4th Quarter and
2013 Year End Results
Maria das Graças Silva Foster
CEO
Conference Call/Webcast
February 26th, 2014
22
FORWARD-LOOKING STATEMENTS:
DISCLAIMER
The presentation may contain forward-looking statements about future events with...
33
Main Discoveries in Brazil 2013
 RRR Brazil: 131% (above 100% for the 22 years in a row)
 Reserves/Production = 20 ye...
44
Oil and NGL production in Brazil reached 1,931 kpbd in 2013, down by 2.5% from 2012.
Natural decline during the last 12...
55
Oil products sales increased by 4% in 2013. Higher increase in production (6%), especially diesel (+8.6%) and gasoline ...
66
Average Realization Price Brazil* x Average Realization Price US Gulf**
*Considers Diesel, Gasoline, LPG, Jet Fuel and ...
77
million m³/day
Domestic
Bolivia
LNG
SUPPLYDEMAND
40,2
37,0
11,7
39,3
Higher thermoelectric demand (+52%) due to the low...
88
PROCOP 2013
Operating Costs OptimizationProgram
PRODESIN 2013
Divestment Program
PROEF 2013
Program to Increase Operati...
99
Investments totaled R$ 104.4 billion, 24% above 2012, including Libra’s signing fee (R$ 6 billion).
R$Billion Annual In...
1010
2013 Results
Increase of 6% in Operating Income and 11% in Net Income
Operating Income increase in 2013 due to, mainl...
1111
2013 Results
EBITDA of R$ 63.0 Billion in 2013, 18% higher than 2012
In 2013, EBITDA was 18% higher than that of 2012...
1212
2013 Net Income: Without Structuring Programs
Structuring Programs: positive outcome of R$ 9.7 Billion in Net Income
...
1313
Cash in 2013: Structuring Programs
Structuring Programs : R$ 14.7 billion more in cash
Positive impact on cash: Struc...
1414
R$ Billion 12/31/12 12/31/13
Short-term Debt 15.3 18.8
Long-term Debt 181.0 249.0
Total Debt 196.3 267.8
(-) Cash and...
1515
Targets for 2014
Higher oil and oil products production, operational efficiency and cost optimization will drive 2014...
16
2013 Results
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4th Quarter and 2013 Year end Results

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Maria das Graças Silva Foster
CEO
Conference Call/Webcast
February 26th, 2014

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4th Quarter and 2013 Year end Results

  1. 1. 4th Quarter and 2013 Year End Results Maria das Graças Silva Foster CEO Conference Call/Webcast February 26th, 2014
  2. 2. 22 FORWARD-LOOKING STATEMENTS: DISCLAIMER The presentation may contain forward-looking statements about future events within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are not based on historical facts and are not assurances of future results. Such forward-looking statements merely reflect the Company’s current views and estimates of future economic circumstances, industry conditions, company performance and financial results. Such terms as "anticipate", "believe", "expect", "forecast", "intend", "plan", "project", "seek", "should", along with similar or analogous expressions, are used to identify such forward-looking statements. Readers are cautioned that these statements are only projections and may differ materially from actual future results or events. Readers are referred to the documents filed by the Company with the SEC, specifically the Company’s most recent Annual Report on Form 20-F, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including, among other things, risks relating to general economic and business conditions, including crude oil and other commodity prices, refining margins and prevailing exchange rates, uncertainties inherent in making estimates of our oil and gas reserves including recently discovered oil and gas reserves, international and Brazilian political, economic and social developments, receipt of governmental approvals and licenses and our ability to obtain financing. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason. Figures for 2014 on are estimates or targets. All forward-looking statements are expressly qualified in their entirety by this cautionary statement, and you should not place reliance on any forward-looking statement contained in this presentation. NON-SEC COMPLIANT OIL AND GAS RESERVES: CAUTIONARY STATEMENT FOR US INVESTORS We present certain data in this presentation, such as oil and gas resources, that we are not permitted to present in documents filed with the United States Securities and Exchange Commission (SEC) under new Subpart 1200 to Regulation S-K because such terms do not qualify as proved, probable or possible reserves under Rule 4-10(a) of Regulation S-X. DISCLAIMER
  3. 3. 33 Main Discoveries in Brazil 2013  RRR Brazil: 131% (above 100% for the 22 years in a row)  Reserves/Production = 20 years  Offshore wells drilled: Post-salt (14) + Pre-salt (17)  R$ 17.3 billion invested in exploration in 2013 Proven Reserves totaled 16.6 Bi boe. RRR* in Brazil above 100% for 22 years in a row. Highlights for new exploratory frontiers - Sergipe-Alagoas and Potiguar. Espírito Santo Post-salt Arjuna Campos Basin Post-salt Mandarim Santos Basin Pre-salt Sul de Tupi / Florim / Sagitário Iara Extensão 4 / Entorno de Iara Iguaçu Mirim / Franco Leste Iara Alto Ângulo / Jupiter Bracuhy Potiguar Post-salt Pitú Sergipe - Alagoas Post-salt Farfan 1 / Muriú 1 / Moita Bonita 1 Highlights in Brazil – 2013 Exploratory Activity 16.6 Billion boe Proven Reserves 2013 4%International 96% 2013 Brazil Oil + NGL Natural Gas 2013 85% 15% 59% 64% 75% 2011 2012 2013 Pre-salt: 100% Success Ratio in Brazil *RRR: Reserves Replacement Ratio
  4. 4. 44 Oil and NGL production in Brazil reached 1,931 kpbd in 2013, down by 2.5% from 2012. Natural decline during the last 12 months below expected range of 10-11%. 1,980 -2.5% 2012 1,931 2013 Petrobras Oil and NGL Production in Brazil in 2013: 1,931 kbpd Main factors that impacted production in 2013: P-63/Papa-Terra: changes in the subsea layout, postponing 1st oil (Jul/13 to Nov/13). Cid. de São Paulo/Sapinhoá and Cid. de Paraty/Lula NE: unavailability of the monobuoys (China), as well as difficulties during installation, delaying the ramp-up of the systems (BSR1 Jul/13 to Feb/14). P-55/Roncador Module III: delay in system delivery, postponement of 1st oil (Sep/13 to Dec/13). P-58/Parque das Baleias: delay in system delivery, postponement of 1st oil (Nov/13 to Mar/14). EWT-Franco: cancelled due to the lack of obtaining the necessary authorizations as originally planned. Limited availability of PLSVs (Pipe-Laying Support Vessels) impacted the pace of interconnection of wells, due to the delayed decision of contracting abroad (should have been contracted by the end of 2011, but were contracted from Apr/2013). 1.961 Mar-12 1.993 Feb-12 2.098 Jan-12 2.110 1.850 50 Dec-13 1.964 Nov-13 1.957 Oct-13 1.960 Sep-13 1.979 Aug-13 1.908 Jul-13 1.888 Jun-13 2.150 May-13 1.892 Apr-13 1.900 1.950 2.050 1.924 Mar-13 1.846 Feb-13 1.920 Jan-13 1.965 Dec-12 2.032 Nov-12 1.968 2.100 1.940 Sep-12 1.843 Aug-12 1.928 Jul-12 1.940 2.200 1.979 2.250 2.000 2.300 Jun-12 1.960 May-12 1.989 Apr-12 Oct-12 Thousand bpd 2013: 1,931 kbpd2012: 1,980 kbpd 1Q12 Avg. 2,066 2Q12 Avg. 1,970 3Q12 Avg. 1,904 4Q12 Avg. 1,980 1Q13 Avg. 1,910 2Q13 Avg. 1,931 3Q13 Avg. 1,924 4Q13 Avg. 1,960
  5. 5. 55 Oil products sales increased by 4% in 2013. Higher increase in production (6%), especially diesel (+8.6%) and gasoline (+12.1%) reduced oil products import needs. Sales (2,383 kbpd) and Oil Products Output (2,124 kbpd) in Brazil Oil Products Sales in Brazil Oil Products Output 937 984 106106 9884 590 LPG Jet Fuel Naphtha Fuel Oil 2,383 2013 Others +4% Gasoline Diesel 231 171 203 2012 2,285 570 224 165 199 Thousand bbl/d +3.5% +5.0% 782 850 137 90 106 96 93 2013 Others 196 Naphtha LPG Fuel Oil 2,124 438 238 143 1,997 491 255 2012 206 Gasoline Diesel Jet Fuel +6%  Better performance due to the start-up of new quality and conversion units since 2012, optimization of refining processes and elimination of logistical bottlenecks. Utilization of refineries reached 97%, higher than 94% in 2012, with a 82% share of domestic crude oil processed. +12.1% +8.6% Thousand bbl/d  Gasoline (+3.5%): increase in automotive fleet, competitive price relative to ethanol and increase of the anhydrous ethanol content in Type C gasoline .  Diesel (+5.0%): increase in retail activities, higher thermal consumption, higher grain harvest and an increase in diesel light vehicle fleet.  Fuel Oil (+16.7%): increased consumption at thermoelectric plants for electricity generation and higher demand from suppliers of natural gas to thermal power plants.
  6. 6. 66 Average Realization Price Brazil* x Average Realization Price US Gulf** *Considers Diesel, Gasoline, LPG, Jet Fuel and Fuel Oil ** Considers Brazilian market volumes for the above mentioned products. In 2013 we had 3 price increases in diesel and 2 in gasoline, totaling 20% and 11% increases respectively. The Real devaluation contributed significantly to the non-convergence of prices throughout the year. Oil Products Price - Brazil vs International Dec/13 Nov/13 Oct/13 Sep/13 Aug/13 Jul/13 Jun/13 May/13 Apr/13 Mar/13 Feb/13 Jan/13 Dec/12 Nov/12 Oct/12 Sep/12 Aug/12 Jul/12 Jun/12 May/12 Apr/12 Mar/12 Feb/12 Jan/12 Prices(R$/bbl) 2012 2013 Average Sales Price USGC Jun 25th Adjustments July 16th Average Sales Price Brazil Adjustments Jan 30th Mar 6th Nov 30th Adjustments Losses Gasoline Imports Diesel Imports ImportedVolumes(kbpd)
  7. 7. 77 million m³/day Domestic Bolivia LNG SUPPLYDEMAND 40,2 37,0 11,7 39,3 Higher thermoelectric demand (+52%) due to the lower rainfall in the period, met mainly by LNG imports and natural gas from Bolivia. +15% 85.9 2013 14.5 30.5 40.8 2012 74.9 8.4 27.0 39.539.3 23.0 20132012 12.1 34.9 11.9 74.5 85.4 38.6 +15% +52% 2013 x 2012  Higher thermoelectric demand due to lower rainfall.  Thermoelectric generation using natural gas was 6 GW/average in 2013, 58% above the 3.8 GW/average in 2012.  In 2013 and 2012, we met 100% of ONS’s demands (National Operator of the Electric System). +13% +73% Natural Gas Supply and Demand Higher demand for Natural Gas due to increase in thermoelectric demand Non-thermoelectric Thermoelectric Fertilizers* * Other internal uses in Petrobras
  8. 8. 88 PROCOP 2013 Operating Costs OptimizationProgram PRODESIN 2013 Divestment Program PROEF 2013 Program to Increase Operational Efficiency Optimization of operational activities generated greater productivity levels and reduced unit costs above expectations Gain of +63 kbpd in production, with +21 kbpd in UO-BC and +42 kbpd in UO-RIO, due to the higher level of operational efficiency. UO-BC: +7.5 p.p. UO-RIO: +2.5 p.p. +68% 2013 Real 6.6 2013 Target 3.9 +115% 2013 7.3 2012 3.4 +2,5 p.p. With PROEF 92.4 Without PROEF 89.8 Results of Structuring Programs in 2013 PROCOP, PRODESIN and PROEF Actual Transactions: US$ 7.3 billion Cash contribution: R$ 8.5 billion Avoided Costs: R$ 6.6 billion Operational Efficiency (%) +7.5 p.p. With PROEF 75.4 Without PROEF 67.9 Assets Financial Restructuring* 2013* 8.5 8.2 0.3 2012* 6.4 0.6 5.8 +34% * Petrobras and BR financial assets. Operational Effriciency (%) The gains exceeded targets and were obtained through energy integration, workforce productivity, maritime transportation and inventories. R$ billion R$ billion US$ billion Conclusion of 21 divestments since Oct/2012, totalling US$ 10.7 billion, with US$ 3.4 billion in 2012 and US$ 7.3 billion in 2013.
  9. 9. 99 Investments totaled R$ 104.4 billion, 24% above 2012, including Libra’s signing fee (R$ 6 billion). R$Billion Annual Investment +24% 2013 104.4 2012 84.1 29% 6% 5% 57% Gas & Energy Corporate Biofuels Distribution International Downstream E&P 1.1% 1.1% 0.3% Investment by Segment Physical and financial monitoring of 158 individualized projects, which represent 73% of investments (S-Curves): average physical realization of 91% and financial realization of 101%. 2013 Investments: R$ 104.4 Billion
  10. 10. 1010 2013 Results Increase of 6% in Operating Income and 11% in Net Income Operating Income increase in 2013 due to, mainly, readjustments in the price of oil products and asset sales (PRODESIN). The extension of hedge accounting since May/2013 contributed to an increase of 11% in the year’s net income. 23.6 +11% +6% 34.4 21.2 32.4 R$ billion 2012 2013 2013 x 2012 Results Highlights  Higher oil products prices (mainly diesel and gasoline since 2H12 and throughout 2013);  Higher throughput in our refineries, reducing imported oil products share in the sales mix;  Asset sales gains of PRODESIN – Divestment Program  Lower dry and sub-commercial wells expenses;  Extension of hedge accounting since May/2013;  Lower crude oil exports due to lower production levels, as well as higher domestic crude oil share in throughput;  Persistence of domestic oil products price differentials relative to international prices due to the currency devaluation;  Lower finance income due to the sales of government bonds (NTN-B) and readjustment of judicial deposits in 2012; and  Higher finance expense due to higher debt. Operating Income Net Income
  11. 11. 1111 2013 Results EBITDA of R$ 63.0 Billion in 2013, 18% higher than 2012 In 2013, EBITDA was 18% higher than that of 2012 due to, mainly, adjustments of oil products price, asset sales of PRODESIN and lower dry and sub-commercial wells expenses. 63.0 21.2 34.4 53.4 +18% +11% 23.6 +6%32.4 2012 2013 2013 x 2012 EBITDA  Higher oil products prices (mainly diesel and gasoline since 2H12 and throughout 2013);  Higher throughput in our refineries, reducing imported oil products share in the sales mix;  Asset sales gains of PRODESIN – Program of Divestitures  Lower dry and sub-commercial wells expenses;  Lower crude oil exports due to lower production levels, as well as higher domestic crude oil share in throughput;  Persistence of domestic oil products price differentials relative to international prices due to the currency devaluation R$ billion Operating Income Net Income EBITDA
  12. 12. 1212 2013 Net Income: Without Structuring Programs Structuring Programs: positive outcome of R$ 9.7 Billion in Net Income PROCOP (R$ 4.3 Billion), PRODESIN (R$ 3.3 Billion) and PROEF (R$ 2.1 Billion) increased Net Income by 41%. Divestment ProgramOperating Costs Optimization Program Program to Increase Operational Efficiency Of UO-BC and UO-RIO R$ Billion Structuring Programs Gains are equivalent of exports results of +293 kbpd of crude oil Structuring Programs +63 kbpd +100 kbpd +130 kbpd 2013 Net Income Without Structuring Programs 13.9 PROEF R$ -9.7 billion (-41%) PRODESIN 3.3 PROCOP 23.6 2013 Net Income 2.1 4.3
  13. 13. 1313 Cash in 2013: Structuring Programs Structuring Programs : R$ 14.7 billion more in cash Positive impact on cash: Structuring programs PRODESIN (R$ 8.9 billion), INFRALOG (R$ 0.8 billion), PRC-Poço (R$ 0.7 billion) and Procop (R$ 4.3 billion) enabled a 47% higher cash position. Avoided CAPEX was not considered in PRC-SUB in 2013 *Sales Value + Avoided CAPEX. **Gain with Income Tax discounted R$ Billion Cash Position 2013 46.3 0.8 PRODESIN* 8.9 4.3 PRC Poço R$ +14.7 billion (+47%) Cash Position without Structuring Programs PROCOP** 31.6 INFRALOG 0.7 Divestment Program Integrated Management of Logistcs Projects Program to Reduce Well Costs Operating Costs Optimization Program
  14. 14. 1414 R$ Billion 12/31/12 12/31/13 Short-term Debt 15.3 18.8 Long-term Debt 181.0 249.0 Total Debt 196.3 267.8 (-) Cash and Cash Equivalents 3 48.5 46.3 = Net Debt 147.8 221.6 US$ Billion Net Debt 72.3 94.6 2.77 2.32 2.57 3.05 3.52 31% 31% 34% 36% 39% -10% 0% 10% 20% 30% 40% 50% 1,5 2,5 3,5 4,5 4Q12 1Q13 2Q13 3Q13 4Q13 Net Debt /Adjusted EBITDA Net Debt / Net Capitalization21 Debt Ratios Net Debt/EBITDA reached 3.52 in 2013 (2.77 in 2012), due to an increase in indebtedness as a result of new borrowings and the effect of the Real devaluation against the Dollar on net debt. Leverage was 39%. 1) Refers to the adjusted EBITDA which excludes equity income and impairment. 2) Net Debt / (Net Debt + Shareholder’s Equity) 3) Includes tradable securities maturing in more than 90 days
  15. 15. 1515 Targets for 2014 Higher oil and oil products production, operational efficiency and cost optimization will drive 2014 results PROCOP – 2014 Target (R$ billion)Investments (R$ billion) Oil Products Output (kbpd) 850 908 +1% 2014 2,148 480 760 2013 2,124 491 783 Diesel Gasoline Others +11% +68% 2014 7.3 2013 Real 6.6 2103 Target 3.9 Oil Production (kbpd) -9% 2014 94.6 2013 104.4 57% E&P Brasil 64% E&P Brasil UO-BC +5.6 p.p. 2014 81.0 2013 75.4 20142013 1,931 UO-RIO +0.7 p.p. 2014 93.1 2013 92.4 PROEF (Operational Efficiency %) Máximo Meta Mínimo 7.5% +/- 1p.p. +7%
  16. 16. 16 2013 Results The End

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