Webcast 3Q09

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  • 1. Conference call / Webcast RESULTS ANNOUCEMENT 3rd Quarter 2009 (Brazilian Corporate Law) Almir Guilherme Barbassa CFO and Investor Relations Officer November 17th, 2009

2. DISCLAIMER 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. 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 SECs guidelines strictly prohibit us from including in filings with the SEC. CAUTIONARY STATEMENT FOR US INVESTORS 3. CONTINUED GROWTH OF DOMESTIC AND INTERNATIONAL PRODUCTION Domestic Production -3Q09 VS 3Q08 Total Production (Oil, NGL and Natural Gas) -3Q09 VS 3Q08 2,437 3Q08 3Q09 2,534 +8% 2,213 2,293 +5% TWO CONSECUTIVE MONTHS WITH DOMESTIC OIL PRODUCTION ABOVE 2 MILLION BPD -3% +4% Thousand bpd Thousand bpd 3Q08 3Q09

  • Increase in total production due to higher domestic production and the start-up of Akpo field, in Nigeria
  • 5% increase in domestic oil production due to increased output from P-52 and P-54, coupled with the start-up of P-51, P-53, FPSO Cidade de Niteri and FPSO Cidade de So Vicente
  • Natural gas production restricted by the decrease in demand, specially from thermo-electric plants

4. P-51 P-51 FPSO Cidade de Niteri P-53 FPSO Cidade de Niteri NEW PRODUCTION UNITS WILL CONTINUE RAMP-UP TO INCREASE PRODUCTION PLATFORM/ FIELD CAPACITY (thous. bpd) AVERAGE 3Q09 (thous. bpd) NUMBER OF WELLS EXPECTED WELLS P-53 /Marlim Leste 180 90 7 producers 3 injectors 13 producers8 injectors P-51 / Marlim Sul 180 88 5 producers 6 injectors 10 producers 9 injectors FPSO-Cidade de Niteri / Marlim Leste 100 38 2producers (oil) 9 producers (oil)1 producer (gas) Total 460 216 - - 5. Drilling of the 4th well of the Evaluation Plan of Tupi was concluded,confirming the potential of the area Excellent performance of Tupi EWT, with production of approximately 20 thousand bpd Formation Test in wells Iara, Iracema and Tupi Northeast Drilling and completion of the 1st well in the Tupi pilot BM-S-10 BR 65% BM-S-11 BR 65% BM-S-24 BR 80% BM-S-9 BR 45% BM-S-22 BR 20% BM-S-21 BR 80% BM-S-8 BR 66% Legend: Drilled Wells Formation Test Drilling and Completion Parati Iara Iracema Tupi NE Tupi TupiP1 Extenso - Tupi Jpiter Guar Carioca Iguau Abar Azulo Guarani Caramba Bem-te-vi PRE-SALT ACTIVITIES ACCELERATING, REAFIRMING POTENTIAL AND INCREASING UNDERSTANDING Next steps: new wells in the Tupi pilot; new exploratory wells in BMS-9, BMS-11 and BMS-10 Rigs: 3 new drilling rigs until 1H/2010 Ongoing biddings: (i) FPSO chartered for the Guar pilot; (ii) 8 hulls for the Pre-salt project in Santos Basin 6. (US$/barrel) REDUCED HEAVY OIL DISCOUNT IMPROVES MARGINS

  • Decrease in global supply of heavy oil contributed to the significant reduction in the Brent discount
  • Improvement in relative price for Petrobras export basket increased export revenues


  • Lower lifting costs without government take, in Reais, despite increase in international oil prices
    • In Dollars, the increase was due to FX rate appreciation
  • Increase in the government take due to higher international oil prices and increase in tax rates applied to certain fields, especially Marlim Sul e Marlim Leste

54.40 41.48 34.24 38.86 41.62 US$/barrel 30.27 18.11 14.69 19.50 22.86 8. US$/bbl R$/bbl ARP Petrobras ARP EUA

  • Comparing with the 2Q09 the ARP decreased in Reais due to reduction of gasoline and diesel price and the strengthening of the Real
  • Express in Dollars, average sales price increased 5,4% due to strengthening of Real

SUCCESSFULLONG TERM PRICING POLICY US$/bbl 2Q09 3Q09 3Q08 70.37 81.54 62.23 77.34 129.81 112.49 0 20 40 60 80 100 120 140 160 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 R$/bbl 128.41 160.79 152.65 131.52 215.62 187.02 2Q09 3Q09 3Q08 0 50 100 150 200 250 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 9. 1,998 1,824 2,054 Oil Products and Natural Gas in Brazilian Market Thousand bpd +3% INCREASE IN SALES VOLUMES, IN LINE WITHECONOMIC RECOVERY2,085 2,118 +10% +2% -2% -13%

  • Oil product sales increased with resumption of Brazilian economic growth, accentuated by seasonal aspects
  • Natural gas sales decreased due to lower thermoelectric demand, partially compensated by higher industrial consumption

10. 9M09 9M08 628 633 5 152 562 714 vs + US$ 1,795 - US$ 1,813 IMPROVING OPERATIONS REFLECTED IN GROWING TRADE BALANCEOil Oil products (thousand barrel/day) Financial Volume (US$ Million)

  • Boost in oil production led to higher oil export
  • Imports decreased (specially diesel imports) due to economic slow down, lower thermoelectric generation and increase in production of domestic oil products (diesel)


  • Inventories acquired in previous quarters affected the companys operating results (inventories average cost methodology).

- 12. NET REVENUE(IN MILLION R$ - 2Q09 VS 3Q09) 2Q09 Operating Income Net Operating Revenue COGS Operating Expenses 3Q09 Operating Income 13,896 3,272 (4,401) (2,520) 10,247 12,295 P.E. MARLIM = 2,048 OPERATING INCOME IMPACTED BY SPECIAL PARTICIPATION PROVISIONING

  • Higher oil prices, lower spread between light and heavy oil and increase in oil products sale generated higher net operating revenue
  • Higher sales volumes and higher import prices led to increase in COGS
  • Decline in operating income is explained by a provisioning for special participation tax related to Marlim field (R$ 2.05 billion)

13. NET INCOME(R$ MILLION 2Q09 VS 3Q09) 7,734 (3,649) 3,168 7,303 (836) (63) 949 1,677 Net Monetary Variation

  • Better financial result due to lower FX rate appreciation and net monetary variation from the BNDES loan (R$ 1.7 Billion)
  • Counterpart of hedge gains was higher COGS
  • Taxes Increased due to the higher fiscal benefit from interest on equity along with higher recovery of fiscal credits in exploratory activities abroad in 2Q09
  • Reduction in minority interest due to lower FX gains on SPCs debts

533 Hedge NET INCOME FLAT, AFTER ADJUSTING FOR FX VARIATIONS Financial Result Taxes Equity Income Operating Income Minority Interest 2Q09 Net Income 3Q09 Net Income 14. 2,806 (425) (820) 418 (2,419) 7,806 8,246

  • Reduced spread between light and heavy oil contributed to the increase in revenues
  • Increase in inventories caused slight reduction in sales volumes
  • Increase in COGS due to higher production taxes due to higher oil prices
  • Increase in operating expenses due to the extraordinary provision for Marlim field Government take

EXPLORATION AND PRODUCTION SOLID OPERATING PERFORMANCE EXPLORATION & PRODUCTION OPERATING INCOME (R$ MILLION 2Q09 VS 3Q09) 2Q09 Oper. Income Price Effecton Revenues Volume Effect on Revenues Operational Expenses 3Q09 Oper.Income Volume Effect on COGS Cost Effect on averageCOGS 15. DOWNSTREAM OPERATING INCOME (R$ MILLION 2Q09 VS 3Q09) (636) (5,278) 2,911 (2,316) 205 2,800 7,914

  • Despite reduction in ARP in Reais (2Q09: R$ 160.79; 3Q09: R$ 152.75), increase in the volumes sold, led by economic growth, increased revenues
  • Higher oil and oil products import costs and reduced heavy/ light oils spread led to increase in COGS

DOWNSTREAM INCOMENORMALIZING WITHINCREASES IN INTERNATIONAL PRICES 2Q09 Oper. Income Price Effecton Revenues Volume Effect on Revenues Cost Effect on averageCOGS Operational Expenses 3Q09 Oper.Income Volume Effect on COGS 16. INCREASING CONTRIBUTIONS FROM GAS & ENERGY, INTERNATIONAL AND DISTRIBUTION (2Q09 VS 3Q09) Gas & Energy International Operating Result: 2Q09 R$ 576 million VS. Operating Result : 2Q09 R$ 224 million VS. Operating result: 2Q09 R$ 466 million VS.

  • 7% increase in sales margins and 9% in volumes supported continued strength for our distribution segment

3Q09 R$ 651 million 3Q09 R$ 363 million 3Q09 R$ 620 million Distribution

  • Higher volumes sold in non-thermo electric markets
  • Decrease in natural gas imports/transfer costs, following the levels of international reference prices
  • Reduction in the energy generation income partially offset by better results from power sales
  • Higher realization prices and increase in production contributed to higher operating income
  • Akpo start-up in Nigeria was main contributor to the tr