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Webcast: Results Annoucement - 2nd Quarter 2008

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Conference Call / Webcast …

Conference Call / Webcast
RESULTS ANNOUCEMENT
2nd Quarter 2008
(Brazilian Corporate Law)
Almir Guilherme Barbassa
CFO and Investor Relations Officer
August, 13th 2008

Published in: Investor Relations
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  • 1. 1 Conference Call / Webcast RESULTS ANNOUCEMENT 2nd Quarter 2008 (Brazilian Corporate Law) Almir Guilherme Barbassa CFO and Investor Relations Officer August, 13th 2008
  • 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. 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. CAUTIONARY STATEMENT FOR US INVESTORS
  • 3. 3 NATIONAL PRODUCTION OF OIL, NGL & NATURAL GAS – 2Q08 VS 1Q08 1.789 1.816 1.854 269 304 321 2Q07 1Q08 2Q08 Oil and NGL Natural Gas Thous.bpd 2,120 2,175 2,058 • 2% increase in oil production for the quarter due to the increase in the production of P-52 and P-54 platforms (Roncador field); • 6% increase in the natural gas production. Increase in the production of non-associated natural gas in the Manati field and in the Espírito Santo Basin, and increase in the production of associated natural gas in the new production units in the Campos Basin; • June, monthly production record: 1,867 th. bpd . Unit Production 1st Q/08 Production 2nd Q/08 Current Production (August, 5) P-52 52.7 107.9 154.8 P-54 42.7 62.2 96.5 FPSO Vitória 27.9 26.9 31.7 FPSO Rio de Janeiro 59.2 61.0 62.1 Thousandbpd Oil and Natural Gas Production in Brazil
  • 4. 4 Water Depth Operating 2007 Start Up 2008 Start Up 2009 Start Up 2010 Start Up 2011 Start Up 2012 From 2013 to 2017 0-999m 5 • Pride South Atlantic • O. Yorktown • Pride Mexico • Borgny Dolphin • Ocean Concord • Falcon-100 • Petrobras XIV 1000-1999m 18 Olinda Star Ocean Worker ≥ 2000m 5 • Lone Star • Schahin III • Petrorig II • Sevan Driller • West Taurus • West Eminence • Dave Beard • Gold Star • Schahin I • Norbe VI • Delba III • SSV Victoria • West Orion •Delba IV • Delba V • Delba VI • Scorpion • Delba VII • Delba VIII • Norbe IX • Schahin 1 • Schahin 2 • Norbe VIII • Petroserv • Etesco 8 • Sevan Brasil + 28 new units to be leased Total per year 28 6 9 7 1 12 28 Cumulative 6 15 22 23 35 63 NEW DRILLING RIGS Stena Drillmax e Deep Water Millennium are not being considered since they are being negotiated in the Spot Market
  • 5. 5 COMPETITIVE NATIONAL SUPPLY OF GOODS AND SERVICES imports imports Current Demand Future Demand 1. Increase productive capacity of sectors already highly competitive 2. Develop competition among sectors with limited competition 3. Incentives for new national entrants 4. Incentives for joint ventures between national and international companies 5. Incentives for international companies to invest in Brazil National Industry PATH Increase in National Supply Capacity of G&S Adequacy of The National Supply Industrial Complex GOOD AND SERVICES SUPPLY
  • 6. 6 PRE-SALT – SANTOS BASIN BM-S-21 (Caramba) BM-S-8 (Bem-te-Vi) BM-S-9 (Parati) BM-S-11 (Tupi) (Guará) (Yara) Wells Being Drilled Wells Drilled BM-S-9 (Carioca)
  • 7. 7 • Increase in the demand for oil products and strong operating performance of the refineries led to increasing throughput of 3% and production of oil products by 4% during the quarter, with 95% utilization rate ; • 4% increase in oil products sales in Brazil, mainly diesel (8%). 1,79 51,79 6 1,8 0 2 1,776 1,8 4 6 1,70 3 1,776 1,70 9 1,76 8 1,76 5 9 5 8 9 9 1 9 0 8 9 78 7878 79 77 1, 500 1, 650 1, 800 1, 950 2Q07 3Q07 4Q07 1Q08 2Q08 30 40 50 60 70 80 90 Out put of Dome st ic Oi l P r oduc t s S a le s Volume of Tot a l Oi l P r oduc t s Use of Inst a lle d Ca pa c it y - Br a z il ( %) Dome st ic Cr ude ( %) of Tot a l Fe e dst oc k P r oc e sse d Thous. bpd % DOWNSTREAM OPERATIONAL PERFORMANCE
  • 8. 8 GAS & POWER OPERATIONAL PERFORMANCE Energy sold in the last auctions Increase gas supply from E&P New gas pipelines in operation New regulatory framework in the electric sector Next Steps…Completed Actions More gas available to be sold or to be used in thermo generation Better prices and margins Higher dispatch in the thermo power plants to guarantee the security of the electric system Recovery of fixed costs Reduction in contractual penalties Hydro Nuclear Wind Coal Third-parties Thermo generation (oil + gas) Petrobras Thermo generation (oil + gas) New contracts with the distribution companies 40.000 42.000 44.000 46.000 48.000 50.000 52.000 jun/07 jan/08 jun/08 MWavergae Gas-fired thermo generation growing importance in Brazil Creating flexibility in the portfolio Increase LNG regasification capacity Completing gas infra-structure Increasing domestic production More contracts sold in energy auctions Source: ONS (Brazilian Energy System)
  • 9. 9 LIFTING COST IN BRAZIL • Increase in government take due to higher oil prices and higher taxes from the Roncador field, due to production increases (P-52 and P-54 platforms); • Increase in lifting cost calculated in Reais due to maintenance (P-26 e P-33) and programmed stoppages (Marlim and Namorado fields) besides cost inflation in the industry; • In dollar terms, lifting cost also impacted by the FX rate appreciation. 16.3415.1615.2214.6614.45 34.80 28.0425.76 23.2620.58 0 10 20 30 40 50 60 2Q07 3Q07 4Q07 1Q08 2Q08 Lifting Cost (R$) Gov. Part.(R$) 7.33 7.65 8.60 8.66 9.88 10.62 12.48 14.56 16.16 21.20 96.9 121.0 88.7 74.968.8 0 10 20 30 40 2Q07 3Q07 4Q07 1Q08 2Q08 0 20 40 60 80 100 120 140 Lifting Cost (US$) Gov.Part. (US$) Brent US$/barrel R$/barrel 37.92 35.03 40.98 43.20 51.14
  • 10. 10 AVERAGE REALIZATION PRICE – ARP • Adjustment in diesel (15%) and gasoline (10%) prices in May and Real appreciation in the period contributed to the increase of ARP in Brazil.; • Due to higher oil prices (average Brent in the quarter was US$ 121 against US$ 69 in the 2Q07), refining margins were compressed, following international trend. 2 0 4 0 6 0 8 0 10 0 12 0 14 0 Jun-06 Sep-0 6 Dec-06 M ar-0 7 Jun-0 7 Sep-07 Dec-0 7 M ar-0 8 Jun-08 ARP Brazil (US$/ bbl) Average Brent Price(US$/ bbl) ARP (US$/ bbl with V ol. Sold in BRl) 126.03 121,38 107.46 2Q08 Average 82.42 69,45 78.23 2Q07 Average US$/bbl 1Q08 Average 104.79 97,07 93.90
  • 11. 11 1,8541,816 NET INCOME CHANGE – R$ MILLION - 1Q08 VS. 2Q08 Oil Production in Brazil (th. bpd) Result was affected by : • Increase in gross income: increase in average realization prices (oil and oil products) and volumes sold; • Decrease in operating expenses: reduced exploratory costs and fines related to natural gas supply; • Increase in net financial expenses: strong appreciation of the Real in the period; • Better non-operating result: change in participation in relevant investments in Quattor (R$ 409 MM). 6,925 7,678 3,693 173 1,132 586 582 8,783 1Q08 Net Income Revenues COGS Oper. Exp. Fin. and non oper. expenses Taxes Minority Inter. and Particip. in Equity Income and Employee Part. 2Q08Net Income
  • 12. 12 1,8541,816 EXPLORATION & PRODUCTION – CHANGE IN OPERATING PROFIT– R$ MILLION – 1Q08 VS. 2Q08 Domestic Production of Oil, NGL and Condensate (th.bpd) • Better operating result in E&P due to the increase in crude oil sales price (22%) and production (2%). 14,496 743 4,004 1,237 282 40 17,724 1Q08 Oper. Profit Price Effect on revenues Volume Effect on revenues Cost Effect on average COGS Volume Effect on average COGS Operational expenses 2Q08 Oper. Profit
  • 13. 13 1,8551,779 DOWNSTREAM – CHANGE IN OPERATING PROFIT – R$ MILLION – 1Q08 VS. 2Q08 Oil Products and Alcohol sales in the domestic market (th.bpd) • Increase in average oil products realization prices (9%) and sale volumes; • Increase in costs due to higher acquisition prices (oil and oil products), partially offset by liquidation of inventories with a lower cost basis purchased during previous quarters (average cost of the inventories methodology); • World trend of refining margin compression due to the strong increase in oil prices. (903) 4,531 2,400 (577) 4,760 2,283 20 Volume Effect on average COGS Operational Expenses 2Q08 Oper. Loss 1Q08 Oper. Loss Volume Effect on Revenue Price Effect on Revenue Cost Effect on average COGS
  • 14. 14 166 226 497 25 382 95 INTERNATIONAL – CHANGE IN OPERATING PROFIT – R$ MILLION – 1Q08 VS. 2Q08 • Increase in sales volume and higher sales price of crude oil; • Decrease in operating expenses due to a reduction in exploratory costs in the USA and Nigeria and absence of contingencies related to royalties in Colombia, which occurred in the 1Q08. International Sales Volume (th. bpd) 631557 2Q08 Oper. Profit 1Q08 Oper. Profit Cost Effect on average COGS Volume Effect on average COGS Operational Expenses. Volume Effect on Revenue Price Effect on Revenue 627
  • 15. 15 (502) 353 140 452 320 124 265 GAS & POWER – CHANGE IN OPERATING PROFIT – R$ MILLION – 1Q08 VS. 2Q08 Natural Gas Sales Volume (million m3/day) • Better price for natural gas due to new contracts with distributors; • Increase in volumes, with higher supply of domestic gas by E&P (3% - 29 million m3/day); • Higher generation of electric power due to the availability of gas and the new resolution for the sector; • Less contractual fines related to the supply of natural gas for third parties. 5048 2Q08 Oper. Profit 1Q08 Oper. Loss Cost Effect On average COGS Volume Effect on average COGS Operational Expenses. Volume Effect on Revenue Price Effect on Revenue
  • 16. 16 CASH FLOW 2Q08 1Q08 2Q07 Net Cash Generated by Operating Activities 11,888 9,771 13,184 (-) Cash used for Capex (10,969) (10,070) (10,236) (=) Free Cash Flow 919 (299) 2,948 (-) Cash used in Financing Activities (1,433) (1,212) (5,557) Financing 678 2,862 (3,958) Dividends (2,111) (4,074) (1,599) (=) Net Cash Generated in the Period (514) (1,511) (2,609) Cash at Beginning of Period 11,560 13,071 20,463 Cash at End of Period 11,046 11,560 17,854 R$ million • Positive Cash Flow generated by operating activities; • Cash used for dividends payment.
  • 17. 17 Petrobras’ Leverage Ratio R$ million 06/30/2008 03/31/2008 Var Short Term debt (1) 8,699 7,639 14% Long Term Debt (1) 33,256 35,674 -7% Total Debt 41,955 43,313 -3% Cash and Cash Equivalents 11,046 11,560 -4% Net Debt (2) 30,909 31,753 -3% Capital Structure 46% 47% -1 pp Net Debt/Net Capitalization 21% 19% 18% 17% 16% 19% 19% Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 LEVERAGE • Net debt decreased 3% in the 2Q08 when compared to the 1Q08, due to the Real appreciation. • Net Debt/Net Capitalization decreased 2 p.p. in the same period, falling to 19%. (1) Includes debt from leasing contracts (R$ 1,202 million on June 30, 2008 and R$ 1,429 million on March 31, 2008). (2) Total Debt – Cash/Cash Equivalents
  • 18. 18 QUESTION AND ANSWER SESSION Visit our website: www.petrobras.com.br/ri For more information contact: Petróleo Brasileiro S.A – PETROBRAS Investor Relations Department Theodore Helms – 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

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