Conference Call / Webcast   Almir Barbassa
RESULTS ANNOUCEMENT         CFO and Investor
1st Quarter 2007             Relat...
Disclaimer
The presentation may contain forecasts about future events. Such forecasts merely reflect the
expectations of t...
DOMESTIC OIL AND NGL PRODUCTION




                                                       Δ=-
                           ...
TOTAL OIL, NGL AND NATURAL GAS PRODUCTION

  Thous. boed
                                                                 ...
E&P – OIL PRICES
                                                                            69.62     69.49



          ...
REFINING IN BRAZIL AND SALES IN THE DOMESTIC MARKET
     Thous. barrels/day
                                              ...
AVERAGE REALIZATION PRICE - ARP

100


                                                            1Q06                   ...
INCOME STATEMENT 1Q07 VS 4Q06
                                                    4Q06        1Q07
                       ...
NET INCOME



                                                      1Q-2007     4Q-2006
   Operating Profit               ...
OPERATIONAL EXPENSES ANALYSIS 1Q07 VS 4Q06

                                                         4Q06       1Q07
     ...
CHANGE IN QUARTER REVENUES(1Q07 VS 4Q06)
                  Exploration & Production –Operating Profit Change– R$ millions
...
CHANGE IN QUARTER REVENUES (1Q07 VS 4Q06)

                   Downstream – Change in Operating Profit – R$ million
       ...
NET EXPORTS OF OIL AND OIL PRODUCTS
         187 thous. bpd Volume Surplus and US$ 528 million Financial in the 1Q07


   ...
NET INCOME CHANGE – R$ million (1Q07 VS 4Q06)

       1,823                   Domestic Oil, NGL and Condensate – thousand ...
LEVERAGE

                                                        Petrobras’ Leverage Ratio

    32%                      ...
CONSOLIDATED CASH FLOW STATEMENT

                                                  R$ million
                           ...
INVESTMENTS

                                                                 R$ million
                                 ...
DOMESTIC LIFTING COSTS WITHOUT GOVERNMENT PARTICIPATION
                                                                  ...
LIFTING COSTS INCLUDING GOVERNMENT PARTICIPATION

          26
                                                           ...
REFINING COSTS IN BRAZIL (US$bbl)

                                                        Δ = -6.3% or US$ 0.17

        ...
COSTS: WORLD MARKET TRENDS




                                      2006




• Rising trend beginning in 2002/2004, affec...
QUESTION AND ANSWER SESSION
Visit our website: www.petrobras.com.br/ri

                         For more information cont...
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Webcast: Results Annoucement - 1st Quarter 2007

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Webcast: Results Annoucement - 1st Quarter 2007

  1. 1. Conference Call / Webcast Almir Barbassa RESULTS ANNOUCEMENT CFO and Investor 1st Quarter 2007 Relations Officer (Brazilian Corporate Law) May 15th 2007
  2. 2. Disclaimer The presentation may contain forecasts about future events. Such forecasts merely reflect the expectations of the Company's management. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein. The Company is not obliged to update the presentation/such forecasts in light of new information or future developments. Cautionary Statement for US investors The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as oil and gas resources, that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. 1
  3. 3. DOMESTIC OIL AND NGL PRODUCTION Δ=- 1.2% 1,823 1,800 • Decrease of 1.2% in the 1Q07 thous. bpd due to scheduled stoppage in P- 37 platform (Marlim), from January 15 to February 05, 2007. 4Q06 1Q07 2
  4. 4. TOTAL OIL, NGL AND NATURAL GAS PRODUCTION Thous. boed 2% Δ = 1. 2,304 2,334 2,305 Δ= -1.2 % 2,279 2,273 1Q06 2Q06 3Q06 4Q06 1Q07 • Decrease in the 1Q07 production due to the scheduled stoppage in platform P-37; problems in the production growth acceleration in FPSO-Capixaba (Golfinho) and P-34 (Jubarte) units, preventing a better performance in the quarter; • 3% decrease in international production due to the interruption of activities in Ecuador caused by popular unrest. 3
  5. 5. E&P – OIL PRICES 69.62 69.49 61.53 61.75 64.74 66.07 59.68 57.75 56.9 56.39 57.59 58.20 58.69 52.7 US$/bbl 51.59 56.08 55.24 47.50 53.69 54.24 49.33 48.70 47.79 44.19 46.05 43.04 37.48 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 Average Sales Price Brent (aver.) OPEC Basket •Decrease in Petrobras’ average oil sales price aligned to the international market. 4
  6. 6. REFINING IN BRAZIL AND SALES IN THE DOMESTIC MARKET Thous. barrels/day % 91 93 89 90 85 90 1,9 50 81 80 79 78 77 80 1,812 1,795 1,8 0 0 1,781 1,753 1,746 1,696 1,711 70 1,684 1,652 1,6 50 1,623 60 1,50 0 50 1T06 2T06 3T06 4T06 1T07 D o m e s t ic o il pro duc t s pro duc t io n O il pro duc t s s a le s v o lum e P rim a ry pro c e s s e d ins t a lle d c a pa c it y - B ra zil ( %) D o m e s t ic c rude o il a s % o f t o t a l • Reversal in the oil products production, which increased 5%, due to higher utilization factor (+ 5 p.p.); • Decrease in the volumes of oil products sold in the 1Q07 due to seasonality. 5
  7. 7. AVERAGE REALIZATION PRICE - ARP 100 1Q06 4Q06 1Q07 Avrg Avrg Avrg 80 71.0 70.6 71.5 70.2 68.8 67.3 60 61.8 59.7 57.8 40 20 Dec-04 M ar-05 Jun-05 Sep-05 Dec-05 M ar-06 Jun-06 Sep-06 Dec-06 M ar-07 A RP B rasil (US$ /bbl) A verage B rent P rice (US$ /bbl) A RP USA (US$ /bbl w/sales vo l.in B rasil) • Steady ARP Brazil confirms our policy of aligning the domestic prices to international benchmarks in the mid/long term; •Due to Real appreciation, ARP in Reais presented a slight decrease (from R$ 152,10 to R$ 150,97, or -0.74%). 6
  8. 8. INCOME STATEMENT 1Q07 VS 4Q06 4Q06 1Q07 38.894 Net Revenues - 5.2% 41.041 23.629 GOGS -11.5% 26.696 R$ million 10.993 EBITDA 10.225 7.5% 8.582 Operational Profit 7.460 15.0% 4.131 - 20.6% Net Income 5.200 • Drop in net revenues due to lower sales volumes of oil products and lower average realization prices; • Drop in COGS as a result of lower oil prices, lifting cost, government participation, refining cost and import volumes • Increase in the Operating profit due to better cost structure aligned with stable operating expenses even considering the non-recurring expense of R$ 1 billion related to renegotiation of terms of the Petros Retirement Fund Plan; • Net income was negatively affected by the financial result (FX variation) and the absence of fiscal benefit, when compared to the previous quarter. 7
  9. 9. NET INCOME 1Q-2007 4Q-2006 Operating Profit 8.582 7.460 Net Financial Expenses (950) (72) Gains from investments in subsidiaries (84) 20 Operating profit (after fin. exp.) 7.547 7.408 Non-operating Income (Expenses) 27 35 Income Tax / Social Contribution (2,968) (1,901) Minority Interest (476) (342) Net Income 4.131 5.200 • Higher net financial expenses due to FX variation on international assets; • Net Income in the 1Q07 did not reflect fiscal benefits from the payment of interests in own-capital occurred in the previous quarter. 8
  10. 10. OPERATIONAL EXPENSES ANALYSIS 1Q07 VS 4Q06 4Q06 1Q07 1.415 -8.7% Sales Expenses 1.550 General and 1.641 R$ million 1.728 -5.0% Administrative 655 Exploratory Costs -19.9% 818 299 -16.0% Taxes 356 1.844 29.1% Others 1.428 • Sales: highlights for the decrease of expenses in the distribution and international segments; • G&A: lower expenditures with wages and benefits; • Exploratory Costs: decrease due to high level of dry wells write-offs in the 4Q06 (R$ 125 million); • Others: increase caused mainly by the financial incentive paid to the Petros Plan participants, as a counterpart for the acceptance of the renegotiation of its terms (R$ 1.040 million). 9
  11. 11. CHANGE IN QUARTER REVENUES(1Q07 VS 4Q06) Exploration & Production –Operating Profit Change– R$ millions 1,823 Domestic Oil, NGL and Condensate – thousand bpd 1,800 781 8.075 1.024 354 433 7.289 244 4Q06 Oper. Price Effect on Avrg Cost Effect Volume Effect Volume Effect Oper. Exp. 1Q07 Oper. Profit Net Revenue on COGS on Net Revenue on COGS Profit • Increase of the Operating Profit due to lower production costs and gov. participation, partially offset by the production decline, as well as lower domestic oil average selling and transfer prices. 10
  12. 12. CHANGE IN QUARTER REVENUES (1Q07 VS 4Q06) Downstream – Change in Operating Profit – R$ million 1.456 1.808 1.474 157 3.210 2.188 57 4Q06 Oper. Price Effect on Avrg Cost Effect Volume Effect Volume Effect Oper. Exp. 1Q07 Oper. Profit Net Revenue on COGS on Net Revenue on COGS Profit • Increase of 46% in Operating Profit mainly due to reduction in the oil purchase / transfer cost in the 1Q07; • This increase was partially offset by the reduction in selling volumes in the domestic market. 11
  13. 13. NET EXPORTS OF OIL AND OIL PRODUCTS 187 thous. bpd Volume Surplus and US$ 528 million Financial in the 1Q07 Exports (thous barrels/day) Imports (thous barrels/day) 669 576 624 540 532 536 510 215 459 442 437 247 137 132 221 115 88 97 270 269 454 354 373 408 377 344 340 355 262 267 1T06 2T06 3T06 4T06 1T07 1Q06 2Q06 3Q06 4Q06 1Q07 Oil Oil Products • 1Q07 trade balance reflected seasonal demand, increase in the oil products production and stability in oil production. 12
  14. 14. NET INCOME CHANGE – R$ million (1Q07 VS 4Q06) 1,823 Domestic Oil, NGL and Condensate – thousand bpd 1,800 3.067 202 990 1067 5.200 2.147 134 4.131 4Q06 Net Income Revenues COGS Oper. Exp. Fin. Exp, Non Taxes Minority Interest 1Q07 Net Income Oper. and Others • Increase in the gross margin, provided by lower oil prices, government participation and import volumes was insufficient to offset extraordinary expenses related to the financial incentive paid to retirement plan participants, FX variation effects in the financial results and increase in tax burden. 13
  15. 15. LEVERAGE Petrobras’ Leverage Ratio 32% R$ million 03/31/2007 12/31/2006 28% 28% 27% (1) 27% Short Term debt 11.879 13.074 26% 26% 24% (1) Long Term Debt 32.540 33.531 20% 19% 23% 18% 19% 17% 16% Total Debt 44.419 46.605 19% Cash and Cash 20.463 27.829 Equivalents jun/05 set/05 dez/05 mar/06 jun/06 set/06 dez/06 mar/07 (2) Net Debt/Net Capitalization Net Debt 23.956 18.776 Short-Term Debt/Total Debt • Increase in Net Debt due to cash/cash equivalent reduction as a result of interest on own capital payment (R$ 5,9 billion). (1) Includes debt contracted through leasing contracts (R$ 2.259 million in 03.31.2007 and R$ 2.540 million in 12.31.2006). (2) Total debt - cash and cash equivalents 14
  16. 16. CONSOLIDATED CASH FLOW STATEMENT R$ million 1Q07 4Q06 (=) Net Cash from Operating Activities 7.493 13.244 (-) Cash used in Cap. Expend. (7.951) (12.061) (=) Free Cash Flow (458) 1.183 (-) Cash used in Financing and Dividends (6.908) 2.127 Financing (1.035) 2.128 Dividends (5.873) (1) (=) Net Cash Generated in the Period (7.366) 3.310 Cash at the Beginning of Period 27.829 24.519 Cash at the End of Period 20.463 27.829 • Cash decrease due to dividends and financing payments. 15
  17. 17. INVESTMENTS R$ million 1Q07 % Direct investments 7.385 88 Exploration & Production 3.986 48 Downstream 1.040 12 Gas & Energy 197 2 International 1.922 23 Distribution 107 1 Corporate 133 2 Special Purpose Companies (SPCs) 861 11 Ventures under Negociation 54 1 Project Finance - - Total Investments 8.300 100 • Highlight: international capex due to construction of 2 drilling rigs (R$ 636,4 million) and GOM fields’ development (R$ 122,6 million). 16
  18. 18. DOMESTIC LIFTING COSTS WITHOUT GOVERNMENT PARTICIPATION Δ = -0.6% or US$ 0.04 US$/bbl 7.24 7.20 6.64 6.32 6.12 1TQ06 2Q06 3Q06 4Q06 1Q07 • Labor cost reduction duet to 4Q non recurring expenditures, retroactive to sept/06, as a result of the 2006/2007 Collective Agreement • Lower material utilization for repairs and well intervention and substitutions. 17
  19. 19. LIFTING COSTS INCLUDING GOVERNMENT PARTICIPATION 26 61.5 61.8 56.9 69.6 69.5 59.7 57.8 60 51.6 47.5 18,1 17,6 17,3 17,5 16,1 16,2 16 38.2 15,2 40 US$/boe 28.8 13,6 13,9 24.8 65% 11.4 64%11.5 59% 10.4 56% 9.0 10,7 10.0 64%11.0 7.6 59% 8.5 9.8 8,5 20 7,0 6.4 6 5.1 4.0 57% 6.0 6.1 6.3 6.1 6.6 7.2 7.2 4.3 5.4 5.4 0 3.0 3.4 2002 2003 2004 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 -4 -20 Lifting Cost Gov. Take Brent •Lower government take due to decrease in average domestic oil prices, linked to international benchmarks. 18
  20. 20. REFINING COSTS IN BRAZIL (US$bbl) Δ = -6.3% or US$ 0.17 2.71 2.48 2.54 2.07 1.90 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 • 6.2% decrease compared to the previous quarter reflecting the lower costs with personnel (wages and benefits) as a result of the bonus payment in the 4Q06 Collective Bargaining Agreement. 19
  21. 21. COSTS: WORLD MARKET TRENDS 2006 • Rising trend beginning in 2002/2004, affecting both the oil industry services and raw material (steel and iron for the construction of platforms and drilling rigs) Source: CERA 20
  22. 22. QUESTION AND ANSWER SESSION Visit our website: www.petrobras.com.br/ri For more information contact: Petróleo Brasileiro S.A – PETROBRAS Investor Relations Department Raul Adalberto de Campos– Executive Manager E-mail: petroinvest@petrobras.com.br Av. República do Chile, 65 – 22o floor 20031-912 – Rio de Janeiro, RJ (55-21) 3224-1510 / 3224-9947 21

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