Petrobras (PBR)

4. Merger of UPB’s Assets into PETROBRAS

Equity Transfer. Through the merger of UPB, its entire equity will be transferred to PETROBRAS, and UPB will subsequently be liquidated.

Cancellation of Shares, Inexistence of an Increase in PETROBRAS’s Capital Stock, and Investment Substitution. For the purposes of the proposed merger, no shares of PETROBRAS shall be allocated to the shareholders of UPB, since PETROBRAS is the owner of all shares issued by UPB. As a result, the three hundred twenty seven million, five hundred sixty five thousand, four hundred fifty six (327,565,456) common shares issued by UPB will be cancelled, and the necessary adjustments and adaptations to PETROBRAS’s accounting records will be carried out. Since this is a merger of a wholly-owned subsidiary by its controlling company, there will be no cancellation or issuance of shares by PETROBRAS due to the merger. In addition, there will be no change in the value of its capital stock. As a result, after the merger, PETROBRAS’s capital stock and its By-laws will remain unchanged. The substitution of PETROBRAS’s interest in UPB by assets and liabilities included in UPB’s Balance Sheet will be carried out without any change to PETROBRAS’s shareholders’ equity.

Goodwill to be Amortized. The goodwill generated from the acquisition of the investment in the petrochemical assets of Grupo Ipiranga amounted to six hundred seventy million reals (R$670,000.00), based on the expectation of future results. With the merger of UPB, said goodwill will become deductible, by PETROBRAS, from the calculation basis of the Corporate Income Tax and the Social Contribution Tax at the ratio of 1/120th per month, in accordance with the terms of Brazil’s Federal Revenue Service’s Normative Instruction no. 11/99.

Winding Up of UPB and Succession by PETROBRAS. With the merger, UPB shall be liquidated and PETROBRAS shall become the universal successor to the former’s rights and duties.

No Minority Shareholders and No Right of Withdrawal. UPB does not have, and it shall not have, on the date of the Merger, minority shareholders, which is the reason why there is no right of withdrawal arising from the Merger, as well as reimbursement rights for the shares issued by UPB.

5. Regulatory Approvals
Regulatory Approvals. The merger of UPB into PETROBRAS was forwarded to be analyzed by Brazil’s Securities and Exchange Commission (“CVM”), which will timely voice its opinion on the matter.

6. Documents Available for Consultation
The Protocol, the Appraisal Report, as well as any other documents to be made available in compliance with the applicable legislation and rules were forwarded, on this date, to Brazil’s Securities and Exchange Commission (CVM) and to the São Paulo Stock Exchange (BOVESPA), and shall be available for examination and copy by the shareholders of PETROBRAS as from today at the headquarters of this company.

The Company will keep its shareholders and the market in general timely and adequately informed about any developments related to the merger operation up to its conclusion.

     Almir Guilherme Barbassa
CFO and Investor Relations Director

www.petrobras.com.br/ri/english
Contacts: PETRÓLEO BRASILEIRO S. A. – PETROBRAS Investor Relations Department I
E-mail: petroinvest@petrobras.com.br /acionistas@petrobras.com.br
Av. República do Chile, 65 – 22^nd floor - 20031-912 - Rio de Janeiro, RJ I Tel.: 55 (21) 3224-1510 / 9947

This document may contain forecasts that 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.

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.