Webcast4 t06ingles

Conference Call / WebcastRESULTS ANNOUCEMENT4th Quarter 2006 and 2006 Brazilian Corporate Law)

Almir BarbassaCFO and Investor Relations Officer

February 14th 2007

1

The presentation may contain forecasts about future events. Such forecasts 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. The Company is not obliged to update the presentation/such forecasts in light of new information or future developments.

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as oil and gas resources, that the SEC’s guidelines strictly prohibit us from including in filings withthe SEC.

Cautionary Statement for US investors

Disclaimer

2

DOMESTIC OIL AND NGL PRODUCTION

5.6% increase y-o-y due to the start-up of the following production units:

P-50 (Albacora Leste), in April 2006

FPSO Capixaba (Golfinho), in May 2006

P-34 (Jubarte), in December 2006

1,778

1,684

2005 2006

Δ = 5.6%

thou

sand

bpd

3

2,256

2,301

2,2732,278

2,334

4Q05 1Q06 2Q06 3Q06 4Q06

thous. boed

Δ = 3.5% Δ = 1.4%

• Increase in the 4Q06 production due to the start-up of new production wells linked to P-50 platform (Albacora Leste)• For the same period, decrease in the international oil and gas production, as a consequence of the contractual negotiations in Argentina that affected production in some fields (oil), lower demand for Bolivian gas and the finalization of some repairs in the duct of San Antonio (gas).

TOTAL OIL, NGL AND GAS PRODUCTION

4

35.1137.48

43.04

54.24

46.05

53.69

58.20 58.69

48.70

61.53 59.68

69.4969.62

61.75

56.9

51.5947.83

44.00

39.7044.19

49.33

56.39

52.7

57.59

64.74 66.07

56.08

4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06

US$

/bbl

Average sales price Brent (average) OPEC Basket

US$ 10.98 bbl

Stable spread between Brazilian oil and Brent (US$ 10.80/bbl in the 3Q06 and US$ 10.98/bbl in the 4Q06) despite of the oil prices decrease in the international market.

E&P – OIL PRICES

10.43

65.14

54.71

2006

Spread

Brent (Av.)

Aver. Sales Price

US$/bbl

-8.96

19.79%54.38

20.45%45.42

Δ2005

5

1,76 41,753

1,79 51,8 12

1,76 1

1,6 9 61,73 5 1,6 9 7

1,6 4 4

1,70 71,74 6

1,6 8 41,6 4 9

1,6 3 5

8 0

8 9

8 78 5

8 9 9 1 9 38 9

8 08 1 8 079 79 78

1, 500

1, 650

1, 800

1, 950

4Q05 1Q06 2Q06 3Q06 4Q06 2005 200650

55

60

65

70

75

80

85

90

95

D o mest ic o i l p rod uct s p ro duct ion Oil p ro duct s sales vo lume

Primary p rocessed inst al led capacit y - B raz il ( %) D omest ic crud e as % o f t o t al

%Thousand barrels/day

REFINING AND SALES IN THE DOMESTIC MARKET

Oil products production in 4Q06 decreased relative to 3Q06 because of programmed stoppages in REVAP, REFAP and REMAN refineries, also affecting capacity utilization;

Sales volume decreased due

to seasonal demand;

Slight decline in domestic crude participation was a consequence of greater competitive advantage to process more light oil, reducing production of fuel oil.

6

20

40

60

80

100

Dec-04 M ar-05 Jun-05 Sep-05 Dec-05 M ar-06 Jun-06 Sep-06 Dec-06ARP Brasil (US$/bbl) Average Brent Price (US$/bbl)ARP USA (US$/bbl w/sales vol.in Brasil)

69.49

81.83

3Q06Avrg

68.81

59.68

70.59

4Q06Avrg

4Q05Avrg

68.90

56.90

72.90

AVERAGE REALIZATION PRICE - ARP

Domestic prices aligned with the practiced prices in the American market in the 4Q06.After summer season in the northern hemisphere, international oil prices tended to decrease.

72.28

75.52

65.14

70.92

2006

ARP USA

Brent (Av.)

ARP Brazil

US$/bbl

15.93%65.14

19.79%54.38

21.07%58.58

Δ2005

7

7.085

10.609

13.218

27.066

43.363

5.200

7.829

10.594

26.696

41.041

Net Income

Operational Profit

EBITDA

COGS

Net Revenue

3Q06 4Q06

-1.4%

- 19.9%

- 26.2%

R$

mill

ion

- 26.6%

- 5.4%

INCOME STATEMENT 4Q06 VS 3Q06

• The decrease in oil (E&P) and realization (Downstream) prices and smaller sales volume led to a fall in net revenues in the 4Q06. In the other hand the drop in COGS wasn’t able to follow the decrease in the net revenues as inventories with a higher costs basis purchased during prior quarters were liquidated. (inventories evaluation using the average cost criteria).

• increase in operational expenses, specially Exploratory and General & Administrative.

8

1.036

262

531

1.459

1.546

1.059

356

818

1.728

1.550

Others

Taxes

Exploratory Costs

General andAdministrative

Sales Expenses

3Q06 4Q06

18,4%

54,0%

2,2%

0,3%

OPERATIONAL EXPENSES ANALYSIS 4Q06 VS 3Q06

R$

mill

ion

• Sales Expenses: stable despite decrease in total volume sold in the domestic market. There was an increase in gasoline and diesel sales volumes;

• General & Adm.: higher personnel expenses due to increase in labor force and collective bargaining agreement;• Exploratory Costs: write-off of dry and non-commercial wells and update of provision for area abandonment.

These costs usually are concentrated in the fourth quarter.

35,9%

9

1,8231,779

CHANGE IN QUARTER REVENUES (4Q06 VS 3Q06)

Exploration & Production –Operational Profit Change– R$ millions

Domestic Oil, NGL and Condensate – thousand bpd

E&P’s operational result in 4Q06 was particularly affected by the decrease in the international oil prices

10.313 3.748

776796

363 3657.409

3Q06 OperatingProfit

Price Effect onNet Revenue

Avrg Cost Effecton COGS

Volume Effect onNet revenue

Volume Effect onCOGS

OperationalExpenses

4Q06 OperatingProfit

10

1.533 3,557

326634 2.315

319 142

3Q06 OperatingProfit

Net Effect Volume Effecton COGS

OperatingExpenses

4Q06 OperatingProfit

CHANGE IN QUARTER REVENUES (4Q06 VS 3Q06)Downstream – Change in Operating Profit – R$ million

• ARP’ drop reduced the operational revenues on the Downstream by R$ 3,557 million;• The decrease on the transfer prices (E&P to Supply) and the lower offshore operating costs contributed to the

reduction in the average costs (R$ 4.191 million);• R$ 634 million net effect as inventories with a higher costs basis purchased during prior quarters were liquidated.

Price Effecton Net Rev

Volume Effecton Net

Revenues

Avrg Cost Effecton COGS

4.191

11

7.085 2.322

370828

640361 43

5.20063

3Q06 NP Income COGS Oper. Expen. Fin. Expen.,Non Oper.,

Others and IncPar

Taxes Non Control.Shareholder

Part.

Employee Part. 4Q NP

1,8231,779

NET PROFIT CHANGE – R$ million (4Q06 VS 3Q06)

Domestic Oil, NGL and Condensate – thousand bpd

• Profit decrease in 4Q06 mainly due to smaller average realization prices of exports and oil products in the domestic market;;

• Liquidated inventories with a higher costs basis purchased during prior quarters (average cost criteria) halted a steeper drop in the COGS.

12

BUSINESS AREAS CONTRIBUITION TO OPERATIONAL PROFIT

10.609 2.904

782327 45

542377 21 7.829

3Q06 Oper.Prof.

E&P Downst G&E Distr. Inter. Corp. Elim. 4Q06 Oper.Prof.

4Q05 vs. 3Q05 (R$ million)

G&E: improvement related to the previous quarter due to:• Increase in gross profit as a result of better

commercialization energy margins; • Loss accrued in the 3Q06 as a result of the closing of

the hedge contract for the reduction of natural gas price volatility.

International: decrease mainly due to:• Decrease in the international oil prices;• Lower trade oil volume in Argentina (oil workers strike);• Lower sales volume in Bolivia (repairs in the Santo Antonio pipe);• Write-off of well in the USA and expenses with seismic in

Argentina and USA

13

263335

181

228

246260

2004 2005 2006

Oil Oil Products

NET EXPORTS OF OIL AND OIL PRODUCTS

Imports (thous barrels/day)Exports (thous barrels/day)

2006 includes ongoing exports

• The lower percentage of domestic crude participation in the throughput (due to the commercial advantages of processing light oil, reducing the fuel oil production) allowed an increase in the heavy oil exports and a decrease in the fuel oil exports;

• On the other side there was an increase in the light oil imports and stability in the oil products imports.

Volume Surplus 128 thous bpd in 4Q06 and 93 thous bpd in the year

267355

454262

215

270221

281

1Q06 2Q06 3Q06 4Q06

442459 510669 540

409

581 576548532488

446

559

354 373 408344

132115

13788

1Q06 2Q06 3Q06 4Q06

352 370450

10911894

2004 2005 2006

523

14

Cash Breakdown (R$ millions)

(25.000)

(15.000)

(5.000)

5.000

15.000

25.000

'jun/05 'sept/05 'dec/05 'mar/06 'jun/06 'sept/06 'dec/06

(1.200)

(800)

(400)

0

400

800

1.200

1.600

Abroad In Brazil w/ FX correctionIn Brazil CDI CashFinancial Income

FX rate change* Δ-5.5% Δ5.3% Δ-7.2%

* Price of US Dollar at end of the period

Δ0.5% Δ-1.7%Δ-0.4%

Cas

h

• Financial revenues influenced by the US dollar indexed cash as hedge against the debt and costs linked to dollar.

15

R$ million 12/31/2006 12/31/2005

Short Term debt (1) 13.074 11.116

Long Term Debt (1) 33.531 37.126

Total Debt 46.605 48.242

Cash and Cash Equivalents 27.829 23.417

Net Debt (2) 18.776 24.825

18% 17% 16%

28% 27%24%

26%

37%

32%

20%23%19%20%

19%

26%28%

Mar-05 Jun-05 Sept-05

Dec-05 Mar-06 Jun-06 Sept-06

Dec-06

Net Debt/Net CapitalizationShort-Term Debt/Total Debt

(1) Includes debt contracted through leasing contracts of R$ 2.540 million on December 31, 2006, and R$ 3.300 million on December31, 2005.(2) Total debt - cash and cash equivalents

Decrease in total and net debt:Strong operating cash generation allows reduction of the debt (bonds

buyback) and increase in cash balance.

LEVERAGE

Petrobras’ Leverage Ratio

16

CONSOLIDATED CASH FLOW STATEMENT

R$ 3,3 billion cash increase.

4Q06 3Q06 (=) Net Cash from Operating Activities 13.244 10.209 (-) Cash used in Cap. Expend. (12.061) (8.341) (=) Free Cash Flow 1.183 1.868 (-) Cash used in Financing and Dividends 2.127 (62) Financing 2.128 (60) Dividends (1) (2) (=) Net Cash Generated in the Period 3.310 1.806 Cash at the Beginning of Period 24.519 22.713 Cash at the End of Period 27.829 24.519

R$ million

17

INVESTMENTS

Primarily Investing in the development of oil and gas production capacity using own resources and partnerships.

2006 % 2005 % %Direct investments 29.769 90 22.927 89 30 Exploration & Production 15.314 51 13.934 54 10 Downstream 4.181 13 3.286 13 27 Gas & Energy 1.566 5 1.527 6 3 International 7.161 17 3.153 12 127 Distribution 642 2 495 2 30 Corporate 905 2 532 2 70 Special Purpose Companies (SPCs) 3.507 9 2.385 10 47 Ventures under Negociation 409 1 311 1 32 Project Finance 1 - 87 - -Total Investments 33.686 100 25.710 100 31

18

6.646.126.326.077.24

4Q 05 1Q06 2Q06 3Q06 4Q06

Δ = 9% or US$ 0.60

US$/bbl

DOMESTIC LIFTING COSTS WITHOUT GOVERNMENT PARTICIPATION

MAIN CAUSES

Higher expenditures:• Drilling rigs• Specialized services and materials• Well interventions and repairs • Personnel expenses resulting from wage readjustment• High initial unitary costs from FPSO-Capixaba (Golfinho) and P-34 (Jubarte) projects, which will tend to

decrease with the production grow.

19

Lower government participation in the quarter due to the decrease in the average reference priceof the domestic oil, linked to the international quotations.

LIFTING COSTS INCLUDING GOVERNMENT PARTICIPATION

3,0 3,4 4,3 6,0 5,4 5,4 6,1 6,3 6,1 6,6 7,24,0 5,1

6,47,7 8,4 9,7 10,0 11,0 11,4 11,5 10,4

59,769,569,6

24,828,8

38,2

47,551,6

61,556,9

61,8

-4

6

16

26

2002 2003 2004 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06

US$/boe

-20

0

20

40

60

Lifting Cost Participação Gov. Brent

7,08,5

10,7

13,6 13,9 15,216,1

17,3 17,5 18,1 17,6

65%64% 64%

59%

59%

57%

20

2.712.48

2.071.902.03

4Q 05 1Q 06 2Q 06 3Q 06 4Q 06

9% increase in 4Q06 relative to the previous period reflecting an increase in personnel expenses as due to Collective Work Agreement 2006/2007 and programmed stoppages

REFINING COSTS IN BRAZIL (US$bbl)

Δ = 9% or US$ 0.23

21

US$ billion 2005 2006 2006/ 2005Petrobras* 9,74 11,92 22,3%Chevron 14,10 17,14 21,6%ConocoPhillips 13,53 15,55 14,9%Exxon 36,13 39,50 9,3%Shell 25,31 25,44 0,5%BP 22,34 22,00 -1,5%Média 11,2%

NET INCOME COMPARISON 3Q06 Vs 4Q06 AND 2006 Vs 2005

Petrobras presented the higher y-o-y growth among majors...

...however 4Q06 results were affected by the decrease in Brent price.

US$ bilhões 3Q06 4Q06 4T06/3T06Exxon 10,49 10,25 -2,3%Shell 5,94 5,28 -11,1%ConocoPhillips 3,88 3,20 -17,5%Chevron 5,02 3,77 -24,8%Petrobras* 3,26 2,42 -25,8%BP 6,23 2,88 -53,8%Média -22,5%

* Petrobras results converted by the average dollar prices from their corresponding periods.Source: Evaluate Energy

22

QUESTION AND ANSWER SESSIONVisit our website: www.petrobras.com.br/ri

For more information contact:Petróleo Brasileiro S.A – PETROBRAS

Investor Relations DepartmentRaul Adalberto de Campos– Executive Manager

E-mail: [email protected]. República do Chile, 65 – 22o floor

20031-912 – Rio de Janeiro, RJ(55-21) 3224-1510 / 3224-9947