Petroleo Brasileiro Petrobras : Petrobras’ Proved Reserves in 2016

¹ Includes Extensions that contain expansions of proved reserves areas through wells drilling after the discovery
² Divestments that represent advanced reserves monetization
³ Revision based on technical and economic criteria (ex: reservoir characteristics)

The main factors impacting reserves were:

• Incorporation of 0.110 billion boe in proved reserves as a result, mainly due to new wells drilling in Búzios field (Santos Basin);

• Additions in proved reserves of 0.203 billion boe, resulting from new production development well drilling and better reservoir response in onshore and offshore post-salt fields, in Brazil and USA. In the pre-salt, the additions in proved reserves were a result of positive answers from the reservoirs, recovery mechanisms (water injection) and operating efficiency of production systems in operation, as well as the growing drilling activities and tie-back activities, in Santos and Campos Basin, both in Brazil;

• Divestments that provided early monetization of 0.153 billion boe of Petrobras in Argentina and Venezuela reserves;

• Production of 0.925 billion boe in 2016. This volume includes synthetic oil, although does not include the volume extracted from Extended Well Tests (EWT) nor production in Bolivia. EWTs occur in exploratory areas where field commerciality has not yet been declared and, therefore, there is no associated reserve; in the case of Bolivia, the country's Constitution prohibits concessionaires from recording reserves.

• Petrobras presented a 34% Reserve Replacement Index (RRI), disregarding the effects of divestments carried out in 2016. The ratio between the volume of reserves and production volume is 13.5 years, and 13.9 years in Brazil. The Development Ratio (RD), which is the ratio between developed proved reserves and proved reserves, was 50% in 2016.

Proved Reserves per SEC Criteria

According to SEC criteria, on December 31, 2016, Petrobras' proved oil, condensate, and natural gas reserves reached 9.672 billion barrels of oil equivalent (boe), as shown in Table 3. In 2015, those volumes were 10.516 billion boe.

Table 3 - Proved Reserve Volumes in 2016 (SEC criteria)

The same highlights offered above to prove reserves according to ANP/SPE are applicable to prove reserves according to SEC criteria.

The main difference between the ANP/SPE criteria and those by the SEC is the oil price considered in calculating the economic feasibility of reserves.

By SEC criteria, Petrobras presented a 25% Reserve Replacement Index (RRI), disregarding the effects of divestments carried out in 2016. The ratio between the volume of reserves and production volume is 10.5 years, and 10.7 years in Brazil. The Development Ratio (RD) was 54% in 2016.

It should be mentioned that Petrobras historically certifies 95% of its proved reserves according to SEC criteria. The current certifying entity is D&M (DeGolyer and MacNaughton).