2. DISCLAIMER
The presentation may contain forecasts about CAUTIONARY STATEMENT FOR
future events. Such forecasts merely reflect the US INVESTORS
expectations of the Company's management.
Such terms as "anticipate", "believe", "expect", The United States Securities and Exchange
"forecast", "intend", "plan", "project", "seek", Commission permits oil and gas companies, in
"should", along with similar or analogous their filings with the SEC, to disclose only proved
expressions, are used to identify such forecasts. reserves that a company has demonstrated by
These predictions evidently involve risks and actual production or conclusive formation tests to
uncertainties, whether foreseen or not by the be economically and legally producible under
Company. Therefore, the future results of existing economic and operating conditions. We
operations may differ from current expectations, use certain terms in this presentation, such as oil
and readers must not base their expectations and gas resources, that the SEC’s guidelines
exclusively on the information presented herein. strictly prohibit us from including in filings with the
The Company is not obliged to update the SEC.
presentation/such forecasts in light of new
information or future developments.
2
3. HIGHLIGHTS:
First quarter highlights
o EBITDA was R$ 15.1 billion increasing 5% when compared 1Q10 vs 4Q09. Net
Income increased 4% in comparison to 4Q09, achieving R$ 7.7 bilhões
o Higher production with daily oil and LGN production record of 2,084 thous. in April
o Total Capex in this quarter reached R$ 17,753 million
o Start up of EWT in Tiro and Sídon, Santos Basin (03/2010)
o Oil discoveries in post-salt and pre-salt in Barracuda field (Campos Basin -
02/2010) and light oil in Piranema field (Sergipe Basin - 03/2010)
o Approval of CAPEX range between US$ 200-220 billion for 2010-2014 Business
Plan (03/2010) and capitalization process by Board of Directors to be completed by
July/2010
3
4. DOMESTIC AND INTERNATIONAL PRODUCTION 1Q10 vs 1Q09:
Sustainable growth trend
New monthly oil production record in Brazil in April average 2.033 thous. barrels per dia
Two consecutive daily oil and NGL production records, on April 23rd and 24th 2,081 thous. and
2,084 thous. barrels per day, respectively.
Total Production Domestic Production
2,482 +3% 2,547 +2%
2,261 2,302
221 245
309 317
Thous. boed
2,261 2,302 1,952 1,985
1Q09 1Q10 1Q09 1Q10
Domestic International Oil & NGL Natural Gas
o 2% increase in domestic oil production due to production growth: P-51, P-53, FPSO-Cidade de Vitória and P-54
o 11% increase in international production in Akpo and Agbami fields which started-up in Nigeria
4
5. MAIN E&P PROJECTS:
New systems will add substantial production capacity
New Production Units
EWT for Tiro and Sídon
Brazil
Project Capacity Start Up
• 1st oil: 03/22/2010
10 million of m3/day
• Capacity: 20 thous. bpd and to treat 475.720 Uruguá Tambaú 2Q10
35 thous. Bpd
m3 of gas/day
Cachalote and 100 thous. bpd
• 210 km off the coast and 250mt of water depth 2Q10
Baleia Franca 3.2 million m3/day
• Estimated volume of oil recoverable: 150
EWT Guará 30 thous bpd 3Q10
million of boe
Mexilhão 15 million of m3/day 3Q10
• Early results indicate the presence of good
quality oil (34º API) 100 thous. bpd
Tupi Pilot 4Q10
5 million of m3/day
EWT Tupi
30 thous. Bpd 4Q10
Nordeste
2010 Target Production: 2,100 thous. bpd (+ - 2,5%)
International
Project Capacity Start Up
Cascade‐Chinook
80 thous. bpd 2H10
SS-11 Atlantic Zephyr operating in Tiro and Sídon (USA)
5
6. PRODUÇÃO 2010
NEWS COMING FROM THE PRE-SALT:
New wells and EWT reduce uncertainty and confirm areas’ huge potential
o 5 appraisal wells being drilled in Santos Basin – Guará, Guará
Norte, Tupi Alto, Tupi NE and Macunaíma.
o Improving geological characterization and reducing uncertainties
in Tupi EWT, producing for nearly one year
o Second stratigraphic well being drilled for ANP (Libra) 32 km from Libra
Franco Franco
o Letter of intention for leasing and operation of
the FPSO Pilot of Guará signed in January 26th
by Petrobras, BG Group and Repsol with the Macunaíma Tupi NE
consortium Schahin/Modec. First sizable leased Tupi Alto
Tupi
unit to be converted using 65% of local content
o 7 drilling rigs shall be delivered in 2010 Guará Norte
Guará
Poços em
perfuração
Poços ANP
6
7. AVERAGE REALIZATION PRICE:
Higher crude oil price, continued stability in the domestic market
US$/bbl R$/bbl
Averg. Averg Averg.
1Q09 4Q09 1Q10
121
120 220
115
105 163.59
97 157.65
100 154.82
101 170
86
80 75 76
68 148.43
73 120
59 70 122.82 135.80
60 55 64
44
48 49 70
40
32
20 20
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10
Petrobras Oil Price (Average) Brent (US$/bbl) ARP USA ARP Petrobras
o Higher international prices and reduction of spread between light oil/heavy improved for 1Q10 results
o ARP Petrobras, in Reais, stable, despite the short term volatility
o Convergence between oil products prices in domestic and international markets in the long term
7
8. DOMESTIC LIFTING COST:
Despite higher Brent price, costs remain stable
US$/barrel R$/barrel
75 76
68
59
44
38.86 41.62 43.04 43.82
34.24
22.86 24.74 23.73 16 .3 3 2 1.2 8 2 4 .78 2 6 .53 2 6 .8 7
14.69 19.50
10.78 13.84 15.23 14.33
6.87 17.9 1 17.58 16 .8 4 16 .51 16 .9 5
7.82 8.72 9.02 9.51 9.40
1Q0 9 2 Q0 9 3 Q0 9 4 Q0 9 1Q10
1Q09 2Q09 3Q09 4Q09 1Q10
Lifting Cost Gov. Take Brent Lif t ing C o s t Go v. T ake
o Increase lifting cost in dollars was caused by higher personnel expenses, non-recurring interventions and
maintenance in Campos Basin, but it kept stable when compared to 4Q09
o Lifting cost in reais, without government take, declined 5% comparing 1Q10 X 1Q09 due to Real appreciation
(22%) and higher materials expenses in 1Q09
8
9. OIL PRODUCTS AND NATURAL GAS:
Domestic sales growing with the economy
Oil Products Natural Gas
+15%
1,869 1,851 +15%
257
Thous. barrels/day
1,614 247
509 505 223
439
212 203
195
366 410
328
652 782 733
1Q09 4Q09 1Q10 1Q09 4Q09 1Q10
Diesel Gasoline LPG Others
Oil Products sales volume on domestic market was 15% higher than 1Q09, due to:
o Diesel increase of 12% on sales volume due to GDP growth, industrial and rural activities; and infrastructure
development
o 25% increase in gasoline sales due to the increasing utilization of gasoline by flex fuel vehicles, due to ethanol
shortage at the beginning of 2010, and reduction in the ratio of anhydrous ethanol
o Higher natural gas sales volume due to recovery of economic activity
9
10. TRADE BALANCE 1Q10 vs 1Q09:
Oil export record
1Q09 (thous. barrels/day) 1Q10 (thous. barrels/day)
666 747
566 192 621
215
140
274
451 426 555
100 347 126
Exports Imports Net Exports Exports Imports Net Exports
Oil Oil Products Oil Oil Products
Financial Volume (US$ Million)
o Higher gasoline imports due to scarcity of
+ US$ 772
ethanol in the domestic market
- US$ 150 5.110 o Higher sales volumes and imports of Diesel, Jet
4.338
Fuel and LPG due to domestic economic
2.375 2.225 recovery
o Scheduled stoppages in distillation units in
1Q09 1Q10 1Q10, reducing throughput thereby increasing
Imports Exports exports and reducing imports of crude oil
10
11. OPERATING INCOME 1Q10 vs 4Q09:
Higher sales volumes and reduction in operating expenses
(R$ MILLION)
2,716 (1,530) 773 11,617
9,658
4Q09 Net Operating Operating 1Q10
COGS Expenses Operating Income (1)
Operating Income (1) Revenue
o Increase in operating income due to higher prices in domestic market and export market
o Higher COGS due to higher sales and import prices
o Lower operating expenses with lower exploratory costs and lower Impairment
o Operating Income increased 20% from 4Q09 to 1Q10
11
*(1) Operating income before financial result, equity balance and taxes
12. NET INCOME 1Q10 vs 4Q09:
Higher Net Income due to a better operating result
(R$ MILLION)
1,959 (812)
243 (763)
(339) 7,726
7,438
4Q09 Operating Financial Equity Taxes Minority Interest 1Q10
Net Income Income Result Income and Employees Net Income
Part.
o Negative financial result were due to exchange rate variation (4Q09: appreciated 2%; 1Q10: devaluated 2%)
and increase in debt denominated or indexed to the exchange rate
o Increase in taxes due to lower results in the 1Q10 in Companies abroad with differentiated tax regimes (1Q10:
R$ 238 million; 4Q09: R$ 473 million) and higher IOC provision in the 4Q09 (1Q10: R$ 597 million; 4Q09: R$
955 million)
o Recovery of Brazilian economy contributed to a better result
12
*(1) Operating income before financial result, equity balance and taxes
13. UPSTREAM 1Q10 vs 4Q09:
Reduction in the light-heavy differential contributed to margin gains
(R$ MILLION)
(765) 448 11,060
1,573 347 376
9,081
4Q09 Price Effect Cost Effect Volume Effect Volume Effect Operational 1Q10
Oper. Income on Revenues on COGS on Revenues on COGS Expenses Oper. Income
o Reduced spread between light/heavy oil contributed to the increase in revenues
o Benefits on cost effect on COGS due to reduction of depreciation/depletion expenses due to reserves growth at the
end of 2009
o Reduction of exploratory costs and no impairment in 1Q10 (4Q09: R$ 550 million) contributed to increase operating
income and margin gains
13
14. DOWNSTREAM 1Q10 vs 4Q09:
Increasing volumes offset by higher cost
(R$ MILLION)
1,379 (2,062) 2,192 (1,991)
2,440
(88) 1,870
4Q09 Price Effect Cost Effect Volume Effect Volume Effect Operational 1Q10
Oper. Income on Revenues on COGS on Revenues on COGS Expenses Oper. Income
o Higher export volumes and higher domestic sales combined with increase in prices led to higher revenues
o International prices of oil and products increased faster than domestic prices, reducing margins
14
15. GAS & ENERGY, INTERNATIONAL and DISTRIBUTION (1Q10 vs 4Q09)
Continued improvement across other segments
1Q10 VS. 4Q09
Operating Results:
R$ 558 million R$ 413 million
Gas&Energy
o Higher industrial demand and residential consumption increase promote natural gas
sales (+4%) and electric energy contracts (+36%) in 1Q10
o Favorable hydro conditions contribute reducing energy cost acquisition in the short run
(PLD) (4Q09: R$ 70; 1Q10: R$ 45), reducing COGS
o Contracts revision, better sale prices and lower acquisition costs explain higher
segments margins
1Q10 VS. 4Q09
International
Operating Results :
R$ 697 million R$ 201 million
o Better oil products commercialization price (+7%, in USD) compensated lower oil sales
(11%)
o Strong reduction in operating expenses in the 4Q10 due to seasonal expenses in 4Q09
FPSO Campo de Akpo (write-off of dry wells and exploratory expenses sum up R$ 406 million)
o Higher operating results both in the 4Q09 and 1Q09
1Q10 VS. 4Q09
Operating Results : R$ 566 million R$ 563 million
Distribution
o Higher market share (4Q09: 38,6%; 1Q10: 39,5%) with higher average sales price
o Decrease in extraordinary operating expenses in the 1Q10 (4Q09: workforce
agreement 2009, sales increase and losses with unrecoverable bonds sum up
approximately R$ 100 million)
o Stable margins with higher results
15
15
16. CAPEX 1Q10 vs 1Q09:
Increasing CAPEX to meet growth plans
Investments* 1Q09 Investments* 1Q10
R$ 14.4 Billion R$ 17.8 billion
0.1 0.1
1.0 0.7 E&P 1.5 0.5
5,6 Downstream
0,05
1,1
2.2 Gas and Energy 2.4
7.4 7.9
1,3 International
3,8
3.0 6,1
RTC
5.4
10,1 24,7 Others
EBITDA (R$ billion)
15.1 o Strong EBITDA gave support to increase our
13.5 +12%
Capex level
o 50% of Downstream Capex for better fuel quality
products plants, conversion and upgrade in our
refining park
1Q09 1Q10
16
* Include investments in SPCs
17. LEVERAGE:
Multiples maintained within Company leverage targets
6 Net Debt/ Net Cap. Net Debt/Ebitda 40%
5.5 35%
5 28% 28% 30% 32% 30%
4.5 26% 26%
25%
4
3.5 20%
3 15%
2.5 10%
2 5%
1.5 1.21 1.35
1 0.85 0.95 0.95 1.00 0%
-5%
0.5
0 -10%
-0.5 -15%
-1 -20%
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 Targets:
- Leverage between 25% and 35%
- Net Debt / EBITDA up to 2,5x
R$ Billion 03/31/2010 12/31/2009
Short Term Debt 20.7 15.6
Long Term Debt 87.5 85.3
Total Debt 108.2 100.9
Cash and Cash Equivalents 27.0 29.0
Net Debt 81.2 71.9
Net Debt/Ebitda 1.35X 1.21X
US$ Billion 03/31/2010 12/31/2009
Total Debt 60.8 57.9
17
18. QUARTELY CASH FLOW STATEMENT:
Financing capability and cash flow support investments
R$ million 1Q09 4Q09 1Q10
Cash at the begging of the period 16,099 30,310 29,034
Cash generated by operating
12,403 13,700 9,676
activities
Cash used in investment activities (14,427) (19,658) (16,013)
Free Cash Flow (2.024) (5.958) (6.337)
Dividends (11) (5.605) (24)
Financing 5.610 10.080 4.212
Cash at the end of the period 19.776 29.034 26.951
Brent (US$/bbl) 44 75 76
FX rate (R$/US$) 2,32 1,74 1,80
o Net cash from operating activities reduced due to higher receivables, reduction of liabilities with tax and
other working capital items
o Liquidity still strong
18
19. CAPITALIZATION PROCESS:
Estimated timeline of Capitalization with or without Transfer of Rights with Compensation
May June July August on
Approval of EXTRAORDINARY Completion of
Capitalization SHAREHOLDING Transaction
MEETING
Process by Board
of Directors and • Giving the Board
Announcement for authority to proceed with
the capital increase
Extraordinary
Shareholding
PUBLIC OFFERING
Meeting
• Kick Off with the Registration procedure with
Regulators
• Marketing (Road show)
• Capitalization Register in CVM and others
regulatory agencies
• Bookbuilding
• Financial Settlement
TRANSFER OF RIGHTS WITH COMPENSATION
• Definition of oil price, in accordance with Brazilian Government
• Transfer of Rights agreement, with criteria for future revision, as set up in the Bill
• Payment of the Transfer of Rights
19
