Petrobras (PBR)

CHANGES 2Q-2006 X 1Q-2006
Main Influences

The increase in operating income was partially offset by an increase in the following expenses:

• General and Administrative (R$ 229 million), due to: the increase in personnel spending, principally as a result of the increase in the workforce (R$ 38 million); spending for information services and environmental management (R$ 46 million); spending for personnel training (R$ 23 million); increase of operations (R$ 22 million); and higher consulting costs related to new exploratory projects (R$ 24 million).
  
  
• Research and Development (R$ 253 million) mainly to comply regulatory demands from ANP (R$ 203 million).
  
  
• Other Operating Income and Expense, due to Contingency provisions (R$ 103 million), as well as expenses relating to institutions and cultural projects (R$ 40 million).

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A positive impact of R$ 303 million on the net financial results is mainly due to the improvement in the net financial results from reduced losses associated with monetary assets and liabilities (R$ 220 million), as a result of the lower appreciation of the real in the 2Q-2006 (0.37%) compared to the 1Q-2006 (7.19%) .

Reduction in the loss with exchange rate variation (R$ 375 million) calculated on stockholders’ equity from companies headquartered outside of Brazil, as a result of the lower appreciation of the real against the U.S. dollar in the 2Q-2006 (0.37%) versus the 1Q-2006 (7.19%);

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PETROBRAS SYSTEM	Operating Performance