Prepared remarks
Good afternoon, and welcome to Petrobras' webcast with analysts and investors about our second quarter 2026 results. It's a pleasure to have you with us today. This event will be presented in Portuguese with simultaneous interpretation into English. Links for both languages are available on our Investor Relations website. Joining us today are Magda de Chambriard, the President of Petrobras; Angelica Laureano, Executive Officer for Logistics, Commercialization and Market; Clarice Coppetti, Executive Officer for Corporate Affairs; Fernando Melgarejo, Chief Financial and Investor Relations Officer; Renata Baruzzi, Executive Officer for Engineering, Technology and Innovation; Ricardo Wagner, Chief Governance and Compliance Officer; Sylvia Anjos, Chief Exploration and Production Officer; William Franca, Chief Industrial Processes and Products Officer; and William Nozaki, Acting Executive Officer for Energy Transition and Sustainability. To begin with, I will hand it over to our President, Magda de Chambriard, for her remarks. President, please go ahead.
Good morning, everyone. It's a pleasure to be with you today to demonstrate once again Petrobras' capacity to surpass its goals and deliver impressive results to our investors, be they public or private. We have the full Board of Petrobras with us, and I'd like to take the opportunity to greet all investors, all of the representatives of our investors, all of the executives that are in this session with us and our partners and everybody that joined us remotely for the disclosure of our second quarter 2026 results. Also, I'd like to greet everybody from the press joining us. We become increasingly prouder of our results. It's a pleasure to be here once again joined by you to present another result that surpassed the previous ones, a result of our intensive work with our diverse teams working in partnership to deliver an increasing amount of oil, gas and byproducts with safety, quality, efficiency and capital discipline. In the first quarter of 2026, we reached several records. In the second quarter, we surpassed them with important milestones once again. I must highlight that we reached the highest net profit on a recurring basis for a quarter in dollars in the history of Petrobras. This recurring profit excludes extraordinary events. It is also the highest gross profit in the history of Petrobras. We're proud to say that we achieved these results with no sales of assets. Of course, Brent above USD 100 per barrel strengthened our results, but the highest results achieved are the ones I will go over now. The recurring results are not only explained by high Brent prices; we have had more than ten quarters with similar oil prices in the past, and nonetheless we achieved the highest recurring net profit in Petrobras' history. Our key differentiator, which we're proud of, is operational management, which is shared across the company's several departments. Operational records in production of oil, gas, refining and product sales are the outcome of this commitment. In the quarter, we produced 2.7 million barrels of oil per day in addition to gas. If we consider oil-equivalent barrels, it was more than 3 million barrels per day. We can't promise that we will always surpass our goals, but I guarantee that we always work toward that, often surpassing our targets. In the second quarter of 2026, our guidance was 2.5 million barrels per day. We surpassed the quarter's goal by 200,000 barrels per day. That's due, among other factors, to increased efficiency in platform production and also by accelerating the delivery of projects. You may remember that we advanced the delivery and ramp-up of P-78 as well as the delivery and ramp-up of P-79. Other platforms will come; some are already arriving this year. Once again, we will move forward the delivery of large projects. With greater volumes, we also increased our oil export levels by an additional 12% this quarter. These sales generate greater revenue and cash. I must note that, besides production and engineering work on these projects, the participation of refining in valuing our crude and the work of our commercial and logistics teams to broaden the market for our end products were impressive. It was the joint work of all Petrobras departments dedicated to the same purpose that allowed us to achieve these great results. The larger generation of revenue and cash flow will be used to fund our investments and to safely prepare us for the future of the company. The cash flow being generated today will be used to fund Petrobras' growth. Just as the company was successful in its first 72 years, we are preparing the company to successfully take on the following 72 years. Our refining teams, in addition to production and engineering, did a great job. The utilization factor of our refineries surpassed 100% in the second quarter of 2026. At Petrobras, we have the habit of saying that goals are for the weak of heart. Petrobras is proud to always surpass its goals. We increased processing while maintaining the same diesel and gasoline yields, which is equivalent to greater revenue for Petrobras and greater value to our shareholders, public and private, without losing sight of capital discipline. The production of byproducts grew 6% compared with the previous quarter, and with that we were able to reduce imports by 40%, especially diesel. We do what we must do. We're elevating operating efficiency and producing beyond original capacity on seven platforms. We've also increased the utilization factor of refineries as a whole, always prioritizing safety. Brent price and the exchange rate are not under our control. We don't know where they'll go. That's why we invest with capital discipline, prioritizing projects with high returns. All our investments involve rigorous governance for approval to verify attractiveness and return for our shareholders and, at the same time, to deliver value to society. Respecting governance every day is a pillar of our management. We will continue focusing on our business plan, well known to all of you, with the commitment to deliver to society a Petrobras that is profitable and absolutely relevant to our country. I will now give the floor to our CFO, Fernando Melgarejo, who will dive into the details of the second quarter of 2026. Thank you all for your presence.
Thank you, President. Good morning, everyone. Thank you for joining us for this webcast for the results of the second quarter of 2026. I also want to greet everybody that's here at the headquarters of the company. As we said, we had a quarter of record operating performance, which drove Petrobras to one of its best financial results in history, deeply anchored in good operating performance. I must highlight that this was a major step forward where we were able to manage and also evolve in the best possible manner. One of the highlights of this administration is the search for increased oil production, production efficiency, accelerated ramp-ups — all part of the records we've been delivering. If it were not for that operational performance, we wouldn't have achieved these financial records. Financial records are firmly anchored in the company's operating records. Now let's move to Slide 3. Our oil production, as the President already said, was 2.7 million barrels per day, a 15% increase over 12 months, which is equivalent to 350,000 additional barrels. If we compare this period to the same period a year earlier, it's like adding approximately three platforms' production in only one year. Last year we also had records in the third quarter; we increased 4% then, which is quite relevant. Alexandre de Gusmao, for instance, at the Mero field is producing 100,000 barrels and P-78 at Buzios 120,000, and both have nameplate capacity to produce 180,000 barrels per day. That is to say, we still have room to reach nominal capacity and add additional barrels. When these units reach nominal capacity, we'll add another 90,000 barrels per day. We also have the ramp-up of P-79, which started operations in May this year and has a capacity of 180,000 barrels. In summary, even with record production of 2.7 million barrels per day, we still have about 270,000 barrels per day of capacity to ramp up in the second half. Another highlight has been increasing production of certain platforms beyond their nameplate capacities. The Almirante Tamandaré FPSO in Buzios has an original capacity of 225,000 barrels but has reached peak production of 270,000 barrels per day and is currently the highest producing platform in Brazil. In addition to Almirante Tamandaré, we have another six platforms adapted to operate above their original capacity. Today, this additional capacity already totals more than 100,000 barrels per day — practically a new midsize or large platform — and we're working to expand this potential. Importantly, we're increasing production safely without the need for additional construction work, allowing us to increase revenue and cash flow immediately without additional investment. Before moving to the next slide, I'd like to highlight important news from this week: we announced a new gas discovery in Colombia, confirming the region's gas potential. This project aligns with our long-term strategy to replenish reserves through exploration in new frontiers. This doesn't mean Brazil is not our priority — Brazil remains our focus — but we are an international company and must look beyond our borders. Slide 4, CapEx. In the second quarter of this year, as shown on the slide, we invested $5.3 billion, up 4% over the first quarter when we invested $5.1 billion. Overall, we have $10.4 billion over these two quarters. More than 80% of that investment, in fact 82%, is focused on E&P projects aimed at increasing production with high returns. Examples versus the previous quarter: well drilling increased by 40% and well completions by 45%. Interconnections also increased by 43%, driven by the ramp-up of Buzios 6 and Buzios 8 and complementary wells, which helped to maximize production for each production unit. Part of the investment was also allocated to advancing construction of new platforms in Buzios such as P-78, P-82 and P-83. These are large platforms, each with nameplate capacity of 225,000 barrels, offering high returns and rapid cash generation. With P-80, we expect positive news regarding bringing it forward, similar to what happened with P-79. Slide 5, refining and products. We hit a record refinery utilization with a 101% FUT, increasing production of higher value-added products. In April and May we reached about 102% FUT, a company record. Usually when FUT increases it's because we're focusing on lower value-added products, but in this case we maintained the same shares for higher value-added products like diesel, jet fuel and gasoline, which makes the refineries more effective. As a result, we expanded supply of our own products and reduced imports, especially diesel. We're essentially self-sufficient in gasoline. We also increased oil product output by 6% and reduced imports by 40% compared with the previous quarter. This improves company efficiency and cash flow. Despite higher processing, production growth led to increased exports — exports rose 12% and improved cash flow. Slide 6, financial results. All these operating records led us to one of the best financial results in Petrobras' history in terms of recurring net income and gross profit, as the President said. Brent prices were high, exceeding $104, but this was not the highest Brent we've ever seen, nor among the top 10. Even so, adjusted EBITDA excluding one-off events was $20 billion this quarter, 70% higher than the previous quarter and nearly double the figure from 12 months ago. Gross profit was $19.5 billion for the quarter, the highest in company history. Higher volumes and higher Brent strengthened cash generation, with operating cash flow of $12.3 billion for the quarter, nearly 50% growth versus the previous quarter. Slide 7, debt. This year we renegotiated contracts for recharters and well services, monitoring the market to identify opportunities. The result is expected to generate an estimated cash flow savings of over $1 billion over 2026-2030, reducing our debt by over $400 million by 2030. Because the amendments extending contract terms were signed in the second quarter, we had to reorganize the value of these contracts and lease liabilities immediately, increasing short-term liabilities but reducing future disbursements and cash flow, creating value. The increase in lease liabilities was offset by a reduction in financial debt due to prepayments during the quarter. We repaid loans and financing totaling $2.9 billion, notably prepayment of $1.4 billion in the bank market and repurchase and redemption of $700 million in bonds issued in international capital markets. We opportunistically raised about $600 million. We ended the quarter with gross debt of $70.8 billion and net debt of $60.4 billion. Without recognizing the lease contract amendments, our debt would have been at the same level as in 2025. The trend is still downward. We maintain our expectation of converging to $65 billion over the horizon of this plan, a level that optimizes our capital structure. Slide 8, forecast for the year. Here we show a snapshot of how we're progressing this semester versus our projections in the 2025 strategic plan. Production has remained above the top of the range, and we're working hard to exceed the target. We'll deliver as much as possible, though there are challenges. With regard to cash investments, we expect to end the year at the top of the range — projection $16.9 billion with a 5% margin. If we bring any investments forward, it will be because it creates value ahead of schedule. Operating expenses are slightly above plan for this half of the year, pressured by higher freight and logistics due to increased production as well as exchange rate effects. We totaled $11.7 billion in operating expenses in this half versus a full-year plan of $20.2 billion. We're monitoring the situation; expenses may exceed the projection if global logistics costs and exchange rates remain at current levels over the next six months. We believe there will be less uncertainty next quarter and we will revise figures with full transparency if needed. Slide 9, taxes and government take. When we produce more, we pay more taxes. We paid BRL 88.6 billion in taxes and government take in the second quarter alone: BRL 500 million to municipalities, BRL 31.5 billion to state governments, BRL 34.2 billion to the federal government and BRL 22.4 billion in government participation. Petrobras paid about BRL 22 billion more in taxes and government take versus the second quarter of last year. On an annualized basis, that's close to BRL 90 billion additional for the government per year. I conclude with the message that we're reaffirming our commitment to growing the company with profitability and responsibility when it comes to capital. Petrobras' success is shared with society. Thank you all for your attention. Alongside the President and other executive officers, we're available to answer your questions. I will now hand it back to Eduardo, who will begin our question-and-answer session.
Thank you, Magda and Fernando. We'll now start our Q&A session. I kindly ask the participants to only ask one question, so that we are able to make better use of our time. The first question comes from Bruno Montanari from Morgan Stanley.
Questions and answers
Congratulations on the results, especially for the execution and production growth. Focusing on production, the President and Fernando already gave us an idea of how much production could grow this year. But I'd like to understand if it's fair to say the plan curve in the medium and long term does not look very conservative, especially if you look at the peak of the curve, which is at 2.6 or 2.7 million that you already surpassed. In terms of CapEx and bringing Buzios' deliveries forward and the sequence of P-80 for upcoming quarters, will there be a ramp-up for P-80 this year or not? I'd like to know that.
Thank you for your question, Bruno. We have to remember we work with nonrenewable resources; producing 2.7 million barrels per day is a challenge, especially because we face production declines. Nevertheless, these declines have been reduced. To give you an idea, when we took office, we were looking at a decline of about 12% a year. Currently, this decline is in the range of 4% per year due to better reservoir management, improved water injection, better production methods, and so on. With new platforms arriving and recently started platforms ramping up to peak, we will achieve the planned results and likely surpass them. However, surpassing results is something we like to deliver without promising it in advance. I'll give the floor to Sylvia and Renata. Renata will talk about the new platforms that will go into production. They're arriving soon in Brazil, they're leaving Asia and coming to Brazil. But I want to mention an important aspect: the first large platform that has been different is Almirante Tamandaré, with capacity initially of 225,000 barrels per day but which reached 270,000 barrels per day. That platform's increase is the result of better reservoir management, interconnecting wells, drilling high productivity wells, and platform debottlenecking. In addition to those platforms, we have another three arriving between this year and next year, each of 225,000 barrels per day with the target of achieving 270,000 in practice. At the end of the day, that means an extra 45,000 barrels per day times four — about 180,000 barrels per day on top of the original capacities as a result of our efforts. So that's what we do: better reservoir management, better platform management and design, and debottlenecking, which combined leads to increased production. We are doing the same thing in refineries. I mentioned this earlier and Fernando did as well: the utilization factor of our refineries, which used to be 65–70%, now surpasses 100% because Petrobras seeks to surpass its best results and deliver value to shareholders. Renata will talk about stage delivery of the new platforms, and Sylvia will discuss ramp-up of P-78 and P-79. Over to you, Renata.
Hi, Bruno. Good afternoon. Regarding P-80, P-82 and P-83: P-80 and P-82 sailaway is scheduled for the third quarter of 2026 and production will start in the second quarter of 2027. We are working strongly toward bringing forward P-80's production to the first quarter of 2027. For P-83, sailaway is scheduled for the beginning of the first quarter of 2027 with production starting in the second half of 2027. As the President said, we are constantly working to bring production forward: pre-lay works, prelaunching of lines, anchoring. However, the second half historically has worse sea conditions than the first half, so we cannot safely guarantee bringing them forward due to weather. We are working on bringing P-80 to the first quarter of 2027, and the other ones are scheduled as stated.
Thank you, Bruno, for your questions. I'm sorry.
Thank you, Bruno, for your question. Picking up on what the President and Renata said: the forecast for production is based on a risk analysis of everything scheduled. We have the ramp-ups for P-78 and P-79 included in our analysis, and we like to work with a leeway of more or less 4%. We'll certainly reach the top of guidance, always seeking to surpass past results, but currently we consider it reasonable to maintain the maximum at a 4% leeway. We are considering downtimes and operational variability. One area of focus has been the downtimes of these very large platforms. We've been strongly investing in three things: better planning of downtimes, optimizing timelines and ensuring sufficient headcount capacity — similar to how high-performance teams operate. A reduction in downtime even by a few days can generate a lot of additional oil, so we've focused heavily on scheduled downtimes. We also guarantee production by working on platform integrity. We're reducing the number of technical inspection recommendations with better maintenance, which reduces unscheduled downtime and supports stability. To give an idea of scheduled downtimes for the year, we expect impacts equivalent to 290,000 barrels per day during downtimes. We'll try to reach maximum production, but guidance includes possible variations due to inspections and other occurrences.
The next question comes from Monique Greco from Itau BBA.
I'd like to discuss the diesel import strategy. How is the company assessing the decision to import diesel given the current price scenario vis-à-vis its pricing and commercial strategy, especially with recent volatility? Local prices have been below import parity. How does that fit into the commercial strategy?
Hi Monique. Our production planning process takes into account customer commitments, seasonal demand variations, refining activities and available refinery volumes, refining margins and logistics structures. Given that context, our policy and commercial strategy are maintained. Import decisions are based on competitiveness and profitability. We also consider applicable public policy that supports the domestic market, which can lead to customer-perceived prices being lower. In short, imports are a competitiveness and profitability decision, and we plan operations to meet commitments and seasonal demand.
Next question comes from Jorge Gabrich from Scotiabank.
Congratulations on the results, especially in volumes. I'd like to return to decline rates. Petrobras' decline is quite low at about 4% in the pre-salt. How sustainable is that moving forward? How do you see the decline behaving over the next few years?
Thank you, Jorge. This lower decline is the result of a strategy followed closely with reservoir monitoring. We have very large reservoirs. For example, the Tupi field has a contractual limit of around 1,200 square kilometers. Compared with a giant post-salt field, Tupi is much larger in area. These huge fields produce a lot with high productivity, but because they are large deposits we can manage them holistically. We also rely on world-class assets. I'll give the floor to Sylvia to add technical details.
There is a natural decline, Jorge, and we fight it across four main areas. First, 4D seismics to better understand reservoirs. Second, intelligent completions allow us to separate producing zones from water- or gas-bearing zones to manage them intelligently. Third, water injection has been a focus; the largest water injection campaign has improved reservoir pressurization, reducing decline. Fourth, supplemental projects and correctly positioned development wells allow replacement of production. In Tupi we've maintained very significant production and this also benefits our partners. We aim to continue these practices to keep declines low.
Our next question comes from Yuri Pereira with Santander.
With the very favorable cash generation environment — due to market circumstances and company performance — how does that compare with your 2026-2030 plan? Specifically, how will you allocate incremental capital this year — for refining or other ambitions Petrobras has in mind?
This is an ongoing discussion for us. Whenever we meet the question is asked: what will we do with additional cash flow generated by better production? We do have somewhat larger cash flow. It's important to remember our dividend formula: any additional cash will be distributed through ordinary cash distribution per our policy, which includes a 14% guideline. Debt reduction is a priority. We are discussing bringing forward investments that generate returns — that is priority number one. Priority number two is to converge debt toward $65 billion or the optimized level in our plan, and accelerate convergence of net debt where it makes sense. We're already looking into the new strategic planning process for the next horizon and will discuss these allocations there. Regarding extraordinary dividends, it's unlikely in the near term even though we would welcome it if no investment opportunities arise and debt is under control. For now, Brent is expected to normalize to levels assumed in our plan, which also affects next year's outlook.
Our next question comes from Gabriel Barra with Citi.
I wanted to ask about Braskem. There has been a lot of news about potential legal reorganization and Petrobras has some active input in these conversations. How do you see this from Petrobras' side? I understand governance and capital allocation constraints, so what is your stance on Braskem's future? It seems the company may be heading toward court-ordered reorganization. How have you been approaching the issue and what's the conversation with bondholders like? What should we expect as an outcome in your view?
I'll start briefly then hand over to Fernando. As you know, we had limited influence over Braskem due to prior governance arrangements. Recent changes gave Petrobras more political influence, and we have been moving closer to the company to understand the situation and the path forward. I don't want to say more now because Braskem will share its results next week. I'll turn it over to Fernando to speak about the current state within the realm of possibilities.
We need to take a step back regarding Braskem. We have a new shareholders' agreement that changed the balance between our economic capital and our political influence. That happened a couple of months ago, and since then we've been exploring options under the agreement. We are in touch with Braskem's Board. There is an injunction in place that is public and which ends on October 24. Braskem will present results on August 13. This is a sensitive time with many decisions to make, and we cannot provide more detail now given the negotiations and legal sensitivities.
Let's move forward with the next question, Lilyanna Yang with HSBC.
Congratulations on your results. I have a broader question about energy policy. First, regarding gas: the Brazilian government would like to lower gas prices for consumers. What role will Petrobras play? For example, where will you sell gas coming from Sergipe? Second, regarding new frontiers: can you update us on investments in Namibia, São Tomé and Príncipe and other areas outside Brazil?
I'll start and then Angelica, William and Sylvia can add. Regarding gas, our projects typically focus on oil with an associated gas component; regulatory changes will affect project structure — sometimes beneficial, sometimes negative, sometimes neutral. Regulatory changes worldwide require reassessment of project economics. Petrobras must ensure projects are profitable; we are not an NGO. Any regulatory or tax change requires reassessment of projects in oil, gas, refining or petrochemicals to ensure the necessary returns.
Adding to the President's comments, Petrobras' assessment of proposed regulatory changes has been outlined recently. The Board's position is that mere transfer of gas molecules' ownership is unlikely to guarantee increased supply, which is what the market needs. The Brazilian gas market has significant opening and pulverization: over 30 companies are competing and there are more than 100 free consumers. The combined capacity of privately operated terminals already exceeds Petrobras'. Our assessment is that regulatory stability and legal certainty are critical to maintain investment discipline and price stability. Any change will require project reassessment. A draft has been made available; Petrobras will present its views in the public hearing over the next 45 days.
To add: we are currently only 15.6% of the gas market, so the market is already open and competitive with many players. To avoid passing Brent volatility to customers, we have extended contract profiles and offered alternatives to mitigate price increases. Petrobras continually seeks to reduce the impact of gas price volatility on industry and consumers. Regarding the proposed regulatory changes, we are awaiting the regulator's position and CNPE may consider alternatives. We will analyze all options related to supply.
From the E&P perspective, over the last few years we've significantly increased gas exports, reaching around 50 million cubic meters, making more gas available. Increasing onshore production in Urucu and the recent discovery in Colombia combined represent supply opportunities — those discoveries exceed Colombia's current needs and could be exported. Regarding Africa and other international activity: we have been investing internationally. We have active areas and partnerships in South Africa with Total, in Namibia, in the Ivory Coast and in Mexico, and we've invested in the Equatorial margin domestically. Internationally we continue to pursue opportunities that help replenish reserves and increase production.
Our next question comes from Tasso Vasconcellos with UBS.
Petrobras has emphasized reserve replacement with new discoveries. Moving beyond the domestic scenario, what are the main priorities for international expansion if it occurs? We discussed Mexico, Venezuela and Bolivia; where would you focus outside Brazil?
Thank you, Tasso. There's no future for an oil company without exploration and reserve replacement. We reinforce our competencies, especially in South America: we've operated for decades and import and produce gas from Bolivia, and we now receive Argentinian gas into Brazil. South America has been an action field for Petrobras for decades, reinforcing our knowledge. Mexico and Africa are also targets due to geological and technological similarities with our deepwater expertise. Deep and ultra-deep waters in Africa and Mexico present opportunities similar to Brazil; our learnings in geology, production and engineering are relevant. Historically, large discoveries can be overlooked at first and then recognized years later — we apply our technical experience to discover value. I will now turn to Sylvia who monitors exploration and international opportunities closely.
As Magda said, we have strong competency in geology and deepwater exploration. In Africa and the Equatorial margin we are looking for turbidite reservoirs similar to those in the Campos Basin. The pre-salt is unique to the Santos Basin, but there are analogous opportunities in Mexico and Africa. We have a nonbinding MOU with Pemex and are surveying seismic data to analyze areas that could add value. We are collecting seismic data and will form opinions on which areas are interesting for Petrobras.
The next question comes from Milene Clifford from JPMorgan.
Quick follow-up about downstream. You mentioned import strategy considering seasonality. How does the company view crack spreads for the second half and the maintenance strategy for refineries in that scope? You've been running the refining complex above 102% FUT. What can we expect in terms of timing and duration of these downtimes for the second half?
Thank you. From a seasonal perspective, the third quarter typically has higher diesel demand. Our operating planning takes that into account. We will import where necessary and our planning is coordinated with refining to maximize refinery use and minimize imports. Imports are occurring naturally and there is no supply shortage in the market.
Thank you for the question. This allows me to clarify our maintenance and downtime approach. We postponed some downtimes for REGAP and REPLAN, but that does not mean all downtimes were moved to the second half. The scheduled downtimes in the second half include catalytic cracker (FCC) maintenance and the REGAP downtime; the Cubatão diesel-related downtime was already scheduled. In the specific case of postponing REGAP and REPLAN downtimes, we were carrying out expansion projects that were not yet mature, so we decided to postpone them to early 2027 after reliability analysis and inspections. This decision allowed us to reduce lost production days by about 45 days. We have expansions at REVAP, REPLAN and REGAP that will add capacity — together they will add almost 10,000 cubic meters per day of additional capacity. We have almost 300,000 of diesel capacity additions, of which around 100,000 come from expansions and optimizations with very low CapEx; the remaining 200,000 come from new diesel plants such as Boaventura HCC and RNEST. RNEST will deliver end-of-year increases, and we are increasing loads at RNEST from 140,000 to 180,000–200,000 with engineering support. To your point, we are only carrying out routine downtimes; there were no wholesale postponements from the first half to the second half. Despite postponements, we achieved high FUT in April–July and in July reached a historical diesel production record of 3,904,000 cubic meters. This decision on scheduling was positive in terms of FUT. We intend to maintain high utilization, always guaranteeing safety and reliability. Our recordable incident rate is 0.3, well below global benchmarks, supporting our reliability at high loads.
I want to reinforce what William said: we are exceeding targets and replacing refining capacity to produce increasingly more value-added products and fewer conventional products. Diesel has been a priority and the diesel results are the outcome of that effort.
Our next question comes from Rodrigo Almeida with BTG.
We discussed international opportunities. I'd like to revisit some projects in Brazil: an update on Tupi — issues around concession extension or changes — what do you see moving forward? Also Alto de Cabo Frio Central, where exploration was successful but the government contract ends next year: do you see adjustments needed, and how do you view the asset's economics? And finally the Equatorial margin — should we expect news in the coming weeks? Please touch on Tupi, Alto de Cabo Frio Central, and the Equatorial margin.
Tupi is under negotiation; any comment from us now would be premature. We are talking with government institutions about next steps. Regarding the Equatorial margin, we continue drilling block FCA-49. We are awaiting permits for three contingent wells in addition to the firm well. A large area like that requires more than one well to properly assess potential; whether we find oil or not, the conclusion is we need to continue exploring the area. For Alto de Cabo Frio Central, we are assessing it together with partners; it presents challenges because of the high content of oil that has contractual implications with the federal government, so we are doing a detailed analysis.
As Magda said, Tupi negotiations are ongoing with stakeholders and we must wait for assessments. For the Equatorial margin, we are awaiting the result of the current well; we have about 500 meters left to reach the reservoir in this well. The challenges have been overcome through technology and learning, and faster results are expected on subsequent wells. The well will conclude this month and we hope it provides significant information; if not, contingent wells will be drilled. We have 32 blocks in the Equatorial margin with huge potential. Alto de Cabo Frio Central is being assessed deeply with our partners due to its complexity and contractual aspects.
Our next question comes from Vicente Falanga with Bradesco BBI.
The company has been vocal in the media about investments. Recently we've also read about rare metals and assessment of seabed basins like the Jupiter basin with potential offshore exploration. How much do you plan to invest in that segment? I understand rare metals are outside the company's main focus; how do you view this area?
We have been improving production and focusing on operations, but we also look at new opportunities to generate shareholder value. Regarding rare metals or other non-core opportunities, we currently have no committed investments. These are possibilities we are exploring and assessing domestically and internationally. Any investment would require governance approval and economic feasibility analysis. We apply strict appraisal criteria across all opportunities to ensure they fit our strategy and return thresholds.
Our next and last question will come from Caio Ribeiro with Bank of America.
A question on capital allocation, specifically M&A. Could you add color to priorities regarding returning to licensing, fuels, moving into ethanol, or purchasing the Mataripe refinery? Also, timing of decisions and status of assessments would be helpful.
We remain on track with our strategic plan, which drives decision-making. Other opportunities may add to that if they are value-accretive for stakeholders. We will honor the noncompete with Vibra fully. We have an ambition in distribution focused on B2B rather than retail and have projects progressing in that area. Regarding Mataripe, due diligence is ongoing; negotiations have not yet moved forward. As usual, we will communicate to the market in due time if anything materializes.
On ethanol: this remains a priority in our business plan. Brazil has maturity in technology and public policy for ethanol, and negotiations are ongoing. We will communicate developments in due time respecting confidentiality and sensitivity of negotiations. Energy transition opportunities remain under close consideration.
Distribution of fuels and LPG is part of our strategy to move closer to the market. Whenever possible and where impediments are removed, we will consider market opportunities to reinforce our strategy.
Thank you so much, Caio, for your question. Fernando, Angelica and Nozaki for your answers. We would like to thank everyone for joining us. This concludes our question-and-answer session; any additional questions may be sent to our Investor Relations team. I will now hand it over to Petrobras' President, Magda Chambriard, for her closing remarks. President, please go ahead.
Reiterating what we said before: Petrobras' performance has been professional and guided by capital discipline, attention to our projects and reservoirs, and care of our assets to always maximize value with operational efficiency and respect to health and safety. This approach guides Petrobras' technical Board and advisory Board with the purpose of delivering value to bondholders, public and private, guided by capital discipline. That will remain our policy. Thank you, and I hope to see you next quarter delivering equally satisfying results.
Thank you, Magda. A recording of this conference will be available for replay online.