01.06.2009 presentation of investor relations executive manager, theodore m. helms- fixed income
TRANSCRIPT
FIXED INCOME PRESENTATION
June 2009
Pre-Salt Reservoir
• Issuer: Petrobras International Finance Company (PifCo)
• Guarantor: Petróleo Brasileiro S.A (Petrobras)
• Size: Benchmark Size
• Ranking: Senior unsecured
• Security: 7.875% Global Notes due Mar 2019
• Ratings: Baa1 (Moody’s); BBB - (S&P); BBB (Fitch)
• Form of offering: SEC Registered
• Listing: NYSE
• Law: NY Law
• Book Runners: Citi, HSBC, JPMorgan, Santander Investment
• Co-Managers: BB Securities, Societe Generale
REOPENING SUMMARY TERMS
OVERVIEW
4
DISCLAIMER
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 with the SEC.
CAUTIONARY STATEMENT FOR US INVESTORS
Market Value as of May 27, 2009
2008 Oil & Gas Production
2008 Refining Capacity
2008 Proven Reserves (SEC)
A WORLD-CLASS, PUBLIC, INTEGRATED ENERGY COMPANY
Note: Peer companies selected above have a majority of capital traded in the public markets.
Source: Evaluate Energy and Company reports
Source: Bloomberg
Source: Evaluate Energy and Company reports
Source: PFC Energy WRMS (barrels per calendar day, considering company % shareholding and including JVs)
(bln
bo
e)
(mm
bo
e/d
)(U
S$
bn
)
(mcb
/d)
23.0
17.9
11.7 11.2 11.2 10.5 10.2
6.65.6
XOM BP RDS PBR CVX ENI TOT STL COP
3.9 3.8
3.2
2.5 2.4 2.4 2.3
1.9 1.8
XOM BP RDS CVX PBR COP TOT STL ENI
299828
2,223 2,083
5,675
2,6002,9173,119
3,905
XOM RDS BP COP TOT PBR CVX ENI STL
5
333.3
168.0 163.0
93.865.9 62.5
129.4130.7150.2
XOM PBR RDS BP TOT CVX ENI COP STL
COMPETITIVE ADVANTAGE IN THE DEEPWATER
XOM
APC6%
MUR
Petrobras operates 22% of global deepwater production
and 18% of all operating vessels
6Source: (1) PFC Energy | Note: Estimated volumes above reflect what operators are responsible for producing, not what they keep on a net working interest or entitlement basis. Minimum water depth is 300 meters; twelve operators above account for 94% of global deepwater production in 2008. (2) Copyright © 2008 ODS-Petrodata, Inc.
2008 Gross Global Operated Deepwater Production (mboe/d)
PBR
22%
XOM
14%
RDS
14%
STL
14%
BP
9%
TOT
8%
CVX
6%
APC
5%
BG
4%
MUR
2%
REL
1%
HES
1%2%
HES
1% 1%
RELMUR
8
45
5
8
1012
13
15
15
100
9
12
0 20 40 60 80 100 120
Petrobras
Shell
StatoilHydro
ExxonMobil
BP
Chevron
Anadarko
Total
CNOOC
ConocoPhillips
ENI/Agip
Others
FPSO Semi Spar TLP Other
FPS OperatorsAll Contracted Vessels (252 Vessels Total)
MAINTAINING INVESTMENT GRADE
INDICES 2008-2012 Plan 2009-2013 Plan
FX Rate (R$/US$) 2.18
Brent for Funding (US$/bbl)
2008 – 55.002009 – 50.002010 – 45.002011-2012 – 35.00
Projected Net Cash Flow (After dividends) (US$ bn)
104.4
Projected Investments (US$ bn) 112.4
Net Debt/Net Debt + Shareholders´Equity(Leverage)
20%
Minimum cash balance (US$ bn) -
2.0
148.6
174.4
Up to 35%
5
2009 – 58.002010 – 61.002011 – 72.002012 – 74.002013 – 68.00
7
Business Plan 2008-12
26%
1%2%
6%
4%2%
59%
E&P
RTC
G&E
Petrochemicals
Biofuels
Distribution
Corporate
US$ 112.4 billion
65.129.6
6.74.3 2.6
1.5
2.5
Business Plan 2009-2013
25%
2%2%
7%
3%2%
59%
E&P
RTC
G&E
Petrochemicals
Biofuels
Distribution
Corporate
US$ 174.4 billion
104.6 (*)43.4
11.8
5.6 3.0
2.8
3.2
(*) US$ 17.0 billion allocated to Exploration
CAREFULLY CRAFTED SPENDING PROGRAM TO SUPPORT OUR VISION
8
FLEXIBLE PIPELINE OF PROJECTS 2009-13: BY PHASE
A substantial portion of our
investment plan has yet to be
approved and contracted
Only projects with a positive
NPV at cost of capital will be
approved
28.3%
49.2%
1.5%
14.3%
6.7%
Phase I (Under Evaluation)
Phase II (Conceptual)
Phase III (Design)
Phase IV (Approved)
Acquisition
9
PRINCIPAL OPERATIONS
CONSISTENTLY DELIVERING RESERVES GROWTH
Maintained a ~120% reserve
replacement rate in 2008. Over the
past decade, reserve replacement
has principally been driven by
internal additions in Brazil
Targeting a reserves to
production life of 15 years
13.0412.35
13.1712.52
0.880.88
0.921.23
2004 2005 2006 2007 2008
Production(0.70 bn boe)
13.02 13.23 13.75
Production(0.67 bn boe)
Reserves Replacement
Index(174%)
Reserves Replacement
Index(131%)
Production(0.75 bn boe)
Reserves Replacement
Index(123%)
Production(0.70 bn boe)
Reserves Replacement
Index(124%)
13.92 14.09
11
Petrobras Total Production (000 boe/d)
PURSUING NEW PROJECTS WHILE MAXIMIZING PRODUCTION FROM EXISTING ASSETS
1,335 1,500 1,540 1,493 1,684 1,778 1,792 1,855 2,050
2,680
3,920
251 265274 277 273 321
463
634
1177
7060
252 269265 250 243
224
244
341
632
252232
2001 2002 2003 2004 2005 2006 2007 2008 2009 2013 2020
Oil production - Brazil Gas production - BrazilInternational productionl (oil & gas)
8.8% avgCAGR 2,3082,3052,223
2,0272,0421,812
1,637
5.6% CAGR
5,729
3,655
2,757
7.5% avgCAGR
2,400
12
FOCUSED & DISCIPLINED INVESTMENT
Total Investments of US$ 104.6 billion in E&P through 2013,of which US$ 92 will be spent in Brazil
17%
12%
58%
13%
Exploration
Santos Pre-salt
Development
International
13
ESTIMATED OIL PRODUCTION IN BRAZIL
Out of the 824 kb/d in domestic production growth through 2013, 566 kb/d will come from fields where we have already declared commerciality
2008 2009 2013 2015 2020
Light Oil ≥ 31º API Medium Oil Heavy Oil ≤ 22º API
1,855
2,680
3,340
3,920
2,050
The PN 2008-2012 Brazil oil target for 2015 was 2,812 k b/d. The new target represents an increase of 19% (+528 kb/d)
The biggest contribution in the domestic production growth of 1,240 kb/d between 2013 and 2020 will come from pre salt production
Petrobras Total Production (000 b/d)
14
SIGNIFICANT PRODUCTION INCREASE FROM 2008 TO 2009
Tho
us. b
pd
Oil and Natural Gas Average Domestic Production
Record for daily production of oil in Brazil (05.04.2009) 2,059,063 barrels
2,1952,261
+3%
2,120
7%
1Q08 4Q08 1Q09
• 3% increase in production due to:
• production increase in platforms P-52 and P-54 (Roncador) ;
• start-up of P-51, in Marlim Sul, P-53, in Marlim Leste, and FPSO Cidade de Niterói, in Marlim Leste;
• Due to a decline in the domestic market demand, natural gas production decreased 6%. We currently have installed
capacity to produce an additional 87 thousand boed of natural gas if the market demands.
1.816 1.865 1.952
304 330 309
Oil and NGL Natural Gas
15
LDA: 2.200m
FPSO BW Cidade de São Vicente
16
PHASE 2POÇO P1
6 MONTHS
PHASE 1POÇO 3-RJS-646
6 MONTHS
PHASE 3POÇO 3-RJS-646
3 MONTHS
DRILL WELL P1
Challenges:
•Special coating for well and flexible risers to
support aggressive fluid and high pressure;
•Supplementary recovery with alternating water
and gas injection*;
•Reinjection of CO2 associated with the fluids
produced in the reservoir*;
•Wet Christmas trees at water depths never used
in Brazil*;
•High resolution seismic acquisition in some areas
to identify reservoirs;
•Completion of wells in an environment with high
pressure;
(*) expected for the Pilot Project in 2010
Extended Well Test:
•Capacity: 30,000 bpd
•Duration: 15 months
•API: 28-30o
Main information to be collected during the EWT:
• long-term behavior of producing reservoir;
• fluids flowage and drainage during production;
• subsea outflow;
• geometry of final wells.
CHALLENGES AND GOALS: TUPI DEVELOPMENT
LINERELOCATION
16
8731,183160
463
632
157 422
62
2013 2015 2017 2020
Pre-Salt Petrobras Pre-salt Partners
PRE-SALT OIL PRODUCTION
Petrobras Pre-salt Oil Production (000 b/d)
2009-2013 2009 -2020
Petrobras Total Pre-salt Capex (Production Development) 28.9 111.4
Santos Basin Pre-salt 18.6 98.8
Espírito Santo Pre-salt (includes post-salt fields) 10.3 12.6
Pre-salt Capex Through 2020
219
1,336
1,815
582
17
DOWNSTREAM OPEATIONS: VERTICALLY INTEGRATED SYSTEM TO CAPTURE SYNERGIES WITHIN THE VALUE CHAIN
PetrobrasOther Companies
Upstream Operations Downstream Operations
Existing PipelinesRefineriesMarine Terminal In Land Terminal
18
2007 Total Oil Consumption by Country (mmbo/d)
DOMINANT POSITION IN A LARGE AND GROWING EMERGING MARKET
Source: BP Statistical Review 2008, PFC Energy
Total Oil Consumption mb/d (index)
Brazil is world’s ninth-
largest oil consumer
Brazil oil consumption growing
at 2.4% p.a.
OECD oil consumption growing
at 1% p.a.100
110
120
130
140
150
160
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Brazil OECD World
2.4
1.61.71.71.92.02.22.22.32.42.72.7
5.1
0
2
4
6
8
US
Ch
ina
Jap
an
Ind
ia
Ru
ssia
Ger
ma
ny
S. K
ore
a
Ca
na
da
Bra
zil
Sa
ud
i
Me
xic
o
Fra
nc
e
Ita
ly
UK
Ira
n
20.77.9
19
Th
ou
san
d b
arr
els
/da
yOIL AND OIL PRODUCTS IMPORTS AND EXPORTS
353390
102
160 97
51
Exports Imports Net Exports
615
538
77
439
81
373
152
127
70
Exports Imports Net Exports
672
570
102
Financial Surplus 2007
US$ 71 MillionFinancial Deficit 2008
US$ 928 Million
� Despite surplus in volumes, a financial deficit in trade balance;
� Investments focused in capturing margins through increase in refining capacity of domestic crude.
20
FINANCE
LIFTING COST IN BRAZIL
15.16 16.34 17.61 19.09 17.91
28.0434.80 36.79
22.3916.33
0
10
20
30
40
50
60
70
80
1Q08 2Q08 3Q08 4Q08 1Q09
Lifting Cost (R$) Govr. Take (R$)
8.66 9.88 10.21 8.24 7.82
16.1621.20 20.06
9.87 6.87
96.90
121.37114.78
44.4054.91
0
10
20
30
40
50
60
70
80
1Q08 2Q08 3Q08 4Q08 1Q09
0
20
40
60
80
100
120
140
Lifting Cost (US$) Govr. Take (US$) Brent
US$/barrel R$/barrel
24.8231.08 30.27
18.11
43.2051.14
54.40
41.48
14.69
34.24
• Lifting cost without government take, both in Reais and in Dollar, have been decreasing in the 1Q09, following
international oil prices;
• 3 new units launched recently (producing 25% of the capacity) contributed to increase this cost, besides
reduction of 6% of natural gas production.
22
LIFTING COST
22
0
20
40
60
80
100
120
140
160
Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09
ARP EUA ARP Petrobras
AVERAGE REALIZATION PRICES – ARP
23
US$/bbl R$/bbl
0
50
100
150
200
250
dez/06 mar/07 jun/07 set/07 dez/07 mar/08 jun/08 set/08 dez/08 mar/09
PMR EUA PMR Petrobras
71.64
161.89
77.40 176.48
163.59
123.7270.53
53.48
4Q08 1Q09 4Q08 1Q091Q081Q08
104.79
93.90
181.83
163.07
• Petrobras announced on June 8, 2009 a decrease of 4,5% in gasoline and 15% in diesel prices.
• Our price policy follows the long term tendency of the international markets.
SOURCES
-15,000
-5,000
5,000
15,000
25,000
35,000
2004 2005 2006 2007 2008
US
$ m
illi
on
OCF Net Debt
USES
GROWING CASH FLOW DRIVES CAPEX
24
-5,000
5,000
15,000
25,000
35,000
45,000
2004 2005 2006 2007 2008
US
$ m
illi
on
CAPEX Dividends Acquisition
ProjectedUS$ 148.6 bn (2009 – 2013)Historical
US$ 88.5 bn (2003 – 2008)
HISTORICALLY, CONSERVATIVE PLANNING HAS LED TO A BALANCE BETWEEN OCF AND CAPEX
Sources Uses
OCF
(after dividends) Capex
(US$ 92,3 bn)
Net Debt
Sources Uses
OCF
(after dividends)
Net Debt
Capex
(US$ 174 bn)
Average Brent:
US$ 60/bbl
Average Oil Production:
1,720 (thousand boe/d)
Average Brent (e):
US$ 66/bbl
Average Oil Production (e):
2,398 (thousand boe/d)
25
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Capex 2008 Capex 2009 Est. Maintenance Capex
E&P Downstream Gas & Energy International Distribution Corporate
29,874 28,600
11,600
INCREMENTAL NET DEBT TO FINANCE GROWTH
Much of Petrobras Capex spending is related to growth
US$
MM
26
PETROBRAS REFERENCE PRICE SIMILAR TO FORWARD CURVE
Financial needs assume very low prices.
0
20
40
60
80
100
120
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
US$
bb
l
Brent - Forwa rd Curve (01/23/09) PIRA (Ja n 09) Petrobra s (Ba se Cas e)
Petrobras (Funding 09-10) WoodMackenzie (Dec 08) Brent- Forwa rd Curve (05/27/09)
Projected Brent Curves
Source: Bloomberg/PIRA/Mackenzie 27
FINANCIAL PLANNING BASED ON A WORST CASE SCENARIO
* Capex for 2010 is based on the annual average of the Pla n´s total spending.
2009 2010*
OCF including amortization and after dividends 10.5 16.0
Capex 28.6 35.0
Funding Needs (18.1) (18.9)
Brent (US$ / bbl) 37 40
Minimum Projected Cash Flow (US$ bn)
Key Variables to Petrobras Cash Flow
• International price of crude oil and oil products
• Internal domestic prices and Exchange Rate
• % of investment execution and Cost of capital investment
2009
Sources
• BNDES: US$ 12.5 bn
• Capital Market: US$ 6,5 bn (bridge loan)
*US$ 1,5 bn (7,875% Global Notes due 2019)
• US Exim : US$ 2 bn
• CDB: US$ 10 bn
2010
Sources
• BNDES: US$ 10.0 bn
28
CAPITAL STRUCTURE AND CREDIT METRICS IN MORE DETAILS
In Million US$ 3M09 2008 2007
Cash and Cash Equivalents 8,126 6,499 6,987
Total Debt 29,959 27,351 21,895
Net Debt 21,833 20,852 14,908
Shareholders Equity 64,499 61,909 65,179
Net Debt / Net Capitalization 25% 25% 19%
Net Debt/ Market Capital 13% 22% 6%
Net Debt / Boe Production (USD/boe)* 22.5 23.8 17.8
Net Debt / Proved Reserves (USD/boe) 1.45 1.38 1.0
Reserves/Production (Years, SPE Criteria)* 16.29 17.24 17.86
3M09 2008 2007
Net Income 2,636 18,879 13,138
EBITDA 5,521 31,308 25,333
Net Debt/EBITDA* 0.99 0.67 0.59
* Annualized
29
30
CASH FLOW
1Q09 2008 2007
Cash Flow from Operating Activities
Net Income 2,636 18,879 13,138
Depreciation, depletion and amortization 1,328 5,928 5,544
Others 1,938 3,413 3,982
CFFO 5,902 28,220 22,664
Net Cash Used in Investing Activities
Capex + Aquisition (6,528) (29,466) (24,026)
Cash Flow from Financing Activities
Net from Financing Activities 2,192 2,778 (5,988)
Cash and Cash equivalents at the beginning of the period 6,499 6,987 12,688
Cash and Cash equivalents at the end of the period 8,126 6,499 6,987
• Increase in the Company’s Capex as a result of the strong cash generation;
• Cash flow from Finance Activities in 2008 indicates that debt level will increase to finance
investments.
*US GAAP30
US$ Million*
FUNDING SOURCES
DEBT PORTFOLIO
69%
6%
25%
JPY US$ R$
37%
63%
Fixed Floating * Including Project Finance
31
27%
27.4
3.4
1.0
2.9
4.5
1.4
1.6
5.7
6.9
Dec-08(US$bn) Mar-09 Dec-07
Comercial Banks Debt 7.9 4.7
International Bonds 7.2 5.3
Local Bonds 1.6 2.1
ECA’s 1.3 1.6
Project Finance 4.2 4.4
BNDES* 2.8 2.5
Other 1.3 1.3
BB/CEF 3.7
Total Debt 30.0 21.9
% Capital Market 29% 34%
