 224,875
Accumulated depreciation, amortization, depletion and impairment (2,407) (48,519) (12,101) (29,736) (7,911) (100,674)
Balance at December 31, 2020 3,043 58,680 15,443 31,166 15,869 124,201
Additions - 359 1,476 - 382 2,217

Additions to / review of estimates of decommissioning

costs

- - - (1) - (1)
Capitalized borrowing costs - - 212 - - 212
Write-offs - (3) (98) (14) (4) (119)
Transfers 265 (229) (1,144) 1,158 - 50
Transfers to assets held for sale - (1,070) (107) (101) 3 (1,275)
Depreciation, amortization and depletion (33) (988) - (1,039) (988) (3,048)
Impairment recognition (note 19) - (114) - (8) - (122)
Impairment reversal (note 19) - - 27 - - 27
Cumulative  translation adjustment (270) (5,115) (1,304) (2,686) (1,361) (10,736)
Balance at March 31, 2021 3,005 51,520 14,505 28,475 13,901 111,406
Cost 4,976 95,926 25,166 55,355 21,874 203,297
Accumulated depreciation, amortization, depletion and impairment (****) (1,971) (44,406) (10,661) (26,880) (7,973) (91,891)
Balance at March 31, 2021 3,005 51,520 14,505 28,475 13,901 111,406
Weighted average useful life in years

40

(25 to 50)

(except land)

20

(3 to 31)

 

  Units of production method

8

(2 to 47)

 
(*) It is composed of production platforms, refineries, thermoelectric power plants, natural gas processing plants, pipelines, and other operating, storage and production plants, including subsea equipment for the production and flow of oil and gas, depreciated based on the units of production method.
(**) See note 24 for assets under construction by operating segment.
(***) It is composed of exploration and production assets related to wells, abandonment and dismantling of areas, signature bonuses associated with proved reserves and other costs directly associated with the exploration and production of oil and gas.
(****) In the case of assets under construction, it refers only to impairment losses.

 

 

 

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

25 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

 

  Platforms Vessels Properties Total
Balance at March 31, 2021 7,266 5,917 718 13,901
Cost 10,411 10,133 1,330 21,874
Accumulated depreciation, amortization and depletion (3,145) (4,216) (612) (7,973)
Balance at December 31, 2020 7,979 7,167 723 15,869
Cost 11,144 11,256 1,379 23,779
Accumulated depreciation, amortization and depletion (3,165) (4,089) (656) (7,910)

 

 

 

17.2.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, 2021, the capitalization rate was 5.55% p.a. (6.36% p.a. for the three-month period ended March 31, 2020).

18.Intangible assets
18.1.By class of assets
  Rights and Concessions Software Goodwill Total
Balance at January 1, 2020 19,168 242 63 19,473
Addition 31 88 - 119
Capitalized borrowing costs - 1 - 1
Write-offs (173) (3) - (176)
Transfers (2) (1) (26) (29)
Amortization (8) (58) - (66)
Impairment recognition - (6) (6) (12)
Cumulative  translation adjustment (4,302) (53) (7) (4,362)
Balance at December 31, 2020 14,714 210 24 14,948
Cost 14,803 1,245 24 16,072
Accumulated amortization and impairment (89) (1,035) - (1,124)
Balance at December 31, 2020 14,714 210 24 14,948
Addition 10 26 - 36
Capitalized borrowing costs - 1 - 1
Write-offs (1) - - (1)
Transfers (39) 1 - (38)
Amortization (2) (13) - (15)
Cumulative  translation adjustment (1,292) (19) (2) (1,313)
Balance at March 31, 2021 13,390 206 22 13,618
Cost 13,471 1,169 22 14,662
Accumulated amortization and impairment (81) (963) - (1,044)
Balance at March 31, 2021 13,390 206 22 13,618
Estimated useful life in years (*) 5 Indefinite  
(*) Mainly composed of assets with indefinite useful lives, which are reviewed annually to determine whether events and circumstances continue to support an indefinite useful life assessment.

 

 

19.Impairment
19.1.Impairment of property, plant and equipment and intangible assets

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

In the first quarter of 2021, impairment losses were recognized, in the amount of US$ 90, mainly due to:

26 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
·Oil and gas production and drilling equipment in Brazil: the Company decided to discontinue the use of P-33 platform in the Marlim field, due to the discontinuation of production and the beginning of its decommissioning process, resulting in its exclusion of CGU North group and its impairment testing as a separated asset, with the recognition of a US$ 122 impairment loss; and
·Oil and gas production and drilling equipment abroad: the Company decided to use in producing fields in the Santos basin, certain equipment that were previously part of platforms P-72 and P-73. Thus, considering estimated future cash flows for these assets, the Company recognized a US$ 27 impairment reversal.

In the first quarter of 2020, impairment losses were recognized due to the significant and adverse effects on the oil and oil products market arising from: (i) the outbreak of the COVID-19 pandemic and its effects on the economic activity, and (ii) failure in negotiations between members of Organization of the Petroleum Exporting Countries (OPEC) and its allies to define production levels, which contributed to an increase in the global oil supply with a significant reduction in price in early March 2020.

These events led the Company to adopt a set of measures, aiming at preserving cash generation, as well as to revise its key assumptions such as Brent prices, exchange rates, oil product spreads, among others and, in the first quarter of 2020, impairment losses were recognized in the amount of US$ 13,371, primarily due to:

(i) US$ 11,798 relating to the effect of updated assumptions in the estimation of the recoverable amount of several E&P fields, notably in the following Cash Generating Units (CGU): Roncador, Marlim Sul, North group, Albacora Leste, Berbigão-Sururu group, CVIT group and Mexilhão; and

(ii) US$ 1,356 relating to the hibernation of fields and platforms in shallow waters, affecting CGUs North group, Ceará-Mar group and Ubarana group, as well as Caioba, Guaricema and Camorim fields.

On November 25, 2020, management concluded and approved its 2021-2025 Strategic Plan, considering a complete update of economic assumptions, as well as its project portfolio and estimates of reserve volumes, which support the impairment tests conducted in this reporting period. Thus, impairment reversals were accounted for in the last quarter of 2020, in the amount of US$ 6,019, mainly on producing properties relating to oil and gas activities in Brazil.

19.2.Investment in publicly traded associate (Petrobras Distribuidora S.A. – BR Distribuidora)

On August 26, 2020 the Company’s Board of Directors approved the disposal of the remaining interest in this Company. Accordingly, the recoverable value of this investment took into account the value in use, including the disposal value, considering the intention to sell the shares. The post-tax discount rate in constant currency applied was 11% p.a., considering the cost of equity. Thus, a US$ 26 impairment loss was recognized in the first quarter of 2021.

20.Exploration and evaluation of oil and gas reserves

The exploration and evaluation activities include the search for oil and gas reserves from the date of obtaining the legal rights to explore a specific area to the declaration of the technical and commercial viability of the 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/2021 Jan-Dec/2020
Property plant and equipment    
Opening Balance 3,024 4,262
Additions 88 428
Write-offs (119) (197)
Transfers (72) (494)
Cumulative translation adjustment (251) (975)
Closing Balance 2,670 3,024
Intangible Assets 13,221 14,526
Capitalized Exploratory Well Costs / Capitalized Acquisition Costs 15,891 17,550
(*) Amounts capitalized and subsequently expensed in the same period have been excluded from this table.    

 

 

 

Exploration costs recognized in the statement of income and cash used in oil and gas exploration and evaluation activities are set out in the following table:

27 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

 

  2021 2020
  Jan-Mar Jan-Mar
Exploration costs recognized in the statement of income    
Geological and geophysical expenses 67 72
Exploration expenditures written off (includes dry wells and signature bonuses) 131 26
Contractual penalties 15 6
Other exploration expenses 1 -
Total expenses 214 104
Cash used in :    
Operating activities 68 72
Investment activities 115 149
Total cash used 183 221
     

 

 

21.Collateral for crude oil exploration concession agreements

The Company has granted collateral to ANP in connection with the performance of the Minimum Exploration Programs established in the concession agreements for petroleum exploration areas in the total amount of US$ 1,544 (US$ 1,631 as of December 31, 2020) of which US$ 1,464 were still in force as of March 31, 2021 (US$ 1,543 as of December 31, 2020), net of commitments undertaken. The collateral comprises crude oil from previously identified producing fields, pledged as collateral, amounting to US$ 1,146 (US$ 1,256 as of December 31, 2020) and bank guarantees of US$ 318 (US$ 287 as of December 31, 2020).

28 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
22.Investments
22.1.Investments in associates and joint ventures
  Balance at 12.31.2020 Investments Transfer to assets held for sale Restructuring, capital decrease and others Results of equity-accounted investments CTA OCI Dividends

Balance at

03.31.2021

Joint Ventures 813 1 (2) - 46 (28) 1 (5) 826
Associates (*) 2,455 1 - 1 137 (92) (113) (50) 2,339
Other investments 5 - - (3) - 2
Total 3,273 2 (2) 1 183 (123) (112) (55) 3,167
(*) It includes Petrobras Distribuidora and Braskem.
23.Disposal of assets and other changes in organizational structure

The Company has an active partnership and divestment portfolio, which takes into account opportunities for 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. The divestment projects and strategic partnerships follow the procedures aligned with the guidelines of the Brazilian Federal Auditor’s Office (Tribunal de Contas da União – TCU) and the current legislation.

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

    03.31.2021 12.31.2020
   E&P RT&M Gas & Power Corporate and other business Total Total
Assets classified as held for sale            
Cash and cash equivalents 1 1 14
Trade receivables - - 24
Inventories - 298 298 4
Investments - 19 19 68
Property, plant and equipment 637 1,090 1,727 640
Others - - 35
Total 638 1,388 19 2,045 785
Liabilities on assets classified as held for sale            
Trade payables - - - - - 22
Finance debt - - - 1 1 13
Provision for decommissioning costs 695 - - - 695 640
Others - - - - - 10
Total 695 1 696 685

 

 

23.1.Transactions pending closing at March 31, 2021

As of March 31, 2021, the amounts refer to (i) the remaining 10% interest in Lapa field; (ii) Sale of the Company’s entire interest in Polo Peroá; (iii) Onshore fields in Ceará, Bahia e Espírito Santo; (iv) Eólicas Mangue Seco 1, 2, 3 and 4; and (v) RLAM Refinery.

The most significant progress under the divestment process is describe below:

29 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

 

Transaction Acquirer Signature date Transaction amount (*) Further information
Sale of E&P assets in the state of Espírito Santo (Polo Peroá). OP Energy e DBO Energy  January 2021 13 a
Sale of the Company’s entire interest in nine onshore fields, called Miranda group, in the in the state of Bahia.

Miranga S.A. (structured entity), subsidiary of

PetroRecôncavo S.A.

February 2021 135 b
Sale of the Company’s 51% interest in the company Eólica Mangue Seco 2 - Geradora e Comercializadora de Energia Elétrica S.A. (“Eólica Mangue Seco 2), wind power generation plant. Fundo de Investimento em Participações Multiestratégia Pirineus (FIP Pirineus) February 2021

6

(R$ 33 million)

c
Sale of the Company's shares that will hold the Landulpho Alves Refinery (RLAM) and its associated logistics assets, in the state of Bahia MC Brazil Downstream Participações, a company of the Mubadala Capital group March 2021 1,650 d
(*) Only amounts considered at the signing of the transaction.

 

 

a)                Sale of E&P assets in Espírito Santo (Polo Peroá)

Amounts due to Petrobras are composed of: (i) US$ 5 was paid at the contract signing; (ii) US$ 8 to be paid at the transaction closing; (iii) up to US$ 42 as contingent payments provided for in the contract, related to factors such as Malombe's declaration of commerciality, future oil prices and extension of the concession terms. This transaction is subject to price adjustments and to the fulfillment of conditions precedent, such as approval by the ANP.

b)               Sale of onshore fields in Bahia

Amounts due to Petrobras are composed of: (i) US$ 11 paid upon the contract signing; (ii) US$ 44 to be paid at the transaction closing; (iii) US$ 80 deferred in three installments over three years from the transaction closing.

The contract provides for the payment of conditional amounts of up to US$ 85 in contingent payments related to future average Brent prices for the years 2022, 2023 and 2024.

This transaction includes price adjustments and is still subject to conditions precedent, such as approval by the ANP.

c)                Sale of Eólica Mangue Seco 2

Amount to be paid to Petrobras in a single installment at the transaction closing, subject to price adjustments provided for in the contract. The transaction results from the exercise of the preemptive right by FIP Pirineus, in accordance with the shareholders' agreement of Eólica Mangue Seco 2.

This sale is subject to price adjustments and to the fulfillment of conditions precedent, such as approval by Banco do Nordeste do Brasil, resource provider of the wind farm development, and by the Administrative Council for Economic Defense (CADE).

d)               Sale of the RLAM refinery

The agreement provides for price adjustment due to changes in working capital, net debt and investments until the transaction closing, and is subject to conditions precedent, such as approval by the CADE.

30 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
23.2.Closed transactions in the three-month period ended March 31, 2021
Transaction Acquirer

Signature date (S)

Closing date (C)

 Sale amount (*)  Gain/(loss) (**) Further information  
Sale of 30% of the Frade field concession. The transaction also includes the sale of the entire stake held by the subsidiary Petrobras Frade Inversiones S.A. (PFISA), in the company Frade BV. PetroRio

November 2019 (S)

February 2021 (C)

44 88 a  

 

Sale of the Company’s entire interest in Petrobras Uruguay Distribución S.A. (PUDSA).

DISA Corporación Petrolífera S.A.

August 2020 (S)

February 2021 (C)

68 (3) b  
Petrobras Biocombustível S.A. (PBio) signed a contract for the sale of all of its shares issued by BSBios Indústria e Comércio de Biodiesel Sul Brasil S.A. (BSBios) (50% of the share capital). RP Participações em Biocombustíveis S.A

December 2020 (S)

February 2021 (C)

60

(R$ 322 million)

1 c  
      172 86    
(*) 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).

 

a)                Sale of the Frade field

The operation was concluded with the payment of US$ 36 to Petrobras, after price adjustments (including cash inflows from the sale of crude oil from the concession), in addition to US$ 8 paid to Petrobras upon the contract signing. In addition, there is a contingent amount of US$ 20 linked to a potential new commercial discovery in the field.

The original sale amounting to US$ 100 was adjusted considering the cash flows arising from the Company’s interest in the block from July 1, 2019 (inception date of the negotiation) to February 5, 2021 (closing date). In addition, there is a contingent payment amounting to US$ 20 subject to a new discovery in the field.

b)               Sale of Petrobras Uruguay Distribución S.A. (PUDSA)

The transaction was concluded with the payment of US$ 62 to Petrobras, in addition to US$ 6 paid upon the contract signing, totaling US$ 68. As a result of this operation, a US$ 34 loss was reclassified to the statement of income, within other income and expenses, relating to cumulative translation adjustments arising from exchange rate variations recognized in PUDSA's shareholders' equity since de acquisition of this investment.

c)                Sale of BSBios

The transaction was concluded with the payment of US$ 47 to Petrobras, including price adjustments. In addition to this amount, US$ 12 is held in an escrow account for indemnification of eventual contingencies, to be released according to terms and conditions set forth in the contract, and US$ 1 was received in advance as interest on capital in December 2020, totaling US$ 60.

23.3.Other operation

On January 5, 2021, Petrobras acquired 100% of shares of the structured entity Companhia de Desenvolvimento e Modernização de Plantas Industriais (CDMPI) for US$ 9 thousand. The difference between the amount paid and CDMPI's negative shareholders' equity, in the amount of US$ 691, was registered as a capital transaction, reducing the shareholders' equity attributable to shareholders of Petrobras, while increasing non-controlling interests, since Petrobras already controlled its operations prior to this transaction. On April 14, 2021, an Extraordinary General Shareholders Meeting approved the incorporation of CDMPI.

23.4.Cash flows from sales of interest with loss of control

In the three-month periods ended March 31, 2021 and 2020, the Company disposed of its interest in certain subsidiaries over which control was lost. The following table summarizes cash flows arising from losing control in subsidiaries:

31 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

 

  Cash received Cash in subsidiary before losing control Net Proceeds
Jan-Mar/2021      
PUDSA 62 (15) 47
Total 62 (15) 47
Jan-Mar/2020      
Petrobras Oil & Gas B.V.(PO&GBV) 276 276
Total 276 276

 

 

24.Assets by operating segment
  Exploration and Production Refining, Transportation & Marketing

Gas

&

Power

Corporate and other business Elimina-tions Total
             
Consolidated assets by operating segment - 03.31.2021
             
Current assets 3,459 12,950 2,156 13,857 (5,397) 27,025
Non-current assets 104,332 20,044 7,414 16,405 148,195
Long-term receivables 4,430 1,776 746 13,052 20,004
Investments 405 488 581 1,693 3,167
Property, plant and equipment 86,213 17,691 5,974 1,528 111,406
Operating assets 76,485 15,354 3,797 1,265 96,901
Under construction 9,727 2,337 2,177 264 14,505
Intangible assets 13,284 89 113 132 13,618
Total Assets 107,791 32,994 9,570 30,262 (5,397) 175,220
             
Consolidated assets by operating segment - 12.31.2020
             
Current assets 5,333 8,170 1,975 15,337 (3,427) 27,388
Non-current assets 114,947 23,879 8,321 15,473 2 162,622
Long-term receivables 4,745 2,539 976 11,938 2 20,200
Investments 390 400 607 1,876 3,273
Property, plant and equipment 95,222 20,842 6,614 1,523 124,201
Operating assets 84,916 18,304 4,300 1,238 108,758
Under construction 10,305 2,537 2,315 286 15,443
Intangible assets 14,590 98 124 136 14,948
Total Assets 120,280 32,049 10,296 30,810 (3,425) 190,010

 

 

32 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 
25.Finance debt
25.1.Balance by type of finance debt
In Brazil 03.31.2021 12.31.2020
Banking Market 3,750 5,016
Capital Market 2,323 2,512
Development banks 1,149 1,315
Others 9 11
Total 7,231 8,854
Abroad    
Banking Market 13,609 13,581
Capital Market 26,070 27,625
Development banks - 201
Export Credit Agency 3,210 3,424
Others 197 203
Total 43,086 45,034
Total finance debt 50,317 53,888
Current 3,292 4,186
Non-current 47,025 49,702

 

 

 

Current finance debt is composed of:

 

  03.31.2021 03.31.2020
Short-term debt 338 1,140
Current portion of long-term debt 2,408 2,383
Accrued interest on short and long-term debt 546 663
Total 3,292 4,186

 

 

At March 31, 2021, there was no default, breach of covenants or change in collateral provided or clauses that would result in change in payment terms compared December 31, 2020.

25.2.Changes in finance debt and reconciliation with cash flows from financing activities
  Balance at 12.31.2019 Additions Principal amorti zation (*) Interest amorti zation (*) Accrued interest (**) Foreign exchange/ inflation indexation charges Cumulative translation adjustment (CTA) Modification of contractual cash flows Transfer to liabilities classified as held for sale Balance at 12.31.2020
In Brazil 10,730 1,488 (1,080) (352) 399 142 (2,473) - - 8,854
Abroad 52,530 15,535 (23,471) (2,967) 3,187 1,667 (1,201) (245) - 45,035
  63,260 17,023 (24,551) (3,319) 3,586 1,809 (3,674) (245) 53,889

 

 

 

33 

NOTES TO THE FINANCIAL STATEMENTS - UNAUDITED

PETROBRAS

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

 

 

 

Balance at

12.31.2020

Additions Principal amorti zation (*) Interest amorti zation (*) Accrued interest (**) Foreign exchange/ inflation indexation charges Cumulative translation adjustment (CTA) Modification of contractual cash flows Transfer to liabilities classified as held for sale Balance at 03.31.2021
In Brazil 8,854 - (940) (83) 81 89 (507)