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 I • N º 2 2 / M A R C H 2 0 0 7
HIGHLIGHTS
Interest on Shareholders’ Equity
■ In 2006, Petrobras’ Board of Directors approved New frontiers
two interim payouts to shareholders in the form of
interest on equity capital for the gross amounts of
R$ 1,00 (October 20) and R$ 0,45 (on December 15)
in the Gulf of Mexico
P
per common and preferred share. The former value
made some
etrobras America Inc., a Petrobras affiliate company,
was paid on January 4 and the latter on March 30. important advances in its activities in the United States
Both were offset against the remuneration to be sector of the Gulf of Mexico during the year. On the Exploration
distributed for the fiscal year 2006, for which a total and Production front, the company is operating in four different regions in
dividend of R$ 1,80 per share was approved. the Gulf sedimentary basin. The Cottonwood project (Petrobras 100%), in
These payments are subject to 15% income tax at the central part of the block, started operations, lifting production from a
source and conversion to US$ on the payment day.
Miocene age reservoir adjacent to the walls of a salt dome. Situated in a more
For more details, please see “Press Releases” at
mature area of the basin, estimated output is 20,000 barrels/day from two
the address http://www.petrobras.com.br/ri/english.
deepwater wells.
Funding of US$ 500 million In the case of ultra-deep waters, where the Company has made four
■ In October 2006, Petrobras International Finance discoveries in the past five years in sub-Tertiary reservoirs (finds pio-
Company, a wholly owned subsidiary of Petrobras, neered by Petrobras), in 2006 Chevron was able to verify the proven pro-
made a successful placement of Global Notes in ductivity of reserves using a long duration test – part of the Jack field
the international market worth US$ 500 million.
project. According to Renato Tadeu Bertani, Petrobras America’s then
The bonds offer a net annual yield to investors of
6.185% with a ten-year maturity, translating into
production is slated to begin at Cascade and
president,
a rate of 1.55 pp above US Treasury Bills for a Chinook in 2009. Petrobras is to install a FPSO (Floating Production
comparable term. The issue strategy is aligned Storage and Offloading), a platform using technology never before
to policy for repurchasing old securities, recently employed in the Gulf of Mexico and for which a license has already been
introduced by the company. obtained from the MMS (the industry regulator).
Closer to the shoreline, Petrobras has prospects both on land and in
Share Buyback Program
shallow offshore waters. In spite of the interruption of the Blackbeard
■ On December 15, the Board of Directors
project, for which Exxonmobil is operator (Petrobras 20%), due to high
authorized a buyback of preferred shares for future
cancellation. The principal objective behind this
well temperatures and pressures, another prospect with excellent poten-
initiative is to reduce cash and adjust the capital tial for significant gas reserves is being drilled onshore. Finally, in the
structure, thus contributing to the reduction in the western part of the Gulf, close to the Mexican frontier, the company
cost of capital. Over a 365-day period, the company holds prospects classified as an exploratory frontier area with seismic pat-
is to buyback up to 91.5 million preferred shares terns very similar to projects that have been so successful in Brazil.
corresponding to 4.9% of the total of this class of
In the refining sector, Petrobras is investing in the
share trading in the market. The share buyback will
Pasadena Refinery, Texas, to expand its capacity to
in no way compromise the business plan and the
capital expenditures program, or will it substitute
process the heavy Marlin-type oil exported by Brazil. Total
usual dividend payments. investments from 2006 to 2009 are estimated at US$ 2.1 billion, 50%
being for account of Petrobras.
Record Petrobras Trade
earnings of in volume
US$ 12.8 billion Bolivia at the NYSE
PAGE 2 PAGE 3 PAGE 4

2. PROFITABILITY (US GAAP)
Record earnings of US$ 12.8 billion
I
n 2006, Petrobras reported net in 2007 are even brighter. In spite of a US$ 423 million, an improvement on
income of US$ 12.8 billion, surpass- 20% decline in overseas output due to the US$ 352 million in 2005.
ing the record set in 2005, due prin- contractual alterations in Venezuela, The unit cost of lifting oil in Brazil
cipally to increases in oil and oil product Petrobras’ overall production still grew increased 15% in US dollars compared
output as well as domestic and interna- by 4% in 2006. with 2005, a reflection of greater out-
tional prices. This result represented the Throughput at company’s Brazilian lays with drilling rigs and labor over-
largest growth in profits (in US dollars) refineries registered a year on year heads. The startup in operations of the
among major world oil companies. increase of 2%, while overseas through- FPSO-Capixaba and P-34 also con-
Cash generation (EBITDA) of US$ put was up by 23% with the inclusion tributed to the increase with higher ini-
22.9 billion provided the necessary of the Pasadena operations. Sales vol- tial unit costs.
resources for capital expenditures, an ume to the domestic market was 3% Unit refining costs in Brazil increased
improved financial profile and divi- higher than in 2005, due to higher sales 21% in US dollars (8% in Reais) due to
dend payments. volumes of gasoline (7%), naphtha the greater complexity arising from
The company’s internationalization (5%) and natural gas (7%). On the for- investments in the processing of heavy
strategy was responsible for a 127% eign market, exports rose by 11% and oil and improving fuel quality.
increase in investments in the international sales by 31%, thanks to The year was once more an extreme-
International area, among which the enhanced offshore operations (the ly positive one for Petrobras’ shares.
most notable was the acquisition of objective of which is to capture over- Despite the volatility of international oil
the Pasadena refinery for US$ 370 mil- seas commercial opportunities), prices, the common shares appreciated
lion. On the domestic front, there was among other factors. 31.94% and the preferred by 33.83%,
a 6% increase in oil production in The year was also a good one for in line with the Ibovespa stock index
2006, despite operations at P-50, Petrobras’ physical trade balance: the (+32.93%). In New York, the compa-
FPSO-Capixaba and P-34 still not final balance of net exports was 93,000 ny’s ADRs performed even better due
being fully up to speed. With these barrels/day, an increase of 21% on to the foreign exchange impact, post-
facilities now running at full capacity, 2005. The final financial surplus in the ing an increase of 44.51% (common)
the prospects for increased production company’s commercial balance was and 44.10% (preferred).
Petrobras ADRs versus DOW JONES and Amex Oil Indexes Economic and Financial Figures
RESULTS & RETROSPECTIVE
760
Annual
720 566,8% (PBRA/ADR PN)
680
In US$ million 2006 2005 Variation (%)
566,1% (PBR/ADR ON)
640
172,2 (Amex Oil) Sales of products and services 93,893 74,065 26.8
600
560 48,1% (Dow Jones) Net operating revenues 72,347 56,324 28.4
520
480 Gross profit 28,613 23,570 21.4
440
400 Net income 12,826 10,344 24.0
360
320
Earnings per share 1,490 0,950 56.8
280
Net cash provided by operating activities 21,077 15,115 39.4
240
200 Capital expenditures 14,643 10,365 41.3
160
120 Net debt 8,650 11,306 (23.5)
80
Debt to equity ratio 55% 58%
Feb-07
Dec-02
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Dec-03
May-04
Jun-04
Jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
May-05
Jun-05
Jul-05
Aug-05
Sep-05
Oct-05
Nov-05
Dec-05
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Feb-03
Feb-04
Feb-05
Feb-06
Mar-03
Apr-03
Mar-04
Apr-04
Mar-05
Apr-05
Mar-06
Apr-06
Real Increase in Stock Price* Operating Performance
Annual
500%
In thousand barrels of oil equivalent 2006 2005 Variation (%)
421.1% ■ Ibovespa
400%
Average daily crude oil
■ Petrobras PN and gas production 2,297 2,217 4
■ Petrobras ON
300% 261.9%
Oil product production 1,892 1,839 3
Net imports 93 77 21
200%
114.4%
Refining and marketing operations
103.0% 98.4% 104.8% Brasil – Utilization 89% 87% 2 bps
100%
15.4% 4.0%
Refining and marketing operations
2.6%
0% International – Utilization 81% 80% 1 bps
10 Years 5 Years 1 Year Domestic crude oil of total
-100%
feedstock processed 80% 80% -
* Monthly changes discounted for inflation in accordance with IGP-DI index

3. INTERNATIONAL
Petrobras in Bolivia
I
nvestors will have been following the Petrobras’ recoverable costs. Once
Total Reserves: 15.02 billion boe (*)
repercussions for Petrobras of the these are settled, the remaining bal- > Brazil: 13.75 billion boe
enactment of the Supreme Decree ance will be split between YPFB and > International: 1.27 billion boe
28,701 in the media. The Decree was Petrobras according to a table that Bolivia
2.9%
signed by the Bolivian president, Evo takes into account volumes produced,
Morales, on May 1 2006 and regulates rate of depreciation, prices, taxes and Others
5.5%
existing requirements under the Bolivian new investments.
constitution and the Hydrocarbons Law, As to the gas supply contract (GSA),
Brazil
approved on May 17 2005. Three issues negotiations between executives of 91.6%
are under discussion and affect Petrobras and YPFB reached a mutually * SPE criteria
Petrobras’ operations in Bolivia. We give beneficial agreement. At prevailing 2006 data
below the current state of play follow- prices on the international market,
ing the innumerous rounds of negotia- Petrobras agreed to pay YPFB for Total Production: 2,298 thousand boed
> Brazil: 2,055 thousand boed
tions that have already taken place. the liquid hydrocarbon fractions in the > International: 243 thousand boed
Firstly, according to the agreement natural gas effectively delivered, thus Bolivia
2.5%
signed in October 2006 on the elevating its calorific power to values of
Exploration and Production area, more than 8,900 kcal/m3 (1,000 BTU Others
8.1%
Petrobras continues responsible for per cubic foot). No changes were made
operations in the San Alberto and San to volumes or the natural gas acquisition
Brazil
Antonio fields. Both produce natural price formula provided for in the pur- 89.4%
gas and LNG, the Bolivian state-owned chase and sale contract signed between
petroleum company (YPFB) being the two companies. Currently, under 2006 data
responsible for sales of the output. The the terms of the GSA, the calorific power
current assets remain the property of of the natural gas delivered to Petrobras 50% plus one share in the refineries.
Petrobras until the end of the contract is at least 9,200 kcal/m3 (1,034 BTU/ A valuation of the shares is currently
– now with a 30-year expiry cubic foot), reflecting the presence of being undertaken as part of ongoing
date. At the end of the period, natural gas liquids (ethane, butane, negotiations. The refineries continue
the assets will be handed over propane and natural gasoline) worth to operate normally and are responsi-
to YPFB, as foreseen in the more in the international market than ble for satisfying the country’s total
original contract. The Bolivian methane, the basic component of natu- demand for special, premium kerosene
government will receive in ral gas for thermal use. and gasoline and aviation fuel and for
the form of royalties, partici- The third topic of discussion relates more than 70% of the Bolivian diesel
pations and direct hydro- to the ownership of Petrobras’ two fuel requirement.
carbons taxes (IDH), 50% refineries in Bolivia, Gualberto Villaroel Petrobras’ total investments in
of the production value, in Cochabamba, and Guillermo Elder Bolivia amounted to about US$ 1 bil-
calculated on the average Bell in Santa Cruz de La Sierra. lion between 1996 and 2004. In 2005,
prices practiced in the Together, the two refineries process Petrobras Bolivia reported a net
various outstanding sales an average of 40,000 barrels/day of oil income of R$ 250 million, which rep-
contracts. The remain- and LNG. The Bolivian government resented 1.1% of the company’s total
ing 50% will be used firstly to meet envisages acquiring a stake of at least net income for that year.
Green fuels take center stage
BIODIESEL
P
etrobras’ first industrial biodiesel one of the world leaders in process engi- tives – all with the objective of reaching
unit is to be built in Candeias, neering of seeds and vegetable oils. the target of producing 855 thousand
Bahia, the state which pioneered The biofuels area is one of the many cubic meters/year of biodiesel by 2011.
oil production in Brazil. A further two new fronts on which Petrobras is work- The National Production and Use of
plants are to be installed in Montes ing and instrumental in transforming it Biodiesel Program rules make the addi-
Claros (MG) and Quixadá (CE). into an integrated energy company. tion of 2% biodiesel to conventional
Petrobras has signed a contract worth The company is examining about fif- diesel compulsory by January 2008
US$ 227 million with the engineering teen projects in various regions of the although this mixture can go as high as
company Intecnial S.A. to build the country in partnership with various 5%, a percentage that will become
plants. American technology is to be investors. These range from major eco- mandatory from 2012 on, contributing
used – supplied by Crown Iron Works, nomic groups to rural workers’ coopera- to the expansion of the market.

4. Light oil in the Santos Basin
NEWS BOARD
ENVIRONMENT
Tests made by pioneer well (1-RJS-628A) in a new exploratory frontier
in the Santos Basin have confirmed significant volumes of 30º API
light oil with an indicated flow of 4,900 barrels per day of oil and
150,000 cubic meters/day of natural gas. The tests confirmed a highly
productive reservoir beneath a 2,000 thick salt base (subsalt).
The well is located in block BM-S-11, operated by Petrobras (65%), in A Chico Mendes
consortium with BG (25%) and Petrogal (10%). Additional investments for the Amazon
are now to be made, initially through the drilling of the first extension Rain Forest
well for a complete evaluation of reservoir oil volume.
A new character has arrived in the
Amazon Rain Forest to carry out
environmental monitoring over this
P-34 goes into Increasing the vast region. The new kid on the block
production shareholder base is the Chico Mendes robot, the result of
two years of research by the Submarine
T he platform went into F
or the second time running, Robotics Technology Laboratory – part
production in the Jubarte Field Petrobras received the São Paulo
of Cenpes, Petrobras’ Research and
in December 2006. However, Stock Exchange (Bovespa) award
Development Center.
it will still be some months before as the listed company with the
The robot is currently undergoing
the platform is operating at its largest business turnover and the
tests in the waters of the Solimões River.
full capacity of 60,000 barrels highest financial volume.
Chico Mendes is made of glass fiber
– this will only be the case when In December 2006, the company’s
all wells are producing at their common and preferred shares and polycarbonate, with four special
expected capacity. When P-34 accounted for 16.6% of total stock drive wheels that allow it to move
reaches peak production, exchange turnover, the shares across the most varied of forest terrains.
the state of Espírito Santo’s output being the front-runners in liquidity. It is the only vehicle able to successfully
will rise to 135,000 barrels/day. Following the stock split in confront land and water environments,
September 2005, the company has mangrove swamps and flooded areas
attracted some 50,000 new as well as climb over aquatic vegetation
investors to its shareholder base. characteristic of the Amazon region.
In the first four months of 2007, Non-polluting, it is powered by a solar
Petrobras continues to enjoy the energy rechargeable electric battery.
heaviest weighting in the Ibovespa The robot has been projected to
theoretical portfolio: 16,2%. gather data in real time and is
equipped with two TV cameras.
It also uses GPS in three dimensions
Trade volume at the NYSE and has an electronic arm for collect-
ing specimens. This purpose built
Petrobras-issued American Depositary Receipts (ADRs) were the ones environmental machine is one of the
that traded the most at the New York Stock Exchange (NYSE) in 2006,
with an average daily financial volume of US$ 326 million. During the year, items of equipment used by Piatam
the share value rose 44.51% (common) and 44.10% (preferred), well above the (Oil and Gas Industry Potential
Dow Jones Index in the same period (+6.71%), and with excellent liquidity. Impacts and Environmental Risk
Projects) research workers.
326
242
232
227
212
172
154
153
114
105
100
99
93
90
87
This technological contraption has
aroused the curiosity of the local river-
side communities which have already
proposed further uses for the equip-
Million
US $
ment – this time as an ambulance or in
the event of emergencies during sea-
sonal flooding. By 2008, the compa-
ny’s objective is to have some 100
(Total)
(Total)
(Common)
(Common)
(Series L)
(Preferred)
Petrobras
BP
CVRD
Petrobras
Nokia
CVRD
America Movil
America Movil
BHP Billiton
Cemex
Total
Petrobras
Taiwan
Semiconductor
RD Shell
Ellan
small, medium and large robots moni-
toring the 420 kilometers of the bed
and banks of the Solimões River.
Newssheet edited by Petrobras' Investor Relations Department • Executive Manager: Raul Campos • Coordinator: Marcos Vinícius Guimarães • Edition: Petrobras'
Institutional Communications Department • Editors: Cláudio Paula and 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