Petrobras (PBR)

Petrobras’ total capital expenditures were U.S.$20,978 million for the year ended December 31, 2007 (43.3% higher than the year ended December 31, 2006), of which U.S.$9,448 million was invested to expand future crude oil and gas production capacity in Brazil to meet the growth targets set by our Business Plan.

Adjusted EBITDA in 2007 increased 10.5% over 2006, primarily due to the increase in consolidated net operating revenues.

Despite the increase in consolidated net operating revenues in the fourth quarter of 2007, adjusted EBITDA fell by 5.6% from the third quarter of 2007 due to the increase in consolidated costs and expenses.

Average oil and gas production remained very close to 2006 levels, since four of the five new production projects only commenced in the final quarter of 2007. On December 25th, however, we reached a daily oil output record in Brazil of 2,000,238 barrels. We expect the projects that began operations at the end of 2007 to make a major contribution to increasing production in 2008.

Consolidated net income in 2007 remained relatively constant as compared to 2006.

Consolidated net income in the fourth quarter of 2007 fell by 26.6% from the third quarter of 2007 due to higher costs of goods sold, the increase in international exploration costs (dry holes), general and administrative expenses and impairment, especially in Ecuador.

Petrobras’ capital expenditures in 2007 were the highest in its history and were allocated as follows:

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The reserves to production ratio stood at 14.8 years according to SEC methodology. These proven reserves do not include the recently announced oil and gas discoveries in the pre-salt layer.

Oil product output increased 8.1% over 2006, reaching 90.4% of installed capacity in Brazil and 85.0% abroad. Output increased in large part due to the acquisition of the Pasadena Refinery in the USA.

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