Board of Directors reports on the actions implemented

The members of the Board of Directors of Petroperú- Petróleos del Perú-Petroperú S.A. (Emergency Decree No. 004-2024) communicates to its workers and the public the following:

1. That, having been appointed as transitional members until the National Fund for Financing State Business Activity (FONAFE) concludes the selection process for the new Board of Directors, within the framework of Emergency Decree No. 004-2024 issued on 02/27/2024, We have complied with approving actions of the Restructuring Plan proposed by the consulting firm Arthur D. Little/Columbus (ADL/C), as well as other urgent measures of austerity, discipline and quality in spending and personnel income according to the following detail:

   • With Board Agreement No. 031 and 032-2024-PP of 04/01/2024, the Petroperú Restructuring Actions for the year 2024 were approved, composed of 13 components and 52 prioritized activities.
   • Through Letter No. PRES-0173-2024 dated 04/03/2024, the Restructuring Actions and Board of Directors Agreement No. 031 and 032-2024-PP were sent to FONAFE, because FONAFE will supervise the implementation of the actions, in accordance with what is indicated in the D.U. No. 004-2024.
   • On 04/05/2024, following the new transparency guidelines of this Board, the approved Restructuring Actions were published on the Institutional Portal, safeguarding confidential information.
2. In addition to what is required and fulfilled in relation to the D.U. No. 004-2024, we have also reached the Ministry of Energy and Mines (MINEM) and the Ministry of Economy and Finance (MEF) with our diagnosis of the company (Letter PRES-0214-2024 and PRES-0213-2024 delivered on 07.05. 2024 to Mr. Antonio Mendoza, head of the MINEM Advisory Cabinet and to Mrs. Betty Sotelo, Vice Minister of Finance of the MEF); It was presented to the shareholders and the President of the Republic on 05/08/2024. In the aforementioned diagnosis, we noted to the Government that the ADL/C report, on which the restructuring of the company has been based, takes as a fundamental assumption that the Peruvian State was going to continue to financially and unlimitedly support Petroperú. In fact, the last funding awarded earlier this year was awarded under the recommendations of the ADL/C report.

3. Likewise, the projections of said report have been given under a series of financial and technical assumptions that have not been applied, such as, for example, that the New Talara Refinery (NRT) was going to be operational from the year 2024. Today, the projections have serious deviations, resulting in the company's financial conditions being extremely serious.

   Considering that Petroperú, as of today :

   • It operates with limited revenue growth and low profitability as demonstrated by the projected sales and loss figures for 2024, respectively US$3,977MM (30% less than 2022) and -US$716MM (164% greater than 2022). The projected EBITDA for 2024 is US$135MM, insufficient to cover any debt payment.
   • It has a loss of its competitive position having given up market share from 51% to 25%.
   • It shows a serious deterioration in the liquidity position, working capital, solvency (liabilities/equity) and profitability indicators (ROA/ROE) of 0.4, -US$ 3,367, 6.26 and -0.7%/-11.1% respectively.
   • It suffers from a high degree of instability in leadership and governance.

   Caused by:

   • Delays, almost always due to exogenous and/or political causes, to those of efficient management and causing a heavy debt for the construction of the NRT, which almost tripled its cost over time.
   • A long, unfinished start-up and stabilization process of the NRT, in turn causing a new negative financial impact for the year 2024. The uncertainty of the refinery stabilization process generates serious future vulnerabilities to finances, which would lead the State to continue capitalizing on it.
   • An ossified, not very agile and oversized operational organizational structure, also derived from the failures of public management, not private, in the management of the company.
   • Weaknesses in the risk management model, that is, low or no transparency.
   • The inherent weaknesses in the governance model that led Petroperú to not have the 2023 accounting audit planned (now to be presented by PwC on 05/31/24) nor to appoint the audit company for the year 2025.

It is our belief that:

• The financial conditions of the company require broad financial backing from its shareholder, which in the case of Petroperú is the Peruvian State, that is, with the resources of all Peruvians. The latest calculations indicate that an additional US$2,200 million is required.
• In the current circumstances of a Petroperú with governance and business management exposed to the usual political appetites, it would be irresponsible and an act of immorality to request greater financing from the State, since nothing ensures that the company will not return in the near future to request more state support. , to the detriment of the fiscal coffers and the pockets of Peruvian taxpayers.
• That said, private management of the company is considered to be the best option to achieve a return to financial self-sustainability.
• We have raised our request for autonomy in the private management of Petroperú before the General Meeting of Shareholders, as well as before the Government and we are waiting for a definition that, if affirmative, will allow us to continue with a management that we believe can and should be fulfilled for the benefit of Peru.

The members of the Board of Directors (D.U. 004-2024)

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