Petrobras (PBR)

Petrobras posted a consolidated net income of R$ 4.131 million in the first quarter of 2007. Consolidated net operating revenues totaled R$ 38.894 million, 8% higher than in the 1Q-2006 (R$ 35.886 million). At the close of the quarter, the Company’s market capitalization stood at R$ 215.666 million.

* Operating profit, before Financial Result

On a consolidated basis, Petrobras invested a total of R$ 8.300 million during the first quarter, up 40% from the same period a year ago. In line with the 2007-2011 Business Plan, most of the spending was used to expand future oil and natural gas production in Brazil (R$ 3.986 million) and abroad (R$1.737 million). Operating cash flow as measured by EBITDA amounted to R$ 10.993 million, ensuring sufficient resources to cover the Company’s investments.

• Domestic oil and NGL production averaged 1.800 thousand barrels/day, of which 83% was produced from the Campos Basin (1.487 thousand barrels/day), representing an increase of 3% from 1Q-2006 due to the operational start-up of the platforms P-50 (East Albacora), in April/2006, FPSO-Capixaba (Golfinho) in May/2006, P-34 (Jubarte) in December/2006 and FPSO- Cidade do Rio de Janeiro (Espadarte) in January/2007.These new platforms more than offset the natural decline in output from certain mature fields, particularly the Marlim field.
  
  
• Despite the improved operating performance, consolidated net income of R$ 4.131 million was 38% lower than in the 1Q-2006, primarily as a result of a non- recurring operating expense of R$ 1.040 million caused by amending benefits due under Petros, the company’s pension plan. Other contributing factors included the fall in average prices of crude oil and petroleum products in Brazil and abroad, in line with the decline in international oil prices, and by the increase in average selling costs, keeping in mind that during 1Q 2006 costs were positively affected by sales from inventory acquired at lower costs during the last quarter of 2005.
  
  
• The favorable trade balance for Petrobras, based on the positive difference between exports and imports, was highlighted by the increase in oil exports.

• The consolidated net debt of Petrobras ended 1Q-2007 at R$ 23.955 million, 28% higher than the R$18.776 million reported on December 31, 2006, reflecting the reduction in cash and cash equivalents caused by the payment of interest on own capital.
  
  
• Value added by the Petrobras System totaled R$28.338 million, 9% from the year earlier period, R$ 16.638 million of which went to government take and federal, state, and municipal taxes, R$ 3.524 million to suppliers and financial institutions for financial charges, rent and charters, R$ 4.607 million to shareholders and R$ 3.569million to salaries, benefits and charges.

Petrobras posted a consolidated net income of R$ 4.131 million in the first quarter of 2007. Consolidated net operating revenues totaled R$ 38.894 million, 8% higher than in the 1Q-2006 (R$ 35.886 million). At the close of the quarter, the Company’s market capitalization stood at R$ 215.666 million.

* Operating profit, before Financial Result

On a consolidated basis, Petrobras invested a total of R$ 8.300 million during the first quarter, up 40% from the same period a year ago. In line with the 2007-2011 Business Plan, most of the spending was used to expand future oil and natural gas production in Brazil (R$ 3.986 million) and abroad (R$1.737 million). Operating cash flow as measured by EBITDA amounted to R$ 10.993 million, ensuring sufficient resources to cover the Company’s investments.

• Domestic oil and NGL production averaged 1.800 thousand barrels/day, of which 83% was produced from the Campos Basin (1.487 thousand barrels/day), representing an increase of 3% from 1Q-2006 due to the operational start-up of the platforms P-50 (East Albacora), in April/2006, FPSO-Capixaba (Golfinho) in May/2006, P-34 (Jubarte) in December/2006 and FPSO- Cidade do Rio de Janeiro (Espadarte) in January/2007.These new platforms more than offset the natural decline in output from certain mature fields, particularly the Marlim field.
  
  
• Despite the improved operating performance, consolidated net income of R$ 4.131 million was 38% lower than in the 1Q-2006, primarily as a result of a non- recurring operating expense of R$ 1.040 million caused by amending benefits due under Petros, the company’s pension plan. Other contributing factors included the fall in average prices of crude oil and petroleum products in Brazil and abroad, in line with the decline in international oil prices, and by the increase in average selling costs, keeping in mind that during 1Q 2006 costs were positively affected by sales from inventory acquired at lower costs during the last quarter of 2005.
  
  
• The favorable trade balance for Petrobras, based on the positive difference between exports and imports, was highlighted by the increase in oil exports.

• The consolidated net debt of Petrobras ended 1Q-2007 at R$ 23.955 million, 28% higher than the R$18.776 million reported on December 31, 2006, reflecting the reduction in cash and cash equivalents caused by the payment of interest own capital.
  
  
• Value added by the Petrobras System totaled R$28.338 million, 9% from the year earlier period, R$ 16.638 million of which went to government take and federal, state, and municipal taxes, R$ 3.524 million to suppliers and financial institutions for financial charges, rent and charters, R$ 4.607 million to shareholders and R$ 3.569million to salaries, benefits and charges.

PETROBRAS SYSTEM