2. Profile
Founded in 1953, Petrobras is a publicly traded company with activites in 30
countries on all continents. The oil sector leader in Brazil, it ranks third among
the international energy companies in market value, according to PFC Energy’s
ranking. Petrobras operates in exploration and production, refining, oil and
natural gas trade and transportation, petrochemicals, oil product distribution,
electric energy, biofuels, and in other sources of renewable energy.
Mission
Operate in a safe, profitable manner, with social and environmental responsibility,
in Brazil and abroad, providing products and services that meet clients’ needs and
that contribute to the development of Brazil and of the countries in which it
operates.
Vision for 2020
We will be one of the five largest integrated energy companies in the world and
the preferred choice among our stakeholders.
Attributes of the Vision for 2020
Our operations will stand out for:
» Their strong international presence
» Being a global reference in biofuels
» Excellence in operations, management, energy efficiency,
human resources, and in technology
» Their profitability
» Being a benchmark in social and environmental responsibility
» Their commitment to sustainable development
Values
» Sustainable development
» Integration
» Results
» Readiness for change
» Entrepreneurship and innovation
» Ethics & transparency
» Respect for life
» Human & cultural diversity
» People
» Proud to be Petrobras
4. Contents
002 F
inancial Analysis
004 Economic and Financial Summary 053 Related parties
005 Main Consolidated Economic Indexes 062 Deposits in court
005 Volume of Sales 062 Acquisitions and sales of assets
006 Consolidated Results 066 Investments
007 Results by Business Segment 071 Property, plant and equipment
008 VAD 073 Intangible assets
009 Indebtedness 075 Exploration activities and valuation
010 Contractual Liabilities of oil and gas reserves
011 Assets and Liabilities Subject 078 Financing
to Exchange Variation 083 Leasing
012 Net Equity 084 Provisions for dismantling of
014 Financial Statements
016 Balance Sheets
084
areas (non-current)
Taxes, contributions and
profit-sharing
018 Statements of Income 090 Employee benefits
018 Comprehensive Statement 098 Employee and management
of Income profit-sharing
019 Statement of Added Value 098 Shareholders’ Equity
020 Statement of Changes 102 Sales revenue
in Shareholders’ Equity 102 Expenses by nature
022 Statement of Cash Flows 102 Other operating expenses, net
024 Statement of Business 103 Financial income and expenses
Segmentation (consolidated) 104 Legal proceedings and contingencies
030 Statement of Business Segmentation 112 Commitments assumed by
(consolidated) - International Area the energy segment
032 Social Balance 112 Guarantees for concession agreements
for petroleum exploration
Notes to the Financial Statements 112 Derivative financial instruments,
035 The Company and its operations hedge and risk management activities
035 Presentation of the financial statements 122 Fair value of financial assets and liabilities
037 Adoption of international 123 Insurance
accounting standards 123 Security, environment, energy efficiency
044 Consolidation basis and health
046 Description of significant 124 Subsequent events
accounting policies
051 Cash and cash equivalents 125 Independent auditors’ report
051 Marketable securities on the financial statements
052 Accounts receivable 126 Board of Directors and Executive Officers
053 Inventories 127 Report of Fiscal Council
053 Petroleum and alcohol accounts - STN 128 Editorial Staff
6. 1. eCoNoMIC ANd FINANCIAL SuMMArY 2. MAIN CoNSoLIdAted eCoNoMIC INdexeS
FINANCIAL ANALYSIS AND FINANCIAL STATEMENTS 2010
(1)
r$ Million YeAr
2010 vs 2009 (%)
CoNSoLIdAted PetrobrAS 2010 2009
2010 2009 2010 2009 economic and Financial Indexes
Sales revenue 213,274 182,834 156,487 134,034 Brent Oil (US$/bbl) 79.47 61.51 29%
Average dollar for selling (R$) 1.76 2.00 -12%
Income before financial results, interests and taxes 47,057 45,997 36,554 34,381
Final dollar for selling (R$) 1.67 1.74 -4%
Proper activities 34,981 30,116 27,997 22,107 Price indexes
FINANCIAL ANALYSIS
Subsidiaries / Affiliated companies 208 (65) 7,039 7,852 Price of oil products on the domestic market (R$/bbl) 158.43 157.77 0%
Net income of atributable to shareholders of Petrobras 35,189 30,051 35,036 29,959 Average selling price - Brasil
Net income per share (2) 3,57 3,43 3,52 3,42 Oil (US$/bbl) (4) 74.66 54.22 38%
Net indebtedness (3)
62,067 73,416 10,541 26,790 Natural gas (US$/bbl) (5)
15.57 22.53 -31%
Total assets 519,970 350,419 466,655 318,997 Average selling price - International
Investments, property, plant and equipment, intangible Oil (US$/bbl) 66.42 53.58 24%
374,815 241,122 319,013 191,452
assets and deferred charges Natural gas (US$/bbl) 14.15 12.65 12%
Net Equity 310,225 166,895 307,317 165,021 (4) Average of the exports and internal transfer prices from E&P to Supply.
(5) Internal transfer price from E&P to Gas and Energy..
own capital / third-party capital ratio (3) 67/33 52/48 73/27 55/45
breAkdowN oF ebItdA
CoNSoLIdAted PAreNt CoMPANY
3. VoLuMe oF SALeS
2010 2009 % 2010 2009 %
Income before financial results, profit- Volume of sales - thousand barrels per day
47,057 45,997 2 36,554 34,381 6
sharing and taxes YeAr
∆%
Employee profit-sharing (1,691) (1,495) 13 (1,428) (1,270) 12 2010 2009
Depreciation/Amortization 14,881 14,457 3 10,813 10,380 4 Diesel 809 740 9%
(-) Loss on recovery of assets 76 543 (86) (104) 550 (119) Gasoline 394 338 17%
ebItdA 60,323 59,502 1 45,835 44,041 4 Fuel Oil 100 101 -1%
ebItdA margin (%) 28 33 (5) 29 33 (4) Naphtha 167 164 2%
Net Indebtedness/ebItdA 1.03 1.23 (0.20) 0.23 0.61 (0.38) LPG 218 210 4%
EBITDA is not an indicator calculated in accordance with accounting principles generally accepted in Brazil, and possibly it may not serve as a basis for comparison with Jet fuel 92 77 19%
indicators with the same name, presented by other companies. EBITDA should not be considered as a substitute indicator to measure operating income, or even as a better form
for measuring the liquidity and cash flow of the operating activities. EBITDA is additional information on the ability to pay debts, to maintain investments and to cover working Other 180 140 29%
capital needs.
total oil products 1,960 1,770 11%
(1) The amounts expressed in Reais were calculated in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Alcohols, nitrogen-based compounds, biodiesel and others 99 96 3%
Board. For comparison purposes, the information for 2009, published previously, is encountered adjusted to IFRS.
Natural gas 319 240 33%
(2) Net income per share calculated based on the weighted average of the number of shares.
(3) It includes indebtedness contracted through financial leases and federal government bonds with maturity of more than 90 days. total domestic market 2,378 2,106 13%
Exports 698 707 -1%
International sales 593 541 10%
total international market 1,291 1,248 3%
total 3,669 3,354 9%
The volume of sales on the domestic market was 13% migration to gasoline in flex fuel vehicles, in addition
higher than in 2009, reflecting the sales of the following to a reduction in the addition of anhydrous alcohol in
products: C gasoline, from 25% to 20% as from February 2010.
Ք Diesel oil (9% increase) – on account of the recovery of Ք Jet fuel (19% increase) – influenced by the economic re-
industrial activity, the increase in the harvest of grains covery and improved performance of the aviation market.
and consumption generated by investments in infra- Ք Natural gas (33% increase) – reflecting the expansion
structure works. of the consumption of the industrial sector, recovering
Ք Gasoline (17% increase) – a reflection of the scarcity of from the 2009 worldwide financial crisis, in addition
alcohol on the market at the beginning of 2010, caus- to a greater participation of gas in the operation of the
ing a strong increase in the prices of the product and thermal power stations.
004 005
7. 4. CoNSoLIdAted reSuLtS 5. reSuLtS bY buSINeSS SegMeNt
FINANCIAL ANALYSIS AND FINANCIAL STATEMENTS 2010
Petrobras and its subsidiaries presented a consolidated Ք Increase in expenditures, especially: Petrobras is an operationally integrated Company and transactions carried out with third parties and the trans-
net profit of R$ 35,189 million in the year ended December ■ Sales (R$ 1,285 million), on account of the great- the major part of the production of petroleum and gas from fers between the business segments are considered and
31, 2010, after eliminating intercompany transactions and er volume of products sold and the quotation for the Exploration and Production Department is transferred they are valued by internal transfer prices defined between
deducting the minority interest, which is a 17% increase in freight (R$ 543 million), the increase in expendi- to other departments of the company. the segments using calculation methodologies based on
relation to the previous year (R$ 30,051 million). tures with personnel and services of third parties In the computation of the results by business segment, market parameters.
This result was impacted by: (R$ 244 million), a provision for doubtful accounts
YeAr
Ք Increase in gross profit of R$ 3,095 million, due to: (R$ 137 million) and depreciation (R$ 117 million), reSuLtS bY buSINeSS SegMeNt - r$ MILLIoN ∆%
FINANCIAL ANALYSIS
2010 2009
■ Greater volumes sold in Brazil (R$ 7,528 million), due to the entry into operation of the northern sec-
Exploration & Production 29,691 19,289 54
especially for diesel, influenced by the recovery of tion of Gasene;
Supply 3,722 13,521 (72)
industrial activity, and for gasoline, a reflection of ■ General and Administrative (R$ 605 million), espe-
Gas & Energy 1,279 703 82
the scarcity of alcohol on the market, favoring mi- cially the greater expenditures with personnel (R$
Distribuition 1,268 1,247 2
gration to gasoline in flex fuel vehicles, and the re- 312 million), mainly from a salary readjustment ne-
International 1,320 (115) (1.248)
duction in the addition of anhydrous alcohol in C gotiated in the 2010/2011 collective labor agreement;
Corporate (1,141) (3,596) (68)
gasoline, in addition to the appreciation of the aver- Ք Better net financial results (R$ 2,725 million), on ac-
Eliminations (950) (998) (5)
age of prices of exports (R$ 6,069 million). count of the fluctuations in the exchange rate on the net
Net income attributable to shareholders of Petrobras 35,189 30,051 17
■ Higher costs (R$ 10,647 million), resulting from liabilities in US dollars in 2010, while in 2009 there were
greater expenditures from importing oil, oil prod- exchange losses posted on the average balance of the net
ucts and gas and from government interests in Brazil. assets in US dollars, in conformity with the table below: Exploration and Production Ք Increase in the sales of natural gas, accompanying the
The greater net income resulted from the increase in the industrial growth and a greater demand for generation
YeAr ChANge
% price of oil (38% in US$/bbl), and the 2% increase in the daily of electricity;
2010 2009 2010 vs 2009
production of oil and LNG. The reduction in losses and con- Ք An increase in fixed revenue originating from the auc-
Expenses / Financial Revenue 1,228 38 1,190 3,132
tingencies for legal processes (R$ 1,582 million), in explora- tions for power (Regulated Contracting Environment),
Monetary and Exchange Variation 1,335 (200) 1,535 768
tion costs (R$ 443 million), resulting from expenditures with and an increase in revenue from generating thermoelec-
Net Financial result 2,563 (162) 2,725 1,682
geology, geophysics and the write-off of dry wells or that are tric power;
In 2010: appreciation of the Real against the U.S. dolar in 4.3% over net liabilities in the period.
not economically viable, and the decrease in / reversal of esti- Ք A decrease in the costs for purchase/transfer of Brazil-
In 2009: appreciation of the Real against the U.S. dolar in 25,5% over average balance of net assets in the period.
mated losses in the recovery of assets also contributed. ian natural gas, accompanying the behavior of interna-
Part of these effects were offset by greater costs for govern- tional references and the appreciation of the real against
Ք Positive effect of the non-controlling interest (R$ 2,581 Ք The provision for interest on shareholders’ equity ment interests and by expenses with the closing of the Barra- the US dollar.
million) resulting from the fluctuation in the exchange in 2010 generated a tax benefit of R$ 3,456 million cuda and Caratinga structured project (R$ 486 million). These factors were partially offset by the greater costs
rate on the indebtedness of the SPEs, through the ex- (R$ 2,446 million in 2009). The spread between the average price of Brazilian oil for importing LNG and by commercial expenses for re-
ercise of the share purchase option of some structured sold/transferred and the average quotation for Brent de- gasification vessels.
projects, and through the review of the flows of future creased from US$ 7.29/bbl in 2009, to US$ 4.81/bbl in 2010.
receipts related to financial leasing operations. Distribution
Supply The higher net income resulted from the 1% increase in
The lower net income resulted from the increase in the the trading margin and from the 8% increase in the volume
costs for purchase/transfer of oil and importing of oil prod- sold, partially offset by greater expenditures with services
ucts (Brent - 29% increase in US$/bbl) and was partially and personnel as a result of the 2010/2011 collective labor
offset by the growth in the volume of oil products sold on agreement, and by expenditures for resolving ICMS/RJ tax
the domestic market, especially for gasoline, diesel and jet debts (R$ 110 million).
fuel, by the higher price for exports and, on the domestic The market share for distribution of fuels was 38.8% in
market, of oil products directly indexed to international 2010, while it was 38.6% in 2009.
prices, in spite of the decrease in the prices of diesel (15%)
and gasoline (4.5%) in June 2009. International
The increase in the results occurred due to the higher
Gas and Energy prices for commodities in 2010 and an increase in the
The higher net income occurred due to the following volume of sales of petroleum due to the start-up of pro-
factors: duction of Akpo in Nigeria in March 2009.
006 007
8. 6. VAd 7. INdebtedNeSS
FINANCIAL ANALYSIS AND FINANCIAL STATEMENTS 2010
In 2010 the value added distribution of Petrobras was million. The value added distribution may be observed in Indebtedness related to loans and financing in Brazil
R$ 158,683 million, presenting an increase of 14% in rela- the graphs below: and abroad was R$ 117,915 million, as presented below:
tion to the previous year, when it distributed R$ 139,234
r$ Million
2010 2009 ∆%
Short-term indebtedness 15,668 15,556 1
AMOUNT DISTRIBUTED IN 2010 AMOUNT DISTRIBUTED IN 2009
Long-term indebtedness 102,247 86,894 18
FINANCIAL ANALYSIS
Total (6) 117,915 102,450 15
Cash and cash equivalents 30,323 29,034 4
Federal government bonds (maturity of more than 90 days) 25,525
Adjusted cash and cash equivalents 55,848 29,034 92
Net indebtedness (7) 62,067 73,416 (15)
Net indebtedness/(Net indebtedness + Shareholders’ equity) (6) 17% 31% (14)
Total liabilities, net (8) 464,122 321,385 44
Capital structure (net third-party capital / net total liabilities) 33% 48% (15)
uS$ Million
2010 2009 ∆%
Short-term indebtedness 9,403 8,934 5
Long-term indebtedness 61,365 49,905 23
total (6) 70,769 58,839 20
(6) It includes financial leases (R$ 372 million at December 31, 2010 and R$ 739 million at December 31, 2009)
(7) Total indebtedness - Cash and cash equivalents.
Government 57% Government 57% (8) Net total cash liabilities/financial investments.
Amount withheld 15% Amount withheld 16%
Personnel 12% The net indebtedness of the Petrobras System decreased The level of indebtedness, measured through the net
Personnel 11%
15% in relation to December 31, 2009 as a result of the capi- debt/EBITDA ratio, decreased from 1.23 at December 31,
Third parties 9% Third parties 8% talization performed in September 2010, which offset the 2009 to 1.03 at December 31, 2010. The capital structure is
net funding for the year. represented by a 33% third-party capital interest.
Shareholders 7%
Shareholders 6%
Minority interests 2%
008 009
9. 8. CoNtrACtuAL LIAbILItIeS 9. ASSetS ANd LIAbILItIeS SubjeCt to exChANge VArIAtIoN
FINANCIAL ANALYSIS AND FINANCIAL STATEMENTS 2010
r$ Million
The following table summarizes our contractual liabilities and outstanding commitments as at December 31, 2010: ASSetS
12.31.2010 12.31.2009
PAYMeNtS wIth MAturItY Per PerIod Current assets 13,065 5,581
2016 Cash and cash equivalents 10,818 4,035
totAL 2011 2012-2015
oNwArdS Other current assets 2,247 1,546
Contractual liabilities Non-current assets 18,755 17,876
Itens of net equity: (9) Amounts invested abroad by
FINANCIAL ANALYSIS
partner companies in the international segment,
Debt liabilities 107,160 5,109 26,902 75,149 17,351 16,759
in E&P equipament to be used in Brazil and in
With transfer of benefits, risks and control of assets 372 151 134 87 commercial activities
Total itens of net equity: 107,532 5,260 27,036 75,236 Other long-term assets 1,404 1,117
other long-term contractual commitments total Assets 31,820 23,457
Natural gas - ship or pay 9,903 1,058 4,366 4,479
Contract service 175,909 84,459 67,958 23,492 r$ Million
LIAbILItIeS
Contrats for supply of natural gas 21,716 2,364 9,962 9,390 12.31.2010 12.31.2009
Without transfer of benefits, risks and control of assets 80,108 17,736 44,732 17,640 Current Liabilities (11,562) (11,978)
Purchase commitments 30,611 11,460 9,772 9,379 Financing (7,953) (10,303)
International purchase commitments 52,086 7,329 15,905 28,852 Suppliers (3,286) (1,088)
Total other long-term commitments 370,333 124,406 152,695 93,232 Other current liabilities (323) (587)
total 477,865 129,666 179,731 168,468 Non-current Liabilities (26,248) (15,203)
(9) Excludes post-employment benefits liabilities. See note 22 to the Financial Statements. Financing (26,208) (15,125)
Other long-term liabilities (40) (78)
total Liabilities (37,810) (27,181)
Net Assets (Liabilities) in Reais (5,990) (3,724)
(-) FINAME Loans - in reais indexed to dollar (103) (179)
(-) BNDES Loans - in reais indexed to dollar (23,906) (25,368)
Net Assets (Liabilities) in reais (29,999) (29,271)
010 011
10. 10. Net equItY
FINANCIAL ANALYSIS AND FINANCIAL STATEMENTS 2010
c) Shareholders’ remuneration
The shareholders are assured a minimum dividend and/ In 2010, the Company approved a distribution in ad-
At December 31, 2010, the shareholders’ equity of offering, of which R$ 67,816 received from the Federal or interest on shareholders’ equity of at least 25% of the vance of interest on shareholders’ equity in the amount of
Petrobras (Parent company) was R$ 307.317 million, cor- government through financial treasury bills (LFT) was adjusted net income for the year, calculated in accordance R$ 10,163 million, which is 41% higher than the amount
responding to R$ 23,56 per share. used for payment of part of the acquisition of the right to with article 202 of the Brazilian Corporation Law. for 2009:
The Company’s market value was R$380,247 million. carry out research and mining activities for oil, natural
YeAr
gas and other fluid hydrocarbons located in the blocks in
a) Capitalization and onerous assignment the Pre-Salt area (5 billion barrels), through an Onerous 2010 2009
On September 30, 2010 the Company increased its Assignment Agreement, which totaled R$ 74,808 million, dAte oF dAte oF
r$ MILLIoN
dAte oF dAte oF
r$ MILLIoN
FINANCIAL ANALYSIS
APProVAL PAYMeNt APProVAL PAYMeNt
capital by R$ 115,052 million, the result of a public share recorded as intangible assets.
1st payment of interest
05.14.2010 05.31.2010 1,755 06.24.2009 11.30.2009 2,632
r$ Million on shareholders’ equity
CAPItALIzAtIoN INtANgIbLe ASSetS 2nd payment of interest
07.16.2010 08.31.2010 1,755 09.21.2009 12.21.2009 1,755
on shareholders’ equity
FederAL other oNerouS
totAL
goVerNMeNt ShArehoLderS ASSIgNMeNt
3rd payment of interest
10.22.2010 11.30.2010 1,826 12.17.2009 12.29.2009 1,755
Cash 12,274 34,962 47,236 6,992 on shareholders’ equity
LFTs 67,816 67,816 67,816 4th payment of interest
12.10.2010 12.30.2010 2,609 03.19.2010 04.30.2010 1,053
total Capitalization 80,090 34,962 115,052 74,808 on shareholders’ equity
5th payment of interest
02.25.2011 (10)
2,218
on shareholders’ equity
Subsequently, on October 1, 2010, the Board of Direc- b) Capital increase
10,163 7,195
tors approved the option for a lot supplementary to the offer The incorporation in the capital of part of the tax in-
(10) Date to be set in the General Shareholders’ Meeting.
made in September, which resulted in the raising of addi- centive reserves formed in 2010, in the amount of R$ 23
tional capital of R$ 5,196 million. After this global share of- million, in compliance with article 35, paragraph 1 of Or-
fer the capital increased to R$ 205,357 million, represented dinance 2091/07 of the Minister for National Integration, The Board of Directors of Petrobras, based on statu- to the withholding of income tax at source of 15%, ex-
by 7,442,454,142 common shares and 5,602,042,788 pre- without issuing new shares, is being proposed to the Special tory provisions, is proposing to the General Shareholders’ cept for shareholders that are immune and exempt, and
ferred shares. General Shareholders’ Meeting. Meeting, the distribution of a dividend related to 2010 in restated by the SELIC rate from the date of payment un-
the amount of R$11,728 million, corresponding to 35.50% til December 31, 2010. The final portion of interest on
of the basic profit for purposes of a dividend equivalent to shareholders’ equity, together with the dividends, in the
R$ 1.03 per common and preferred share. amount of R$ 3,595 million will be made available on
The dividends include the portion of interest on a date to be fixed by Annual General Meeting and the
shareholders’ equity in the amount of R$ 10.163 million amounts will be updated monetarily from December 31,
(R$ 0.91 per common and preferred share), from which 2010 until the date for the beginning of payment, in ac-
interest on shareholders’ equity paid in advance in the cordance with the variation of the SELIC rate.
amount of R$ 7,945 million will be discounted, subject
012 013
