2. 2FORWARD-LOOKING STATEMENTS:DISCLAIMERThe presentation may contain forward-looking statements about futureevents within the meaning of Section 27A of the Securities Act of 1933, asamended, and Section 21E of the Securities Exchange Act of 1934, asamended, that are not based on historical facts and are not assurances offuture results. Such forward-looking statements merely reflect theCompany’s current views and estimates of future economiccircumstances, industry conditions, company performance and financialresults. Such terms as "anticipate", "believe", "expect", "forecast", "intend","plan", "project", "seek", "should", along with similar or analogousexpressions, are used to identify such forward-looking statements.Readers are cautioned that these statements are only projections and maydiffer materially from actual future results or events. Readers are referredto the documents filed by the Company with the SEC, specifically theCompany’s most recent Annual Report on Form 20-F, which identifyimportant risk factors that could cause actual results to differ from thosecontained in the forward-looking statements, including, among otherthings, risks relating to general economic and business conditions,including crude oil and other commodity prices, refining margins andprevailing exchange rates, uncertainties inherent in making estimates ofour oil and gas reserves including recently discovered oil and gasreserves, international and Brazilian political, economic and socialdevelopments, receipt of governmental approvals and licenses and ourability to obtain financing.We undertake no obligation to publicly update or revise anyforward-looking statements, whether as a result of newinformation or future events or for any other reason. Figures for2013 on are estimates or targets.All forward-looking statements are expressly qualified in theirentirety by this cautionary statement, and you should not placereliance on any forward-looking statement contained in thispresentation.NON-SEC COMPLIANT OIL AND GAS RESERVES:CAUTIONARY STATEMENT FOR US INVESTORSWe present certain data in this presentation, such as oil and gasresources, that we are not permitted to present in documents filedwith the United States Securities and Exchange Commission(SEC) under new Subpart 1200 to Regulation S-K because suchterms do not qualify as proved, probable or possible reservesunder Rule 4-10(a) of Regulation S-X.DISCLAIMER
3. 3Quarter HighlightsPositive financial and operating resultsResults» Net Income of R$ 7,693 million, Operating Income of R$ 9,849 million, and EBITDA of R$ 16,231 million.» Net Debt/EBITDA of 2.32x as of 1Q13, below target of 2.5x.Exploration& Production» Within expectations, oil production in Brazil was 1,910 kbpd (-4% vs. 4Q12).» Domestic production of natural gas was 400 kboed (+1% vs. 4Q12).» Pre-salt production in Santos and Campos Basins reached 311 mbpd on Apr 17th.(Petrobras portion: 256 kbpd).» Production start-up of FPSOs:» Cid. de São Paulo (120 kbpd) on Jan 5th. Petrobras Production (45%) Apr 25th: 11.3 kbpd with 1 well. Expectedpeak: 1H14.» Cid. de Itajaí (80 kbpd) on Feb 16th. Petrobras Production (100%) Apr 25th: 24.1 kbpd with 2 wells. Expectedpeak: 2H13.» Cid. de Paraty (120 kbpd) is currently being anchored at location. Expected peak: 2H14.» Before year end, expected start-up of an additional 4 new platforms with a combined capacity of 500 kbpd.» Contracting of two new leased FPSOs for delivery by 2016 in Lula field of the pre-salt Santos Basin.» New Discoveries: Sul de Tupi and Florim in areas of the Transfer of Rights; Sagitário in the pre-salt Santos Basinand Mandarim, in the post-salt Marlim Sul field of Campos Basin.Downstream» Record daily output in Brazilian refineries on April 7th: 2.149 million barrels.» In 1Q13, 2 price increases for diesel, totalling +10,7%, and 1 for gasoline, +6,6%.Gas &Energy» Met all domestic demand for natural gas: 88 million m3/d.» Power generation of 5,120 MW in our thermoelectric plants.Management» PROCOP: Global results of Jan-Mar/13 higher than expected, resulting in savings of R$ 1.3 billion.» PROEF: Gains of 34 kbpd in oil & LNG production in 1Q13. 3
4. 4As anticipated, Petrobras’ oil and LNG production in 1Q13 was lower than 4Q12: down 4% to 1,910 kbpd.The 2013 production target was maintained (stable relative to the 2012 average).Petrobras: Oil & LNG Production in BrazilScheduled maintenance in Campos Basin impacted quarterly production» 4% lower production in 1Q13 vs. 4Q12 (- 70 kbpd), primarily due to:» Scheduled Stoppages: -23 kbpd.» End of Early Production Systems (SPAs) and EWTs (SS-11, P-34 and Oliva): -36 kbpd.» Natural Decline of Production (10-11% p.y.) and operating problems: -11 kbpd.» The target for the year is maintained. Production will grow sustainably as of July, due to the reduction of scheduledmaintenance and the ramp-up of new production units.2.3002.2502.2002.1502.1002.0502.0001.9501.9001.850501.8461.9201.9652.0321.9681.9401.8431.9281.9401.9601.9891.9611.9932.0982.1101Q12Avg. 2,0661Q13Avg 1,910kbpd201320124Q12Avg. 1,980Mar-13Feb-13Jan-13Dec-12Nov-12Oct-12Sep-12Aug-12Jul-12Jun-12May-12Apr-12Mar-12Feb-12Jan-12
5. 5PROEF UO-BC: Program to Increase Operational EfficiencyOil & NGL production in 1Q13: gain of 14 kbpdAverage 1Q13 Expected for 2013» Since the start of PROEF on April/2012 the operational efficiency in UO-BC increased from 66% to 74% in March/2013.» Lower PROEF benefit in the 1Q13 due to the higher concentration of scheduled stoppages, which will increase operationalefficiency in the future.» PROEF UO-BC: Total expenditure by Feb/13 of US$ 1 billion. NPV of US$ 542 million.395431+36 kbpdWithPROEFWithoutPROEF+7.4 p.p.WithPROEF76.4WithoutPROEF69.0Operational Efficiency (%)Oil + NGL Production(kbpd)+ 14 kbpdWithPROEFWithoutPROEF+5.9 p.p.75.7WithPROEFWithoutPROEF69.8404418Operational Efficiency (%)Oil + NGL Production(kbpd)» Gain of 20 kbpd in 1Q13 with average efficiency of 91%.» Expected gains from PROEF UO-RIO for 2013 is 26 kbpd.PROEF UO-RIO
6. 6Lifting CostsLower production increased per barrel lifting costs in 1Q13R$/Barrel» Total lifting costs were marginally lower, declining by 1% as compared to 4Q12.» However, there was an increase in the per barrel lifting cost in 1Q13, due to lower oil production as a result of higher maintenance.» The decrease in government take is due primarily to lower production in fields that pay Special Participation tax.22.57 26.39 30.79 28.33 29.4939.0338.4838.68 39.54 37.591Q12 2Q12 3Q12 4Q12 1Q13Lifting Cost Government Take69.4764.8761.6067.87 67.08
7. 705001.0001.5002.0002.5003.0003.500Exploration & Drilling Expenses: Brazil18 wells write-offs in 1Q13: All post-salt1Q131,2374Q121,7283Q121,1162Q123,2941Q129214Q111,2383Q116032Q119431Q11859R$million2011R$ 3,643 MM2012R$ 7,058 MMGeology, Geophysics and Dry /Subcommercial WellsExploration and drilling expenses in 1Q13 were lower than those in 4Q12.97Wells16Wells41Wells21Wells19Wells81Wells1Q13R$ 1,237 MM18Wells18Wells2013Reasons for Write-offs Exploratory Area 7 Dry Wells 6 Effectively Dry 1 Mechanical accident8 Subcommercial wells 3 Projects Cancelled 4 Offshore 4 Post-salt 0 Pre-salt 11 Onshore 3 Projects Cancelled1Q13» Expected costs of dry wells and/or subcommercial for2013 at a level below that of 2012.
8. 8757 785 839431 441 45314186 11395 9398Oil Product Production1812241141,942 2,010 2,127+6%+10%1402642014Q121Q12 1Q13197288140Refining Costs Throughput and Utilization6,606,986,24Domestic Production of Oil ProductsOil Processing Records: 2,149 kbpd (Apr. 7), 2,137 (Mar. 30) and 2,125 (Mar. 3)1,534 1,633 1,72235033736093% 97% 98%010203040506070809010005001.0001.5002.0002.5004Q121Q12 1Q134Q121Q12 1Q13(kbpd)(R$/barrel)(kbpd)» 6% increase (117 kbpd) in production of oil products when compared to 4Q12, mainly diesel, due to increased utilization ofdistillation capacity, coking and HDT units in REVAP and REPAR, and restart of distillation operations in REFAP.» 11% decrease in Refining Costs due to lower expenses with scheduled maintenance and higher throughput.Imported OilUtilization (%) Domestic OilDiesel GasolineJet FuelLPG NaphthaFuel Oil Others2,0831,9701,8846.606.986.24
9. 9Oil Products Sales in Brazil7% year over year growth in salesOil Products Sales – Brazil(*) Others – Lubricants, Asphalt, Coke, Propene, Solvent, Benzene, Querosene e Intermediates.When compared to 4Q12, there was a reduction of 3% in oil products sales in the domestic market mainly due to the seasonality ofdiesel and gasoline demand, partially offset by the increase in sales of naphtha and fuel oil.864 986 921545610580106106105751081181Q13-3%2,3132131801964Q122,3912231562021Q122,168214173191kbpd1Q13 x 4Q121Q13 x 1Q12» Diesel (+7%): Economy growth and thermo consumption, as well asincrease in the summer grains crop (corn and soy).» Gasoline (+6%): Increase in family consumption and car fleet growth, aswell as the advantage of gasoline price when compared to ethanol in moststates.+7%» Diesel (-7%): Lower demand in the 1Q13 due to lower industrial andagricultural activity in the period (seasonality). Part of the reduction wascompensated by higher thermoelectric demand.» Gasoline (-5%): Decrease due to the seasonality of sales in the 4Q12related to the vacation period.Diesel GasolineJet FuelkLPG NaphthaFuel Oil Others*
10. 101001201401601802002202402602013jan/13feb/13mar/13Oil Products Price - Brazil vs InternationalPrice adjustments in the last 10 months: +21.9% in diesel and +14.9% in gasolineJun/25Jul/162011 2012Mar/05Adjustment :Diesel: 5.0%Jan/301Q13: 2 price increases in diesel, totaling +10.7%, and 1 in gasoline of +6.6%.The Company seeks convergence to international parity.∆ Fx Rate: 10%FX Rate: R$ 1.82/US$FX Rate: R$ 2.01/US$ARP in Brazil* x ARP in USGC**ARP in USGCARP in BrazilAdjustment:Gasoline: 10%Diesel: 2%Nov/01Adjustment:Gasoline: 7.83%Diesel: 3.94%Adjustment:Diesel: 6%Adjustment:Gasoline: 6.6%Diesel: 5.4%Prices(R$/bbl)jul/12jun/12may/12apr/12mar/12feb/12jan/12dec/12nov/12oct/12sep/12aug//12jul/11Jun/11may/11apr/11mar/11feb/11jan/11dec/11nov/11oct/11sep/11aug//11* Weighted Average Realization Price of Diesel, Gasoline, Naphtha, LPG, Jet Fuel and Fuel Oil** Average Realization Price in United States Gulf Coast, considering the same volumes and products sold in Brazil
11. 11Exports Imports BalanceHigher net imports in 1Q13, mainly due to higher oil imports as a consequence of increasing refinery throughput and lowerdomestic oil production.kbpd-189 -65-364-18588 1315216720618835 29 36-269-4291Q12-501398601364844Q12+6%+8%+7%1Q13-4548061683017641513581Q134061552154Q123771122361Q12714182497Oil ProductsGasolineDieselOther Oil ProductsFuel OilOil-43%+13%+794%Trade Balance of Oil and Oil ProductsHigher imports of crude oil and reduced imports of oil products» Lower oil exports as a result of lower E&P production and increase of refinery throughput, requiring higher imports of lighter oil.» Gasoline and diesel imports decreased, due to higher refinery output.» Higher oil products exports, particularly fuel oil, due to lower thermoelectric demand during 1Q13.1Q134Q121Q12
12. 1239,9Natural Gas Demand and SupplyContinued high demand for thermal power generationmillionm³/dayDomesticBoliviaLNGNon ThermalThermalRefineries / E&PFertilizer plantsSUPPLYDEMAND12.1 12.5 10.840.237.04Q1289.438.638.31Q1263.111.739.3-1%1Q1388.0+39%0.9 15.9 14.1-2%88.130.725.563.543.343.690.230.737.1+39%» Thermo-electric demand remained high and above non thermo-electric consumption throughout 1Q13, due to higher thermo-electric dispatch caused by low levels of water in hydroelectric reservoirs.» Lower demand for LNG in 1Q13 as compared to 4Q12, as non thermo-electric demand and domestic consumption werereduced.» Thermo-electric generation remained above 5 GW.4Q121Q12 1Q13
13. PlannedAccomplished as planned or higherHigh risk of not achieving the annual targetAttention points that can put the achievement of the annual target at riskPROCOP: Monitoring of Outcomes– Mar/13Accomplishment higher than expected. Attention points addressed90%70%100%80%OperationalExecution(%)60%50%40%30%20%10%0%2013 Target: R$ 3.8 billionJan-Mar/13Cost Savings Expected : R$ 646 million (17%)Cost Savings Accomplished: R$ 1,260 million (33%)100%Exploration & Production DownstreamEngineering,Technology& MaterialsCorporate& ServicesTranspetroGas & EnergyOnshoreProduction Administrationand Support Building Mngt,Travels andLodgingOffshoreProductionSupportServicesWellsInterventionRefining Oil and Oil ProductsLogisticsCommercializationSuppliesand StocksITC HSEMngtNG LogisticsFertilizers13
14. 14Operating Income – 4Q12 vs 1Q13Better prices and lower COGSR$Million5,739 (870)3,164 2101,606 9,8494Q12Operating IncomeSales Revenues COGS SG&A Other Expenses 1Q13Opearting Income» Reduction in sales revenues, mainly due to lower volumes of oil products sold in the domestic market.» The decrease in COGS is explained by the lower participation of imported oil products in the sales mix, as aresult of a higher operational output/efficiency from refineries, and reduced consumption of oil products.» Lower expenses due to lower dry hole expense, and the absence of impairments during the quarter.
15. 15Net Income – 4Q12 vs 1Q13Stable as compared to prior quarterR$Million7,7474,110(1,398) (26)( 2,618) (122)7,6934Q12Net IncomeOperating Income Financial Result Equity in earningsof investmentsIncome Tax/SocialContributionMinority Interest 1Q13Net Income» Net Income remained stable, because the increase in the operating income was compensatedby lower financial result and by higher income tax in the absence of the fiscal benefitsgenerated from the provision of interest on own capital (R$ 2.1 Billion in 4Q12)
16. 16Exploration & Production - 4Q12 vs 1Q13As expected, lower production in the quarterR$Million17,474(277)(2,976)(1,146)1,388 621 15,0844Q12Operational ResultsPrice Effect onRevenueVolume Effect onRevenueAverage Cost Effecton COGSVolume Effect onCOGSOperatingExpenses1Q13Operational Results» E&P operating income was negatively impacted by the lower production of oil in Brazil (-4%).» Realization price for oil sold was slightly lower.» The decrease in operating expenses was mainly due to reduction in dry hole expense.
17. 17Downstream – 4Q12 vs 1Q13Higher oil products pricesR$million(8,715)1,651(-2,440) (81)3,378(330) (6,537)4Q12Operating IncomePrice Effect onRevenuesVolume Effect onRevenuesAverage CostsEffect on COGSVolume Effect onCOGSOperatingExpenditures1Q13Operating Income» Downstream improvement was due to price increases in diesel and gasoline as well as lowerparticipation of imported oil products in the sales mix, as a result of higher refinery output anddecreased seasonal demand.
18. 18Exploration and ProductionNet Result by Segment: 4Q12 vs 1Q13R$ 11.5 Bn vs R$ 10.0 BnDownstreamR$ -5.7 Bn vs R$ -4.2 Bn price increase of diesel and gasoline lower share of imported oil products in sales due to lowerdemand of domestic market higher oil products production with maintenance of outputyeld (diesel and gasoline)InternationalR$ -0.6 Bn vs R$ 0.7 Bn higher sales volume, mainly of oil products (from 182 to195 kbpd), and higher oil and NGL production (from 133to 143 kbpd) impairment of R$ 487 million in 4Q12, of which R$ 464million related to Pasadena refinery in USA. dry well write-off of Ogonga (Block 26 Angola), Kabeljou(Namibia), Mapalé e Katmandu (Colombia), addingR$ 243 million in 4Q12. Only small amounts were written-off in 1Q13 (R$ 3 million). lower accounting losses of inventory write-down,especially in USA (R$ 52 million in 1Q13 versus R$ 231million in 4Q12). decrease of oil and NGL production in Brazil lower dry or subcommercial wells write-offs lower total lifting costGas & EnergyR$ 0.5 Bn vs R$ 0.9 Bn higher power generation revenues due to energy prices(PLD) flat volume supply of domestic gas larger acquisition price of LNG in international market,despite lower demand volume
19. 19InvestmentsTracking physical and financial progress of projects – S CurvesInvestments of R$ 19.8 billion in 1Q13, 10% higher than that of 1Q12.R$BillionInvestments: 1Q12 x 1Q13 Investments 1Q13 by segmentPhysical and financial tracking for each of 160 projects (S Curve):Average physical accomplishment of 98.9% and 97.8% for financial progress18.019.81Q131Q12+10%54%R$ 10,7 bi35%R$ 6,9 bi1%1%0%35%54%5%4%BiofuelDistributionG&EE&PCorporateInternationalDownstream
20. 201) Net Debt / (Net Debt + Shareholder’s Equity)2) Refers to the adjusted EBITDA which excludes equity income and impairment3) Includes tradable securities maturing in more than 90 daysCapital StructureNet debt remained stableR$ Billion 03/31/13 12/31/12Short-term Debt 14.6 15.3Long-term Debt 182.4 181.0Total Debt 196.9 196.3(-) Cash and Cash Equivalents 3 46.3 48.5= Net Debt 150.7 147.8US$ BillionNet Debt 74.8 72.31,66 1,612,46 2,422,772,3224% 24%28% 28%31% 31%-20%-10%0%10%20%30%40%0,01,02,03,04,05,04Q11 1Q12 2Q12 3Q12 4Q12 1Q13Net Debt/EBITDA Net Debt/Net Capitalization122» The ratio of Net Debt/Ebitda declined to 2.32X, as aresult of higher cash generation and limited increasein net debt during 1Q13.