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Edition 24 - Sharing in Petrobras - number 3/2007


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Edition 24 - Sharing in Petrobras - number 3/2007

  1. 1. Investor Relations • Year VII • nº 24 / September 2007 Petrobras em Ações Sharing in Petrobras HIGHLIGHTS Production grows 2.5% ■ In August, Petrobras’ oil production was 1,807,074 barrels per day (bpd), a 2.5% increase in lifted volume compared to a year ago (1,763,832 bpd). Until the end of 2007, the company will put four more platforms online. Total daily oil production (in Brazil and abroad) rose to 1,931,941 barrels a day, 27,744 bpd (1.4%) more than in August 2006. Meanwhile, the volume of natural gas produced in Brazil and abroad was 63,000,000 cubic meters per day, stable compared to a year ago. In Brazil and abroad, the company’s total production (oil and natural gas) was 2,319,961 barrels of oil equivalent per day. Risk rating ■ Moody’s announced, in August, it raised Petrobras’ foreign currency debt rating and the 2008-2012 PiFCo from Baa2 to Baa1, with a stable perspective. This classification reflects Brazil’s Business Plan I improved evaluation, now considered as moderate n August 14, Petrobras’ president, José Sergio Gabrielli de Azevedo, risk. The S-series foreign currency title of Petrobras presented, at the company’s main office building, in Rio de Janeiro, the Energia S.A. - Pesa ($300 million), in Argentina, 2008-2012 Business Plan, which foresees total investments in was also bettered from Baa2 to Ba1. The the order of $112.4 billion in Brazil and abroad. company’s global classification in local currency Petrobras’ directors and its executive and general managers, in addition (A2) and on the national scale (Aaa) was not changed, however. to subsidiary presidents and directors, attended the event. Gabrielli explained the Plan maintains the company’s aggres- Shareholder base and Ibovespa sive growth goals and reinforces the challenges in the natural gas and biofuel markets. Of the total investments that have been foreseen, ■ Two years after Petrobras’ share split in the São Paulo Stock Exchange (Bovespa), the number 87% will be allocated to projects in Brazil and 13% abroad. Total oil of new shareholders already adds up to and natural gas production (Brazil and abroad) in barrel equivalents per 50,000 investors. In Ibovespa’s 3Q 2007 portfolio, day is expected to reach 3,494,000 in 2012 and 4,153,000 in 2015. encompassing the period ranging from September The 2020 Strategic Plan, which establishes the company’s corporate to December 2007, Petrobras is still the company mission, vision, strategies and objectives, enhanced Petrobras’ with the most weight in the index: 16.15%. vision, which is to grow from the status of a leader in Latin America to becoming one of the world’s five biggest integrated Interest on Own Capital energy companies, and the preferred one among its stakeholders. ■ Petrobras’ Board of Directors approved The Plan maintains the strategy of boosting performance in the oil, deriv- shareholder remuneration anticipations, in the form of interest on own capital, for the gross value of ative, petrochemical, gas, energy, biofuels and distribution markets while R$0.50 each, totaling R$1.00 per share (both maintaining its profitability, socioenvironmental responsibility and inte- ordinary and preferred). The first value will be paid grated growth. up to 01/31/2008, while the second until 03/31/2008. These values are subject to 15% Withholding Tax, except for immune or exempt Suzano Auctions in Petroleum shareholders. Petroquímica Colombia and in Economist Acquisition Gulf of Mexico Award 2007 PAGE 3 PAGE 3 PAGE 4
  2. 2. PROFITABILITY Second quarter results for 2007 T he positive results achieved in higher value of the Real in the first half surplus compared to imports, some- the first half of the year were of 2007, partly compensated for by thing that was motivated by the big- reached thanks to increased oil the improved results in relevant partic- ger oil production together with the and derivative production, allowed for ipations and by the fiscal benefit effect lower use of domestic oil in the by the shorter scheduled shutdown of the interest on own capital paid in load processed at the refineries. periods at the refineries in Brazil and by the half-year. Investments, including structured proj- boosted production at a few platforms. Domestic oil and LNG production ects and specific purpose partnerships, Conversely, the result was impacted by rose 2% compared to the first half of topped at R$19.8 billion in the first the lower oil prices and by the higher 2006 due to new platforms going half of the year, 45% above the first costs caused by the heated oil industry. online. The international oil produc- half of 2006. Derivative and ethanol sales rose tion decreased 19% because of the The company’s total indebtedness 3% in Brazil due to the country’s loss of participation in operations in fell 10% due to a non-renewed debt improved economic performance. Venezuela. amortization. However, there was also However, the half-year’s operating Total derivative production surged a reduction in availability, a reflex of profit was impacted by the first quar- 7%, influenced by the significant rise in dividend payments worth R$7,472 ter’s realization prices and fell 14%. the load processed abroad, up 144% million made in the half-year and This decrease also reflected the higher due to Pasadena Refinery (USA) opera- investment-related disbursements. The cost of the sold products. There was tions. Sales volume in the internal mar- final effect was 8% less net indebted- also a disbursement for the renegotia- ket was 3% above the same period a ness. The company’s financial leverag- tion of the Petros Pension Plan year ago. In the external market, ing fell, in the quarter, to 19%, down (R$1,050 million) in the first quarter, in exports grew 12% in volume. This from 17%, reflecting the lower net addition to higher exploratory costs. increase is related to higher production indebtedness. Additionally, net financial expens- and reduced participation of domestic Petrobras’ shares valued in the es rose in the half-year because of the oil in the total processed load. first half of 2007. Its market value rose higher creditor exchange exposure in The favorable trade balance of to R$244.7 billion, 21% more than a foreign currency, together with the $286 million resulted from the exports year ago. Petrobras ADRs versus DOW JONES and Amex Oil Indexes Economic and Financial Figures RESULTS & RETROSPECTIVE First half 1180,2% (PBR/ADR ON) In US$ million 2007 2006 Variation (%) 1141,6% (PBRA/ADR PN) Sales of products and services 50,213 43,775 14.7 1,000 950 234,7% (Amex Oil) 900 Net operating revenues 38,964 33,521 16.2 850 67,0% (Dow Jones) 800 750 Gross profit 14,972 14,644 2.2 700 650 Net income 6,493 6,514 -0.3 600 550 500 Earnings per share 1.48 1.49 -0.7 450 400 Net cash provided by operating activities 10,678 9,182 16.3 350 300 250 Capital expenditures 8,867 5,979 48.3 200 150 Net debt 11,035 9,497 16.2 100 50 Debt to equity ratio 50% 52% -2 pp Dec-02 Feb-03 Apr-03 Jun-03 Aug-03 Oct-03 Dec-03 Feb-04 Apr-04 Jun-04 Aug-04 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Real Increase in Stock Price* Operating Performance Second Quarter 800% ■ Ibovespa In thousand barrels of oil equivalent 2007 2006 Variation (%) 726.1% 700% ■ Petrobras PN Average daily crude oil 600% ■ Petrobras ON and gas production 2,304 2,277 1.2 500% 470.5% Oil product production 2,045 1,908 7.2 400% 342.8% 347.9% 373.3% Net imports 105 89 18 300% 186.9% Refining and marketing operations 200% Brasil – Utilization 89% 91% -2 pp 100% 56.8% 57.3% 64.5% 0% Refining and marketing operations 10 Years 5 Years 1 Year International – Utilization 85% 81% +4 pp -100% Domestic crude oil of total * Monthly changes discounted for inflation in accordance with IGP-DI index feedstock processed 78% 80% -2 pp
  3. 3. NEW FRONTIERS PETROCHEMIC New discoveries in the Santos Basin P etrobras has discovered more oil and gas in the Santos Basin, in an area located in deep waters (2,140 m) and 237 km off the coast. The area is explored in a consortium with British Gas and Repsol YPF Brasil. Tests indicate the potential production of 2,900 barrels of oil and 57,000 cubic meters of gas per day, but it is still necessary to check if the reservoirs present good productivity conditions and economically viable volumes. To do so, an area assessment plan will be sub- Suzano Acquisition mitted to the National Petroleum Agency P (NPA). etrobras signed, in August, an agreement for the acquisition of the Based on this new positive result, the totality of the shares of Suzano Petroquímica S.A. (SZPQ), for the relevant historical oil exploration moment total price of R$2.1 billion. The company will now also have partic- Brazil is going through, particularly in the ipation in Rio Polímeros S.A., Petroquímica União S.A., and Santos Basin deep water area. Petroflex S.A. According to its Strategic Plan, Petrobras has made selective investments in the Brazilian and EXPLORATION & PRODUCTION Southern Cone petrochemical sector, in projects that add value to oil, natural Petrobras gas and downstream currents and was the highest operate in an integrated manner. The acquisition contributes to consolidating bidder for 34 the Southeastern Petrochemical Pole. SZPQ has been in the market for 30 years, it is a Latin American leader blocks in the Gulf in propylene resin production and ranks second in Brazil in thermoplastic resin manufacturing. For more information, access the “Suzano of Mexico Petroquímica Acquisition” announcement and subsequent announce- ments at, in the “Press Release” section. P etrobras was the highest bidder, for 34 of the 40 blocks offered in the Lease Sale EXPLORATION & PRODUCTION 204 auction for the Gulf of Mexico. The total value the company bid was $29.3 million in Four blocks acquired the auction held in August, in the United States. As a result, the company guaranteed in a bid in Colombia 100% participation and the operator status P for 20 blocks. Petrobras’ will hold 50% par- etrobras was the highest bidder for four of the 13 blocks offered ticipation in the other 14 blocks, in partner- in the Ronda Caribe 2007 auction, off the Colombian coast, in ship with Devon Energy, which will be the September. The company will be the operator for blocks RC-06 and operator. RC-07, with a 40% participation in the consortium formed by All of the blocks are in Petrobras’ per- Ecopetrol (30%) and Hess Corporation (30%). In addition to these, it formance focus areas in the region and will be will participate as the non-operator partner in blocks RC-04 (30% par- incorporated to its exploratory project portfo- ticipation) and RC-08 (20%). lio, which totals 313 blocks, 177 of which Proposal evaluations carried out by the Colombian National operated by the company. Hydrocarbon Agency (NHA) was based on the production participation Acquiring blocks in the American portion percentage if the companies make commercial discoveries. Therefore, of the Gulf of Mexico is in line with Petrobras’ the auction’s winning companies committed to develop a minimum Strategic Plan, which foresees investments in exploratory program, worth about $5 million for each block, in a 3-year that region, as well as other activities carried period. out abroad, as a priority. With the winning The areas that were acquired are near the Tayrona block, which Petrobras bids, the company increased its exploration already operates. The four blocks total an area of some 12,000 square and production portfolio in deep and ultra- kilometers in shallow and deep waters (depths of up to 2,000 meters). deep waters in that region considerably.
  4. 4. NEWS BOARD SUSTAINABILITY Energy in the Pan American Games P etrobras was one of the official sponsors of the 15th edition of the Pan American Games, held in Rio de Janeiro, in July. The concept of the institutional campaign that was carried out associated sports to energy and valued the Petrobras company’s brand. The actions – cultural and musical presentations and Brazilian film screenings, renews its listing among others – were undertaken at the airport, on the beaches, in the Pan American Village, and even in the Dow Jones in the skies. The gold medals won by the national Brazilian men’s and women’s handball teams, which Sustainability Petrobras has sponsored since the 2003 edition of the games, and which won the tournament for the Index second time, were also celebrated. P etrobras acquired the right to renew its listing in the select group of the 20 oil & gas sector WAP Site tool is launched companies that appear in the Global Dow Jones Sustainability Petrobras launched its official cell phone website. With Index. The most important global objective, easy-to-load content, this tool allows access to sustainability index, it is used as an information via mobile telephones (cells, smartphones analysis parameter by investors and palmtops) through “information pills.” who invest resources in companies The company is now in line with the new trends in interactive media and can develop its relationship that are committed do social and with its publics of interest, considering Brazil environmental responsibility. has upwards of 100 million cell phone users, In the evaluation, Petrobras 10 million of which already use the mobile web. stood out for its transparency, brand management, environmental per- formance, corporate citizenship, and human resource development Petroleum Economist Award 2007 processes. Issues regarding sustain- ability, corporate governance, brand P etrobras was the winner of the Petroleum Economist Award 2007, in the Investor Communications to the Investor area, two other Petrobras areas (the Petrobras University and the Safety, Environment, and risk management, management actions regarding climate change, in addition to vendor practice and Team of Year category, with the and Health – SEH area) also competed International Relations Team project. and were among the finalists in their social project management require- This is an annual award granted by categories. ments are analyzed. the British magazine which analyzes To pick the winner, the publication Petrobras’ listing in the Dow the best work done in the largest considered not only the ordinary Jones Index is an acknowledgement global energy industry organizations. investor programs, but also actions of the company’s entire manage- Petrobras competed with Sasol carried out to strengthen the compa- ment process. This renewal will Chevron, Nigeria LNG, Rosneft, and ny’s relationship with specific investor influence investment decisions Pemex. The awarding ceremony was groups, with socially-responsible made by asset managers, consider- held in September, in London. investors, individual investors, and to ing the fact that this market in The company competed for the explore new interaction channels with socially and environmentally second year in a row in the category it foreign and national investment funds. responsible companies moves more was awarded in. The selection regards Petrobras created initiatives dedicated projects undertaken in 2006 and high- to each target public, and a few results than $4 trillion, according to data lights oil & gas sector companies that of this work were a 26% increase published by the UN, and more developed actions that increased inter- in the shareholder base in 2006 and a than $5.6 billion in investments est or generated positive results for 76% growth in the number of month- based on companies that are listed shareholders and investors. In addition ly hits to the area’s website. in the DJSI. Newssheet edited by Petrobras' Investor Relations Department • Executive Manager: Theodore Helms • Editor: Cláudio Paula (RJ-21059-JP) • Writer: Fábio Xavier and Orlando Gonçalves Jr. • Colaboration: Ana Paula Carvalho, Fábio Rocha and Marcos Vinícius Guimarães • Contact: Petrobras' Shareholders Department • Tel.: (55-21) 3224-1540/4914 • 0800 282-1540 • Fax: (55-21) 2262-3678 • Address: Av. República do Chile, 65 / 2202-B • Centro – Rio de Janeiro – RJ – Brazil – 20031-912 • E-mail: • Design: Estúdio Matiz Depositary Bank: JPMorgan Chase Bank • JPMorgan Depositary Receipts • 4 New York Plaza, 13th Fl. • New York, NY 10004 • +1 (866) JPM-ADRS (576-2377) Visit our website at