pbr-6k_20180803.htm

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 August, 2018

 

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____

 


 

 

 

Quarterly Information- ITR

 

 

 

 

At June 30, 2018 and report on review of

Quarterly Information

 

(A free translation of the original in Portuguese)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Index

(Expressed in millions of reais, unless otherwise indicated)

 

 

Parent Company Interim Accounting Information / Statement of Financial Position – Assets

4

Parent Company Interim Accounting Information / Statement of Financial Position - Liabilities

5

Parent Company Interim Accounting Information / Statement of Income

6

Parent Company Interim Accounting Information / Statement of Comprehensive Income

7

Parent Company Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2018 to 06/30/2018

8

Parent Company Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2017 to 06/30/2017

9

Parent Company Interim Accounting Information / Statement of Cash Flows – Indirect Method

10

Parent Company Interim Accounting Information / Statement of Added Value

11

Consolidated Interim Accounting Information / Statement of Financial Position - Assets

12

Consolidated Interim Accounting Information / Statement of Financial Position - Liabilities

13

Consolidated Interim Accounting Information / Statement of Income

14

Consolidated Interim Accounting Information / Statement of Comprehensive Income

15

Consolidated Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2018 to 06/30/2018

16

Consolidated Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2017 to 06/30/2017

17

Consolidated Interim Accounting Information / Statement of Cash Flows – Indirect Method

18

Consolidated Interim Accounting Information / Statement of Added Value

19

Notes to the financial statements

20

1. The Company and its operations

20

2. Basis of preparation and presentation of financial statements

20

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

21

4. Summary of significant accounting policies

22

5. Accounting estimates

25

6. Cash and cash equivalents and Marketable securities

26

7. Trade and other receivables

27

8. Inventories

29

9. Disposal of Assets and other changes in organizational structure

30

10. Investments

34

11. Property, plant and equipment

36

12. Intangible assets

38

13. Exploration and evaluation of oil and gas reserves

38

14. Trade payables

39

15. Finance debt

40

16. Leases

43

17. Related-party transactions

43

18. Provision for decommissioning costs

48

19. Taxes

48

20. Employee benefits (Post-Employment)

54

21. Equity

57

22. Sales revenues

59

23. Other income and expenses

59

24. Costs and Expenses by nature

60

25. Net finance income (expense)

60

26. Supplemental information on statement of cash flows

60

27. Segment information

61

28. Provisions for legal proceedings

64

29. Collateral for crude oil exploration concession agreements

71

30. Risk management

71

31. Fair value of financial assets and liabilities

76

32. Subsequent events

77

33. Correlation between the notes disclosed in the complete annual financial statements as of December 31, 2017 and the interim statements as of June 30, 2018

78

 

 

3


 

Parent Company Interim Accounting Information / Statement of Financial Position - Assets
(R$ Thousand)

 

Account Code

Account Description

Current Quarter 06/30/2018

Previous Fiscal Year 12/31/2017

1

Total Assets

774,115,000

723,855,000

1.01

Current Assets

90,213,000

81,883,000

1.01.01

Cash and Cash Equivalents

7,125,000

1,305,000

1.01.02

Marketable Securities

3,990,000

3,531,000

1.01.03

Trade and Other Receivables

33,626,000

34,239,000

1.01.04

Inventories

30,809,000

23,165,000

1.01.06

Recoverable Taxes

6,788,000

6,183,000

1.01.06.01

Current Recoverable Taxes

6,788,000

6,183,000

1.01.06.01.01

Current Income Tax and Social Contribution

723,000

669,000

1.01.06.01.02

Other Recoverable Taxes

6,065,000

5,514,000

1.01.08

Other Current Assets

7,875,000

13,460,000

1.01.08.01

Non-Current Assets Held for Sale

325,000

9,520,000

1.01.08.03

Others

7,550,000

3,940,000

1.01.08.03.01

Advances to Suppliers

135,000

173,000

1.01.08.03.02

Others

7,415,000

3,767,000

1.02

Non-Current Assets

683,902,000

641,972,000

1.02.01

Long-Term Receivables

60,068,000

50,816,000

1.02.01.03

Marketable Securities Measured at Amortized Cost

193,000

204,000

1.02.01.04

Trade and Other Receivables

17,220,000

15,211,000

1.02.01.07

Deferred Taxes

12,351,000

8,999,000

1.02.01.07.01

Deferred Income Tax and Social Contribution

3,604,000

1.02.01.07.02

Deferred Taxes and Contributions

8,747,000

8,999,000

1.02.01.10

Other Non-Current Assets

30,304,000

26,402,000

1.02.01.10.03

Advances to Suppliers

431,000

502,000

1.02.01.10.04

Judicial Deposits

21,026,000

17,085,000

1.02.01.10.05

Other Long-Term Assets

8,847,000

8,815,000

1.02.02

Investments

175,644,000

149,356,000

1.02.03

Property, Plant and Equipment

442,017,000

435,536,000

1.02.04

Intangible Assets

6,173,000

6,264,000

 

 

 

4


 

Parent Company Interim Accounting Information / Statement of Financial Position - Liabilities

(R$ Thousand)

 

Account Code

Account Description

Current Quarter 06/30/2018

Previous Fiscal Year 12/31/2017

2

Total Liabilities

774,115,000

723,855,000

2.01

Current Liabilities

161,063,000

132,319,000

2.01.01

Payroll, Profit Sharing and Related Charges

5,203,000

3,662,000

2.01.02

Trade Payables

27,072,000

22,179,000

2.01.03

Taxes Obligations

1,438,000

243,000

2.01.03.01

Federal Taxes Obligations

1,438,000

243,000

2.01.03.01.01

Income Tax and Social Contribution Payable

1,438,000

243,000

2.01.04

Current Debt and Finance Lease Obligations

94,317,000

75,985,000

2.01.04.01

Current Debt

92,981,000

74,724,000

2.01.04.03

Finance Lease Obligations

1,336,000

1,261,000

2.01.05

Other Liabilities

19,826,000

20,590,000

2.01.05.02

Others

19,826,000

20,590,000

2.01.05.02.04

Other Taxes and Contributions

15,172,000

14,485,000

2.01.05.02.05

Other Accounts Payable

4,654,000

6,105,000

2.01.06

Provisions

13,207,000

9,054,000

2.01.06.01

Provisions for Tax Social Security, Labor and Civil Lawsuits

10,543,000

6,397,000

2.01.06.01.04

Provisions for Civil Lawsuits

10,543,000

6,397,000

2.01.06.02

Other Provisions

2,664,000

2,657,000

2.01.06.02.04

Pension and Medical Benefits

2,664,000

2,657,000

2.01.07

Liabilities Associated with Non-Current Assets Held for Sale and Discontinued

606,000

2.01.07.01

Liabilities Associated with Non-Current Assets Held for Sale

606,000

2.02

Non-Current Liabilities

330,913,000

327,551,000

2.02.01

Non-Current Debt and Finance Lease Obligations

203,595,000

197,501,000

2.02.01.01

Non-Current Debt

200,135,000

193,393,000

2.02.01.03

Finance Lease Obligations

3,460,000

4,108,000

2.02.02

Other Liabilities

2,131,000

2,169,000

2.02.02.02

Others

2,131,000

2,169,000

2.02.02.02.03

Income Tax and Social Contribution

2,131,000

2,169,000

2.02.03

Deferred Taxes

2,762,000

2.02.03.01

Deferred Taxes

2,762,000

2.02.04

Provisions

125,187,000

125,119,000

2.02.04.01

Provisions for Tax Social Security, Labor and Civil Lawsuits

10,190,000

12,680,000

2.02.04.02

Other Provisions

114,997,000

112,439,000

2.02.04.02.04

Pension and Medical Benefits

66,293,000

64,519,000

2.02.04.02.05

Provision for Decommissioning Costs

45,898,000

45,677,000

2.02.04.02.06

Other Provisions

2,806,000

2,243,000

2.03

Shareholders' Equity

282,139,000

263,985,000

2.03.01

Share Capital

205,432,000

205,432,000

2.03.02

Capital Reserves

2,673,000

2,673,000

2.03.04

Profit Reserves

92,546,000

77,148,000

2.03.08

Other Comprehensive Income

(18,512,000)

(21,268,000)

 

 

 

5


 

Parent Company Interim Accounting Information / Statement of Income

(R$ thousand)

 

Account Code

Account Description

Current Quarter 04/01/2018 to 06/30/2018

Accumulated of the Current Year 01/01/2018 to 06/30/2018

Same Quarter of the Previous Year 04/01/2017 to 06/30/2017

Accumulated of the Previous Year 01/01/2017 to 06/30/2017

3.01

Sales Revenues

65,284,000

121,151,000

55,463,000

109,559,000

3.02

Cost of Sales

(40,460,000)

(76,000,000)

(38,387,000)

(74,018,000)

3.03

Gross Profit

24,824,000

45,151,000

17,076,000

35,541,000

3.04

Operating Expenses / Income

(9,142,000)

(15,004,000)

(4,339,000)

(11,356,000)

3.04.01

Selling Expenses

(5,034,000)

(9,439,000)

(4,595,000)

(8,828,000)

3.04.02

General and Administrative Expenses

(1,552,000)

(3,027,000)

(1,555,000)

(3,133,000)

3.04.05

Other Operating Expenses

(6,826,000)

(9,092,000)

762,000

(3,101,000)

3.04.05.01

Other Taxes

(205,000)

(571,000)

(2,441,000)

(2,610,000)

3.04.05.02

Research and Development Expenses

(592,000)

(1,085,000)

(548,000)

(885,000)

3.04.05.03

Exploration Costs

(579,000)

(1,017,000)

(585,000)

(888,000)

3.04.05.05

Other Operating Expenses, Net

(5,450,000)

(6,419,000)

4,336,000

1,282,000

3.04.06

Share of Profit / Gains on Interest in Equity-Accounted Investments

4,270,000

6,554,000

1,049,000

3,706,000

3.05

Net Income Before Financial Results and Income Taxes

15,682,000

30,147,000

12,737,000

24,185,000

3.06

Finance Income (Expenses), Net

(2,109,000)

(6,628,000)

(5,698,000)

(11,186,000)

3.06.01

Finance Income

2,725,000

3,455,000

677,000

1,370,000

3.06.01.01

Finance Income

2,725,000

3,455,000

677,000

1,370,000

3.06.02

Finance Expenses

(4,834,000)

(10,083,000)

(6,375,000)

(12,556,000)

3.06.02.01

Finance Expenses

(3,357,000)

(6,676,000)

(5,316,000)

(9,420,000)

3.06.02.02

Foreign Exchange and Inflation Indexation Charges, Net

(1,477,000)

(3,407,000)

(1,059,000)

(3,136,000)

3.07

Net Income Before Income Taxes

13,573,000

23,519,000

7,039,000

12,999,000

3.08

Income Tax and Social Contribution

(3,501,000)

(6,486,000)

(6,723,000)

(8,234,000)

3.08.01

Current

(3,520,000)

(6,260,000)

(1,909,000)

(1,909,000)

3.08.02

Deferred

19,000

(226,000)

(4,814,000)

(6,325,000)

3.09

Net Income from Continuing Operations

10,072,000

17,033,000

316,000

4,765,000

3.11

Income / (Loss) for the Period

10,072,000

17,033,000

316,000

4,765,000

3.99

Income per Share (R$/Share)

 

 

 

 

3.99.01

Income per Share  

 

 

 

 

3.99.01.01

Ordinary Shares

0.772000

1.310000

0.024000

0.370000

3.99.01.02

Preferred Shares

0.772000

1.310000

0.024000

0.370000

3.99.02

Diluted Income per Share

 

 

 

 

3.99.02.01

Ordinary Shares

0.772000

1.310000

0.024000

0.370000

3.99.02.02

Preferred Shares

0.772000

1.310000

0.024000

0.370000

 

 

 

 

 

 

 

 

 

6


 

Parent Company Interim Accounting Information / Statement of Comprehensive Income

(R$ thousand)

 

 

Account Code

Account Description

Current Quarter 04/01/2018 to 06/30/2018

Accumulated of the Current Year 01/01/2018 to 06/30/2018

Same Quarter of the Previous Year 04/01/2017 to 06/30/2017

Accumulated of the Previous Year 01/01/2017 to 06/30/2017

4.01

Net Income for the Period

10,072,000

17,033,000

316,000

4,765,000

4.02

Other Comprehensive Income

756,000

2,829,000

487,000

3,629,000

4.02.03

Cumulative Translation Adjustments

19,938,000

20,790,000

4,046,000

1,575,000

4.02.04

Unrealized Gains/(Losses) on securities measured at fair value through other comprehensive income

(14,000)

(16,000)

4.02.07

Unrealized Gains / (Losses) on Cash Flow Hedge  - Recognized in Shareholders' Equity

(30,239,000)

(31,355,000)

(7,691,000)

(2,428,000)

4.02.08

Unrealized Gains / (Losses) on Cash Flow Hedge  - Reclassified to Profit and Loss

2,634,000

5,036,000

1,870,000

3,834,000

4.02.09

Deferred Income Tax and Social Contribution on Cash Flow Hedge

9,385,000

8,948,000

1,980,000

(478,000)

4.02.10

Share of Other Comprehensive Income of Equity-Accounted Investments

(948,000)

(574,000)

282,000

1,126,000

4.03

Total Comprehensive Income for the Period

10,828,000

19,862,000

803,000

8,394,000

 

 

7


 

Parent Company Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2018 to 06/30/2018

(R$ thousand)

 

Account Code

Account Description

Share Capital

Capital Reserves, Granted Options and Treasury Shares

Profit Reserves

Retained Earnings (Losses)

Accumulated Other Comprehensive Income

Shareholders' Equity

5.01

Balance at the Beginning of the Period

205,432,000

2,673,000

77,148,000

(21,268,000)

263,985,000

5.02

Prior Period Adjustments

(989,000)

(67,000)

(1,056,000)

5.03

Adjusted Opening Balance

205,432,000

2,673,000

77,148,000

(989,000)

(21,335,000)

262,929,000

5.04

Capital Transactions with Owners

(647,000)

(5,000)

(652,000)

5.04.07

Interest on Shareholders' Equity

(652,000)

(652,000)

5.04.09

Realization of the Deemed Cost

5,000

(5,000)

5.05

Total of Comprehensive Income

17,033,000

2,829,000

19,862,000

5.05.01

Net Income for the Period

17,033,000

17,033,000

5.05.02

Other Comprehensive Income

2,829,000

2,829,000

5.07

Balance at the End of the Period

205,432,000

2,673,000

77,148,000

15,397,000

(18,511,000)

282,139,000

 

 

 

 

8


 

Parent Company Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2017 to 06/30/2017

(R$ thousand)

 

Account Code

Account Description

Share Capital

Capital Reserves, Granted Options and Treasury Shares

Profit Reserves

Retained Earnings (Losses)

Accumulated Other Comprehensive Income

Shareholders' Equity

5.01

Balance at the Beginning of the Period

205,432,000

1,251,000

77,584,000

(34,037,000)

250,230,000

5.03

Adjusted Opening Balance

205,432,000

1,251,000

77,584,000

(34,037,000)

250,230,000

5.04

Capital Transactions with Owners

11,000

5,000

(5,000)

11,000

5.04.08

#N/A

11,000

11,000

5.04.09

Realization of the Deemed Cost

5,000

(5,000)

5.05

Total of Comprehensive Income

4,765,000

3,629,000

8,394,000

5.05.01

Net Income for the Period

4,765,000

4,765,000

5.05.02

Other Comprehensive Income

3,629,000

3,629,000

5.07

Balance at the End of the Period

205,432,000

1,262,000

77,584,000

4,770,000

(30,413,000)

258,635,000

 

9


 

Parent Company Interim Accounting Information / Statement of Cash Flows – Indirect Method

(R$ thousand)

 

Account Code

Account Description

Accumulated of the Current Year 01/01/2018 to 06/30/2018

Accumulated of the Previous Year 01/01/2017 to 06/30/2017

6.01

Net cash provided by operating activities

23,468,000

13,427,000

6.01.01

Cash provided by operating activities

42,630,000

33,552,000

6.01.01.01

Net Income (loss) for the period

17,033,000

4,765,000

6.01.01.02

Pension and medical benefits (actuarial expense)

3,564,000

3,996,000

6.01.01.03

Results in equity-accounted investments

(6,554,000)

(3,706,000)

6.01.01.04

Depreciation, depletion and amortization

17,112,000

16,180,000

6.01.01.05

Impairment of assets (reversal)

72,000

91,000

6.01.01.06

Exploratory expenditures write-offs

232,000

324,000

6.01.01.07

Gains and losses on disposals/write-offs of assets

(2,573,000)

(5,633,000)

6.01.01.08

Foreign exchange, indexation and finance charges

10,920,000

10,453,000

6.01.01.09

Deferred income taxes, net

226,000

6,325,000

6.01.01.10

Allowance for expected credit losses

1,444,000

276,000

6.01.01.13

Revision and unwinding of discount on the provision for decommissioning costs

1,154,000

1,179,000

6.01.01.15

Gain on remeasurement of investment retained with loss of control

(698,000)

6.01.02

Decrease / (increase) in assets / increase/ (decrease) in liabilities

(19,162,000)

(20,125,000)

6.01.02.01

Trade and other receivables, net

(12,998,000)

(14,497,000)

6.01.02.02

Inventories

(7,535,000)

639,000

6.01.02.03

Judicial deposits

(3,944,000)

(1,729,000)

6.01.02.04

Other assets

754,000

(858,000)

6.01.02.05

Trade payables

1,630,000

(2,981,000)

6.01.02.06

Other taxes payable

6,425,000

3,304,000

6.01.02.07

Pension and medical benefits

(1,784,000)

(1,298,000)

6.01.02.08

Income tax and social contribution paid

(2,956,000)

(77,000)

6.01.02.09

Other liabilities

1,246,000

(2,628,000)

6.02

Net cash used in investing activities

(12,888,000)

(3,320,000)

6.02.01

Acquisition of PP&E and intangibles assets

(20,901,000)

(14,017,000)

6.02.02

Increase in investments in investees

(5,463,000)

(2,694,000)

6.02.03

Proceeds from disposal of assets - Divestment

8,906,000

7,854,000

6.02.04

Divestment (investment) in marketable securities

2,157,000

2,161,000

6.02.05

Dividends received

2,413,000

3,376,000

6.03

Net cash used in financing activities

(4,760,000)

(15,356,000)

6.03.02

Proceeds from financing

48,443,000

41,390,000

6.03.03

Repayment of principal

(47,944,000)

(46,692,000)

6.03.04

Repayment of interest

(4,664,000)

(10,054,000)

6.03.05

Dividends paid to shareholders

(595,000)

6.05

Net increase/ (decrease) in cash and cash equivalents

5,820,000

(5,249,000)

6.05.01

Cash and cash equivalents at the beginning of the year

1,305,000

6,267,000

6.05.02

Cash and cash equivalents at the end of the period

7,125,000

1,018,000

 

10


 

Parent Company Interim Accounting Information / Statement of Added Value

(R$ thousand)

 

Account Code

Account Description

Accumulated of the Current Year 01/01/2018 to 06/30/2018

Accumulated of the Previous Year 01/01/2017 to 06/30/2017

7.01

Sales Revenues

189,755,000

170,174,000

7.01.01

Sales of Goods and Services

166,549,000

143,616,000

7.01.02

Other Revenues

4,317,000

10,752,000

7.01.03

Revenues Related to the Construction of Assets to be Used in Own Operations

20,333,000

16,082,000

7.01.04

Allowance for expected credit losses

(1,444,000)

(276,000)

7.02

Inputs Acquired from Third Parties

(54,600,000)

(57,494,000)

7.02.01

Cost of Sales

(18,138,000)

(19,272,000)

7.02.02

Materials, Power, Third-Party Services and Other Operating Expenses

(25,007,000)

(28,723,000)

7.02.03

Impairment Charges / Reversals of Assets

(72,000)

(91,000)

7.02.04

Others

(11,383,000)

(9,408,000)

7.02.04.01

Tax Credits on Inputs Acquired from Third Parties

(11,383,000)

(9,408,000)

7.03

Gross Added Value

135,155,000

112,680,000

7.04

Retentions

(17,112,000)

(16,180,000)

7.04.01

Depreciation, Amortization and Depletion

(17,112,000)

(16,180,000)

7.05

Net Added Value Produced

118,043,000

96,500,000

7.06

Transferred Added Value

10,456,000

5,536,000

7.06.01

Share of Profit of Equity-Accounted Investments

6,554,000

3,706,000

7.06.02

Finance Income

3,455,000

1,371,000

7.06.03

Others

447,000

459,000

7.07

Total Added Value to be Distributed

128,499,000

102,036,000

7.08

Distribution of Added Value

128,499,000

102,036,000

7.08.01

Employee Compensation

12,376,000

11,666,000

7.08.01.01

Salaries

7,318,000

6,742,000

7.08.01.02

Fringe Benefits

4,543,000

4,365,000

7.08.01.03

Unemployment Benefits (FGTS)

515,000

559,000

7.08.02

Taxes and Contributions

61,759,000

46,106,000

7.08.02.01

Federal

47,002,000

32,702,000

7.08.02.02

State

14,576,000

13,292,000

7.08.02.03

Municipal

181,000

112,000

7.08.03

Return on Third-Party Capital

37,331,000

39,499,000

7.08.03.01

Interest

12,667,000

14,823,000

7.08.03.02

Rental Expenses

24,664,000

24,676,000

7.08.04

Return on Shareholders' Equity

17,033,000

4,765,000

7.08.04.01

Interest on Capital

652,000

7.08.04.03

Retained Earnings / (Losses) for the Period

16,381,000

4,765,000

 

 

11


 

Consolidated Interim Accounting Information / Statement of Financial Position - Assets

(R$ thousand)

 

Account Code

Account Description

Current Period 06/30/2018

Previous Fiscal Year 12/31/2017

1

Total Assets

850,282,000

831,515,000

1.01

Current Assets

144,255,000

155,909,000

1.01.01

Cash and Cash Equivalents

65,536,000

74,494,000

1.01.02

Marketable Securities

4,060,000

6,237,000

1.01.03

Trade and Other Receivables

19,385,000

16,446,000

1.01.04

Inventories

35,534,000

28,081,000

1.01.06

Recoverable Taxes

9,006,000

8,062,000

1.01.06.01

Current Recoverable Taxes

9,006,000

8,062,000

1.01.06.01.01

Current Income Tax and Social Contribution

1,816,000

1,584,000

1.01.06.01.02

Other Recoverable Taxes

7,190,000

6,478,000

1.01.08

Other Current Assets

10,734,000

22,589,000

1.01.08.01

Non-Current Assets Held for Sale

1,542,000

17,592,000

1.01.08.03

Others

9,192,000

4,997,000

1.01.08.03.01

Advances to Suppliers

193,000

258,000

1.01.08.03.02

Others

8,999,000

4,739,000

1.02

Non-Current Assets

706,027,000

675,606,000

1.02.01

Long-Term Receivables

80,530,000

70,955,000

1.02.01.03

Marketable Securities Measured at Amortized Cost

200,000

211,000

1.02.01.04

Trade and Other Receivables

19,091,000

17,120,000

1.02.01.07

Deferred Taxes

25,616,000

21,544,000

1.02.01.07.01

Deferred Income Tax and Social Contribution

15,606,000

11,373,000

1.02.01.07.02

Deferred Taxes and Contributions

10,010,000

10,171,000

1.02.01.10

Other Non-Current Assets

35,623,000

32,080,000

1.02.01.10.03

Advances to Suppliers

3,074,000

3,413,000

1.02.01.10.04

Judicial Deposits

22,545,000

18,465,000

1.02.01.10.05

Other Long-Term Assets

10,004,000

10,202,000

1.02.02

Investments

12,287,000

12,554,000

1.02.03

Property, Plant and Equipment

605,484,000

584,357,000

1.02.04

Intangible Assets

7,726,000

7,740,000

 

 


12


 

Consolidated Interim Accounting Information / Statement of Financial Position - Liabilities

(R$ thousand)

 

Account Code

Account Description

Current Period 06/30/2018

Previous Fiscal Year 12/31/2017

2

Total Liabilities

850,282,000

831,515,000

2.01

Current Liabilities

84,649,000

82,535,000

2.01.01

Payroll, Profit Sharing and Related Charges

6,013,000

4,331,000

2.01.02

Trade Payables

20,769,000

19,077,000

2.01.03

Taxes Obligations

1,648,000

990,000

2.01.03.01

Federal Taxes Obligations

1,648,000

990,000

2.01.03.01.01

Income Tax and Social Contribution Payable

1,648,000

990,000

2.01.04

Current Debt and Finance Lease Obligations

15,353,000

23,244,000

2.01.04.01

Current Debt

15,266,000

23,160,000

2.01.04.03

Finance Lease Obligations

87,000

84,000

2.01.05

Other Liabilities

25,498,000

23,344,000

2.01.05.02

Others

25,498,000

23,344,000

2.01.05.02.04

Other Taxes and Contributions

15,775,000

15,046,000

2.01.05.02.05

Other Accounts Payable

9,723,000

8,298,000

2.01.06

Provisions

15,203,000

10,254,000

2.01.06.01

Provisions for Tax Social Security, Labor and Civil Lawsuits

12,398,000

7,463,000

2.01.06.01.04

Provisions for Civil Lawsuits

12,398,000

7,463,000

2.01.06.02

Other Provisions

2,805,000

2,791,000

2.01.06.02.04

Pension and Medical Benefits

2,805,000

2,791,000

2.01.07

Liabilities Associated with Non-Current Assets Held for Sale and Discontinued

165,000

1,295,000

2.01.07.01

Liabilities Associated with Non-Current Assets Held for Sale

165,000

1,295,000

2.02

Non-Current Liabilities

478,185,000

479,371,000

2.02.01

Non-Current Debt and Finance Lease Obligations

338,270,000

338,239,000

2.02.01.01

Non-Current Debt

337,604,000

337,564,000

2.02.01.03

Finance Lease Obligations

666,000

675,000

2.02.02

Other Liabilities

2,180,000

2,219,000

2.02.02.02

Others

2,180,000

2,219,000

2.02.02.02.03

Income Tax and Social Contribution

2,180,000

2,219,000

2.02.03

Deferred Taxes

1,637,000

3,956,000

2.02.03.01

Deferred Taxes

1,637,000

3,956,000

2.02.04

Provisions

136,098,000

134,957,000

2.02.04.01

Provisions for Tax Social Security, Labor and Civil Lawsuits

13,376,000

15,778,000

2.02.04.02

Other Provisions

122,722,000

119,179,000

2.02.04.02.04

Pension and Medical Benefits

71,522,000

69,421,000

2.02.04.02.05

Provision for Decommissioning Costs

47,335,000

46,785,000

2.02.04.02.06

Other Provisions

3,865,000

2,973,000

2.03

Shareholders' Equity

287,448,000

269,609,000

2.03.01

Share Capital

205,432,000

205,432,000

2.03.02

Capital Reserves

2,457,000

2,457,000

2.03.04

Profit Reserves

92,761,000

77,364,000

2.03.08

Other Comprehensive Income

(18,511,000)

(21,268,000)

2.03.09

Non-controlling interests

5,309,000

5,624,000

 

 

 

13


 

Consolidated Interim Accounting Information / Statement of Income

(R$ thousand)

 

Account Code

Account Description

Current Quarter 04/01/2018 to 06/30/2018

Accumulated of the Current Year 01/01/2018 to 06/30/2018

Same Quarter of the Previous Year 04/01/2017 to 06/30/2017

Accumulated of the Previous Year 01/01/2017 to 06/30/2017

3.01

Sales Revenues

84,395,000

158,856,000

66,996,000

135,361,000

3.02

Cost of Sales

(52,772,000)

(100,460,000)

(45,627,000)

(90,206,000)

3.03

Gross Profit

31,623,000

58,396,000

21,369,000

45,155,000

3.04

Operating Expenses / Income

(14,647,000)

(23,094,000)

(5,764,000)

(14,668,000)

3.04.01

Selling Expenses

(4,748,000)

(8,876,000)

(3,889,000)

(6,279,000)

3.04.02

General and Administrative Expenses

(2,206,000)

(4,348,000)

(2,221,000)

(4,528,000)

3.04.05

Other Operating Expenses

(8,003,000)

(10,691,000)

(269,000)

(5,088,000)

3.04.05.01

Other Taxes

(359,000)

(840,000)

(3,069,000)

(3,360,000)

3.04.05.02

Research and Development Expenses

(593,000)

(1,088,000)

(549,000)

(886,000)

3.04.05.03

Exploration Costs

(584,000)

(1,026,000)

(603,000)

(899,000)

3.04.05.05

Other Operating Expenses, Net

(6,467,000)

(7,737,000)

3,952,000

57,000

3.04.06

Share of Profit / Gains on Interest in Equity-Accounted Investments

310,000

821,000

615,000

1,227,000

3.05

Net Income Before Financial Results and Income Taxes

16,976,000

35,302,000

15,605,000

30,487,000

3.06

Finance Income (Expenses), Net

(2,647,000)

(9,893,000)

(8,835,000)

(16,590,000)

3.06.01

Finance Income

4,596,000

5,697,000

1,051,000

1,984,000

3.06.01.01

Finance Income

4,596,000

5,697,000

1,051,000

1,984,000

3.06.02

Finance Expenses

(7,243,000)

(15,590,000)

(9,886,000)

(18,574,000)

3.06.02.01

Finance Expenses

(5,346,000)

(11,196,000)

(6,868,000)

(12,813,000)

3.06.02.02

Foreign Exchange and Inflation Indexation Charges, Net

(1,897,000)

(4,394,000)

(3,018,000)

(5,761,000)

3.07

Net Income Before Income Taxes

14,329,000

25,409,000

6,770,000

13,897,000

3.08

Income Tax and Social Contribution

(4,638,000)

(8,593,000)

(6,478,000)

(8,798,000)

3.08.01

Current

(4,108,000)

(7,429,000)

(2,573,000)

(3,399,000)

3.08.02

Deferred

(530,000)

(1,164,000)

(3,905,000)

(5,399,000)

3.09

Net Income from Continuing Operations

9,691,000

16,816,000

292,000

5,099,000

3.11

Income / (Loss) for the Period

9,691,000

16,816,000

292,000

5,099,000

3.11.01

Attributable to Shareholders of Petrobras

10,072,000

17,033,000

316,000

4,765,000

3.11.02

Attributable to Non-Controlling Interests

(381,000)

(217,000)

(24,000)

334,000

3.99

Income per Share (R$/Share)

 

 

 

 

3.99.01

Income per Share  

 

 

 

 

3.99.01.01

Ordinary Shares

0.77000

1.31000

0.02400

0.37000

3.99.01.02

Preferred Shares

0.77000

1.31000

0.02400

0.37000

3.99.02

Diluted Income per Share

 

 

 

 

3.99.02.01

Ordinary Shares

0.77000

1.31000

0.02400

0.37000

3.99.02.02

Preferred Shares

0.77000

1.31000

0.02400

0.37000

 

 

14


 

Consolidated Interim Accounting Information / Statement of Comprehensive Income

(R$ thousand)

 

Account Code

Account Description

Current Quarter 04/01/2018 to 06/30/2018

Accumulated of the Current Year 01/01/2018 to 06/30/2018

Same Quarter of the Previous Year 04/01/2017 to 06/30/2017

Accumulated of the Previous Year 01/01/2017 to 06/30/2017

4.01

Net Income for the Period

9,691,000

16,816,000

292,000

5,099,000

4.02

Other Comprehensive Income

1,109,000

3,225,000

543,000

3,640,000

4.02.03

Cumulative Translation Adjustments

20,291,000

21,186,000

4,102,000

1,586,000

4.02.04

Unrealized Gains/(Losses) on securities measured at fair value through other comprehensive income

(14,000)

(16,000)

(2,000)

(42,000)

4.02.07

Unrealized Gains / (Losses) on Cash Flow Hedge  - Recognized in Shareholders' Equity

(30,589,000)

(31,688,000)

(7,742,000)

(2,281,000)

4.02.08

Unrealized Gains / (Losses) on Cash Flow Hedge  - Reclassified to Profit and Loss

2,846,000

5,507,000

2,371,000

4,806,000

4.02.09

Deferred Income Tax and Social Contribution on Cash Flow Hedge

9,433,000

8,902,000

1,825,000

(859,000)

4.02.10

Share of Other Comprehensive Income of Equity-Accounted Investments

(858,000)

(666,000)

(11,000)

430,000

4.03

Total Comprehensive Income for the Period

10,800,000

20,041,000

835,000

8,739,000

4.03.01

Attributable to Shareholders of Petrobras

10,828,000

19,862,000

803,000

8,394,000

4.03.02

Attributable to Non-controlling Interests

(28,000)

179,000

32,000

345,000

 

 

 

15


 

Consolidated Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2018 to 06/30/2018

(R$ thousand)

 

Account Code

Account Description

Share Capital

Capital Reserves, Granted Options and Treasury Shares

Profit Reserves

Retained Earnings (Losses)

Accumulated Other Comprehensive Income

Shareholders' Equity

Non-controlling interest

Consolidated Shareholders' Equity

5.01

Balance at the Beginning of the Period

205,432,000

2,673,000

77,148,000

(21,268,000)

263,985,000

5,624,000

269,609,000

5.02

Prior Period Adjustments

(989,000)

(67,000)

(1,056,000)

(51,000)

(1,107,000)

5.03

Adjusted Opening Balance

205,432,000

2,673,000

77,148,000

(989,000)

(21,335,000)

262,929,000

5,573,000

268,502,000

5.04

Capital Transactions with Owners

(647,000)

(5,000)

(652,000)

(443,000)

(1,095,000)

5.04.06

Dividends

(420,000)

(420,000)

5.04.07

Interest on Shareholders' Equity

(652,000)

(652,000)

(652,000)

5.04.08

Change in Interest in Subsidiaries

(23,000)

(23,000)

5.04.09

Realization of the Deemed Cost

5,000

(5,000)

5.05

Total of Comprehensive Income

17,033,000

2,829,000

19,862,000

179,000

20,041,000

5.05.01

Net Income for the Period

17,033,000

17,033,000

(217,000)

16,816,000

5.05.02

Other Comprehensive Income

2,829,000

2,829,000

396,000

3,225,000

5.07

Balance at the End of the Period

205,432,000

2,673,000

77,148,000

15,397,000

(18,511,000)

282,139,000

5,309,000

287,448,000

 

 

 

16


 

Consolidated Interim Accounting Information / Statement of Changes in Shareholders’ Equity - 01/01/2017 to 06/30/2017

(R$ thousand)

 

Account Code

Account Description

Share Capital

Capital Reserves, Granted Options and Treasury Shares

Profit Reserves

Retained Earnings (Losses)

Accumulated Other Comprehensive Income

Shareholders' Equity

Non-controlling interest

Consolidated Shareholders' Equity

5.01

Balance at the Beginning of the Period

205,432,000

1,251,000

77,584,000

(34,037,000)

250,230,000

2,513,000

252,743,000

5.03

Adjusted Opening Balance

205,432,000

1,251,000

77,584,000

(34,037,000)

250,230,000

2,513,000

252,743,000

5.04

Capital Transactions with Owners

11,000

5,000

(5,000)

11,000

(349,000)

(338,000)

5.04.06

Dividends

(207,000)

(207,000)

5.04.08

Change in Interest in Subsidiaries

11,000

11,000

(142,000)

(131,000)

5.04.09

Realization of the Deemed Cost

5,000

(5,000)

5.05

Total of Comprehensive Income

4,765,000

3,629,000

8,394,000

345,000

8,739,000

5.05.01

Net Income for the Period

4,765,000

4,765,000

334,000

5,099,000

5.05.02

Other Comprehensive Income

3,629,000

3,629,000

11,000

3,640,000

5.07

Balance at the End of the Period

205,432,000

1,262,000

77,584,000

4,770,000

(30,413,000)

258,635,000

2,509,000

261,144,000

 

 

 

17


 

Consolidated Interim Accounting Information / Statement of Cash Flows – Indirect Method

(R$ thousand)

 

Account Code

Account Description

Accumulated of the Current Year 01/01/2018 to 06/30/2018

Accumulated of the Previous Year 01/01/2017 to 06/30/2017

6.01

Net cash provided by operating activities

47,813,000

42,878,000

6.01.01

Cash provided by operating activities

58,610,000

48,175,000

6.01.01.01

Net Income (loss) for the period

16,816,000

5,099,000

6.01.01.02

Pension and medical benefits (actuarial expense)

3,882,000

4,352,000

6.01.01.03

Results in equity-accounted investments

(821,000)

(1,227,000)

6.01.01.04

Depreciation, depletion and amortization

22,020,000

21,148,000

6.01.01.05

Impairment of assets (reversal)

(119,000)

207,000

6.01.01.06

Exploratory expenditures write-offs

232,000

324,000

6.01.01.07

Gains and losses on disposals/write-offs of assets

(2,123,000)

(5,685,000)

6.01.01.08

Foreign exchange, indexation and finance charges

14,830,000

16,153,000

6.01.01.09

Deferred income taxes, net

1,164,000

5,399,000

6.01.01.10

Allowance for expected credit losses

1,483,000

1,458,000

6.01.01.11

Inventory write-down to net realizable value

55,000

249,000

6.01.01.12

Reclassification of cumulative translation adjustment

185,000

6.01.01.13

Revision and unwinding of discount on the provision for decommissioning costs

1,191,000

1,211,000

6.01.01.14

Gain on remeasurement of investment retained with loss of control

(698,000)

6.01.02

Decrease / (increase) in assets / increase/ (decrease) in liabilities

(10,797,000)

(5,297,000)

6.01.02.01

Trade and other receivables, net

(5,034,000)

383,000

6.01.02.02

Inventories

(6,526,000)

823,000

6.01.02.03

Judicial deposits

(3,971,000)

(1,608,000)

6.01.02.04

Other assets

601,000

(1,053,000)

6.01.02.05

Trade payables

1,046,000

(2,381,000)

6.01.02.06

Other taxes payable

6,289,000

3,904,000

6.01.02.07

Pension and medical benefits

(1,879,000)

(1,364,000)

6.01.02.08

Income tax and social contribution paid

(3,714,000)

(626,000)

6.01.02.09

Other liabilities

2,391,000

(3,375,000)

6.02

Net cash used in investing activities

666,000

(11,311,000)

6.02.01

Acquisition of PP&E and intangibles assets

(20,023,000)

(20,681,000)

6.02.02

Increase in investments in investees

(97,000)

(50,000)

6.02.03

Proceeds from disposal of assets - Divestment

16,880,000

9,455,000

6.02.04

Divestment (investment) in marketable securities

2,233,000

(610,000)

6.02.05

Dividends received

1,673,000

575,000

6.03

Net cash used in financing activities

(65,732,000)

(24,039,000)

6.03.01

Non-controlling interest

(23,000)

(142,000)

6.03.02

Proceeds from financing

27,231,000

43,988,000

6.03.03

Repayment of principal

(81,506,000)

(55,345,000)

6.03.04

Repayment of interest

(10,531,000)

(12,130,000)

6.03.05

Dividends paid to shareholders

(595,000)

6.03.06

Dividends paid to non-controlling interests

(308,000)

(410,000)

6.04

Effect of exchange rate changes on cash and cash equivalents

8,295,000

1,334,000

6.05

Net increase/ (decrease) in cash and cash equivalents

(8,958,000)

8,862,000

6.05.01

Cash and cash equivalents at the beginning of the year

74,494,000

69,108,000

6.05.02

Cash and cash equivalents at the end of the period

65,536,000

77,970,000

 

 

 

18


 

Consolidated Interim Accounting Information / Statement of Added Value

(R$ Thousand)

 

Account Code

Account Description

Accumulated of the Current Year 01/01/2018 to 06/30/2018

Accumulated of the Previous Year 01/01/2017 to 06/30/2017

7.01

Sales Revenues

229,077,000

198,822,000

7.01.01

Sales of Goods and Services

203,257,000

170,758,000

7.01.02

Other Revenues

4,866,000

12,102,000

7.01.03

Revenues Related to the Construction of Assets to be Used in Own Operations

22,437,000

17,420,000

7.01.04

Allowance for expected credit losses

(1,483,000)

(1,458,000)

7.02

Inputs Acquired from Third Parties

(74,197,000)

(68,311,000)

7.02.01

Cost of Sales

(33,298,000)

(28,077,000)

7.02.02

Materials, Power, Third-Party Services and Other Operating Expenses

(28,649,000)

(29,580,000)

7.02.03

Impairment Charges / Reversals of Assets

119,000

(207,000)

7.02.04

Others

(12,369,000)

(10,447,000)

7.02.04.01

Tax Credits on Inputs Acquired from Third Parties

(12,314,000)

(10,198,000)

7.02.04.02

Inventory Write-Down to Net Realizable Value

(55,000)

(249,000)

7.03

Gross Added Value

154,880,000

130,511,000

7.04

Retentions

(22,020,000)

(21,148,000)

7.04.01

Depreciation, Amortization and Depletion

(22,020,000)

(21,148,000)

7.05

Net Added Value Produced

132,860,000

109,363,000

7.06

Transferred Added Value

6,675,000

3,477,000

7.06.01

Share of Profit of Equity-Accounted Investments

821,000

1,227,000

7.06.02

Finance Income

5,697,000

1,984,000

7.06.03

Others

157,000

266,000

7.07

Total Added Value to be Distributed

139,535,000

112,840,000

7.08

Distribution of Added Value

139,535,000

112,840,000

7.08.01

Employee Compensation

14,949,000

14,366,000

7.08.01.01

Salaries

9,203,000

8,834,000

7.08.01.02

Fringe Benefits

5,151,000

4,893,000

7.08.01.03

Unemployment Benefits (FGTS)

595,000

639,000

7.08.02

Taxes and Contributions

75,789,000

58,219,000

7.08.02.01

Federal

50,996,000

35,835,000

7.08.02.02

State

24,416,000

22,087,000

7.08.02.03

Municipal

377,000

297,000

7.08.03

Return on Third-Party Capital

31,981,000

35,156,000

7.08.03.01

Interest

18,973,000

21,654,000

7.08.03.02

Rental Expenses

13,008,000

13,502,000

7.08.04

Return on Shareholders' Equity

16,816,000

5,099,000

7.08.04.01

Interest on Capital

652,000

7.08.04.03

Retained Earnings / (Losses) for the Period

16,381,000

4,765,000

7.08.04.04

Write-Off of Overpayments Incorrectly Capitalized

(217,000)

334,000

 

 

 

19


 

Notes to the financial statements

(Expressed in millions of Reais, unless otherwise indicated)

 

 

1.

The Company and its operations

Petróleo Brasileiro S.A. (Petrobras), hereinafter referred to as “Petrobras” or “Company,” is a partially state-owned enterprise, controlled by the Brazilian Federal Government, of indefinite duration, governed by the terms and conditions under the Brazilian Corporate Law (Law 6,404 of December 15, 1976), Law 13,303 of June 30, 2016 and its Bylaws.

Following the adherence to the market tier called Level 2 at the Brazilian stock exchange (B3), a market tier that requires a high level of corporate governance standards, the Company, its managers and fiscal council members also became subject to provisions set out in the Level 2 Regulation (Regulamento de Listagem do Nível 2 de Governança Corporativa da Brasil Bolsa Balcão – B3).

The provisions of the Level 2 Regulation shall prevail over statutory provisions, in the event of damage to the rights of investors of public offers provided for in the Company's Bylaws, except in cases of: (i) prior notice to shareholders made by the Minority Shareholders’ Committee and eventual dissenting opinion of the controlling shareholder as to the prevalence of said Level 2 Regulation (article 30, paragraphs 4 and 5 and article 40, paragraphs 3 and 4 of the Company’s Bylaws); (ii) disputes or controversies that refer to Petrobras’ activities based on art. 1 of Law 9,478/97, observing the provisions of the Bylaws, regarding the public interest that justified the Company’s creation; and (iii) disputes or controversies involving inalienable rights, as provided for in the sole paragraph of article 58 of the Bylaws.

The Company is dedicated to prospecting, drilling, refining, processing, trading and transporting crude oil from producing onshore and offshore oil fields and from shale or other rocks, as well as oil products, natural gas and other liquid hydrocarbons. In addition, Petrobras carries out energy related activities, such as research, development, production, transport, distribution and trading of all forms of energy, as well as other related or similar activities.

The economic activities linked to its business purpose shall be developed by the Company as free competition with other companies according to market conditions, in compliance with the other principles and guidelines of Laws no. 9,478/97 and 10,438/02 (oil & gas and electricity sector regulations, respectively).

Petrobras may perform any of the activities related to its corporate purpose, directly, through its wholly owned subsidiaries, controlled companies, alone or through joint venture with third parties, in Brazil or abroad.

Petrobras may have its activities, provided they are in compliance with its corporate purpose, guided by the Brazilian Federal Government to contribute to the public interest that justified its creation, aiming to meet the objectives of the national energy policy outlined in the Annual Letter of Public Policies and Corporate Governance approved by the Board of Directors.

The Brazilian Federal Government may only guide the Company to assume obligations or responsibilities, including the implementation of investment projects and the assumption of specific operating costs/results, such as those relating to the sale of fuels, as well as any other related activities, under conditions different from those of any other private sector company operating in the same market, when:

I – established by law or regulation, as well as under provisions of agreements with a public entity that is competent to establish such obligation, abiding by the broad publicity of such instruments; and

II – the cost and revenues thereof have been broken down and disseminated in a transparent manner, including in the accounting plan.

Moreover, as set out in the Company’s Bylaws, the terms of which were amended to conform to provisions under law 13,303/2016, Decree 8,945/2016 and the B3 market tier named New Market (Novo Mercado - the main governance market tier of B3), in the event the Brazilian Federal Government guides the Company to meet the public interest under conditions different from market conditions, the Company’s Finance Committee and Minority Shareholders Committee, exercising their advisory role to the Board of Directors, shall assess and measure the difference between such market conditions and the operating result or economic return of the transaction, based on technical and economic criteria for investment valuation and specific operating costs and results under the Company's operations, In this case, for every financial year, the Federal Government shall compensate the Company.

 

2.

Basis of preparation and presentation of financial statements

The consolidated and individual (Parent Company) financial statements have been prepared and are presented in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and with the pronouncements issued by the Brazilian Accounting Pronouncements Committee (Comitê de Pronunciamentos Contábeis - CPC) and released by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM).

20


Petróleo Brasileiro S.A. – Petrobras

Notes to the financial statements

(Expressed in millions of reais, unless otherwise indicated)

 

This interim financial information presents the significant changes in the period, avoiding repetition of certain notes to the financial statements previously reported, and presents the consolidated information, considering Management’s understanding that it provides a comprehensive view of the Company’s financial position and operational performance, complemented by certain information of the Parent Company. Hence, this interim financial information should be read together with the Company’s audited annual financial statements for the year ended December 31, 2017, which include the full set of notes.

The Company’s Board of Directors, in a meeting held on August 2, 2018, authorized the issuance of these consolidated interim financial information.

 

 

3.

The “Lava Jato (Car Wash) investigation” and its effects on the Company

In the third quarter of 2014, the Company wrote off R$ 6,194 (R$ 4,788 in the Parent Company) of capitalized costs representing amounts that Petrobras overpaid for the acquisition of property, plant and equipment in prior years. For additional information about this write off and its approach to estimate amounts overpaid by the Company, see note 3 to the audited consolidated financial statements ended December 31, 2017.

In the preparation of these unaudited interim financial statements ended June 30, 2018, the Company has not identified any additional information that would affect the adopted calculation methodology to write off the amounts overpaid. The Company has monitored the progress of investigations by Brazilian authorities under the Lava Jato Operation, as well as an internal investigation carried out by independent law firms. The Company will continue to monitor these investigations for additional information and will review their potential impact on the adjustment made.

We have been formally recognized as a victim of the crimes identified under the Lava Jato investigation by the Brazilian Federal Prosecutor’s Office, the lower court hearing the case and by the Brazilian Supreme Court. As a result, we have entered into 49 criminal proceedings as an assistant to the prosecutor. In addition, we have entered into four criminal proceedings as an interested party. We have also renewed our commitment to continue cooperating with authorities to clarify the issues and report them regularly to our investors and to the public in general.

In addition, the Company has been taking the necessary procedural steps to seek compensation for damages suffered from the improper payments scheme, including those related to its reputation.

Accordingly, the Company joined 15 public civil suits addressing acts of administrative misconduct filed by the Brazilian Public Prosecutor’s Office and the Federal Government, including demands for compensation for reputation damages.

To the extent that any of the proceedings resulting from the Lava Jato investigation involve leniency agreements or plea agreements for return of funds, the Company may be entitled to receive a portion of such funds. Nevertheless, the Company is unable to reliably estimate further recoverable amounts at this moment. Any future recoverable amount will be recognized as income when received or when its economic benefits become virtually certain.

The total funds collected through June 30, 2018 under the Lava Jato investigation amounted to R$ 1,477 (R$ 1,476 through December 31, 2017).

3.1.

Investigations involving the Company

Petrobras is not a target of the Lava Jato investigation and is formally recognized as a victim of the improper payments scheme by the Brazilian Authorities.

On November 21, 2014, Petrobras received a subpoena from the U.S. Securities and Exchange Commission (SEC) requesting certain documents and information about the Company with respect to, among other things, the Lava Jato investigation and any allegations regarding a violation of the U.S. Foreign Corrupt Practices Act. The U.S. Department of Justice (DoJ) is conducting a similar inquiry, and the Company is cooperating with both investigations and intends to continue to do so, working with the independent Brazilian and U.S. law firms that were hired to conduct an independent internal investigation. The investigations carried out by the SEC and DoJ may require the Company to pay penalties or provide other financial relief, or consent to injunctions or orders on future conduct or suffer other penalties.

The inquiries carried out by these authorities remain ongoing, and to date it is not possible to estimate their duration, scope or results. Accordingly, the Company is unable to make a reliable estimate about amounts and probability of penalties that may be required or if other financial relief may be provided in connection with any SEC or DoJ investigation.

21


Petróleo Brasileiro S.A. – Petrobras

Notes to the financial statements

(Expressed in millions of reais, unless otherwise indicated)

 

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 stock market. The Company has provided all relevant information required by the authorities.

 

4.

Summary of significant accounting policies

The same accounting policies and methods of computation were followed in these consolidated interim financial statements as those followed in the preparation of the annual financial statements of the Company for the year ended December 31, 2017, except for the changes arising from the adoption of IFRS 9 - Financial Instruments, IFRS 15 - Revenue from Contracts with Customers and IFRIC 22 Foreign Currency Transactions and Advance Consideration. The provisions under these standards and interpretation became effective on January 1, 2018.

4.1.

IFRS 9 - Financial Instruments (CPC 48 - Instrumentos Financeiros)

IFRS 9 establishes, among others, new requirements for classification and measurement of financial assets, measurement and recognition of impairment of financial assets, changes in the terms of financial assets and liabilities, hedge accounting and disclosure.

As permitted by IFRS 9, the company did not restate prior periods with respect to classification and measurement (including impairment and modification of financial assets and liabilities) changes. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 were recognized at January 1, 2018 in retained earnings within equity. Information on the consolidated impacts is presented below:

Item of Consolidated Statement of Financial Position

Balance at 12.31.2017

Adjustment by initial application of IFRS 9

Note

Balance at 01.01.2018

Current assets

 

 

 

 

Trade and other receivables, net

16,446

(341)

4.1.3

16,105

Non-current assets

 

 

 

 

Trade and other receivables, net

17,120

(64)

4.1.3

17,056

Deferred income taxes

11,373

484

 

11,857

Others

10,202

(7)

4.1.3

10,195

Current liabilities

 

 

 

 

Finance debt

23,160

3

4.1.2

23,163

Non-current liabilities

 

 

 

 

Finance debt

337,564

1,175

4.1.2

338,739

Equity

 

 

 

 

Accumulated other comprehensive deficit

(21,268)

(67)

4.1.1

(21,335)

Retained earnings

-

(989)

 

(989)

Non-controlling interests

5,624

(51)

 

5,573

 

 

 

 

 

 

The new hedge accounting requirements were applied prospectively. The cash flow hedge relationships of highly probable future exports for the purposes of IAS 39 were considered as hedges for IFRS 9 purposes, since they also qualify for hedge accounting in accordance with the new standard.

The main accounting policies following the adoption of IFRS 9 at January 1, 2018 are shown below:

4.1.1.

Classification and measurement of financial assets

Financial assets are generally classified and subsequently measured based on the business model in which assets are managed and their contractual cash flow characteristics, as follows:

Amortised cost: when the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, and the business model’s objective is to hold financial assets in order to collect contractual cash flows;

Fair value through other comprehensive income: i) when the contractual terms of a debt instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding and the business model’s objective to collect contractual cash flows and sell financial assets; and ii) equity instruments not held for trading purposes for which the Company has made an irrevocable election in their initial recognition to present changes in fair value in other comprehensive income rather than within profit or loss; and

22


Petróleo Brasileiro S.A. – Petrobras

Notes to the financial statements

(Expressed in millions of reais, unless otherwise indicated)

 

Fair value through profit or loss: if the financial asset does not meet the criteria for the two aforementioned categories.

The table below presents comparative information of marketable securities between the former classification and measurement in accordance with IAS 39 and the current requirements following the effectiveness of IFRS 9:

Classification according to CPC 38 / IAS 39

Carrying amount according to CPC 38 / IAS 39 at December 31, 2017

Classification according to

CPC 48 / IFRS 9

Carrying amount according to

CPC 48 / IFRS 9

at January 1, 2018

In Brazil

Abroad

Total

In Brazil

Abroad

Total

Trading securities

3,531

-

3,531

Fair value through profit or loss

4,222

4,222

Available-for-sale securities

505

2,015

2,520

Fair value through other comprehensive income

42

2,015

2,057

Held-to-maturity securities

397

-

397

Amortised cost

169

-

169

 

4,433

2,015

6,448

 

4,433

2,015

6,448

 

 

4.1.2.

Modification of contractual cash flows

When the contractual cash flows of a financial liability measured at amortized cost are renegotiated or modified and this change is not substantial, its gross carrying amount should reflect the discounted present value of its cash flows under the new terms using the original effective interest rate. The difference between the book value immediately prior to such modification and the new gross carrying amount is recognized as gain or loss in profit or loss.

4.1.3.

Impairment of financial assets

An allowance for expected credit losses is recognized on a financial asset that is measured at amortized cost, including lease receivables, and on financial assets measured at fair value through other comprehensive income.

The Company measures expected credit losses for short-term trade receivables using a provision matrix based on unadjusted historical observed default rates when such information represents the best estimate, or such information adjusted by current and forward-looking information available without undue cost or effort.

The Company measures the allowance for expected credit losses of other financial assets based on their 12-month expected credit losses. However, whenever their credit risks have increased significantly since their initial recognition, the allowance for expected credit losses is based on their lifetime expected credit losses.

Significant increase in credit risk since initial recognition

When determining whether there has been a significant increase in credit risk, the Company compares the risk of default on initial recognition and at the reporting date by using certain indicators, such as the actual or expected significant change in the financial instrument’s external credit rating and information on payment delays.

Regardless of the assessment of significant increase in credit risk, a delinquency period of 30 days past due triggers the definition of significant increase in credit risk on a financial asset, unless otherwise demonstrated by reasonable and sustainable information.

The Company assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is considered to have low credit risk at the reporting date. The financial instrument has a low credit risk in case of low risk of default, the counterparty has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. The Company determines if a financial instrument has low credit risk based on external credit ratings or internal methodologies.


23


Petróleo Brasileiro S.A. – Petrobras

Notes to the financial statements

(Expressed in millions of reais, unless otherwise indicated)

 

Definition of default

The Company assumes that a default occurs whenever financial assets are at least 90 days past due and or the counterparty does not comply with the legal obligation to pay its debts when due.

Measurement of expected credit losses

The measurement of credit loss comprises the difference between all contractual cash flows that are due to the Company and all the cash flows that the Company expects to receive, discounted at the original effective interest rate weighted by the probability of default.

The probability of default, losses (the magnitude of the loss if a default occurs) and exposure to default are factored into the measurement of the expected credit loss.

The evaluation of default probability takes into account data of the main credit rating agencies, as well as internal valuation methodologies. The loss due to a default also takes into account the probability of expected cash flows from collateral (collateral assets) and other credit enhancements that are part of the contractual terms, less the costs of obtaining and selling that collateral. Exposure to default comprises the gross carrying amount of the financial asset at the reporting date.

Disclosure

The Company recognizes in profit or loss the impairment on financial assets measured at amortized cost.

4.1.4.

Hedge Accounting

At inception of the hedge relationship, the Company documents its objective and strategy, including identification of the hedging instrument, the hedged item, the nature of the hedged risk and evaluation of hedge effectiveness requirements. The hedge relationship meets all of the hedge effectiveness requirements when:

An economic relationship exists between the hedged item and the hedging instrument;

The effect of credit risk does not dominate the value changes that result from the economic relationship; and

The hedge ratio is the same as that resulting from the quantity of the hedged item that the Company actually hedges and the quantity of the hedging instrument that the Company uses to hedge that quantity of hedged item.

The Company applies cash flow hedge accounting for certain transactions. Hedging relationships qualify for cash flow hedges when they involve the hedging of exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction that may impact the statement of income.

Gains or losses relating to the effective portion of such hedges are recognized in other comprehensive income within equity and recycled to the statement of income in finance income (expense) in the periods when the hedged item affects the statement of income. The gains or losses relating to the ineffective portion are immediately recognized in finance income (expense).

When the hedging instrument expires or settled in advance or no longer meets the criteria for hedge accounting, the cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income from the period when the hedge was effective is recorded separately in equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, the cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is immediately reclassified from equity to the statement of income.

In addition, when a financial instrument designated as a hedging instrument expires or settled, the Company may replace it with another financial instrument in a manner such that the hedge relationship continues to occur. Likewise, whenever a hedged transaction effectively occurs, its financial instrument previously designated as a hedging instrument may be designate for a new hedge relationship.

4.2.

IFRS 15 - Revenue from Contracts with Customers (CPC 47 - Receita de Contrato com Cliente)

The company has determined when and by what amounts revenue from contracts with customer should be recognized according to the following five step approach: 1) identify the contract with a customer; 2) identify the separate performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the separate performance obligations in the contract, 5) recognize revenue when the entity satisfies a performance obligation. A performance obligation is satisfied when the customer obtains control of that good or service.

24


Petróleo Brasileiro S.A. – Petrobras

Notes to the financial statements

(Expressed in millions of reais, unless otherwise indicated)

 

For the purposes of the transition requirements, the Company applied this standard retrospectively with the cumulative effect of its application recognized at its effective date within retained earnings. However, the changes arising from the adoption of IFRS 15 only affected the way certain revenues from contracts with customers are disclosed within the statement of income and did not affect net income. Accordingly, there were no impacts within retained earnings (equity).

The following table presents the impacts of adoption of this standard for the first half of 2018:

 

 

Initial application of IRFS 15 / CPC 47

 

 

Amount at 06.30.2018

Agent

Breakage

Others

Amount without effects of initial application of

IRFS 15 / CPC 47

at 06.30.2018

Sales revenues

158,856

4,117

(450)

(77)

162,446

Cost of sales

(100,460)

(4,117)

28

(104,549)

Gross profit

58,396

(422)

(77)

57,897

Income and expenses

(23,915)

422

77

(23,416)

Income before finance income, results in equity-accounted investments and income taxes

34,481

34,481

 

 

The Company acting as an agent

In accordance with accounting policies at December 31, 2017, the Company was regarded as the principal in certain transactions. Therefore, the revenues from these sales, cost of the product sold and sales expenses were presented separately in the statement of income. However, under the new standard’s requirements, the Company acts as an agent because it does not obtain control of goods or services provided by another party before it is transferred to the customer. From January 1, 2018, revenues from these sales have been presented in the statement of income net of their cost of sales and sales expenses.

Non-exercised right Income (breakage)

In accordance with accounting policies at December 31, 2017, the Company regarded the income from rights not exercised by customers in certain take or pay and ship or pay contracts as penalties revenue and presented it as other income and expenses in the statement of income. However, according to the new standard’s requirements, the Company has accounted for and presented its income from rights not exercised by customers as sales revenues in the statement of income, as from January 1, 2018.

4.3.

IFRIC 22 Foreign Currency Transactions and Advance Consideration

Based on the transition provisions of IFRIC 22, the Company has applied the new requirements prospectively from January 1, 2018. IFRIC 22 clarifies that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration.

5.

Accounting estimates

The preparation of interim financial statements requires the use of estimates and assumptions for certain assets, liabilities and other transactions. These estimates and assumptions include oil and gas reserves and their impacts to other parts of the financial statements, the main assumptions and cash-generating units identified for impairment testing of assets, pension and medical benefits liabilities, provisions for legal proceedings, dismantling of areas and environmental remediation, deferred income taxes, cash flow hedge accounting and impairment of trade receivables. Although our management uses assumptions and judgments that are periodically reviewed, the actual results could differ from these estimates.

Except for the impairment of trade receivables estimate, which has been based on the expected credit losses model since the effectiveness of IFRS 9 at January 1, 2018 (see note 4.1.3), information on those accounting estimates is presented in note 5 to the Company’s annual financial statements for the year ended December 31, 2017.

The Company uses judgment for inputs and assumptions, such as risk of default, the determination of whether or not there has been a significant increase in credit risk and expectation of recovery, that are factored into the estimate of expected credit losses.

 

25


Petróleo Brasileiro S.A. – Petrobras

Notes to the financial statements

(Expressed in millions of reais, unless otherwise indicated)

 

6.

Cash and cash equivalents and Marketable securities

Cash and cash equivalents

 

Consolidated

 

06.30.2018

12.31.2017

Cash at bank and in hand

1,748

5,193

Short-term financial investments

 

 

   - In Brazil

 

 

Brazilian interbank deposit rate investment funds and other short-term deposits

8,801

3,889

Other investment funds

12

57

 

8,813

3,946

   - Abroad

 

 

Time deposits

20,345

20,632

Automatic investing accounts and interest checking accounts

31,314

37,337

Other financial investments

3,316

7,386

 

54,975

65,355

Total short-term financial investments

63,788

69,301