Good afternoon, ladies and gentlemen. And welcome to Petrobras Conference Call with Analysts and Investors for the Presentation of Third Quarter 2015 Results.

We would like to inform you that participants will only be listening to the conference call during the company's presentation which will be conducted in Portuguese with simultaneous translation into English. Following the presentation, a Q&A session will begin in both Portuguese and English. [Operator Instructions] Present with us today are Mr.

Ivan de Souza Monteiro, Petrobras' Chief Financial and Investor Relation Officer; Ms. Solange da Silva Guedes, Chief Exploration and Production Officer; Mr. Jorge Celestino Ramos, Chief Downstream Officer; Mr. Hugo Repsold Júnior, Chief Gas and Power Officer; Mr. Roberto Moro, Chief Engineering, Technology and Procurement Officer; Mr.

João Adalberto Elek, Jr., Chief Governance Risk & Compliance Officer as well as other company executives. I would like to remind you that this meeting is being recorded. And please be mindful of slide number 2, which contains a notice to shareholders and investors.

The words believe, expect and similar ones related to projections and targets are mere forecasts based on the expectations of executives regarding the future of Petrobras. To begin, we will hear Mr. Lucas Mello, Executive Manager of Investor Relations. Then, there will be the presentation of the results of the third quarter 2015.

Lastly, the questions from participants will be answered. Please, Mr.

Lucas?.

Good afternoon, everyone. I would like to call your attention to slide number 2, word for disclaimer. On slide number 3, about the exchange rates, we see there the change in the first nine months of 2015 and the first period in 2014, the real has depreciated by 62%.

Concerning the third quarter of 2014 and 2015, the depreciation of the real was equivalent to 28%. Now, on slide number 4, Brent prices. We see a drop in Brent of 48% when compared to the first nine months of 2015 over the first nine months of 2014. Comparing the first and the second quarters, the Brent dropped by 19%.

Slide number 5, about highlights of the results, the first nine months of 2015, higher oil production through the NGL and natural gas amounted to 2,790 million barrels of oil equivalent per day or 6% of growth versus 2014. The free cash flow was BRL 8.3 billion, an improvement.

And the trade balance went from minus 424,000 barrels per day to minus 89,000 barrels per day in 2015. Lower import and government take expenses and a pre-salt daily production record of 1.120 million barrels per day on September, including our partners.

And highlights for third quarter 2015, higher oil production, as well as NGL and natural gas, 1% of growth versus the second quarter with 35 million barrels of oil a day. A free cash flow of BRL 3.8 billion, higher domestic oil products demands and an improvement in the trade balance from minus 27 million to minus 21 million barrels per day.

Slide number 6, speaking about the net results for the nine months of 2015 which achieved BRL 2.1 billion. In sales revenues, we see a drop due to decrease in oil product sales volume in the domestic market, lower oil products exports and lower export prices.

In terms of cost of sales, we also see a drop in costs especially due to lower oil and oil products imports and lower government take expenses. With that, the gross profit was BRL 71.7 billion, 23% above of the same period in 2014.

In terms of operational expenses, we see a drop in the expenses, reminding you that in 2014, we had a write-off of overpayments incorrectly capitalized, impairment in trade receivables from the electricity sector, a write-off of Premium I and II and the Voluntary Separation Incentive Plan.

In 2015, we had lower dry/subcommercial well expenses which compensated for REFIS agreements, provisions for legal contingencies, higher expenses with pension and medical plans which are actuarial revision and impairments. With that, the operating income was BRL 28.6 billion, 149% above of what we achieved in 2014.

Concerning the financial results, that's a quite negative line [indiscernible] and negative BRL 23.1 billion when compared to 2014 which was minus BRL 2.1 billion. And that was due to higher exchange rate loss of our foreign currency debts and financial expenses due to the increase in debt and lower interest capitalization.

With that, the net income was BRL 2.1 billion in period versus BRL 5 billion in 2014. The adjusted EBITDA was $56.8 billion, 45% higher than $39.1 billion from 2014, $55.5 billion were investments in 2015, 11% lower than the $62.5 billion in 2014. And the free cash flow was $8.3 billion versus negative of $12.3 billion in 2014.

Now slide number 7, operating expenses without special items. On the left hand side you see that there is a decrease in the income of 8% again from BRL 46.9 billion to BRL 43.1 billion. And on the right hand side of the slide you can see this operating expense without special items and there you see an increase of 6% in these [indiscernible].

And this increase is lower than we envisioned in the period underlined with the company's activities. Now, on slide number 8, EBITDA without special items. EBITDA in the months of 2014 achieved BRL 39.1 billion and achieved BRL 56.8 billion. Without such items in 2014, the EBITDA was BRL 45.8 billion and BRL 62.9 billion in 2015.

It was an increase in 2015 without special items. On the right-hand side of the slide, you can see the margin, the EBITDA margin that was 15% in 2014 and 24% in 2015, and without special items, it was 18% in 2014 and 27% in the first 9 months of 2015.

Now, slide number 9, the net results of the third quarter of 2015 was negative BRL 3.8 billion (sic) [BRL 3.8 million] (08:46). The sales revenues went up in 2015, especially due to the higher demand for domestic oil products and due to higher oil export prices.

The costs also went up due to higher oil import costs and due to higher oil products sales. With that, we achieved a gross profit of BRL 23.8 billion. In the third quarter of 2015, it was BRL 25.6 billion for the second quarter of 2015.

In terms of operational expenses, they went up for the third quarter due to legal contingencies and higher dry and subcommercial well expenses. With that, we achieved an operating income of BRL 5.8 billion in the third quarter versus BRL 9.5 billion in the second quarter.

The financial results are much lower in the third quarter, BRL 11.4 billion, and second quarter was negative BRL 6 billion due to higher exchange rate losses over foreign exchange-denominated debt. With that, we had a loss of BRL 3.8 billion versus BRL 500 million in the second quarter of 2015.

Adjusted EBITDA was $15.5 billion versus $19.8 billion in the second quarter. Investments, $19.3 billion versus $18.3 billion in the second, and the free cash flow was BRL 3.8 billion versus BRL 500 million in the second quarter of 2015.

The adjusted EBITDA was BRL 15.5 billion versus BRL 19.8 billion in the second quarter; investments, BRL 19.3 billion versus BRL 18.3 in the second; and the free cash flow was BRL3.8 billion versus BRL 5.7 billion in the second quarter. Slide number 10. Now, talking about exploration and production in Brazil.

The total production of Petrobras during the first nine months of 2015 achieved 2.790 million barrels per day, a growth of 6% versus the first nine months of 2014. It's important to highlight that the pre-salt represented almost 24% of the total production of the first nine months of 2015.

On the right-hand side of the slide, we've seen the results for that – for the production in Brazil of oil and gas growing by 8% first nine months of 2014 and first nine months of 2015. On slide number 11, moving on with exploration and production.

Pre-salt production has been growing steadily since 2008, achieving a monthly record in August this year with 859,000 barrels per day. The daily production record was on September 15 this year with 901,000 barrels per day and the record including oil was 1.120 million barrels per day also on that date.

It's important to highlight that this production includes Petrobras partners. Slide number 12, the connection of new wells in Brazil. From first nine months in 2015, we connected 52 wells which 35 were production wells and 17 were inductor wells, and we expect connect another 20 wells off shore with a total of 72 wells for the year.

Slide number 13, about downstream and the oil products in Brazil. When we compare the first nine months of 2015 versus the same period in 2014, we see decrease of 6% in the production of oil products. When you compare with third quarter 2015 versus the second quarter of 2015, we see a drop of 1% in the production of oil products.

Slide number 14, still on downstream now, speaking about sales modeling in Brazil. We see a drop of 8% between the first nine months of 2015 versus the first nine months of 2014. And when you compare the third quarter 2015 versus the second quarter of 2015, we see a growth of 1% in the sales of products and that's due to seasonal variation.

Slide number 15, still speaking about downstream, about the trade balance of oil and oil products. And at the top of the slide, you see that exports of oil and oil products went up in the first nine months of 2015 reaching 501,000 barrels per day versus 389,000 barrels per day in 2014.

There was a decline in imports to 590,000 barrels per day versus 830,000 barrels per day in 2014. And therefore, the balance went from minus 424,000 to minus 89,000 barrels per day in the first nine months of 2015.

At the bottom of the slide, we see that there is a order trend towards an improvement in the trade balance evolution of oil and oil products. And in third quarter of this year, we achieved minus 21,000 barrels per day versus minus 27,000 barrels per day in the second quarter of 2015.

Slide number 16, we have the net income evolution between the first nine months of 2015 with the first nine months of 2014. We'll start the graph with the net results in 2014, it was BRL 5 billion. And we observed a drop in the sales revenue due to less volume of sales and products, less price of exports and [indiscernible] exports of products.

We can also see an improvement in the cost line due to fewer imports of oil and products and lower government take. The operating expenses also include – bear in mind that in 2014, we've had additional costs which were capitalized [indiscernible] and losses with the electrical sector and also the voluntary incentive layoff program.

And in 2014, we had fewer expenses with dry wells. The financial results has an impact due to exchange depreciation debt, the financial expenses and an increase in the debt and also less interest rate which was capitalized. So, that [indiscernible] reached a net result of BRL 2.1 billion in 2015, in the first nine months.

Slide 17, we have the operating income evolution between the first nine months in 2015 and 2014 per segments. We start with an operating income in 2014 of BRL 11.5 billion. We noticed some improvement in the Downstream because of a better margin, trade margin of oil products.

The E&P segment had worsening results due to the result of the lowering of Brent costs. The Gas and Power has an improvement because of the better trade margins of natural gas and electricity. In the Corporate segment, we see it has dropped because of an increase in tax expenses.

At the end, our operating income in 2015, that's BRL 28.6 billion and 49% above the first nine months in 2014. Slide 18 now, the operating income evolution per segment between the second quarter and the third quarter in 2015 per segment.

The operating income in the second quarter is BRL 9.5 billion, and we observed in the Downstream because of the tax expenses. In the E&P segment, there is also a drop because of the price of rent. In the Gas and Power, better trading margins of natural gas and electricity.

And in the Corporate, there's an improvement because of less tax expenses in the quarter. So the final operating income at the end of the third quarter 2015 was BRL 5.8 billion in relation to BRL 9.5 billion in the second quarter. Slide 19, the cost of lifting and refining. We have the lifting cost at the top part of the slide.

We can see that the lifting cost in reais increased 17%, but in dollars it dropped 16%. The reason for this increase in reais were higher cost of interventions in the wells and subsea engineering and maintenance in Campos Basin. So without the exchange rate, this increase would have been up 4% if it included the impact of exchange rates.

The cost of refining cost, we have the same situation, an increase of these costs in reais, 18% increase, although in dollar terms, it presents a 15% drop. The reason for the increase in reais was lower throughput in the refinery and higher personnel expenses. Slide 20, talking about the indebtedness of the company.

The net debt December 31, 2014 was 31.6 and in the September 30, 2015, it was mainly because of the exchange rate which we had because most of our debt is in hard currency. Now, this net debt measured in dollars presents a drop going from $106.2 billion to $101.3 billion in the period.

Slide 21, we're talking about the financial ratios between the second and third quarters increased because our debt in reais also increased as we saw in the previous slide. The leverage went to 58%. Before, it was 51% in the second quarter. And the net indebtedness EBITDA went from 15 to 4.2 turns in the second quarter of 2015.

Slide 22, bear in mind the adjustments which are made in the business management 2015/2019. On the left hand side, we have our assumptions. The Brent in 2015 in our plan was $60 a barrel, was up $80 to $54 in October.

In 2015, it went from $70 to $55 and the exchange rate that in 2015 when we launched our plan was $3.10, and now it's being updated to $3.28 in October and in 2016, it was 3.26 and it was up later to 3.80 in October. So investments, CapEx, financial in dollars, also was updated in relation to the plan.

It had a forecast of $20 billion for 2015 and that was updated to $25 billion in October. And in 2016, it was $27 million when the plan was announced, and it was updated to $18 billion in October this year. Slide 23, we're talking about the free cash flow in billions of dollars.

We can see that between the first nine months of 2015 and nine months of 2014, we left 2014 with a negative cash flow of $5.3 billion and the first nine months of 2015, we have a positive cash flow of $2.5 billon. This is operating cash flow, less investment.

And when we compare the second quarter to the third quarter of 2015, the second quarter, we had $1.9 billion and in the third quarter, $1 billion in free cash flow. Slide 24. We have an update of the cash flow for 2015 in billions of dollars. We start with an initial cash position of $26 billion. 2015. Operating cash flow, our expectation is $25 billion.

We've already achieved $21 billion. We have excluded of the $21 billion. The tax contingencies which are in another line, the investments of $23 million. We have already invested $17 billion. It's important to mention that we are not changing the assumption of the plan but we are doing the best analysis for the 2015 cash flow.

The interest, amortization, tax contingencies and other lines was $26 billion. We have already about $20 million. Divestments $0.7 billion, so far $200 million – $500 million, correction. The rollover is $5 billion. Funding needs $14 billion, and we have realized $11 billion. And we hope the final cash position for 2015 is to achieve $22 billion in cash.

That is my presentation. And now, I will go to the Q&A session..

Now, we will have the Q&A session. We would ask that each participant ask a maximum of two questions in a clear manner, and they can be asked consecutively. We kindly ask you not to use speaker phones. We inform that the question is in English.

It will be translated into Portuguese for the executives of Petrobras and their answers will be translated into English. Our first question is from Mr. Luiz Carvalho from HSBC..

Good afternoon. I have two questions. In relation to a comment involving [indiscernible] during the press conference that there will be $25 billion or something around that. Is credit available for the company that already had been mapped? I would like to understand with the leverage that we have of 5.2 times and 58% of total leveraging.

This might solve the problem of short-term liquidity. But in the terms of indebtedness and as part of equity holder, that could be very bad if the cash generation doesn't offset this overall debt in the future. So I'd like to see how you understand the effective availability that's in the market in relation to the capital structure of the company.

My second question is also in relation to a comment made yesterday during the press conference that you mentioned a possible impairment in the fourth quarter.

I would like to understand if you already have anything you can say about the size, if it is related to the level of oil that we see today, or there might be something that's not related to impairment, but a write-off due to corruption of the federal police.

And also, how would you believe that this can impact the payment of dividends in 2015? Thank you..

Thank you for your question, Luiz. Just let me correct a few of your comments. First of all, the comment we made yesterday about the $25 million are options available for the company which are being analyzed. The company can consider this from 0 to 25 if it deems adequate.

The company concentrates its majority in the first quarter of 2016, and we expect to cover all the funding needs for 2016 up to the end of 2015. So, it doesn't mean that the company will use $25 billion. It might use just to pay some of the existing debt if that improves its profile and the cost of its financing.

In relation to the impairment process, that's a natural process that occurs always at the end of the year. There was no declaration from a company saying that the company has plan. We'll have to find something about this. It will have its normal impairment process at the end of the year, and it will see if there is [indiscernible].

If the company will acknowledge it, it's not [indiscernible]. The comment about you mentioned the Lava Jato operation by [indiscernible] that the company informs that information that we have before we arrived here for this teleconference of the adjustment made for the third quarter. There's no alteration.

Bear in mind that there are two types of adjustment. One is the specific costs of corruption, and the other one is through the impairment process of those additional values which were added artificially to the assets of the company because of the cartel. Thank you very much..

Thank you, Ivan..

Our next question is from Mr. Diego Mendes, Itaú..

Good morning to all. I also have two questions. The first question is just to understand, as Lucas mentioned, there was a difference of $2 billion in CapEx in this year, and I'd like to understand why there's this possible delay. And also looking towards next year, the $17 billion that [indiscernible].

So which are the cutoff lines that you have given in relation to the previous year? And also in relation to the managerial costs of $21 billion for next year, when you consider the exchange rate that's also included in the assumption. There is a great drop from one year to the other.

So, I'd like to really understand which are the main line of cost because it's going to be a significant drop..

Speaking particularly about CapEx, the previous plan of the [indiscernible] probably the beginning of the administration, the CapEx should be $45 million. We plan with [indiscernible] was a not a review. The plan is still in the $25 billion range ensuring that those numbers of the company would achieve $23 billion.

So, there are no revisions concerning the 2015 numbers but we're finishing the year with an expectation of achieving CapEx in $23 billion for this year. Concerning the costs, all opportunities that we may have to reduce our costs is being pursued in many different ways.

[indiscernible] certain items showing as we advance in the production of pre-salt and as a production of the pre-salt advances towards the total production of the company, there are objective, gains and productivity, and we're very happy about that.

And you can expect for the next quarters and next years, paying in advance and sort of making Petrobras a much more efficient company..

Our next question comes from Mr. Bruno Montanari..

Hey. Good afternoon. Thank you. I have two quick questions. Concerning the fiscal provisions that we've obtained for the last two quarters, should we expect the continuity for those agreements for the next quarters? That's the first question.

And secondly, [indiscernible] could we have enough play on the completion status of the platforms that will start 2017 with [indiscernible]. It's just an idea. Thank you..

Thank you, Bruno for your questions. Now starting with the [indiscernible] business processes, our dynamic processes where our decisions are made.

So, the administrative is here and the legal is here, or when there are problems such as [indiscernible] – because that happened with gas intake with very big discounts, the company always looks at that and then judge that – if those two processes deserve to be dealt with the way we ended up dealing with them.

We have no expectation regarding that subject, but we've been monitoring possibly what occurs in terms of decisions both at the administrative and the legal levels. Now, I'd like to pass the floor to Director Solange..

Good afternoon. We've been making huge efforts to compete in platforms and the systems that we mentioned that are in our business plan for 2017.

We've been letting some negotiations especially in terms of platforms because we have mentioned the platforms, but there are also [indiscernible] construction factors as well as subsea equipment and solutions.

Our adjustments that we are discussing now made after the adjustments are already published concerning investment by the company can lead to an adjustment be made to these systems and [indiscernible]. However, this is an ongoing work, and so far, our best efforts are being very effective in terms of completing these units by 2017..

Thank you very much, Solange..

Our next question is by Mr. Felipe Santos from JPMorgan..

Good morning, everyone. First question concerns made for provision as a result of the forecast of oil reserves for last year. The scenario was low during the year and the rules of the acquiring company to annually review the reserves and see if that could cause an impact.

Have you studied that and how much do we expect in terms of reduction and provision as a result of that? And the second question is about an update about the Mitsui's operation and leaseback operations, is there any chance that these operations will not be completed by the end of 2015 and carry over to 2016?.

Thank you, Felipe, for your question. I will now give the floor to Director Solange about the research and then I'll comment on Mitsui impact..

Good afternoon. As it occurs with other processes, the [indiscernible] of reserves are regular process that companies execute at the end of the year and we already done in Petrobras according to the SEC criterion and also accordance to the overall criteria on countries where we operate.

There has been criteria applied – that are applied differently in different countries. And this study has not yet been completed. It's still ongoing. And we will publish the results at the end of January 2016..

Felipe, concerning the Mitsui and [indiscernible] processes, both processes are doing very well. Mitsui, it depends on regulatory authorizations especially by [indiscernible] regulatory agency involved, and we're being monitored very closely by the company.

And it would tell you that our best expectation is that we're going to be completing that at the end of this year. Concerning leaseback, our expectation is that we'll be completing all of the stages and the construction stages by November. Thank you..

Thank you..

Our next question is by Ms. [indiscernible]..

Thank you for the opportunity.

About the asset sales where you intend to gain $13 billion by the end of next year, [indiscernible] do you still think that it's sustainable? And could you illustrate or could you talk about the [indiscernible] that is coming across from the sales process are being more related to regulatory aspects or more to an negotiation in pricing? The second question is about the status of the contract for the [indiscernible] at South Brazil with Petrobras.

Could you give us an update about that? Thank you..

You're asking about the asset sales. The company's goal is to have a cash result of $15.1 billion and realized $200 million at the end of 2015. We will realized the difference of $700,000 and the difference of $13.1 billion will be left for 2015.

We're still fully focused on achieving this goal and in terms of best expectation is that we'll be able to achieve at the end of 2015 [indiscernible] $15.1 billion concerning [indiscernible] Brazilian company always speaks about any relevant tax, any additional information about that will also be provided through relevant facts..

Could you comment on whether you see the negotiation from the perspective of prices as a challenge for the sales of assets? Thank you..

You're welcome. Concerning the regulatory assets, at the beginning, Petrobras defined which assets will comprise its divestment plan, and obviously that involves the entire board of directors.

And once that's been defined which assets will be included in the process, all of these perspectives, regulatory and pricing perspectives are taken into account.

But invariably, when you look at the process from [indiscernible] proposal, at the end, in spite of the previous content and the previous analysis from the industry perspective of the impact of that divestment, and the regulatory agency, they have a formal process, regulatory process.

But that has all been considered in that BRL 16.1 billion number that the company has been committed to and has published to the market. Thank you..

Our next question is by Mr. Pedro Medeiros from Citigroup..

Good morning, everyone, and thank you for taking my question. I actually have three questions. The first question is a follow-up on the goal of reducing manageable costs and the CapEx reduction for 2015.

Ivan, could you give us an estimate on how much of that goal has been reached, in your opinion, in terms of manageable, potential costs? And have you delivered part of it in the third quarter? Concerning CapEx, when we look at your numbers, the CapEx numbers and the federal budget where the numbers are published monthly.

The [indiscernible] for August, I know [indiscernible] but it seems to point towards the $19 billion have been reached and keep the same expenditure rates, is that information apply or do you think – do you still require additional efforts in terms of efficiency in cutting costs versus what you're dealing today to deliver this $19 billion? The second question is speaking a little bit about [indiscernible], we had an important change in the electricity cost sector in the third quarter and the [indiscernible] distributor.

The impression I had it will have the opportunity is a little bit higher than the liquidity of the electricity sector [indiscernible].

Is there anything specific in the third quarter that you can comment on that? And if this mess that's occurring in spite of it is there any promise of reversal for the fourth quarter? And the third question is as you [indiscernible] the company provisioning the collective agreement [indiscernible] I know that they're negotiating with them and they usually see what's stronger or higher than the one that you've been reporting.

And the results that you're seeing, is it possible for us to have a provision level much higher during the fourth quarter? Thank you. Those are my questions..

Thank you, Pedro. I'll give the floor to Director Solange to speak about manageable expenditures and then I'll comment on the electricity sector and on the provisions that we spoke off. Thank you..

Good afternoon, Pedro. Concerning the manageable cost scenario that gives an important contribution to the company as a whole. And that scenario where there are some ongoing actions you referred to our plans for 2016 for instance. Initially, we already have a forecast for this process cost optimization.

We've been doing to a very intense task in 2015 and that will be seen in the 2015 results. And some other aspects will be concluded in the 2016 results. We've been working in several aspects in optimizing processes as a whole wherever we have the opportunity to gain more with less.

We did something good that we worked in revision in contracts where we dealt with the major contracts of the E&P area with a significant progress in cost reduction that will in turn have important impact that will allow us in turn to meet the operational expenditures goal for 2016.

In addition to that, process of hibernation are on system, so to speak, that are not in line with our strategy of cost optimization. So, these are the ongoing activities that I can use an example to you..

Thank you. Concerning [indiscernible] sector, there was no means at all. We believe that as the builds for containers are becoming higher and higher. The liquidity is higher in the sector, so there is no prospective of worsening in the sector and no tax caught our attention in this quarter.

Concerning the negotiations with the unions, we had a provision in the third quarter for that. And if there is any implementation, it will be for the fourth quarter. So, the biggest amount has already been provisioned..

Thank you. And as a quick a follow-up – Solange, thank you very much for the information and for commenting on the [indiscernible] objectively.

Is there any information on how much the company has been able to achieve vis-à-vis the 2016 goal? Can you give us a number or range?.

Well, Pedro, we're not giving any ranges or numbers. But what I can tell you is [indiscernible] had several initiatives and several areas to the company are being undertaken to help us achieve the goal that we published to the market, and we are confident that we are going to achieve the goals. Thank you..

Thank you..

Our next question is from Mr. Gustavo from Santander..

Good afternoon. I have two questions. The first one is in relation to the comment that you mentioned yesterday during the press conference. I'd like to understand if you could give me some additional information.

Which of these options and at what cost would it be aligned with the Petrobras brands were at a lower cost? And my second question is linked to the reduction of CapEx of the company.

I'd like to understand what is the impact, especially from 2017 in the production curve of the company if you have this target of 2.8 billion barrels by 2018 even with the reduction of the CapEx. Thank you..

Gustavo, thank you. Talking about the options, all the options are only attractive if they are below to our secondary of 10-year bonds. So, you can have directions, the price of the secondary, and these operations would be lower than that price. The first option that we considered was the sale leaseback. It's about $2 million.

That expectation is we will finalize these operations still in November. We're working towards that. And other options, the first that we discussed was to reduce the need of resources that Petrobras needs. So we have to review the CapEx, reduce costs. All this follows that line.

And also trying to find operations which are not linked to any risk of increasing the cost of finance because of the loss of the grading by the agencies. So everything is following these lines of leaseback of $2 million. In relation to the CapEx, I will now – and its association to the oil production, I will give the floor to Ms. Solange..

Good afternoon, Gustavo. As I mentioned before, when I was asked about some platforms which are being built and would start operating in 2017, the reference is the same. Today, we are discussing this optimization, this balance between revenue and our business plan. Our assumptions of our business plan is the same.

So we are doing these updates with our capacities and also with the success of our investment plans. So, that's how we are adjusting these projections in terms of E&P 2017 and we considered today. It's not something that's too far because management which are underway to deliver the production in 2017 is already underway.

It's not something that we can change because they're already being done. Some fine tuning will not bring any significant changes or relevance in a period of less than two years ahead of us..

Okay, Solange..

But the target of $22.8 million is maintained. That is being assessed. Our target always draw attention because of our assumptions and business plan. Our assumptions on business plan is leveraging our income and [indiscernible] shareholder. So, our adjustment will be done always with these assumptions. 2020 is different to what I mentioned about 2017.

Some adjustments can be made in our future during 2018, 2019, and we might make some adjustments for the projection in 2020. I was referring to only the year of 2017. Thank you very much..

Our next question is from Mr. Caio Carvalhal..

Good morning to all. I apologize if you have already mentioned this on the call. I'd like to know if you gave any information in relation to volume of oil that was sold but not acknowledged in this quarter so that I just have an idea of the volume and the value.

And especially, if you can tell me the price that this will acknowledge, will it be the September price as you indicated or the October price as it is in the fourth quarter? That's my first question..

Caio, it's a very specific question, so I think we'll contact you. But it's important to see what's going to happen in the fourth quarter if it's positive and to see how much we can estimate. I will speak with people of Investor Relations about that..

My second question, I have other things to ask, but when we're talking about the progression of 2017, obviously, I understand that 2020 is some way ahead of, and I understand that the production of 2016 is consistent and that 2015, I think, we will have some interesting figures. My question is very specific to Solange.

Can we run a risk of having a reduction even though might be a small reduction in 2017, or is it too early to talk about that?.

Good afternoon. I believe that it is a bit early. The only thing that I can anticipate, and I will repeat this because I tried to detail it before, is that the variations increase as we get further and further away from 2015. And you mentioned that, too, and I'm very happy that that's your understanding. And 2015 is almost over.

There are a few variables, but very few in relation to 2016. 2017, there might be a variation, but it won't be significant. And the adjustments and possible comments for the other years are still being analyzed. We are studying this because of the margins and adjustments can still be done in the years 2018, 2019 and 2020.

But I insist, if you have a look at the projects that we listed as those that guide our production in 2017, they are projects which are already executed and we have a margin which changes, which is [indiscernible] for 2017. Thank you very much..

If you allow me, a third question, because the first one [indiscernible] clarify later. I would like to know about the other funding options. I know that the sales leaseback seems like an excellent option for the company especially when there's an implicit rate less than the collateral.

But do you have other options? Are you considering securitization of reserves or is it something that maybe yes, maybe no? It's totally ruled out.

So you how do you this possibility, Ivan?.

It's totally ruled out any reserve securitization. But what the company might explore are securitizations of export flows. Securitization of any reserve transactions is ruled out. Thank you very much..

[Operator Instructions] We have a question in English. Mr. Pavel Molchanov from Raymond James would like to ask a question..

Thank you for taking the question.

When you talk about the $15 billion of asset sale proceeds, can you give a sense of what specific assets – upstream, downstream, domestic or international – you are most in favor of selling?.

Pavel, thank you for your question. It's not profits. It's cash. This is cash. It's not profit. And in relation to the assets, the company published relevant tax rate with business and the percentage that they want to discuss with the market in relation to this divestment but the company does not supply relevant fact in relation to its specific process.

Okay. I suppose [audio gap] (00:55:31 – 00:56:03).

Sir, you can ask your question..

Hi, thank you for taking my question. I have two parts for the question and they're both related to previous question. One is about the financing options, that you have talked about particularly the ones that you're going to be pursuing in the short term and I wanted to know what your thoughts about issuing secured debt might be.

We've seen some headlines about that. So, any guidance regarding volume or sources for that secured financing would be helpful? And the second is regarding your CapEx.

You talked a little bit about what some of the implications of that reduction in CapEx might be going forward, and I was specifically wondering what the implications for your drilling fleet would be. What the current rigs fleet looks like and what your anticipations for future developments would be.

And if you can include in that also sort of how you would optimize your costs regarding renegotiating some of those day rates or terminating some of those contracts, that would be helpful. Thank you..

Thank you, [ph] Sarah. Answering your question in relation to securitization, what we mentioned is that one of the options that the company might explore in the future would be the securitization of commercial contracts of all our exports. We rule out any possibility of securitization of its reserves.

The second part of your question, I will give the floor to Ms. Solange Guedes..

Good afternoon, [ph] Sarah. With regard to the association between the adjustments on CapEx in our investment projection and the consequence in the drilling fleet, this adjustment is something that is being done by the company since 2013.

So, we have successfully reduced the CapEx in our CapEx of annual expenses, and consequently, the non-renewal of contracts. So, in practice, what we are doing is our drilling fleet has been reduced by the renewal of the contracts which have matured.

And there is no opportunity within our business plan of renewing these contracts, and also not look to the market to obtain new opportunities.

We had some specific and unique cases where there was a contract which was supported by contractual clauses with Petrobras, plus you have unilateral [indiscernible] contracts we do a continued adjustment of our fleet as these contracts are maturing.

If in the future, there's a return of the projects or a need, the market today has a lot to offer and the prices are very interesting and Petrobras has illustrated access to this market of services for drilling wells and they will do that when necessary..

[Operator Instructions] [indiscernible] would like to ask a question..

Hi. A couple of questions, please. The first one relates to your CapEx.

I was wondering if you could explain where you got your CapEx in 2016 and what the impact will be on your 2016 production target of 2.2 million barrels today of oil and so just trying to find out what impact that CapEx cut is having on maintenance-type drilling and if you're going to see acceleration at decline rates in the mature [indiscernible] mechanical space and then onshore oil.

The second question relates to the Libra appraisal wells, it seemed to me like the second and the third Libra appraisal wells were somewhat disappointing and just wondering if you can give your expectations for the discovery, given the second appraisal well contains a high amount of CO2 and the third appraisal well, we found poor-quality reservoir.

Thank you..

Good afternoon. Thank you for your question. First part of your question refers to the impact of CapEx on some activities. And according to what we have is our reduction was the elimination or postponing of some projects that we have approved or started or approved for a start in 2016. Yes.

[indiscernible] a reduction in the drilling activities with consequences that I mentioned before when I spoke about the drilling fleet. Concerning your maintenance, since the business plan defined that we are going to maintain in our portfolio the assets that it is comprised today, the maintenance remains in line with what we plan before.

We don't forecast any reduction or delay in our maintenance activities, given what has been happening in 2015 where all of our downtimes for maintenance of production systems were executed absolutely in line with our plans. And that will also be the situation in 2016.

Concerning the decline rate, yesterday, I had the opportunity to talk about a very interesting situation where the decline of the Campos Basin is being well managed. It's one of our most productive areas, and there's no short-term impacts being forecast for our results.

Now, speaking about the Libra assessments, we've published our assessment of our Libra barrels and I must remind you that Libra is still starting its exploratory campaign. We're still beginning our activities in terms of knowing more about the field. And it's too early to say that the results are higher or lower than expected.

These are the typical exploration results. And we and our partners are looking to implement and execute the tests planned for this stage. And we're fully aligned with the plans..

Thank you, everyone. With that, we are now finishing the Q&A session for the Petrobras conference call. Mr. Ivan Monteiro will now make his final remarks. Please, Mr. Ivan..

Once again, I'd like to thank you for your participation, and I wish everybody a great day..

Thank you. Ladies and gentlemen, the audio of this conference call for replay and slides presentation will be available on the Petrobras IR website at www. petrobras.com.br/ir. This concludes today's conference call. Thank you for your participation. Please hang up your telephones, and have a great day..