Petrobras (PBR)

Pag: 131

(A free translation of the original report in Portuguese)

08.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Year-to-date net income from Exploration and Production totaled R$ 18,756 million, 7% down on the first nine months of 2006 (R$ 20,098 million), due to the following factors:

• The R$ 1,576 million reduction in gross profit, due to the decline in average domestic oil prices in Reais due to the appreciation of the Real against the US dollar, partially offset by the 2% upturn in oil and NGL output, the reduction in government participations and higher average transfer prices for natural gas;

• Expenses of R$ 220 million, comprising financial incentives to pension plan participants in exchange for accepting the amendments to the plan’s regulations.

The spread between the average domestic oil sale/transfer price and the average Brent widened from US$ 10.08/bbl in the first nine months of 2006, to US$ 10.61/bbl in the 9M-2007.

In comparison with the previous quarter, 3Q-2007 net income moved up 13% due to higher average domestic oil prices and the 2% increase in the volume of oil and NGL transferred to the domestic and export markets.

The spread between the average domestic oil sale/transfer price and the average Brent price fell from US$ 11.72/bbl in the 2Q-2007 to US$ 10.45/bbl in the 3Q-2007.