Webcast 4th Quarter and Fiscal Year 2008

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Conference Call / Webcast
RESULTS ANNOUNCEMENT
4th Quarter and Fiscal Year 2008
(Brazilian Corporate Law)

ALMIR GUILHERME BARBASSA
CFO and Investor Relations Officer
March, 10th 2009

Published in: Investor Relations
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Webcast 4th Quarter and Fiscal Year 2008

  1. 1. 1 P53 FPSO Cidade de Niterói P51 ALMIR GUILHERME BARBASSA CFO and Investor Relations Officer March, 10th 2009 4th Quarter and Fiscal Year 2008 (Brazilian Corporate Law) Conference Call / Webcast RESULTS ANNOUNCEMENT
  2. 2. 2 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. CAUTIONARY STATEMENT FOR US INVESTORS 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. DisclaimerDisclaimer
  3. 3. 1782 1865 1883 277 330 330 Oil and NGL Natural Gas 3 NATIONAL PRODUCTION OF OIL, NGL & NATURAL GAS – 4Q08 VS 3Q08 Thous.bpd Oil and Natural Gas Average Domestic Production Record daily production of oil in Brazil (03.04.2009) 2,012,654 barrels 2,213 2,195 -1% 2,059 4Q07 3Q08 4Q08 • Slight decrease in the 4Q08 production due to: • Natural decline in mature fields; • Operating Stoppages. • Partially offset by increase in production of new systems P-52 and P-54 (Roncador) and P-53 (Marlim Leste). 3
  4. 4. 4 PLATFORM / FIELD CAPACITY FIRST OIL CURRENT PRODUCTION* (bpd) INTERCONNECTED WELLS EXPECTED WELLS P-51 / Marlim Sul 180 thousand bpd 01/24/2009 45,909 2 producers and 1 injector 10 producers e 9 injectors P-53 / Marlim Leste 180 thousand bpd 11/30/2008 48,375 3 producers 13 producers and 8 injectors FPSO Cidade de Niterói / /Marlim Leste 100 thousand bpd 02/26/2009 32,940 1 producer 9 producers (oil) e 1 producer (gas) Total 460 thousand bpd - 127,224 NEW PRODUCTION SYSTEMS STATUS P-51 P-53 FPSO Cidade de Niterói * In 03/02/09
  5. 5. 5 UPDATE ON SANTOS BASIN PRE SALT Rio de Janeiro50 km Tupi Carioca Parati Iara Guara BM-S-21 BR 80% BM-S-24 BR 80% BM-S-10 BR 65% BM-S-11 BR 65% BM-S-9 BR 45% BM-S-8 BR 66% BM-S-22 BR 20% Azulão Bem-te-vi Caramba 5 Drilled Wells Drilling Plan 2009: Status Tupi EWT: • 9 wells, being 8 exploratory and 1 producing • FPSO BW Cidade de São Vicente in transit to Brazil; • Well 3-RJS-646 (south of Tupi), in process of completion and evaluation. Formation tests show good results; • Production start-up expected for 2Q09.
  6. 6. 6 47.95 47.79 57.04 64.42 76.75 86.13 105.46 100.58 96.90 114.78 121.37 88.69 74.87 68.76 57.75 54.91 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 Average Sales Price Brent (average) Avg. 3Q08 Avg. 4Q08 • In the 4Q08, decrease in Brent and Petrobras’ oil prices surpassed 50% when compared to the previous quarter; • Spread between domestic oil average sales price and Brent decreased from US$ 14.20/bbl in the 3Q08, to US$ 6.96/bbl in the 4Q08. E&P OIL PRICES (US$ per barrel)
  7. 7. 7 LIFTING COST IN BRAZIL 15.22 15.16 16.34 17.61 19.09 25.76 28.04 34.80 36.79 22.39 0 10 20 30 40 50 60 70 80 4Q07 1Q08 2Q08 3Q08 4Q08 Lifting Cost (R$) Gov Take (R$) 8.60 8.66 9.88 10.21 8.24 14.56 16.16 21.20 20.06 9.87 114.8 54.9 121.4 96.9 88.7 0 10 20 30 40 50 60 70 80 4Q07 1Q08 2Q08 3Q08 4Q08 0 20 40 60 80 100 120 140 Lifting Cost (US$) Gov. Take (US$) Brent US$/barrel R$/barrel 23.16 24.82 31.08 30.27 18.11 40.98 43.20 51.14 54.40 41.48 19% decrease in US$ lifting costs without government take from the 3Q08 to the 4Q08; In reais, lifting cost without government take increased due to real devaluation; Decrease in government take due to lower domestic oil reference prices.
  8. 8. 8 AVERAGE REALIZATION PRICES – ARP 8 US$/bbl R$/bbl 3Q08 4Q08Average 2008 ARP USA: US$ 109.72/bbl ARP Petrobras: US$ 91.81/bbl 3Q08 4Q08Average 2008 ARP USA: R$ 194.73bbl ARP Petrobras: R$ 176.41/bbl • Adjustment in diesel (15%) and gasoline (10%) on May 2008 were not enough to reset parity with international prices; • Only in the 4Q08 Petrobras’ ARP reached the level of international benchmarks; • Decrease in ARP measured in Dollar due to Real devaluation. ARP’s curve is more stable when expressed in Reais. 0 20 40 60 80 100 120 140 160 dez/06 mar/07 jun/07 set/07 dez/07 mar/08 jun/08 set/08 dez/08 PMR EUA PMR PetrobrasARP USA ARP Petrobras 0 50 100 150 200 250 dez/06 mar/07 jun/07 set/07 dez/07 mar/08 jun/08 set/08 dez/08 PMR EUA PMR PetrobrasARP USA ARP Petrobras 129.81 112.49 77.40 71.78 176.48 162.23 215.62 187.02
  9. 9. 9 Thousandbarrels/day OIL AND OIL PRODUCTS IMPORTS AND EXPORTS 353 390 102 160 97 51 Exports Imports Net Exports 615 538 77 Financial Surplus 2007 US$ 71 Million Financial Deficit 2008 US$ 928 Million Despite surplus in volumes, a financial deficit in trade balance; Investments focused in capturing margins through increase in refining capacity of domestic crude. 439 373 81 152 127 70 Exports Imports Net Exports 672 570 102
  10. 10. 10 • Lower exports’ revenues due to lower crude oil and oil products prices in international market; • Imports gains with lower oil prices are partly offset by inventory costs – average cost methodology; • About 40% of oil products prices sold in domestic market are adjusted in the short term. Diesel Gasoline LPG Naphtha and others Expo rts crude o il and o il pro ducts Adjusted immediately Adjusted short term Adjusted long term Oil Products Crude Oil Imports Revenue Cost DIFFERENCE IN TIMING BETWEEN REVENUES AND COSTS Government Take
  11. 11. 11 OPERATING INCOME (EXTRAORDINARY ITENS) LAW 6.404/76 R$ Million 11 • Extraordinary Items affected operating results; • Financial revenue from hedge of R$ 603 million in the 4Q08 and R$ 156 million in the 3Q08. 4Q08 3Q08 Variation Operating Income 5,041 10,852 (5,811) - Losses with Devaluation ofInventories 1,089 293 796 - Inventory Turnover Effect(losses) 2,719 187 2,532 - Impairment 925 - 925 - Contractual charges and Fines 58 80 (22) - Inventory Losses (Trading Operations) 964 762 202 Operating Income without Extraordinary Items Effects 10,796 12,174 1,378
  12. 12. 12 EXPLORATION AND PRODUCTION – CHANGE IN OPERATING INCOME (R$ MILLION – 4Q08 VS 3Q08) Impairment 16,665 10,676 1,268 1,253 603 29 7,936 12 • Upstream results affected by lower oil prices; • Impairment of R$ 603 million due to losses of economically viability in projects as oil prices went down (Brent prices fell 52% at 4Q08/3Q08); • Costs reduction due to lower Government take. 3Q08 Oper. Profit Price Effect on revenues Net Volume Effect on revenues Net Cost Effect on average COGS Other Operational expenses 4Q08 Oper. Profit
  13. 13. 13 DOWNSTREAM - CHANGE IN OPERATING INCOME (R$ MILLION – 4Q08 VS 3Q08) 13 3Q08 Oper. Loss Net Volume Effect Loss with Inventory Devaluation 4Q08 Oper. Loss (2,437) 5,798 7,394 141 161 541 (1,402) Price Effect in Revenue Average Cost Effect in COGs Other Oper. Expenses • Downstream income affected by decrease in realization prices; • By the retention of costs in inventories in the current quarter and realization of inventories formed with higher costs in previous periods.
  14. 14. 14 GAS AND ENERGY - OPERATING INCOME CHANGE (R$ MILLION – 2008 VS 2007) 14 Jan to Dec 2007 Oper. Loss Price Effect in Revenue Volume Effect in Revenue Average Cost Effect in COGs Volume Effect in COGs Operating Expenses Jan to Dec 2008 Oper. Loss (1,624) 3,334 1,818 105 (525) 1,956 4,190 • Increase in gross profit due to higher sales volumes (increase in energy and gas sales) and better margins due to the renewal of contracts with natural gas distributors; • Contractual charges and fines (R$ 434 million) in the energy sector should decrease due to investments; • Positive EBITDA (R$ 236 million).
  15. 15. 15 INTERNATIONAL – OPERATING INCOME CHANGE (R$ MILLION – 2008 VS 2007) 15 Jan to Dec 2007 Oper. Loss Price and Volume Effect in Revenue Cost and Volume Effect in COGs Losses with Inventory Devaluation Other Oper. Expenses • Operating result affected by losses with inventory devaluation (R$ 699 million); • EBITDAx of R$ 1,080 million – exploratory expenses of R$ 1,103 million, depreciation of R$ 1,758 million. Jan to Dec 2008 Oper. Loss (106) 9,498 8,496 699 1,078 (881)
  16. 16. 16 NET INCOME CHANGE – R$ MILLION – 4Q08 VS 3Q08 16 Domestic Oil, NGL and Condensate Production (thous. bpd)1,883 1,865 10,852 4,198 1,014 2,959 429 3,511 1,089 503 7,355 3Q08 Net Income 4Q08 Net Income Employees Part. Revenues COGs Oper. Expenses Fin. Expenses and Equity Income Taxes Minority Interest 1,699 Non-recurrent Expenses Net Income affected by: • Decrease in realization prices of oil and oil products; • Extraordinary Items, such as impairment, losses with inventory devaluation and inventory turnover; • Lower tax payments due to fiscal benefit resulting from the provisioning of interest on own capital; • Positive financial results due to real devaluation.
  17. 17. 4Q08 3Q08 2008 2007 Cash Flow from Operational Activities NetIncome 7,355 10,852 32,988 21,512 Depreciation 11,632 10,696 Others 5,332 10,031 CFFO 15,279 13,013 49,952 42,239 Net Cash Used in Investment Activities Capex (17,121) (13,461) (52,118) (41,405) Others (1,138) (666) (1,307) (3,828) Total Investments (18,259) (14,127) (53,425) (45,233) Cash Flow Used in Financing Activities Financing and Loans, Net 7,451 846 11,837 (3,948) Dividends (26) (2) (6,213) (7,474) Net Cash Flow Used in Financing Activities 7,425 844 5,624 (11,422) Cash and Cash equivalents atthe beginning ofthe period 10,776 11,046 13,071 27,829 Cash and Cash equivalents at the end of the period 15,222 10,776 15,222 13,071 17 CASH FLOW • 4Q08 Cash Flow reflects the 21% decrease in inventories value, that affected negatively income and EBITDA, with no impact on cash; • Pre-funding of 2009 needs was followed by increase in cash and cash equivalents. 2008 Cash Flow according to Law 11.638. 4Q08 CF was measured through an analysis based on the comparison of 2008 flow with the 9M08 (before the law adjustments). 17 R$ Million
  18. 18. 18 R$ million 12/31/2008 * 12/31/2007 % Short Term debt (1) 13,859 8,960 55% Long Term Debt (1) 50,854 30,781 65% Total Debt 64,713 39,741 63% Cash and Cash Equivalents 15,889 13,071 22% Net Debt (2) 48,824 26,670 83% Capital Structure 50% 48% +2 pp • Net debt increase was driven by real devaluation (approximately R$ 9.0 billion) and new debt issued in the international and domestic markets; • Level of indebtedness (net debt/EBITDA) was 0.85 on Dec 31, 2008 21% 26% 21% 19% 21% 19% 19% 16% 17% 18% 25% 21% 18% 23% 27%27%27% 28% 12/31/2006 06/30/2007 12/31/2007 06/30/2008 31/12/2008* Net Debt/Net Capt. ST debt/Total debt US$ million 12/31/2008 * 12/31/2007 % Total Debt 27,691 22,436 23% *After adjustments of Law 11.638/07 (1) Total debt - cash and cash equivalents LEVERAGE
  19. 19. 19 CHANGES IN ACCOUNTING PRACTICES: LAW 11.638/07 VS 6.404/76 – 2008 (R$ MILLION) • Law 11.638/07 altered and revoked certain provisions dealing with accounting matters in Law 6.404/76 (Corporate Law) aiming to align Brazilian accounting practices with international standards (IFRS). R$ million Item Law 6.404/76 Transaction Subvention Fin. Inst. Leasing Law 11.638/07 Gross Sales 284,579 (18,085) 266,494 Cost of Goods Sold (157,499) 15,350 526 (141,623) Gross Profit 74,685 (1,715) 526 73,495 Operating Expenses 29,081 1,024 557 (198) 153 (27,544) Net Financial Expenses 4,021 508 200 (1,601) 3,128 Equity Balance Result (399) (475) (874) Operating Profit 49,226 (659) 557 1 (922) 48,205 Net Income 33,915 (636) 557 (109) (740) 32,988
  20. 20. 20 PBR vs. AmexOil (until 03.04.09) Petr4 vs. Ibovespa (until 03.04.09) Source: Bloomberg BUSINESS PLAN 2009-2013 WAS WELL RECEIVED 20 112.49 81.88 70 80 90 100 110 120 130 12/31 1/6 1/12 1/16 1/22 1/28 2/3 2/9 2/13 2/19 2/25 3/3 IndexNumber=100in12.31.08 PBR US$ Amex Oil Before BP 2009- 2013 115.46 102.27 90 95 100 105 110 115 120 125 12/31 1/6 1/12 1/16 1/22 1/28 2/3 2/9 2/13 2/19 2/25 3/3 IndexNumber=100in12.31.08 PETR4 R$ IBOVESPA Before BP 2009-2013
  21. 21. 21 For more information: Investor Relations www.petrobras.com.br/ri +55 21 3224-1510 petroinvest@petrobras.com.br

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