Edition 20 - Sharing in Petrobras - number 1/2006


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Edition 20 - Sharing in Petrobras - number 1/2006

  1. 1. Sharing in Petrobras I N V E S T O R R E L A T I O N S • Y E A R V I • N º 2 0 / M A R C H 2 0 0 6 HIGHLIGHTS Market Capitalization n Petrobras obtained the best classification among the five Brazilian companies in the Financial Times A year of achievements P FT Global ranking based on market capitalization. etrobras chalked up some important records in 2005: a consolidat- The Company was 113th in the overall global ed net income of US$ 10.3 billion, 67% more than 2004 – reflect- ranking. FT Global places General Electric – GE ing increased production and higher international oil prices – and as the world's largest company. As of the survey's publication date (December 21 2005), Petrobras' capital expenditures of US$ 10.3 billion, 34% up on 2004. Petrobras' market capitalization was US$ 74 billion. production of oil and natural gas in Brazil and overseas recorded a daily By January 2006, this figure had already reached average of 2,217 thousand boe, a volume 10% greater than 2004. the US$ 98 billion mark. “The year 2005 was important not only for the New Fields n Three more gas and light oil fields were declared fantastic profits, but also for the consolidation of a commercially viable at the end of 2005: Uruguá and capital expenditures policy which will guarantee the Tambaú in the Santos Basin, directly offshore from Company's future growth”, declared Petrobras' president, José the city of Rio de Janeiro in water depths of 1,000 Sergio Gabrielli, announcing fiscal year 2005 earnings. In 2006, and 1,400 meters, and Canapu, in the Espírito Santo Petrobras plans to invest R$ 38 billion (approximately US$ 18 billion), marine basin. Uruguá has an accumulation of nearly 50% more than in 2005. 33º API light oil, and another of gas. Tambaú has gas and Canapu has oil, condensates and gas. As a result of the investments in exploration and production, the If these fields are included with the Papa Terra field Company made some important oil and gas finds in the Santos, in the Campos Basin, and Inhambu, an onshore field Espírito Santo and Campos basins – notably the gigantic Papa Terra in the state of Espírito Santo, then Petrobras field with estimated recoverable volumes of between 700 million and registered five new commercially viable fields in 2005. one billion boe. Overseas, not only did Petrobras acquire more Interest on Shareholders' Equity exploratory blocks in Libya, Nigeria and Venezuela, but it also bid suc- n In 2006, shareholders received two interim cessfully for 53 offshore blocks in the US section of the Gulf of Mexico. payouts of interest on equity – R$ 0.5013 per In refining – a very profitable sector due to the high profit margins share on January 5 and R$ 0.5180 per share on on heavy oil – refinery modernization continues as part of the pro- March 22, less withholding tax at source at the prevailing rates with the exception of shareholders gram for increasing the country's heavy oil processing capacity. not liable or tax exempt. These interim payouts The foundation stone for Brazil's first dedicated heavy oil refinery will be offset against the total dividends declared was laid in the state of Pernambuco. On average during the year, for the fiscal year 2005. 80% of the oil processed in our refineries was produced by Biodiesel the Company itself, the refined products being sold n Petrobras anticipated the new law on the at an average price of US$ 58.61 per barrel. introduction of biodiesel into the Brazilian energy CFO Almir Barbassa consid- matrix by signing contracts for acquiring 65.3 mil- ered the Company's pricing lion liters in 2006 from four companies, holders of policy as the right one: “We the “Social Fuel” seal for fostering social inclusion. This marks the initial stage of adding biodiesel to accompany international prices with- the diesel oil sold by domestic distributors. out transferring the volatility of the Law 11.097/05 requires that the addition of 2% world market to the domestic econo- biodiesel be made mandatory by 2008. my”, he said. Cash A plan New generation for exploratory guarantees refining frontier capex PAGE 2 PAGE 3 PAGE 4
  2. 2. PROFITABILITY (US GAAP) Cash generation guarantees capex P etrobras posted a consolidated sand barrels/day in the fourth quarter. net income of US$ 10.3 billion in However, this result was still not 2005, 67% more than in 2004. enough to avoid a negative balance of The Company's excellent operating US$ 130 million. In 2004, the negative performance resulted in an operating balance was US$ 3.1 billion. Net sales cash generation of US$ 15.1 billion totaled US$ 21.5 billion in the fourth during the year, allowing the funding quarter of 2005, an increase of 46% of a capital expenditures program of over the same quarter in 2004. US$ 10.4 billion. Fourth quarter con- Based on 2005 earnings, the Board solidated net income in 2005 was is recommending the Annual General US$ 3.5 billion, surpassing by 106% Production platform (FPSO) P-48 in Caratinga Shareholders' Meeting approve the the figure for the same quarter in the field at Campos Basin distribution of R$ 7.0 billion (R$ 1.60 preceding year. Operating profit was per share) in dividends. These divi- US$ 4.3 billion, 73% higher than senting an average of 274 thousand dends include interest on shareholder's recorded in the same period in 2004. boe/day. Crude oil throughput at equity of R$ 5.5 billion (R$ 1.25 per In 2005, average domestic oil pro- Brazilian refineries was a record in share) – subject to withholding tax at duction was 1.684 million barrels/day, 2005 at an average of 1.727 million source of 15%, except for shareholders 13% up on 2004, reflecting the start- barrels/day. not liable or tax exempt – R$ 4.4 bil- up of platforms in the Marlim Sul, Domestic production growth dur- lion of which has already been distrib- Barracuda and Caratinga fields. ing 2005 made a positive contribution uted to shareholders. Payout date for Domestic natural gas output reported to the Company's trade balance, which the balance (R$ 2.6 billion) was set to a year-on-year increase of 3%, repre- was in surplus to the tune of 126 thou- June 2 nd by the AGM on April 3 2006. Petrobras ADRs versus DOW JONES and Amex Oil Indexes Economic and Financial Figures RESULTS & RETROSPECTIVE In US$ million 2005 2004 Variation (%) 496.8% (PBRA/ADR PN) 485.9% (PBR/ADR ON) Sales of products and services 74,065 51,954 42.6 680 130.9% (Amex Oil) Net operating revenues 56,324 38,428 46.6 640 31.8% (Dow Jones) 600 Gross profit 26,496 17,149 54.5 560 Net income 10,344 6,190 67.1 520 480 Earnings per ADR 9.44 5.64 67.4 440 400 Net cash provided by operating activities 15,115 8,155 85.3 360 Capital expenditures 10,365 7,718 34.3 320 280 Net debt 11,306 14,082 (19.7) 240 200 Debt to equity ratio 58% 64% -6 pp 160 Price/Earnings * 120 (share price/earnings per share) 7.5x 7.1x 6.4 80 Aug-03 Feb-04 May-04 Jan-03 Jun-03 Jul-03 Nov-03 Jan-04 Jul-04 Oct-04 Sep-03 May-03 Mar-03 Mar-04 Sep-04 Apr-03 Oct-03 Dec-03 Apr-04 Feb-03 Dec-04 Dec-02 Aug-04 Jun-04 Nov-04 Apr-05 Jun-05 Mar-05 Jan-06 Feb-06 Feb-05 Dec-05 Aug-05 Sep-05 Jul-05 Oct-05 Nov-05 Jan-05 May-05 Dividend Yield * (dividends/share price) 1.0% 1.1% -0.1 pp * Reference: common ADR Real Increase in Stock Price * Operating Performance 1,486.6% In thousand barrels of oil equivalent 2005 2004 Variation (%) 1,500% n Petrobras ON Average daily crude oil 1,300% and gas production 2.217 2.020 10 n Petrobras PN 1,100% n Ibovespa Oil product production 1.839 1.797 2 900% 683.9% Net exports 58 (150) – 700% 500% Refining and marketing operations Brasil – Utilization 88% 87% 1 pp 300% 180.4% 103,6% 122,1% 97.2% 90.6% Refining and marketing operationss 100% 27,0% 55.1% International – Utilization 80% 78% 2 pp -100% 10 Anos 5 Anos 1 Year Domestic crude oil of total (*) Monthly changes discounted for inflation in accordance with IGP-DI index. feedstock processed 80% 76% 4 pp
  3. 3. STRATEGY A plan for refining P etrobras is matching self-suffi- previously only produced at the ciency in oil production by also Cubatão refinery. investing heavily in refining. Petrobras has eleven refineries in Refinery Between 2006 and 2010, US$ 8 billion is to be invested in a far-reaching pro- Brazil as well as an oil shale plant, while it operates four more refineries else- in Texas gram: adjusting the refinery complex to handle domestic heavy crude throughput as well as comply with where in South America. Developments on the refining front in 2006 include the acquisition of a 50% stake in the I n February, a purchase and sale agreement approximately US$ 370 mil- worth environmental requirements, market Pasadena refinery in Texas (USA) as lion was approved with Astra tendencies and future diesel oil and well as the decision to build the first Oil Trading NV for the acquisi- gasoline quality standards. heavy oil-dedicated refinery in the tion of 50% of the Pasadena The Business Plan 2006-2010 is state of Pernambuco. The new refinery Refining System Inc. (PRSI) forecasting that domestic refinery oil is to be built in partnership with refinery, formerly Crown throughput will increase from 1.75 mil- Petróleos de Venezuela S.A. (PDVSA), Refinery, in Pasadena – Texas. lion to 1.87 million barrels/day by its priority being the production of The initial business plan 2010, domestic oil accounting for 91% diesel, LPG, naphtha and coke for involves the joint operation of this and the equivalent of 1.70 mil- sale in the region. The Refinaria do and the commercial manage- lion barrels/day. Coking and hydrotreat- Nordeste, to be built at ment of the refinery. ment units are key features in the new an estimated cost of With a throughput capacity Petrobras refinery model. The coking US$ 2.5 billion, will go of 100 thousand barrels/day, units will allow the Company to ramp into production in 2011, the refinery is being upgraded up heavy oil refining while the increasing domestic refin- to meet new environmental hydrotreatment units will begin pro- ery capacity by 200 regulations established for ducing low sulfur content S500 diesel, thousand barrels/day. gasoline by the Environmental Protection Agency (EPA). With Petrobras' entry as a partner, the refinery will be adapted for processing about 70 thousand barrels/day of heavy oil, some of it from the Marlim field in the Campos Basin. Diesel hidro-treatment Unit at Presidente Bernardes Refinery NEGOTIATION Thermoelectric Power Plants Reserves I C n February, Petrobras signed a memorandum of under- ontrary to the oil industry trends, increased produc- standing for the acquisition of the companies El Paso Rio tion has not meant a reduction in the Company's Claro Ltda (Macaé Merchant) and El Paso Rio Grande Ltda proved reserves in 2005. Petrobras recorded a 10% (MarketCo). growth in production of oil and gas, while proved reserves The completion of the operation is to be finalized fol- reached 13.232 billion boe according to the SPE (Society of lowing due diligence and negotiations with the parties Petroleum Engineers) criterion. The reserve/production ratio involved. The parties have jointly requested the temporary stands at 19.7 years. suspension of arbitration procedures and provisional judicial The reserves replacement ratio proceedings currently progressing through the Rio de was 131.1% – for each barrel pro- PROVED RESERVES VOLUME % Janeiro state courts. Should negotiations come to a success- duced in 2005, 1.311 barrels of (SPE) ful conclusion, final contracts worth US$ 357.5 million will boe were appropriated to proved Oil + Condensates 11.364 86 be signed covering the settlement of outstanding debt and reserves. In numbers, this repre- (billion bbl) the transfer of quotas. Once the operation is concluded, the sented a total of 882 million boe Natural Gas 296.941 14 (billion m3) value of R$ 518 million deposited by Petrobras in escrow appropriated to proved reserves with Banco Itaú in the name of El Paso Rio Claro Ltda, will be against accumulated production Total 13.232 100 (billion boe) returned to the Company together with financial income. of 673 million boe.
  4. 4. NEWS BOARD SOCIAL SPONSORSHIP The company that investors most love to own The Yahoo! Finance website selected Petrobras' first place ranking is a Petrobras as the company most liked reflection of a sharp appreciation in by investors. “The 10 Highest-Rated its ADRs in 2005 (common: 79.2%; Stocks Investors Love to Own” rank- preferred: 77,8%). This gain was ing is prepared based on a computer- further enhanced for US investors ized database completely free of thanks to the appreciation of the Real human interference, and based on against the dollar of 11.8% in 2005. Banking on pre-selected parameters and filtered by “Investor's Business Daily, Inc (IBD)”, The shares in the domestic market rallied 55.1% (common) and 53.2 % knowledge A with monthly updating. (preferred). t the beginning of February, Petrobras and the Ministry of Education launched the Emancipate – MEC/ Petrobras for Education Solar heating Program, which will benefit 14.7 mil- The Duque de Caxias Refinery in the lion high school students and pri- state of Rio de Janeiro is using solar mary school 5th to 8th graders from paneling to heat water federal, state and municipal schools used in the restau- throughout Brazil. Free Gasoline rant and in the The project will run for a year and changing has a budget of approximately In January, Petrobras launched the rooms. Monthly R$ 178 million. It is designed to stim- “One year of free fuel campaign” savings are ulate youngsters' curiosity into using the corporate Loyalty Card 18,917 kwh, increasing their knowledge. The pro- (Cartão Petrobras) as its vehicle. equal to the aver- ject's starting point is based on For purchases over R$ 20.00, Card age consumption of 126 homes for Petrobras' own experience: through- holders compete over a 12-month a month. Petrobras harnesses solar out its history, the Company has con- period through the Federal Lottery energy in projects with thermal tinually invested in the formation and for prizes worth R$ 200.00 a month (for heating water) and photovoltaic skills' upgrading of its technical team – by filling up at any one of the more (for the generation of electric energy) instrumental in Brazil achieving than 3,300 accredited service sta- applications at its operating units. self-sufficiency in oil. Through tions. A total of 120 consumers will Emancipate, Petrobras and MEC win prizes by the end of June. The intend to stimulate new and exciting complete campaign regulations are experiences to help students achieve available from the Cartão Petrobras Ethanol Pipeline emancipation as citizens. site by accessing the BR portal The construction of an ethanol Another objective is to awaken the www.br.com.br pipeline at an estimated cost of students' interest in the oil, natural R$ 500 million is one of the gas and energy industry by supplying New exploratory frontier projects mooted under the didactic material as teaching aids for agreement for joint studies signed extracurricular classes on this sector Petrobras has discovered an between Petrobras and the of the economy, a sector that is in an accumulation of 28º API light oil Infrastructure Secretariat for the expansion mode in Brazil. The feder- in the Marlim Leste field, in an state of Goiás. The line will link al government's National Oil and ultra-deep geological structure the Paulínia Refinery (SP) to the Natural Gas Mobilization Program 4,200 meters below the seabed. Senador Canedo (GO) terminal (Promimp), estimates that by 2008 The discovery is important not only and will have a capacity to carry there will be a shortage of 70,000 for expanding the exploratory fron- 4 million m3 from one of professionals in the sector involving tiers of the Campos Basin where oil the country's principal sugarcane- 150 different skills. By 2010, is found at average depths of 3,000 growing regions to the São Paulo Petrobras alone is expected to hire meters, but also as an indication of market as well as for export. 10,000 professionals to meet its the potential for discovering lighter expansion requirements. and better quality oil in the region. Newssheet edited by Petrobras' Investor Relations Department • Executive Manager: Raul Campos • Coordinator: Marcos Vinícius Guimarães • Edition: Petrobras' Institutional Communications Department • Editor: Tereza Lobo • Contact: Petrobras' Shareholders Department • Tel.: (55-21) 3224-1540/4914 Fax: (55-21) 2262-3678 • 0800 282-1540 • Av. República do Chile, 65 / 2202-A • Centro – Rio de Janeiro – RJ – 20031-912 • E-mail: acionistas@petrobras.com.br Depositary Bank: Citibank N.A.• Tel.: 1 212 657 1925 • Fax: 1 212 825 5398/825 21 03 • E-mail: alex.navarrete@citicorp.com Visit our website at www.petrobras.com.br/ri/english