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This excerpt taken from the PBR 6-K filed Nov 19, 2009. RESULTS BY BUSINESS AREA Petrobras is a company that operates in an integrated manner, with the greater part of oil and gas production in the Exploration and Production area being sold or transferred to other Company areas. The main criteria used to report results per business area are as follows: a) Net operating revenues: revenues from sales to external clients, plus intra-Company sales and transfers, using internal transfer prices established between the various areas as a benchmark, with assessment methodologies based on market parameters; b) Operating income: net operating revenues, plus the cost of goods and services sold, which are reported per business area considering the internal transfer price and other operating costs for each area, plus the operating expenses effectively incurred by each area; c) The entire financial result is allocated to the corporate group; d) Assets: refers to the assets as identified by each area. Equity accounts of a financial nature are allocated to the corporate group.
The lower result reflected the reduction in oil prices, the recognition, in September 2009, of the special take from the Marlim field, pursuant to the agreement between Petrobras and the ANP, (R$ 2,048 million) and the increase in exploration costs due to higher geological and geophysical costs. Part of these effects was offset by the 6% increase in average daily oil and NGL production and the lower government takes. This excerpt taken from the PBR 6-K filed Sep 9, 2009. RESULTS BY BUSINESS AREA Petrobras is a company that operates in an integrated manner, with the greater part of oil and gas production in the Exploration and Production area being sold or transferred to other Company areas. The main criteria used to report results per business area are as follows: a) Net operating revenues: revenues from sales to external clients, plus intra-Company sales and transfers, using internal transfer prices established between the various areas as a benchmark, with assessment methodologies based on market parameters; b) Operating income: net operating revenues, plus the cost of goods and services sold, which are reported per business area considering the internal transfer price and other operating costs for each area, plus the operating expenses effectively incurred by each area; c) The entire financial result is allocated to the corporate group; d) Assets: refers to the assets as identified by each area. Equity accounts of a financial nature are allocated to the corporate group.  The lower result reflected the new level of international oil prices and the increase in exploration costs due to higher geological and geophysical costs. Part of these effects were offset by the 7% increase in average daily oil and NGL production and the lower government take. The spread between the average domestic oil sale/transfer price and the average Brent price narrowed from US$ 13.25//bbl in the 1H-2008 to US$ 10.86/bbl in the 1H-2009.  The quarter-over-quarter results increase was due to the upturn in international oil prices and the increase of 7% in the oil sale/transfer volume, as well as the reduction in exploration costs due to the write-off of dry or economically unviable wells. These factors were partially offset by the higher government take and increased geological and geophysical costs The spread between the average domestic oil sale/transfer price and the average Brent price fell from US$ 12.17/bbl in the 1Q-2009 to US$ 10.11/bbl in the 2Q-2009.  The year-on-year improvement in the Supply result was due to lower oil acquisition/transfer costs and reduced imported oil product costs, reflecting the new level of international oil prices. These effects were partially offset by the following factors: • The reduction in average oil product prices due to reduced export prices and, in Brazil, to the lower price of those oil products pegged to international prices; gasoline and diesel prices remained at 2008 levels until June 2009; 17
• Higher operating expenses, particularly from the adjustment of inventories to market value and from judicial contingencies. 
The increase in the quarter-over-quarter result was due to the following factors: • Higher sales volume in Brazil and abroad; • Higher average export prices; • The sale, in the 2Q-2009, of inventories formed in the previous quarter at a lower acquisition cost; • Increased equity income, reflecting the petrochemical sector result. These effects were partially offset by the reduction in average domestic oil product prices due to the downturn in diesel and gasoline prices in June 2009. 
The improved result was due to lower electricity purchase costs due to the reduction in the difference settlement price, the greater availability of electricity for commercialization, due to the recovery of the peg, and the increase in fixed revenue from auctions, as well as higher electricity exports. Other contributory factors included the conclusion of infrastructure projects, which facilitated gas production outflow, thereby avoiding the failure-to-supply penalties incurred in the 1H-2008. These effects were partially offset by reduced thermal power output due to higher hydroelectric reservoir levels and lower gas sales volume.  The quarter-over-quarter result recorded an upturn due to higher electricity sales/generation margins generated by the reduction in spot market acquisition costs, increased export volume and lower gas import costs. These effects were partially offset by the reduction in the average gas sales price.  The year-on-year decline was caused by narrower sales margins, in turn due to lower average sales prices. This was partially offset by the 10% upturn in sales volume, primarily thanks to the consolidation of ALVO Distribuidora, despite the consequent increase in SG&A expenses. 18
The Company’s share of the fuel distribution market climbed from 35.2% in the 1H-2008 to 38.4% in the 1H-2009.  The higher result was caused by the 9% increase the sales margins and the 5% upturn in sales volume. These effects were partially offset by higher SG&A expenses due to increased freight costs. The segment recorded a 38.0% share of the fuel distribution market in the 2Q-2009, versus 38.8% in the previous quarter.  The main events impacting the year-on-year reduction were: • The reduction in gross profit due to lower international oil prices; • Lower equity income due to losses on investments in the USA from the acquisition of the remaining 50% of the Pasadena refinery.  Higher oil prices and the upturn in sales volume due to the start-up of production in Akpo, in Nigeria, increased gross profit by R$ 189 million. The constitution of provisions for losses on investments in the USA in the 1Q-2009 also contributed to the improvement. 
The increase in the negative result was due to the upturn in the negative financial result (R$ 1,440 million), as dealt with on page 6, and the minority interest result, reflecting the impact of appreciation of the Real against the dollar on the debt of Special Purpose Companies and controlled companies that are not wholly-owned by Petrobras or its subsidiaries. These effects were partially offset by the increase in income tax and social contribution credits due to the tax benefit generated by provisions for interest on equity. 19
The increase in the negative result was due to the upturn in the negative financial result (R$ 1,612 million), as mentioned on page 10, and the minority interest result, despite the increase in income tax and social contribution credits. 20
The net debt of the Petrobras System increased by 16% over March 31, 2009, due to the investments envisaged in the Petrobras 2009/2013 business plan, as well as cash reduction given the payment of partial dividends. The level of indebtedness, measured by the net debt/EBITDA ratio totaled 0.95 on June 30, 2009, identical to the ratio on March 31, 2009. The portion of the capital structure represented by third parties was 49%.  21
This excerpt taken from the PBR 6-K filed Aug 18, 2009. RESULTS BY BUSINESS AREA Petrobras is a company that operates in an integrated manner, with the greater part of oil and gas production in the Exploration and Production area being sold or transferred to other Company areas. The main criteria used to report results per business area are as follows: a) Net operating revenues: revenues from sales to external clients, plus intra-Company sales and transfers, using internal transfer prices established between the various areas as a benchmark, with assessment methodologies based on market parameters; b) Operating income: net operating revenues, plus the cost of goods and services sold, which are reported per business area considering the internal transfer price and other operating costs for each area, plus the operating expenses effectively incurred by each area; c) The entire financial result is allocated to the corporate group; d) Assets: refers to the assets as identified by each area. Equity accounts of a financial nature are allocated to the corporate group.
The lower result reflected the new level of international oil prices and the increase in exploration costs due to higher geological and geophysical costs. Part of these effects were offset by the 7% increase in average daily oil and NGL production and the lower government take. The spread between the average domestic oil sale/transfer price and the average Brent price narrowed from US$ 13.25//bbl in the 1H-2008 to US$ 10.86/bbl in the 1H-2009. This excerpt taken from the PBR 6-K filed Aug 17, 2009. RESULTS BY BUSINESS AREA Petrobras is a company that operates in an integrated manner, with the greater part of oil and gas production in the Exploration and Production area being sold or transferred to other Company areas. The main criteria used to report results per business area are as follows: a) Net operating revenues: revenues from sales to external clients, plus intra-Company sales and transfers, using internal transfer prices established between the various areas as a benchmark, with assessment methodologies based on market parameters; b) Operating income: net operating revenues, plus the cost of goods and services sold, which are reported per business area considering the internal transfer price and other operating costs for each area, plus the operating expenses effectively incurred by each area; c) The entire financial result is allocated to the corporate group; d) Assets: refers to the assets as identified by each area. Equity accounts of a financial nature are allocated to the corporate group. The lower result reflected the new level of international oil prices and the increase in exploration costs due to higher geological and geophysical costs. Part of these effects were offset by the 7% increase in average daily oil and NGL production and the lower government take. The spread between the average domestic oil sale/transfer price and the average Brent price narrowed from US$ 13.25//bbl in the 1H-2008 to US$ 10.86/bbl in the 1H-2009. The quarter-over-quarter results increase was due to the upturn in international oil prices and the increase of 7% in the oil sale/transfer volume, as well as the reduction in exploration costs due to the write-off of dry or economically unviable wells. These factors were partially offset by the higher government take and increased geological and geophysical costs The spread between the average domestic oil sale/transfer price and the average Brent price fell from US$ 12.17/bbl in the 1Q-2009 to US$ 10.11/bbl in the 2Q-2009. The year-on-year improvement in the Supply result was due to lower oil acquisition/transfer costs and reduced imported oil product costs, reflecting the new level of international oil prices. These effects were partially offset by the following factors: • The reduction in average oil product prices due to reduced export prices and, in Brazil, to the lower price of those oil products pegged to international prices; gasoline and diesel prices remained at 2008 levels until June 2009; 17
• Higher operating expenses, particularly from the adjustment of inventories to market value and from judicial contingencies.
The increase in the quarter-over-quarter result was due to the following factors: • Higher sales volume in Brazil and abroad; • Higher average export prices; • The sale, in the 2Q-2009, of inventories formed in the previous quarter at a lower acquisition cost; • Increased equity income, reflecting the petrochemical sector result. These effects were partially offset by the reduction in average domestic oil product prices due to the downturn in diesel and gasoline prices in June 2009.
The improved result was due to lower electricity purchase costs due to the reduction in the difference settlement price, the greater availability of electricity for commercialization, due to the recovery of the peg, and the increase in fixed revenue from auctions, as well as higher electricity exports. Other contributory factors included the conclusion of infrastructure projects, which facilitated gas production outflow, thereby avoiding the failure-to-supply penalties incurred in the 1H-2008. These effects were partially offset by reduced thermal power output due to higher hydroelectric reservoir levels and lower gas sales volume. The quarter-over-quarter result recorded an upturn due to higher electricity sales/generation margins generated by the reduction in spot market acquisition costs, increased export volume and lower gas import costs. These effects were partially offset by the reduction in the average gas sales price. The year-on-year decline was caused by narrower sales margins, in turn due to lower average sales prices. This was partially offset by the 10% upturn in sales volume, primarily thanks to the consolidation of ALVO Distribuidora, despite the consequent increase in SG&A expenses. 18
The Company’s share of the fuel distribution market climbed from 35.2% in the 1H-2008 to 38.4% in the 1H-2009. The higher result was caused by the 9% increase the sales margins and the 5% upturn in sales volume. These effects were partially offset by higher SG&A expenses due to increased freight costs. The segment recorded a 38.0% share of the fuel distribution market in the 2Q-2009, versus 38.8% in the previous quarter. The main events impacting the year-on-year reduction were: • The reduction in gross profit due to lower international oil prices; • Lower equity income due to losses on investments in the USA from the acquisition of the remaining 50% of the Pasadena refinery. Higher oil prices and the upturn in sales volume due to the start-up of production in Akpo, in Nigeria, increased gross profit by R$ 189 million. The constitution of provisions for losses on investments in the USA in the 1Q-2009 also contributed to the improvement.
The increase in the negative result was due to the upturn in the negative financial result (R$ 1,440 million), as dealt with on page 6, and the minority interest result, reflecting the impact of appreciation of the Real against the dollar on the debt of Special Purpose Companies and controlled companies that are not wholly-owned by Petrobras or its subsidiaries. These effects were partially offset by the increase in income tax and social contribution credits due to the tax benefit generated by provisions for interest on equity. 19
The increase in the negative result was due to the upturn in the negative financial result (R$ 1,612 million), as mentioned on page 10, and the minority interest result, despite the increase in income tax and social contribution credits. 20
The net debt of the Petrobras System increased by 16% over March 31, 2009, due to the investments envisaged in the Petrobras 2009/2013 business plan, as well as cash reduction given the payment of partial dividends. The level of indebtedness, measured by the net debt/EBITDA ratio totaled 0.95 on June 30, 2009, identical to the ratio on March 31, 2009. The portion of the capital structure represented by third parties was 49%. 21
This excerpt taken from the PBR 6-K filed May 20, 2009. RESULTS BY BUSINESS AREA Petrobras is a company that operates in an integrated manner, with the greater part of oil and gas production from the Exploration and Production area being sold or transferred to other Company areas. The main criteria used to report results per business area are as follows: a) Net operating revenues: revenues from sales to external clients, plus intra-Company sales and transfers, using internal transfer prices established between the various areas as a benchmark, with assessment methodologies based on market parameters; b) Operating income: net operating revenues, plus the cost of goods and services sold, which are reported per business area considering the internal transfer price and other operating costs for each area, plus the operating expenses effectively incurred by each area; c) The entire financial result is allocated to the corporate group; d) Assets: refers to the assets as identified by each area. Equity accounts of a financial nature are allocated to the corporate group.
The lower result reflected the new level of international oil prices and the decrease in natural gas sale/transfer volume, due to reduced demand, and the increase in exploratory costs due to the write-off of dry or economically unviable wells and higher geological and geophysical costs. Part of these effects were offset by the 7% increase in average daily oil and NGL production and the lower government take. The spread between the average domestic oil sale/transfer price and the average Brent price widened from US$ 10.77/bbl in the 1Q-2008 to US$ 12.17/bbl in the 1Q09.
The quarter-over-quarter reduction was due to the decline in international oil prices and the reduction in gas sale/transfer volume, due to reduced demand, partially offset by the following factors: • The lower government take; • The 5% increase in daily oil and NGL production; • Estimated losses from the impairment of assets booked in the 4Q-2008. The spread between the average domestic oil sale/transfer price and the average Brent price rose from US$ 6.96/bbl in the 4Q-2008 to US$ 12.17/bbl in the 1Q09.
The improvement in the Supply result was due to lower oil acquisition/transfer and oil products imports costs, reflecting the change in international price levels. These effects were partially offset by higher freight charges on exports and trading transactions due to increased sales volume. 19
The increase in the quarter-over-quarter result was due to the following factors: • Reduced oil acquisition/transfer costs and the decline in oil product import costs; • Lower SG&A expenses due to the reduction in freight costs; • The decline in provisions for the reduction of inventories to market value; • Higher equity income, reflecting the impact of the devaluation of the Real against the dollar on the debt of petrochemical investees in the 4Q-2008. These effects were partially offset by: • The decrease in domestic sales volume, reflecting the seasonal behavior of the agricultural and industrial sectors; • The 7% reduction in average realization prices in Brazil, despite the maintenance of gasoline and diesel prices. 
The improved result was due to the reduction in penalties for failure to supply thanks to the greater availability of infrastructure and greater gas supply flexibility, as well as lower electricity purchase costs due to the reduction in the difference settlement price. These effects were partially offset by reduced thermoelectric output – thanks to the increased level of the hydroelectric reservoirs – and the decline in natural gas sales volume.
The quarter-over-quarter operating result recorded an improvement due to lower costs from the sale of electricity (thanks to the reduction in spot market acquisition costs) and natural gas imports (due to the decline in the international natural gas price). These effects were partially offset by reduced demand for thermal energy (thanks to the increased level of the hydroelectric reservoirs) and the decline in gas sales volume. However, this was more than offset by the reduction in minority interests, reflecting improved results from the Special Purpose Companies and subsidiaries in which Petrobras does not retain a 100% stake, which led to a reduction in the net result. 20
The decline was caused by narrower sales margins, in turn due to lower average realization prices. This was partially offset by the 7.9% upturn in sales volume, primarily thanks to the consolidation of ALVO Distribuidora, despite the consequent increase in SG&A expenses. The Company’s share of the fuel distribution market climbed from 35.9% in the 1Q-2008 to 38.8% in the 1Q-2009.
The lower result reflected the narrower sales margins due to the reduction in average realization prices, partially offset by the decrease in SG&A expenses caused by the reduction in provisions for doubtful debts and expenses from the 2008/09 collective bargaining agreement booked in the 4Q-2008. The segment recorded a 38.8% share of the fuel distribution market in the 1Q-2009, versus 34.7% in the previous quarter.
The main events impacting the reduction were: i) the constitution of provisions for losses on investments in the USA (R$ 341 million): and ii) the decline in international oil prices. 
Higher refining volumes and margins in the USA and Japan, together with the improved performance of joint refining and distribution operations in Argentina, increased gross profit by R$ 592 million. The following factors also contributed to the improvement: • The reduction in exploration costs, especially seismic and geological expenses (R$ 281 million) and the write-off of dry or economically unviable wells (R$ 103 million); • Estimated impairment of assets in the 4Q-2008 (R$ 325 million); • The reduction in losses from the devaluation of inventories in the USA and Japan (R$ 436 million); • Losses from the devolution of Block 31 in Ecuador in the 4Q-2008 (R$ 182 million). These events were partially offset by the constitution of provisions for losses on investments in the USA (R$ 341 million). 21
The increase in the negative result was due to the upturn in the negative financial result (R$ 613 million), as dealt with on page 5, partially offset by the increase in income tax and social contribution credits. 
The reduced result was due to the reduction in the net financial result (R$ 3,254 million), as mentioned on page 7, and the reversal of minority interest, reflecting the impact of the 4Q-2008 devaluation of the Real against the dollar on the debt of Special Purpose Companies and subsidiaries in which Petrobras and its subsidiaries do not retain a 100% stake. 22
The net debt of the Petrobras System increased by 4% over the 4Q-2008 due to financing operations in the international market, especially the issue of global notes, and pre-shipment export financing. Most of the proceeds were allocated to financing the Company’s 2009/2013 business plan and its oil imports. The level of indebtedness, measured by the net debt/EBITDA ratio, increased from 0.85 on December 31, 2008, to 0.95 on March 31, 2009. The portion of the capital structure represented by third parties was 49%, one percentage point down on the close of December 31, 2008.
23
This excerpt taken from the PBR 6-K filed Mar 24, 2009. RESULTS BY BUSINESS AREA Petrobras is a company that operates in an integrated manner, with the greater part of oil and gas production in the Exploration and Production area being sold or transferred to other Company areas. The main criteria used to report results per business area are as follows: a) Net operating revenues: revenues from sales to external clients, plus intra-Company sales and transfers, using internal transfer prices established between the various areas as a benchmark, with assessment methodologies based on market parameters; b) Operating income: net operating revenues, plus the cost of goods and services sold, which are reported per business area considering the internal transfer price and other operating costs for each area, plus the operating expenses effectively incurred by each area; c) The entire financial result is allocated to the corporate group; d) Assets: refers to the assets as identified by each area. Equity accounts of a financial nature are allocated to the corporate group.
The higher annual result was due to the increase in average domestic oil prices and the 4% upturn in daily oil and NGL production Part of these effects were offset by the higher government take, with estimated losses from the impairment of assets (due to the end-of-year reduction in international oil prices, which affected future projections) and the increase in exploration costs, chiefly due to the write-off of dry and economically unviable wells. The spread between the average domestic oil sale/transfer price and the average Brent price widened from US$ 10.95/bbl in 2007 to US$ 15.44/bbl in 2008.
The quarter-over-quarter reduction was due to the change in the level of oil prices, in addition to the following factors: • Higher exploration costs from the write-off of dry or economically unviable wells, provisions for abandonment and geological and geophysical costs; • Estimated losses from the impairment of assets. Part of these effects were offset by the 5% increase in total oil and NGL sales/transfer volume and the narrowing of the spread between the average domestic oil sale/transfer price and the average Brent price, which fell from US$ 14.20/bbl in the 3Q-2008 to US$ 6.96/bbl in the 4Q-2008, as well as the reduction in government take and lower expenses from the 2008/09 collective bargaining agreement. 
20
The annual reduction in the Supply result was due to higher oil acquisition/transfer costs and the increase in oil product import costs, together with the following factors: • Higher freight costs due to the increase in sales volume; • Losses from petrochemical investments, reflecting the impact of the devaluation of the Real against the dollar on debt and the upturn in naphtha prices; • Losses from the devaluation of inventories. These effects were partially offset by the upturn in average oil product prices in Brazil and abroad and by gains from the change in holdings as a result of Quattor’s corporate restructuring.
The result was due to reduced costs from the decline in international oil prices, despite the sale of inventories acquired at a higher average cost in the previous quarter and the maintenance of average gasoline and diesel sale prices on the domestic market, despite the decline in the price of the other oil products. These effects were partially offset by the following factors: • Increased provisions for the reduction of inventories to market value; • Higher G&A expenses, due to increased freight charges on exports and trading transactions; • Reduced equity income, reflecting the impact of the devaluation of the Real against the dollar on the debt of petrochemical investees.
The improved result was due to wider gas and electricity sales margins – thanks to higher sales prices – and the increase in gas and electricity sales volume. These effects were partially offset by provisions for the reduction of NGL inventories to market value. 
The negative impact of the reduction in gas sales margins – due to higher import costs – and gas sales volume was more than offset by the reduction in expenses from R&D, employees’ profit sharing and the reversal of the write-off of bad debts, as well as the increase in equity income. 21
The improved result was due to the 10% increase in sales volume and the reduction in operating expenses, chiefly thanks to the elimination of the CPMF financial transaction tax and the revision of the amounts involved in judicial processes in 2007. The increase in sales volume helped raise the Company’s share of the fuel distribution market from 34.3% in 2007 to 34.9% in 2008.
The upturn in equity income (from ALVO Distribuidora) and the reduction in expenses from judicial contingencies offset the narrower sales margins caused by the decline in average sales prices. The segment recorded a 34.7% share of the fuel distribution market in the 4Q-2008, versus 34.8% in the previous quarter. 
The main events impacting the 2008 reduction were: the constitution of provisions for the adjustment of inventories in the USA, Japan and Argentina to market value, due to the change in the level of oil and oil product prices as of September/08 (R$ 699 million); provisions for legal disputes involving royalties (R$ 220 million); losses from the devolution of block 31 in Ecuador (R$ 178 million); the total amortization of goodwill from the acquisition of the Pasadena refinery (R$ 374 million); and the gains from the sale of the Bolivian refineries and Argentinean companies in 2007 (R$ 111 million). These effects were partially offset by the R$ 1,002 million increase in gross profit due to the 32% appreciation of the U.S. dollar against the Real. 
22
The quarter-over-quarter reduction was due to the R$ 346 million decrease in gross profit, caused by the decline in international oil and oil product prices, and losses from the devaluation of inventories in the USA, Japan and Argentina (R$ 507 million). Other factors contributing to the 4Q-2008 result included: the increase in exploration expenses (R$ 711 million), especially the estimated impairment of assets (R$ 300 million) and the write-off of wells in the USA (R$ 145 million); the total amortization of goodwill from the acquisition of the Pasadena refinery (R$ 374 million); and losses from the devolution of block 31 in Ecuador (R$ 178 million). 
The lower negative result was due to the following factors: • The reduction in net financial expenses (R$ 8,043 million), dealt with on page 8; • The reversal of the minority interest, reflecting the devaluation of the Real against the dollar on the debt of the SPEs and subsidiaries which are not wholly owned by Petrobras and its subsidiaries. • The reduction in expenses from the pension and health plan (R$ 1,196 million) due to the amendments to the Petros Plan regulations in 2007; • Reduction in tax expenses due to the extinction of the CPMF financial transaction tax, partially offset by the increase in the IOF financial operations tax 
The improved result was due to the following factors: • The increase in the net financial result (R$ 538 million), dealt with on page 10; • The booking of interest on equity, which generated a tax benefit of R$ 2,386 million; These effects were partially offset by the reduction in equity income. 23
This excerpt taken from the PBR 6-K filed Mar 9, 2009. RESULTS BY BUSINESS AREA Petrobras is a company that operates in an integrated manner, with the greater part of oil and gas production in the Exploration and Production area being sold or transferred to other Company areas. The main criteria used to report results per business area are as follows: a) Net operating revenues: revenues from sales to external clients, plus intra-Company sales and transfers, using internal transfer prices established between the various areas as a benchmark, with assessment methodologies based on market parameters; b) Operating income: net operating revenues, plus the cost of goods and services sold, which are reported per business area considering the internal transfer price and other operating costs for each area, plus the operating expenses effectively incurred by each area; c) The entire financial result is allocated to the corporate group; d) Assets: refers to the assets as identified by each area. Equity accounts of a financial nature are allocated to the corporate group.
The higher annual result was due to the increase in average domestic oil prices and the 4% upturn in daily oil and NGL production Part of these effects were offset by the higher government take, with estimated losses from the impairment of assets (due to the end-of-year reduction in international oil prices, which affected future projections) and the increase in exploration costs, chiefly due to the write-off of dry and economically unviable wells. The spread between the average domestic oil sale/transfer price and the average Brent price widened from US$ 10.95/bbl in 2007 to US$ 15.44/bbl in 2008.
The quarter-over-quarter reduction was due to the change in the level of oil prices, in addition to the following factors: • Higher exploration costs from the write-off of dry or economically unviable wells, provisions for abandonment and geological and geophysical costs; • Estimated losses from the impairment of assets. Part of these effects were offset by the 5% increase in total oil and NGL sales/transfer volume and the narrowing of the spread between the average domestic oil sale/transfer price and the average Brent price, which fell from US$ 14.20/bbl in the 3Q-2008 to US$ 6.96/bbl in the 4Q-2008, as well as the reduction in government take and lower expenses from the 2008/09 collective bargaining agreement.
20
The annual reduction in the Supply result was due to higher oil acquisition/transfer costs and the increase in oil product import costs, together with the following factors: • Higher freight costs due to the increase in sales volume; • Losses from petrochemical investments, reflecting the impact of the devaluation of the Real against the dollar on debt and the upturn in naphtha prices; • Losses from the devaluation of inventories. These effects were partially offset by the upturn in average oil product prices in Brazil and abroad and by gains from the change in holdings as a result of Quattor’s corporate restructuring.
The result was due to reduced costs from the decline in international oil prices, despite the sale of inventories acquired at a higher average cost in the previous quarter and the maintenance of average gasoline and diesel sale prices on the domestic market, despite the decline in the price of the other oil products. These effects were partially offset by the following factors: • Increased provisions for the reduction of inventories to market value; • Higher G&A expenses, due to increased freight charges on exports and trading transactions; • Reduced equity income, reflecting the impact of the devaluation of the Real against the dollar on the debt of petrochemical investees.
The improved result was due to wider gas and electricity sales margins – thanks to higher sales prices – and the increase in gas and electricity sales volume. These effects were partially offset by provisions for the reduction of NGL inventories to market value.
The negative impact of the reduction in gas sales margins – due to higher import costs – and gas sales volume was more than offset by the reduction in expenses from R&D, employees’ profit sharing and the reversal of the write-off of bad debts, as well as the increase in equity income. 21
The improved result was due to the 10% increase in sales volume and the reduction in operating expenses, chiefly thanks to the elimination of the CPMF financial transaction tax and the revision of the amounts involved in judicial processes in 2007. The increase in sales volume helped raise the Company’s share of the fuel distribution market from 34.3% in 2007 to 34.9% in 2008.
The upturn in equity income (from ALVO Distribuidora) and the reduction in expenses from judicial contingencies offset the narrower sales margins caused by the decline in average sales prices. The segment recorded a 34.7% share of the fuel distribution market in the 4Q-2008, versus 34.8% in the previous quarter.
The main events impacting the 2008 reduction were: the constitution of provisions for the adjustment of inventories in the USA, Japan and Argentina to market value, due to the change in the level of oil and oil product prices as of September/08 (R$ 699 million); provisions for legal disputes involving royalties (R$ 220 million); losses from the devolution of block 31 in Ecuador (R$ 178 million); the total amortization of goodwill from the acquisition of the Pasadena refinery (R$ 374 million); and the gains from the sale of the Bolivian refineries and Argentinean companies in 2007 (R$ 111 million). These effects were partially offset by the R$ 1,002 million increase in gross profit due to the 32% appreciation of the U.S. dollar against the Real.
22
The quarter-over-quarter reduction was due to the R$ 346 million decrease in gross profit, caused by the decline in international oil and oil product prices, and losses from the devaluation of inventories in the USA, Japan and Argentina (R$ 507 million). Other factors contributing to the 4Q-2008 result included: the increase in exploration expenses (R$ 711 million), especially the estimated impairment of assets (R$ 300 million) and the write-off of wells in the USA (R$ 145 million); the total amortization of goodwill from the acquisition of the Pasadena refinery (R$ 374 million); and losses from the devolution of block 31 in Ecuador (R$ 178 million).
The lower negative result was due to the following factors: • The reduction in net financial expenses (R$ 8,043 million), dealt with on page 8; • The reversal of the minority interest, reflecting the devaluation of the Real against the dollar on the debt of the SPEs and subsidiaries which are not wholly owned by Petrobras and its subsidiaries. • The reduction in expenses from the pension and health plan (R$ 1,196 million) due to the amendments to the Petros Plan regulations in 2007; • Reduction in tax expenses due to the extinction of the CPMF financial transaction tax, partially offset by the increase in the IOF financial operations tax
The improved result was due to the following factors: • The increase in the net financial result (R$ 538 million), dealt with on page 10; • The booking of interest on equity, which generated a tax benefit of R$ 2,386 million; These effects were partially offset by the reduction in equity income. 23
This excerpt taken from the PBR 6-K filed Nov 17, 2008. RESULTS BY BUSINESS AREA Petrobras is a company that operates in an integrated manner, with the greater part of oil and gas production in the Exploration and Production area being sold or transferred to other Company areas. The main criteria used to report results per business area are as follows: a) Net operating revenues: revenues from sales to external clients, plus intra-Company sales and transfers, using internal transfer prices established between the various areas as a benchmark, with assessment methodologies based on market parameters; b) Operating income: net operating revenues, plus the cost of goods and services sold, which are reported per business area considering the internal transfer price and other operating costs for each area, plus the operating expenses effectively incurred by each area; c) The entire financial result is allocated to the corporate group; d) Assets: refers to the assets as identified by each area. Equity accounts of a financial nature are allocated to the corporate group.
The higher year-on-year result was due to the increase in average domestic oil prices and the 3% increase in daily oil and NGL production Part of these effects were offset by the higher government take and the increase in exploration costs, the latter due to the write-off of dry and non-commercial wells. The spread between the average domestic oil sale/transfer price and the average Brent price widened from US$ 10.61/bbl in the first nine months of 2007, to US$ 13.51/bbl in the first nine months of 2008.
The quarter-over-quarter reduction was due to the decline in international oil prices, associated with the following factors:
Part of these effects were offset by the 2% increase in total oil and NGL production and the reduction in the spread between the average domestic oil sale/transfer price and the average Brent price narrowed from US$ 15.92/bbl in the 2Q-2008 to US$ 14.20/bbl in the 3Q-2008.
18
The year-on-year reduction in the Supply result in the 9M-2008 was due to higher oil acquisition/transfer costs and the increase in oil product import costs, reflecting the behavior of international prices. These effects were partially offset by the increase in oil product average realization prices in Brazil and abroad.
The quarter-on-quarter decline was due to:
These effects were partially offset by higher average realization prize of oil products in domestic market and higher sales volumes.
The year-on-year reduction in the negative gas and energy result was due to the wider gas sales margin, influenced by higher realization prices, and the increase in electricity and natural gas sales volume. These effects were partially offset by the increase in contractual fines and charges related to natural gas supply.
The quarter-on-quarter decline was due to:
These effects were partially offset by the increase in the average natural gas sales. 19
The result was positively impacted by the 12% increase in sales volume, which helped raise the Company’s share of the fuel market from 34.1% in the first nine months of 2007 to 35.0% in the same period of 2008.
The quarter-over-quarter decline was due to the margin compression as a result of sharper competition and higher SG&A expenses, partially offset by the 6% rise in sales volume. The segment recorded a 34.8% share of the national fuel distribution market, versus 34.5% in the 2Q-2008.
The year-on-year increase was caused by higher oil and oil product prices, associated with lower exploration costs in Turkey, Argentina and the USA, as well as the incorporation of Nigerian production, the acquisition of the Okinawa refinery and the improved contractual conditions in Bolivia as of May 2007. These effects were partially offset by i) lower sales margin and volume in the USA (R$ 516 million); ii) the constitution of provisions for royalty contingencies. (R$ 173 million); iii) provisions for the reduction of inventories to market value (R$ 96 million); iv) lower capital gains as a result of the sale of companies in Bolivia and Argentina in 2007 (R$ 88 million). 
The quarter-on-quarter downturn was due to:
20
These effects were offset by the impact of the depreciation of the Real against the dollar on the conversion of accounting statements.
The lower negative result was due to the following factors:
The result obtained in the 3Q-2008 was due to the reversal of the net financial result (R$ 4,645 million), as detailed on page 9, associated with the effect of FX gains on foreign investments. These effects were partially offset by higher operating expenses associated with third-party services and the 2008/09 labor agreement. 21
This excerpt taken from the PBR 6-K filed Nov 12, 2008. RESULTS BY BUSINESS AREA Petrobras is a company that operates in an integrated manner, with the greater part of oil and gas production in the Exploration and Production area being sold or transferred to other Company areas. The main criteria used to report results per business area are as follows: a) Net operating revenues: revenues from sales to external clients, plus intra-Company sales and transfers, using internal transfer prices established between the various areas as a benchmark, with assessment methodologies based on market parameters; b) Operating income: net operating revenues, plus the cost of goods and services sold, which are reported per business area considering the internal transfer price and other operating costs for each area, plus the operating expenses effectively incurred by each area; c) The entire financial result is allocated to the corporate group; d) Assets: refers to the assets as identified by each area. Equity accounts of a financial nature are allocated to the corporate group. This excerpt taken from the PBR 6-K filed Aug 13, 2008. RESULTS BY BUSINESS AREA Petrobras is a company that operates in an integrated manner, with the greater part of oil and gas production in the Exploration and Production area being sold or transferred to other Company areas. The main criteria used to report results per business area are as follows: a) Net operating revenues: revenues from sales to external clients, plus intra-Company sales and transfers, based on internal transfer prices established between the various areas, with assessment methodologies based on market parameters; b) Operating income: net operating revenues, plus the cost of goods and services sold, which are reported per business area considering the internal transfer price and other operating costs for each area, plus the operating expenses effectively incurred by each area; c) The financial result is completely allocated to the corporate segment; d) Assets: refers to the assets as identified by each area. Equity accounts of a financial nature are allocated to the corporate segment.
The improved result was due to the increase in average domestic oil prices and the 2% upturn in daily oil and NGL production. Part of these effects were offset by the higher government take and the increase in exploration costs, the latter due to the write-off of dry and economically unviable wells. The spread between the average domestic oil sale/transfer price and the average Brent price widened from US$ 10.84/bbl in the 1H-2007 to US$ 13.25/bbl in the 1H-2008, due to the fact that heavy crude moved up less than light, together with the upturn in international transport costs.
The quarter-over-quarter improvement was due to higher average domestic oil prices and the 2% increase in daily oil and NGL production, partially offset by the higher government take. The spread between the average domestic oil sale/transfer price and the average Brent price increased from US$ 10.77/bbl in the 1Q-2008 to US$ 15.92/bbl in the 2Q-2008, due to the fact that heavy crude moved up less than light, together with the upturn in international transport costs.
The year-on-year reduction in the Supply result in the 1H-2008 was due to higher oil acquisition/transfer costs and the increase in oil product import costs, reflecting the behavior of international prices. 18 These effects were partially offset by the upturn in oil product prices in Brazil and abroad.
The quarter-over-quarter improvement was due to the following factors:
These effects were partially offset by higher average oil acquisition/transfer costs and the increase in oil product import costs.
The year-on-year improvement in the first-half Gas and Energy result was due to the wider gas sales margin and the increase in electricity sales volume. These effects were partially offset by contractual fines and charges related to natural gas supply (R$ 295 million).
The improved G&E result was due to the increase in electricity sales margins, higher gas prices and the reduction in contractual fines and charges related to natural gas supply (R$ 211 million).
The result was positively impacted by the 14% increase in sales volume, which helped raise the Company’s share of the fuel market from 33.8%, in the 1H-2007, to 35.2% in the 1H-2008.
19 The healthier sales margin was due to higher sales volume and prices, although these effects were partially offset by increased operating expenses related to third-party services and freight. The segment recorded a 34.5% share of the national fuel distribution market, versus 35.9% in the 1Q-2008.
The upturn was caused by higher oil prices plus reduced seismic acquisition costs in Turkey, Angola, the USA and Libya, offset by lower sales margins and volume in the USA and the constitution of provisions for royalty contingencies.
The quarterly improvement in the result was due to the following factors:
The higher result was due to the following factors:
The 2Q-2008 downturn was due to the negative impact of net financial expenses, as detailed on page 9, plus the impact of the negative exchange variation on offshore investments. 20 | EXCERPTS ON THIS PAGE:
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