In recent months, we have faced significant challenges related to our management. And we wish to clarify the facts and adopt all necessary measures.

As such, we have activated our control mechanism, enhanced our standards and effectively collaborated with the work of the public authorities, who recognize the company as a victim. We are tackling these challenges with the same effort employed to achieve important milestones in our operational performance.

Operation Lava-Jato: our measures

Investigations are underway concerning alleged irregularities in disfavor of Petrobras. The investigations are being led by the Brazilian Federal Police and the Federal Public Prosecutor, under the scope of "Operation Lava-Jato". The operation far-reaching and involves investigations related to a wide spectrum of criminal practices committed by individuals in different parts of the country and sectors of the economy.

Throughout 2014, the Federal Public Prosecutor's office has focused part of its investigations on irregularities involving suppliers and contractors responsible for the provision of goods and services to Petrobras and, in this sense, revealed the existence of an illicit payment scheme involving these parties.

The scheme of illicit payments involves a huge number of suppliers and contractors, who used the resources received through goods and service supply contracts with Petrobras to make illicit payments to political parties, politicians, ex-managers of Petrobras and others involved in the scheme, corrupting them in such a way as to ensure no measures were taken against the criminal organization's operations and even involving said suppliers and contractors in specific practices.

As part of the aforementioned Operation, three ex-directors and one ex-executive manager of Petrobras have been accused of money laundering, criminal organization and passive corruption. Executives from goods and service suppliers for Petrobras have also been accused as a result of the investigation.

Learn more about our measures concerning these facts:

- Internal Investigation Commissions: We have created Internal Investigation Commissions to review incidents or occurrences of nonconformities relative to rules, procedures or corporate regulations, as well as subsidize resulting administrative measures and procedures. The results are submitted to the competent authorities for the necessary measures.

- Independent Internal Investigation Firms: we have contracted two independent law firms specialized in investigation, the first a Brazilian firm (Trench, Rossi e Watanabe Advogados) and the second an American firm (Gibson, Dunn & Crutcher LLP), to undertake an independent internal investigation.

- Independent Special Committee: we created an Independent Special Committee to act as the Reporting Line for independent internal investigations conducted by the law firms. The new director of Governance, Risk and Conformity, Mr. João Adalberto Elek Júnior, is one of the Committee members, along with ex-minister of the Federal Supreme Court, now retired, Dr. Ellen Gracie Northfleet, and the Chief Compliance Officer of Siemens AG from 2007 to 2010, Dr. Andreas Pohlmann.

- Precautionary Company Block: we have formed Commissions for the analysis of Sanction Application (CAASE) and implemented precautionary blocks on companies belonging to the economic groups cited as participants of the cartel in the statements gathered. These companies have been prevented from participating in our tenders and forming contracts with Petrobras as a precautionary measure. The decision for precautionary blockage does not imply in the paralyzation or termination of existing contracts, nor the suspension of due payment for services rendered.

- Legal Reimbursement Measures: we are working on legal measures for adequate reimbursement for damages caused to the Company, including to its image.

- Collaboration with investigations: we have effectively collaborated with the work of the public authorities, as duly noted by the Judicial Power and the Federal Public Prosecutor's office. We have systematically catered to the needs of external control entities (Federal Court of Auditors – TCU, Brazilian Office of the Comptroller General – CGU and Public Prosecutor's Office) and continue to do our utmost to collaborate with investigations and audits.

Focus on financial management

Financial management is an important focus of our current effort. In view of the information raised within the scope of "Operation Lava-Jato", we delayed the publication of the balance sheet for the third quarter of 2014. Risk classification bodies have also announced a rating review of our debt, reflecting the concern surrounding the corruption investigations underway and possible pressure on the Company's liquidity resulting from a delay in the publication of audited financial statements.

Learn more about our effort to present financial effort with transparency and agility, while guaranteeing the preservation of cash flow:

- Publication of results: in accord with the facts and evidence provided as part of the Operation Lava-Jato, we delayed the publication of the balance sheet for the third quarter of 2014. The statements we have had access to reveal the existence of illegal acts, which would have impacted the cost of our fixed assets. In January 2015, we published the accounting statements for the third quarter of 2014 that had not been revised by independent auditors, but we are working on adjustments to these accounting statements to correct the values of fixed assets that were impacted by values related to illicit acts found to be part of "Operation Lava-Jato". We are developing a methodology that will permit us to make these adjustments. (Link to the page with the results published thus far).

- Financial planning: we are reviewing our financial planning and realize it will be necessary to reduce investments, elevate divestiture, while also studying other possibilities for financing and increasing cash flow.

Our executive management has already approved a review of the divestiture plan for the 2015 and 2016. The total value of the plan is US$ 13.7 billion, split among the areas of Drilling & Production in Brazil and abroad (30%), Supply (30%) and Gas & Energy (40%). The review aims to reduce leveraging, preserve cash flow and concentrate on priority investments, notably in the production of gas and oil in Brazil in areas with higher productivity and return.

We are evaluating our Business and Management Plan for the 2015-2019 period. We further wish to reiterate that we are in compliance with our contractual obligations and that the payment of recognized commitments with other companies are being made in accord with existing legislation and contract provisions.

Construction of a new management model

A new management model is being assessed, with a focus on enhancing financial management and the decision-making model, investing in synergy among the areas of management and fostering greater agility in processes, with increased security. The new president and directors will assume their mission of continuing to enhance the Company's management model.

- New president and directors: with the approval of the Board of Management, Aldemir Bendine took office as company president in February. The executive was the president and a Board member of Banco do Brazil. Ivan de Souza Monteiro was named Financial and Investor Relations Manager. Since June 2009, he occupied the vice-presidency of Financial and Investor Relations Management for Banco do Brazil. New directors, based on the company framework, were also nominated for the other areas of management, except for the Management of Governance, Risk and Conformity, which has only recently been created. Meet the new directors.

- Creation of a new Management of Governance, Risk and Conformity: creation of the new management body was approved unanimously by the Board of Management in November 2014. The new director, João Adalberto Elek Júnior, took office in January 2015. The management body aims to guarantee process conformity and mitigate risks, among them fraud and corruption, ensuring compliance with laws, rules, standards and regulations, both inside and outside the company.

We rely on transparency and control mechanisms that are continuously enhanced

Our control and management authorities are working to guarantee process conformity and the enhancement of monitoring and control mechanisms. Our dialogue channels and management bodies are prepared to receive and deal with demands.

Transparency and dialogue channels

- General ombudsman - A direct communication channel between stakeholders and Upper Management, it deals with all the opinions, suggestions, requests, praise, complaints, information requests, consultation and reports. These demands are from all of our stakeholders and treated confidentially, individually and accessibly.

- Report Channel - An exclusive workforce channel to report incidents that involve accounting, financial and audit fraud or that affect our internal controls, with guarantee anonymity.

- Transparency Portal and SIC - To put the Information Access Law into effect, we have a structure built around our Citizen Information System (SIC), which offers an average reply time of nine days. This structure is also responsible for the Transparency Portal , which publishes information about Petrobras, with a highlight on the agenda of public commitments for the president and directors, tenders, agreements and contracts signed by the company.

HIGHLIGHT: Since the Information Access Law came into effect on December 31, 2014, we have responded to 13,859 information requests, catering to over 90% of the manifestations. The residual percentage of access negatives corresponds to strategic data.

Internal and external control mechanisms:

- Internal audit - An independent unit within the Company, aimed at executing control and conformity activities for hiring processes.

- Controllership Management - Aimed at assessing the risk in meeting the legal and regulatory standards that the Petrobras System is submitted to, including the risk of fraud and corruption.

- Internal investigation commissions - Created in the case of irregularities in the company's contracts.

- Inspection by public entities - We are audited by a range of public entities, such as the Brazilian Office of the Comptroller General, Federal Court of Auditors, Public Prosecutor's Office, Securities and Exchange Commission and regulatory agencies.

Documents that establish parameters for relations with our stakeholders:

- Code of Ethics: defines the leading ethics and conduct commitments of the Petrobras System in relationships with its stakeholders.

- Conduct Guide: presents the ethical conduct that must be observed by members of the Board of Management, the Audit Committee, Executive Management, occupants of managerial positions, employees and interns. With regards to our Conduct Guide in the review of the Contracting Manual, we included a document with guidelines that we and our suppliers must follow upon signing agreements.

- Petrobras Corruption Prevention Program Manual: holds the leading concepts and measures adopted by the Program and reaffirms our commitment to ethics, transparency and zero tolerance of fraud and corruption in our activities and business.

We continue achieving important results in our operational performance

We have already produced 713,000 barrels of oil in a single day through the pre-salt layer, a milestone from February 26, 2015. This is one of the achievements that is only possible thanks to the excellence of our technical and operational processes, the effort of our workforce and also the concern regarding management and control processes.

About Petrobras

We have upwards of 100 production platforms, 16 refineries, 30,000 kilometers of pipelines and more than 6,000 service stations. Our proved reserves are around 14 billion barrels of oil, a figure expected to double in the next few years. With the discovery of oil and gas in the pre-salt region, Brazil may become the world's fourth biggest oil producer in 2030.

We have built a track record of overcoming challenges since 1953, when the company was created. The main one was developing technology to explore and produce oil in deep and ultra-deep waters, where upwards of 90% of our reserves are nestled. With innovation and daringness, we are now the Brazilian company that makes the applies for the most patents in Brazil and abroad.