Webcast about Second Quarter Results - IFRS

1. Results Announcement
2nd Quarter 2010
(IFRS)
August 17th, 2010
Conference Call / Webcast
Almir Guilherme Barbassa
CFO and Investor Relations Officer
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2. DISCLAIMER
FORWARD-LOOKING STATEMENTS:
DISCLAIMER
The presentation may contain forward-looking statements We undertake no obligation to publicly update or
about future events within the meaning of Section 27A of revise any forward-looking statements, whether as
the Securities Act of 1933, as amended, and Section 21E a result of new information or future events or for
of the Securities Exchange Act of 1934, as amended, that any other reason. Figures for 2010 on are
are not based on historical facts and are not assurances of estimates or targets.
future results. Such forward-looking statements merely
reflect the Company’s current views and estimates of
future economic circumstances, industry conditions, All forward-looking statements are expressly
company performance and financial results. Such terms qualified in their entirety by this cautionary
as "anticipate", "believe", "expect", "forecast", "intend", statement, and you should not place reliance on
"plan", "project", "seek", "should", along with similar or any forward-looking statement contained in this
analogous expressions, are used to identify such forward- presentation.
looking statements. Readers are cautioned that these
statements are only projections and may differ materially
from actual future results or events. Readers are referred NON-SEC COMPLIANT OIL AND GAS RESERVES:
to the documents filed by the Company with the SEC,
specifically the Company’s most recent Annual Report on CAUTIONARY STATEMENT FOR US INVESTORS
Form 20-F, which identify important risk factors that could We present certain data in this presentation, such
cause actual results to differ from those contained in the as oil and gas resources, that we are not permitted
forward-looking statements, including, among other to present in documents filed with the United
things, risks relating to general economic and business States Securities and Exchange Commission (SEC)
conditions, including crude oil and other commodity under new Subpart 1200 to Regulation S-K because
prices, refining margins and prevailing exchange rates, such terms do not qualify as proved, probable or
uncertainties inherent in making estimates of our oil and possible reserves under Rule 4-10(a) of Regulation
gas reserves including recently discovered oil and gas S-X.
reserves, international and Brazilian political, economic
and social developments, receipt of governmental
approvals and licenses and our ability to obtain financing.
2

3. HIGHLIGHTS FOR THE QUARTER
o Net Income increased 7%, reaching R$ 8.3 billion;
o New light oil discoveries in Campos Basin pre-salt.
Recoverable volume estimates of around 500 million
boe;
o Start-up of FPSO Capíxaba, producing from pre-salt
horizon in Espírito Santo in July;
o Business Plan 2010-2014 disclosed, with total planned
investments of US$ 224 billion;
o Two Extraordinary General Assemblies:
1. Increase in authorized capital and authorization for the
Board to execute the capitalization;
2. Approval of the method to value Brazilian Treasury Notes
in the capitalization.
3

4. OIL AND NATURAL GAS PRODUCTION 1H10 VS 1H09:
New projects contribute to production increases
(Thous. bpd)
Total Production National Production
2,503 2,568
231 246 International 2,272 2,322
National
314 324 Natural Gas
Oil and LNG
2,272 2,322
1,958 1,998
o Monthly record of domestic oil production of 2,033 thousand bpd in April,2010;
o 6,5% growth in international production due to production start-up in the fields of Akpo and
production increase in Agbami, in Nigeria.
4

5. NEW PRODUCTION UNITS:
Continued increases in capacity
Main units responsible for production increase
Projects Capacity 2Q10
FPSO Cidade de Vitória
100 thousd bpd 60.9
(Golfinho)
FPSO Espírito Santo
100 thousd bpd 28.2
Parque das Conchas (1)
FPSO Capixaba
100 thousd bpd 9.7
Cachalote e Baleia Franca
Production Start-up:
Mexilhão and Uruguá- 35 thousd bpd and
UTB - 14/jul
Tambaú 25 million cu.m gas
Mexilhão – 4Q10
(1) Projects in partnership, production refers to Petrobras share (35%)
Principal New Units to start-up operation
Projects Capacity Start-up forecast
FPSO Cidade de Angra dos Reis (Tupi Pilot) 100 mil bpd 4Q10
P-56 (Marlim Sul) 100 mil bpd 2011
P-57 (Jubarte) 180 mil bpd 2011
5

6. PRODUÇÃO 2010
PRE-SALT NEWS:
Accelerating development activity
o Campos and Espirito Santo Basin
o New discoveries in Campos basin in the pre-salt layer in Marlim, Albacora Leste
and Caratinga fields;
o Production start-up in Baleia Franca field, in Espírito Santo. 20 Tbpd forecast by
year end.
o Santos Basin
Libra
o 6 new wells to be drilled in 2010, Franco
totaling 16 wells in 2010;
o 3 new rigs* previously contracted Iracema Norte
scheduled to arrive in 2010, in Macunaíma
addition to the 10 already operating;
o FPSO Cidade de Angra dos Reis, to be
installed as Tupi Pilot project
(currently en route to Brazil); Piloto de
Carioca
NE Tupi P1
o Letter of intent with SBM/Queiroz
Galvão to construct 3rd Pilot. FPSO Guará
to operate in Tupi Nordeste. Piloto de
Norte
Capacity: 120 thous. bpd of oil and 5 Tupi Tupi IG1
million cu.m p/day of natural gas. Sudoeste
Delivery date: 34 months;
Guará Wells**:
o Letter of intent to construct 8 Petrobras
replicant FPSO hulls for definitive
systems Santos Basin, with Engevix.
Capacity: 150 thous. bpd. ANP
* Ocean Valor, Vitoria 10.000 and Sevan Driller. ** Drilling or completion or test. 6

7. AVERAGE REALIZATION PRICE:
Stable price in both domestic and international markets
US$/bbl Avg. Avg.
121 R$/bbl Avg.
120 115 2Q09 1Q10 2Q10
105
220
100
101
80 75 76 78 170 160.79
55 68 157.65 158.72
60 59
44 120 128.41
73 74
40 64 70 148.75
152.64
48 32 49 70
20
2Q083Q08 20
4Q08 1Q09 2Q09 4Q07 3Q08
3Q09 4Q09 4Q08 3Q08
1Q10 2Q10 4Q09 1Q09
2Q09 3Q09
ARP EUA 4Q09 1Q10
Petrobras Oil Price (avr) 2Q10
Brent (US$/bbl) ARP Petrobras
o Oil price increase in the international market (1H09:US$40.74; 1H10:US$73.35) and decrease
in the discount between light/heavy oil since the end of 2009 which increased E&P earnings;
o Price stability in Brazil combined with higher Brent and heavy oil prices reduced refining
margins
7

8. DOMESTIC LIFTING COST:
Stable costs
R$/barrel US$/barrel
76.2 78.3
74.6
68.3
43.04 43.82 43.91
41.62 58.8
38.86 24.74 23.73 24.50
22.86
19.50
24.78 26.53 26.87 26.37 15.23 14.71
21.28 13.84 14.33
10.78
17.58 16.84 16.51 16.95 17.54 8.72 9.02 9.51 9.40 9.79
2Q09 3Q09 4Q09 1Q10 2Q10 2Q09 3Q09 4Q09 1Q10 2Q10
Lifting Cost Gov.Part. Lifting Cost Gov. Part. Brent
o In Dollar, lifting cost increased, followed recovery of international oil prices;
o In Reais, lifting cost remained stable during the last year.
8

9. DOMESTIC OIL PRODUCTS AND NATURAL GAS MARKET:
Significant sales growth in the domestic market
Thous. bpd Oil Products Natural Gas
+7%
1,851 1,898 +20%
1,769
257 292
Others 473 505 501 244
LPG 212 203 221
Gasoline 331 410 374
Diesel
753
733 802 2Q09
1Q10
2Q09 2Q10
1Q10
2Q10
Oil product sales in the domestic market grew 7% in comparison with 2Q09, due to:
o 6,5% increase in diesel sales as a result of recovering economic activity and improved grain harvest;
o 13% growth in gasoline sales. Growth was led by increase in the usage of gasoline in flex fuel vehicles
caused by ethanol shortage and temporary reduction of anhydrous ethanol in the gasoline blend;
o 15% increase in jet fuel sales (economic recovery leading to increased aviation).
Natural gas: Higher sales of natural gas to industry, greater thermoelectric dispatch.
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10. TRADE BALANCE 1H09 v. 1H10:
Increasing trade balance despite small reduction in net exports
Thous bpd 1H09 1H10
Oil Oil Products
708 762
524 620
226 204
131 281
184
482 558 142
393
339
Export Import Net Export Import Net
Export Export
Financial Volume (US$ Million)
US$ 1,466
US$ 1,302 o Lower net export due to stronger domestic
10,370 demand, primarily diesel;
8,904
6,208 o Higher financial volume in the trade balance
4,906
(+US$ 164 million) due to smaller light heavy
differential, reduced crack spreads on imports.
1S09 1S10
Import Export
10

11. OPERATING INCOME 2Q10 vs 1Q10:
Higher volumes and reduced operating expenses
(R$ Million)
3,219 (3,142)
609 12,303
11,617
1Q10 Operat. Net COGS Operating 2Q10
Operating Revenue Expenses Operating
Income Income
o Higher sales volume of oil products and better export prices enhanced Operating Revenues;
o Higher COGS due to higher volumes sold, primarily imports of diesel;
o 8% decrease in Operating Expenses due to higher extraordinary items in 1Q10 (impairments,
dry hole expense, provision for contingencies with legal procedures);
o 6% increase in operating income led by EBITDA of R$ 16 billion in the 2Q10.
11

12. NET INCOME 2Q10 vs 1Q10:
Stable exchange rate eliminated fluctuation in financial results
(R$ Million)
686 71 (52) (165) 29 8,295
7,726
1Q10 Operating Financial Equity Minority Interest 2Q10
Taxes
Net Income Income Result Income and Employees Net Income
Part.
o Increase in net income of 7% was driven almost exclusively by higher operating income;
o Items below the EBITDA line were stable, due to stable Dollar/Real exchange rate.
12

13. EXPLORATION & PRODUCTION 2Q10 vs 1Q10:
Higher operating income in absence of extraordinary items
(R$ Million)
357 (553) 840 11,572
11,060 (235) 103
1Q10 Price Effect Cost Effect Volume Effect Volume Effect Operating 2Q10
Operating on Revenues on COGS on Revenue on COGS Expenses Operating
Income Income
o Increase in oil and natural gas sales prices (oil: +1%; NG: +37%, in US$/bbl);
o Lower operating expenses as a result of no extraordinary expenses (Provisions for contingencies of
the ICMS/RJ tax on P-36 platform - R$449 million in 1Q10), and decrease in 2Q10 of exploratory
costs (- R$ 349 million) due to the write-off of dry or economically unviable wells in the 1Q10;
o Higher operating income of 5%.
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14. DOWNSTREAM 2Q10 vs 1Q10:
Increasing costs of throughput reduced margin
(R$ Milhões)
2,816 (2,609)
161 (1,654)
1,870
(340)
244
1Q10 Price Effect Cost Effect Volume Effect Volume Effect Operating 2Q10
Operating on Revenues on COGS on Revenue on COGS Expenses Operating
Income Income
o Increase in COGS in the 2Q10 (+11%) tied to lower inventory costs in the 1Q10;
o Higher diesel import costs due to scheduled stoppages in REPLAN in the 2Q10 contributed to the
increase in COGS;
o Demand growth was met by increase in imports, with positive margins;
o Higher operating expenses due to freights and greater sales volumes.
14

15. GAS & ENERGY, INTERNATIONAL and DISTRIBUTION (2Q10 vs 1Q10)
Continued improvement across other segments
2Q10 VS. 1Q10
Net Income: 8%
Gas&Energy
R$ 349 million R$ 323 million
o Higher revenue due to power generation and higher industrial sales;
o Higher natural gas demand to attend termoelectrical plants. Decrease in
units' operational expenses;
o Earnings were partially offset by higher acquisition costs.
International
2Q10 VS. 1Q10
Net Income: 19 %
R$ 533 million R$ 447 million
o Higher volumes sold in Nigeria, incresing prices for oil production;
o Absence of impairments provisioned in the 1T10;
FPSO Campo de Akpo
o Provision to reduce inventories to market value in United States and Japan.
2Q10 VS. 1Q10
Net Income :
Distribution
R$ 268 million R$ 362 million 26%
o Sales volumes increased 4% although the segment presented higher
expenses (freight and sales promotion);
o Non-recurring expenses from the settlement of ICMS tax debits (R$110
million) reduced income.
15

16. CAPEX 1H10 vs 1H09:
Increasing investments to meet domestic market demand
Capex 1H10 Capex 1H09
R$ 38.1 billion R$ 32.5 billion
0.2
E&P
0.3 3.4 4.2
15.7 Downstream
5,6
2.5 0,05 Gas and Energy 4.2
1,1 14.8
2.4 International
1,3
2,7
3,8
RTC
13.8 6,1 Others 6.4
10,1 24,7
Downstream
Capex
Quality /Sulfur Content Reduction
Conversion
25% 25%
New Refineries
Fleet Expansion
12%
18% Investments of R$ 2.5 billion in Braskem
19% Plangas, Maintenance, infrastructure, HSE
and others
1%
16

17. LEVERAGE:
Multiples maintained within Company´s targets
6 Net Debt/Net Cap. Net Debt/Ebitda 40%
5.5 32% 35%
30% 34%
5
26% 28% 28% 30%
4.5 Targets:
25%
4 - Leverage between
3.5 20% 25% and 35%
3 15% - Net Debt / EBITDA
2.5 10% up to 2,5x
2 5%
1.35 1.52
1.5
0.95 1.00 1.21 0%
1
0.95
-5%
0.5
0 -10%
-0.5 -15%
-1 -20%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
R$ Billion 06/30/2010 03/31/2010
Short Term Debt 26.0 20.7
Long Term Debt 92.4 87.5
Total Debt 118.4 108.2
Cash and Cash Equivalents 24.2 27.0
Net Debt 94.2 81.2
Net Debt/Ebitda 1.52X 1.35X
US$ Billion 06/30/2010 03/31/2010
Total Debt 65.7 60.8
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18. QUARTERLY CASH FLOW:
Financing and cash flow support investments and maintain liquidity
R$ million 2Q09 1Q10 2Q10
Cash at the beginning of the period 19,776 29,034 26,951
Cash generated by operating activities 9,114 9,676 13,259
Cash used in investment activities (17,750) (16,013) (19,638)
Free Cash Flow (8,636) (6,337) (6,379)
Dividends (6,398) (24) (3,711)
Financing 5,937 4,212 7,292
Cash at the end of the period 10,297 26,951 24,210
Brent (US$/bbl) 58 76 78
FX rate (R$/US$) 2.07 1.80 1.79
EBITDA 17,599 15,076 15,927
o Stable EBITDA with substantial liquidity
o Greater EBITDA in 2Q09 due to higher ARP, combined with lower production taxes. Weaker
Real also led to higher export revenues, when expressed in Reais.
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19. Information:
Investor Relations
+55 21 3224-1510
petroinvest@petrobras.com.br
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