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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 6-K/A

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934

For the month of March, 2006

Commission File Number 1-15106



PETRÓLEO BRASILEIRO S.A. - PETROBRAS
(Exact name of registrant as specified in its charter)



Brazilian Petroleum Corporation - PETROBRAS
(Translation of Registrant's name into English)



Avenida República do Chile, 65
20031-912 - Rio de Janeiro, RJ
Federative Republic of Brazil
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. 

Form 20-F ___X___ Form 40-F _______

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes _______ No___X____


PETROBRAS ANNOUNCES FISCAL YEAR 2005 FOURTH QUARTER RESULTS
(Rio de Janeiro – February 17, 2006) – PETRÓLEO BRASILEIRO S.A. – PETROBRAS releases its consolidated results today, expressed in millions of reais, according to Brazilian GAAP.


PETROBRAS reported net income of R$ 23,725 million in 2005, 40% higher than the amount reported in 2004 and the highest in its history. 2005-4Q net income of R$ 8,142 was also a record.


In 2005-4Q, consolidated net operating income was R$ 38,638 million, 31% higher than the same period in 2004 (R$ 29,402 million). EBITDA in 2005-4Q was R$ 12,416 million, 40% higher than the R$ 8,858 million reported in 2004-4Q. The market value of the company at 12.31.2005 totaled R$ 173,584 million, an increase of 54% when compared to year-end 2004.

This document is broken down into 5 sections:     
 
PETROBRAS SYSTEM  Índices  PETROBRAS  Índices 
Financial Performance 
Accounting statements  
Operating Performance 
   
Financial Statements 
 
   
Appendices       

1


PETROBRAS SYSTEM   
 

Comments from the CEO, Mr. José Sergio Gabrielli de Azevedo

2005 was a banner year for Petrobras: Consolidated net income was a record R$ 23.7 billion, 40% higher than 2004´s previous record income. On the operating front, new benchmarks were established: oil and gas production in Brazil and overseas averaged 2.217 million barrels of oil equivalent (BOE) per day, a 10% increase over 2004. Furthermore, we invested R$25.7 billion in 2005, a 14% increase.

Entrepreneurial success, excellent operating and financial results, technological achievements, the establishment of partnerships, and our revised business plan, all contribute to a promising future with sustainable growth. Our Business Plan´s call for total investments of US$ 56.4 billions during the next five years, is indicative of the Company’s opportunity for growth all our business segments, both in Brazil and overseas.

The start-up of two major new platforms (P-43 and P-48), adding a further 300,000 barrels to domestic production capacity, was an important step towards realizing the dream of making our principal market, Brazil, self-sufficient in oil production. National self-sufficiency will be achieved once production from P-50, now in test phase, begins to flow. During 2005, we achieved a milestone in our Company history by reaching peak production of 1.8 million BOE per day, with a daily average output during the year of 1.684 million barrels, 13% more than the average for 2004. This ranks us among the fastest growing companies in the global hydrocarbons industry.

Due to the expansion of investments in exploration and production, the Company was able to report some important discoveries and at the same time, announce the commercial viability of new fields in the Santos, Espírito Santo and Campos basins, where preliminary evaluations for the gigantic Papa Terra field reveal recoverable volumes of between 700 million and one billion BOE. Among the new finds, particularly notable were fresh discoveries of deep oil and gas reservoirs in the Marlim Leste field in the Campos Basin, based on a new exploratory model. These present exceptional opportunities for additional reserves of light sweet oil. Again in the E&P segment, the Company increased its exploration portfolio, successfully bidding for 96 blocks at the National Oil, Natural Gas and Biofuels Agency’s (ANP) seventh bidding round. Of these blocks, Petrobras will be the operator in seventy.

Thus, contrary to what is the case with other major oil companies, increased production volumes have not meant a reduction in our proved oil reserves. We ended the year with a reserves replenishment ratio of 131.1% in Brazil, which means that for every barrel of oil produced during 2005 Petrobras incorporated 1.311 boe.

Besides the production development projects underway at the Company, the new finds and increases in areas with prospecting potential open up excellent perspectives for ensuring the sustainability of Brazilian self-sufficiency, allowing Petrobras to grow in a secure and profitable manner. In the oil and gas production area alone, some 40 new projects in different sedimentary basins are earmarked to be included in the Company’s portfolio.

In the refining area in Brazil, work on refinery modernization continues apace, the objective being to increase the capacity for processing heavy crude and improving the quality of oil products. In addition, the Company placed the cornerstone for the first refinery dedicated exclusively to processing heavy crude oil in Brazil, located in the state of Pernambuco. The Company’s strategic plan is budgeting investments of US$ 8 billion in refinery modernization through 2010.

For the second consecutive year, Petrobras broke its own record for processing domestic feedstock. The Company’s Brazilian refineries processed a daily average of 1,727 thousand barrels of oil, equivalent to 88% of installed capacity. The participation of domestic crude in refinery throughput was also a record, reaching 80%, with significant gains in sales margins given the reduced need for imported light crude. We ended the year with a trade deficit of US$ 130 million after netting our import costs against export revenues, versus a deficit of US$ 3.2 billion in 2004, resulting in a US$ 3.0 billion decrease in the foreign currency expenses with imports of oil and oil products.

2


Petrobras launched its Diesel 500 brand with a 75% lower sulfur content and destined for sale in the major Brazilian metropolitan centers – further underlining the Company’s position as a socially and environmentally responsible institution. Developed in its own refineries, this new diesel fuel from Petrobras will make a contribution to the improvement in air quality in the major urban centers.

In accordance with the strategy for its overseas business, Petrobras further expanded its international activities, particularly in the area of exploration and production. As part of these efforts, the company signed an offshore exploration agreement with Libya, obtained a further block each in Nigeria and Venezuela, and won the concession for an additional 53 blocks in the Gulf of Mexico (USA).

Following a memorandum of understanding with the Astra Oil Company early in 2006, approval was given for the acquisition of a 50% stake in the Pasadena Refining System Inc. refinery in the United States. In line with Company strategy, the acquisition will provide additional value-added to heavy crude oil produced in Brazil since Petrobras plans to introduce its technological know-how for processing heavy oil at this unit.

A joint venture agreement with a Japanese company created the Brazil-Japan Ethanol Co. Ltd, representing yet another step forward in the strategy for international growth aligned to social and environmental responsibility. The objective of this new project will be to import Brazilian ethanol for distribution to the Japanese market.

In the Gas and Energy area, Petrobras accelerated its growth strategy by approving capital expenditures of US$ 6.5 billion through 2010 n this segment. The Company participated in the first new energy auction, ensuring a fixed revenue flow for 1,391 MW of thermo-electric capacity over a 15-year period. During the year and the early weeks of 2006, the Company concluded the acquisition of three merchant thermoelectric plants, which in addition to bolstering its position in the energy segment, eliminated contingency payments that the Company had been obliged to disburse under contracts signed in 2001 and 2002.

The investment grade classification awarded by Moody’s to the Company, should bring Petrobras, among other benefits, a lower cost of capital, and expanded opportunities for the development of new projects, which will ensure over the medium to long term, better shareholder returns, making the Company ever more competitive.

Another reflection of performance in 2005 can also be gauged from the increase of trading in the Company’s shares, Petrobras shares being the most negotiated on the São Paulo Stock Exchange – Bovespa during the year. Trading was further intensified following the stock split in September 2005, improving the accessibility of the shares to the small and medium-size investor. Market confidence in Petrobras was reflected in the increase of 54% in market capitalization in relation to 2004. On January 31 2006, another record was broken when the Company´s valuation in the equity markets reached R$ 218 billion. Business Week magazine, which ranks global companies according to market capitalization, classified Petrobras as the eighth most valuable company in the sector, as well as Latin America’s most valuable.

Petrobras ended 2005 repeating the exceptional performance that has been a characteristic of past years, the result of integrated and collaborative management at all its segments of activity. One consequence of this is the high degree of operating reliability of all our business units throughout each segment. Over the next few years, the opportunities for of the Company’s integrated growth can be measured by our capital expenditures, which are projected to grow in all areas of activity. Emphasis will be given to investments in exploration and production, to the development of the natural gas market, and to selective expansion in our international businesses.

At the dawn of a new era when Brazil is to reach sustainable self-sufficiency in oil, we wish to reaffirm our gratitude to all Petrobras employees as well as our expanded workforce that includes suppliers and service providers, all of whom have been adhering to our recommendations and insistence on improvements in quality, occupational safety, the protection of the environment and social responsibility.

3


PETROBRAS SYSTEM  Financial Performance
 

Net Income and Consolidated Economic Indicators

PETROBRAS, its subsidiaries and controlled companies reported a net income of R$ 23,725 million for 2005, 40% higher than the net income recorded in 2004.

R$ Million
   
Fourth Quarter 
     
Fiscal Year 
3Q - 2005 (1)
2005 (1)
2004 (2)
D% 
2005 (1)
2004 (2)
D% 
 
46.555    50.066    39.225    28    Gross Operating Revenue    179.065    150.440    19 
35.711    38.638    29.402    31    Net Operating Revenue    136.605    111.128    23 
10.905    10.145    6.848    48    Operating Profit (3)   39.773    29.930    33 
(711)   (333)   (527)  
(37)
  Financial Result    (2.843)   (3.321)  
(14)
5.632    8.142    4.237    92    Net Income    23.725    16.887    40 
1,28    1,86    0,97    92    Net Income per Share (4)   5,41    3,85    40 
168.035    173.584    112.458    54    Market Value (Holding)   173.584    112.458    54 
42    43    38      Gross Margin (%)   44    41   
31    26    23      Operating Margin (%)   29    27   
16    21    14      Net Margin (%)   17    15   
12.763    12.416    8.858    40    EBITDA – R$ million (5)   47.808    36.798    30 
 
                Financial and Economic Indicators             
61.53    56.90    44.00    29    Brent (US$/bbl)   54,38    38,21    42 
2,3449    2,2507    2,7862   
(19)
  US Dollar Average Price - Sale (R$)   2,4350    2,9262   
(17)
2,2222    2,3407    2,6544   
(12)
  US Dollar Last Price - Sale (R$)   2,3407    2,6544   
(12)
 
 
(1) From 01.01.2005, the Special Purpose Companies whose activities are directly or indirectly controlled by PETROBRAS were included in the Consolidated Financial Statements, as per CVM Instruction No. 408/2004. 
(2) To facilitate comparison, the Special Purpose Companies were also included in the 3Q-2004 financial statements, and in the accumulated period January-September 2004. 
(3) Income before financial revenues and expenses, equity income and taxes. 
(4) For purposes of comparison, net income per share was recalculated for the prior periods, due to the stock split approved at the Extraordinary Shareholders Meeting on July 22, 2005. 
(5) Operating income before the financial result and equity income + depreciation/amortization/well write-offs. 

EBITDA COMPONENTS

R$ Million
   
Fourth Quarter 
     
Fiscal Year 
3Q-2005 
2005 
2004 
2005 
2004 
 
9.935    10.104    6.051    Operating Income as per Brazilian Corporate Law    36.680    26.464 
711    333    527    (-) Financial Result    2.843    3.321 
259    (292)   270    (-) Equity Income Results    250    145 
           
10.905    10.145    6.848    Operating Profit    39.773    29.930 
1.858    2.271    2.010    Depreciation & Amortization    8.035    6.868 
           
12.763    12.416    8.858    EBITDA    47.808    36.798 
           
 
           
36    32    30    EBITDA Margin (%)   35    33 
           

4



Consolidated operating income for 2005 increased 40% due to the increase in prices and volumes sold in the domestic and international markets, the increase in the production of oil and NGL´s in Brazil (13%), and the production and quality of oil products (2%), as detailed below:

 

       
R$ Million 
            2005 x 2004     
Main Items 
 
Net Revenues 
 
Cost of Goods 
Sold 
 
Gross Profit 
 
. Domestic Market:    - Effect of Volumes Sold   
1.254 
 
(850)
  404 
    - Effect of Prices   
13.040 
 
  13.040 
. Intl. Market:    - Effect of Export Volumes   
4.103 
 
(1.761)
  2.342 
    - Effect of Export Price   
3.226 
 
  3.226 
. Increase in expenses:    - Oil, Gas and Oil Product Imports   
 
(1.718)
  (1.718)
    - Third-Party Services   
 
(832)
  (832)
    - Domestic Government Take   
 
(2.425)
  (2.425)
    - Salaries, Perquisites and Benefits   
 
(814)
  (814)
    - Materials, Services and Depreciation   
 
(1.236)
  (1.236)
. Increase in Profitability of Distribution Segment   
635 
 
  635 
. Increase (Decrease) in Operations of Commercialization Abroad   
805 
 
(784)
  21 
. Increase (Decrease) in International Sales   
2.183 
 
(1.385)
  798 
. FX Effect on Controlled Companies' Revenues and Costs Abroad   
(1.654)
 
1.211 
  (443)
. Others       
1.885 
 
(1.445)
  440 
         
        25.477    (12.039)   13.438 
         

5



6


PETROBRAS SYSTEM  Operating Performance
 

Physical Indicators

Fourth Quarter 
Fiscal Year 
3Q-2005 
 
2005
 
2004 
 
D% 
     
2005 
 
2004 
 
D% 
 
Exploration & Production - thousand bpd             
 
1.889    1.892    1.680    13    Oil and LNG production    1.847    1.661    11 
1.725    1.736    1.511    15                 Domestic    1.684    1.493    13 
164    156    169    (8)                International    163    168    (3)
368    365    360      Natural Gas production (1)   370    359    3 
271    274    267                   Domestic    274    265   
97    91    93    (2)                International    96    94   
               
2.257    2.257    2.040    11    Total production    2.217    2.020    10 
               
(1) Does not include liquified gas and includes reinjected gas             
 
Refining, Transport and Supply - thousand bpd             
393    360    452    (20)   Crude oil imports    352    450    (22)
99    65    132    (51)   Oil products imports    94    109    (14)
               
493    425    584    (27)   Import of crude oil and oil products    446    559    (20)
               
249    301    137    119    Crude oil exports    263    181    46 
246    250    193    30    Oil products exports    241    228   
               
495    551    330    67    Export of crude oil and oil products    504    409    23 
               
2    126    (254)   -    Net exports (imports) crude oil and oil products    58    (150)   - 
               
149    154    126    22    Import of gas and others    141    124    14 
17    13    10    33    Others Exports    13      109 
1.907    1.868    1.833    2    Output of oil products    1.839    1.797    2 
1.804    1.761    1.727      • Brazil    1.735    1.696   
103    107    106      • International    104    101   
2.114    2.114    2.114      Primary Processed Installed Capacity    2.114    2.114    - 
1.985    1.985    1.985    -    • brazil (2)   1.985    1.985   
129    129    129    -    • International    129    129   
                Use of Installed Capacity (%)            
91    91    89      • Brazil    88    87   
77    83    83    -    • International    80    78   
80    79    77      Domestic crude as % of total feedstock processed    80    76   
                     
(2) As per ownership recognized by the ANP. 

Sales Volume - thousand bpd 
                   
 
696    674    684   
(1)
  Diesel    665    656   
290    289    287   
1
  Gasoline    287    275   
103    98    100   
(2)
  Fuel Oil    99    108   
(8)
164    153    154   
(1)
  Naphtha    157    157   
227    217    209   
4
  LPG    213    210   
78    79    75   
4
  QAV    78    74   
173    138    182   
(24)
  Others    156    157   
(1)
     
   
1.731    1.647    1.691   
(3)
  Total Oil Products    1.655    1.637   
1 
26    33    34   
(3)
  Alcohol, Nitrogens and others    28    32   
(13)
236    239    227   
  Natural Gas    228    210   
     
   
1.993    1.919    1.952   
(2)
  Total domestic market    1.911    1.879   
2 
509    560    341   
64 
  Exports    512    416   
23 
413    375    386   
(3)
  International Sales    385    416   
(7)
     
   
922    935    727   
29 
  Total international market    897    832   
8 
     
   
2.915    2.854    2.679   
7 
  Total    2.808    2.711   
4 
     
   

7


Prices and Costs Indicators

Fourth Quarter 
Fiscal Year 
3Q-2005 
 
2005
 
2004 
 
D% 
     
2005 
 
2004 
 
D% 
 
Average Oil Products Realization Prices             
142,21    161,11    131,30    23    Domestic Market (R$/bbl)  
143,16 
119,05 
20 
 
 
Average Sales price - US$ per bbl           
                Oil (US$/bbl)  
54,24    46,05    35,11    31   
             Brazil (3)
 
45,42 
33,49 
36 
37,38    35,04    27,48    28                 International   
34,44 
26,36 
31 
                Natural Gas (US$/bbl)  
13,09    14,61    12,81    14                 Brazil (4)  
13,00 
11,56 
12 
10,13    11,71    7,43    58             International   
9,77 
6,96 
40 
(3) Average of the exports and the internal transfer prices from E&P to Supply 
(4) Intenal transfer prices from E&P to Gas & Energy 
 
Cost - US$/barril 
             
                Lifting Cost:   
                 • Brazil (5)  
5,44    6,07    4,56    33             • • without government participation   
5,73 
4,28 
34 
15,08    15,96    12,30    30             • • with government participation   
14,65 
10,72 
37 
2,78    3,57    2,90    23    • International   
2,90 
2,60 
12 
                Refining cost   
1,86    2,03    1,63    25    • Brazil (5)  
1,90 
1,38 
38 
1,41    1,35    1,09    24    • International   
1,30 
1,09 
19 
402    490    300    63    Corporate Overhead (US$ million) Holding Company (5)  
1.540 
951 
62 
 
Cost - R$/barril               
                Lifting Cost:   
                • Brazil (5)  
12,57    13,73    12,56               • • without government participation   
13,83 
12,30 
12 
35,84    36,24    34,54               • • with government participation   
35,20 
31,17 
13 
                Refining cost   
4,31    4,56    4,67   
(2)
  • Brazil (5)  
4,59 
3,98 
15 
 
(5) The company, in order to promote a better indexes adherence to its operating and management models, has reviewed their concepts, recalculating the values of previous periods.

8


Exploration and Production - Thousand Barrels/Day


Domestic production of oil and NGL´s increased 13% in 2005 over 2004, due to the start-up of operations at FPSO-MLS in Marlim Sul (June/2004) and platforms P-43 in Barracuda and P-48 in Caratinga (December/2004 and February/2005, respectively).

Domestic production of oil and NGL´s in 2005-4Q was kept relatively steady, with an increase of 1% when compared with production levels for 2005-3Q.

International oil production declined 3% against 2004 due to the natural decline in some fields in Angola and Argentina. Gas production increased 2% due to production increases in the Bolivian unit coming from increases gas demand from Brazil and Argentina.

International production of oil for 2005-4Q declined 5% when compared with 2005-3Q due to maintenance stoppages at production facilities in Angola and the work interruption caused by the 10-day strike in Argentina in October 2005. Gas production was also reduced by 6% compared with the third quarter by the Argentine strike.

Refining, Transportation and Supply - Thousand Barrels/Day


The quantity of crude oil feedstock processed by the domestic refineries in 2005 increased 1% when compared with the previous year. Compared with 2005-3Q, the feedstock processed during 2005-4Q decreased 1% due primarily to the maintenance work to the facilities and operating problems with some of the production equipment.

The quantity of feedstock processed (primary processing) by overseas refineries increased 2% in 2005 when compared with 2004, in order to meet higher demand in the Bolivian market and also because of the export of special gasoline and reconstituted oil.

For 2005-4Q, feedstock processed by the overseas refineries increased 8% over 2005-3Q, following the return to normal operations of refineries in Bolivia and Argentina for maintenance stoppages.

9


Costs

Lifting Cost (US$/barrel)

Lifting costs in Brazil, excluding government take increased 34% in 2005 as compared with 2004. After discounting the effect of a 17% appreciation in the Brazilian real against the U.S. dollar, in association with the percent of expenses in national currency over the costs for this activity, the lifting cost increased 10% over 2004 primarily as a consequence of higher chartering fees for rigs linked to the increases in the international price of oil, as well as higher expenses for transportation, underwater operations, restoration and maintenance, and chemicals used to unlock and eliminate toxic gases, increased salaries and benefits resulting from the collective labor agreements for 2004/2005 and 2005/2006, increases in the workforce, and the actuarial review performed at the end of 2004 that prompted an increase to the provisions for future health care and pension benefits.

The 12% increase in lifting costs in Brazil, excluding government take, for 2005-4Q, when compared with 2005-3Q, is due primariliy to higher expenses with well interventions and specialized technical services for restoration and equipment maintenance, as well as third party charters. After discounting the effects of the 4% appreciation in the average exchange rate of the Real against the U.S. dollar, lifting costs were up 7% versus 3Q-2005.

Lifting costs in Brazil for 2005, including government take, increased 37% in relation to 2004, in response to the generalized increases in operating expenses, mentioned above, as well as higher special participation tax resulting from the higher average reference price for domestic oil, based in international market quotations, besides the 17% Real appreciation against the US dollar. The inclusion of P-43 and P-48 in the basis used to calculate the special participation as of 2005 also contributed to the total increase in government participation through the special participation tax.

Brazilian lifting costs in 2005-Q4, taking into account government participation, increased 6% over 2005-Q3 as a result of the previously mentioned lifting cost increase, and government participation (3%), mainly in the Marlim Field, caused by the higher reference price levels for domestic oil.


The international lifting cost increased 12% in 2005 in relation to 2004 due to greater third party expenses, personnel and equipment maintenance costs in the Argentine operation.

10


In 2005-Q4, the international lifting cost increased 28% in relation to 2005-Q3 due to greater maintenance services and equipment expenses in the Bolivian unit and personnel expenses in Argentina.

Refining Cost (US$/Barrel)

Domestic unit refining costs in 2005 increased 38% in relation to 2004 due primarily to higher personnel expenses associated with increased salaries and benefits, an increase in the number of workers, and, a revision in the actuarial calculations at the end of 2004 related to future healthcare and pension benefits. Refining costs were also adversely influenced by higher expenditures for scheduled refinery stopagges. Discounting the effects of the 17% appreciation in the Brazilian real versus the U.S. dollar to domestically incurred expenses denominated in the local currency, the unit refining costs increased 17% in relation to 2004.

The domestic unit refining cost in 2005-Q4 increased 9% compared to 2005-Q3, primarily as a result of the higher personnel expenses and the scheduled shutdowns at RLAM. Discounting the effects of the currency appreciation of 4% in the quarter, the unit refining cost increased 5%.

The average international unit refining cost increased 19% in 2005 in relation to 2004 due to expenses incurred for the scheduled shutdowns at the Bolivian and Argentine refineries.

The average unit cost of international refining in 2005-Q4 was 4% lower than in 2005-Q3 due to a reduction in electric power and personnel expenses in the Bolivian operations.

Corporate Overhead – Parent Company (US$ million)

Corporate overhead increased 62% in 2005 due to higher expenses linked to sponsorships, publicity and advertising, data processing, safety measures, and maintenance expenses at the administrative buildings. Increased salary and benefit expenses resulting from the Collective Labor Agreements for 2004/2005 and 2005/2006, and the revision to actuarial calculations used for healthcare and pension provisions also contributed to the increase. Discounting the effects of the 17% appreciation in the real against the U.S. dollar, given that all overhead expenses are in Reais, overhead increased 35% in relation to 2004.

11


Compared to Q3-2005, corporate overhead for Q4-2005 increased 22%, due, principally, to greater expenses for services contracted for sponsorships, publicity and advertising, safety, environment, health and data processing. Discounting the effects of the Real's appreciation, (4%), for total overall expenses in Reals, there was a 15% increase.

Sales Volume – Thousand Barrels/day


Total domestic sales volumes increased 2% in 2005, compared to 2004. Of particular note was the increase in gasoline sales (4%) resulting from increases in the number of urban vehicles and in the natural gas fleet (9%), greater industrial consumption and a rise in the number of vehicle conversions. The increased sales of these products was partially offset by a reduction in the sales of Fuel Oil (8%) as a result of the strong competition from substitute products such as coal, coke, biomass, wood and natural gas. Diesel consumption remained relatively stable in relation to 2004, because increased use in agriculture was partially offset by reduced demand in other segments from price increases.

12


Result by Business Area R$ million (1)
Fourth Quarter 
Fiscal Year 
3Q-2005 
 
2005
 
2004 
 
D% 
     
2005 
 
2004 
 
D% 
 
7.348 
4.960 
4.506 
10 
  EXPLORATION & PRODUCTION    22.699    18.083    26 
784 
1.272 
838 
52 
  SUPPLY    5.556    2.553    118 
(42)
(476)
(93)
412 
  GAS & ENERGY    (624)   (517)   21 
205 
296 
267 
11 
  DISTRIBUTION (3)   784    623    26 
1 
47 
119 
(61)
  INTERNATIONAL (2)   567    347    63 
(2.014)
948 
(1.305)
(173)
  CORPORATE    (4.096)   (3.677)   11 
(650)
1.095 
(95)
(1.253)
  ELIMINATIONS AND ADJUSTMENTS    (1.161)   (525)   121 
       
5.632 
8.142 
4.237 
92 
  CONSOLIDATED NET INCOME    23.725    16.887    40 
       
 
 
(1) Financial statements by business area and their respective comments are presented starting on page 25. 
 
(2) In the international business unit, the ability to make comparisons between the periods is influenced by changes in the exchange rate, keeping in mind that all operations are executed abroad, in dollars or in other currencies of those countries where each firm is headquartered, there may be significant variations in Reais, principally arising from and reflecting changes in the exchange rate. 
 
(3) In the Distribution business area, comparability between the periods is affected by the business of LIQUIGÁS, acquired by Petrobras Distribuidora - BR on August 9, 2004, and included in the consolidation of the PETROBRAS System as of August 2004. 

13


RESULT BY BUSINESS AREA

PETROBRAS is a company that operates in an integrated manner, with the greatest part of oil and gas production in the Exploration & Production area being transferred to other areas of the Company.

The main criteria used to report results by business area are highlighted below:

a)     
Net operating revenues: the revenues related to sales made to external clients were considered, plus the billing and transfers between business areas, using the internal transfer prices defined between the areas as a reference, with methodology based on market parameters..
 
b)     
Included in the computation of operating income are: net operating revenues, the costs of goods and services sold, which are reported by each business area considering the internal transfer price and the other operating costs of each area, as well as operating expenses in which the expenses effectively incurred in each area are considered.
 
c)      Assets: includes the assets identified in each area.
 

E&P - In 2005, operating profits for the Exploration and Production unit were R$ 22.699 million, 26% higher than the operating income reported in 2004 (R$ 18.083 million), due to the R$ 8.401 million increase in gross profits from petroleum sales and transfers, reflecting the increase in international prices as well as the 13% rise in petroleum and NGL production, and the 3% rise in natural gas production, despite a 17% appreciation in the average exchange rate of the Real against the U.S. dollar and the lesser increase in the value of heavy petroleum in the international market compared to lighter petroleum.

The spread between the average price of sold/transferred domestic petroleum and the average Brent price increased from US$ 4.72/bbl in 2004 to US$ 8.96/bbl in 2005.

Part of the increase in gross profit was offset by a rise of R$ 731 million in expenses for prospecting and drilling due to the abandonment of dry wells and/or subcommercial wells, as well as the updating of provision for abandonment of the area.

In 2005-Q4 operating profit attributable to the Exploration and Production business unit was R$ 4.960 million, 32% less than the cash profit accounted for in the previous quarter (R$ 7.348 million). This was due to a reduction of R$ 3.208 million in gross profit, reflecting the decrease in international petroleum prices, a 1% reduction in natural gas production, a 4% appreciation in the average exchange rate of the Real against the U.S. dollar and the lower increase in value of heavy petroleum in the international market compared to lighter petroleum, despite a 1% increase in petroleum and NGL production.

The spread between the average price for sold/transferred domestic petroleum and the average Brent price increased from US$ 7.29/bbl in 2005-Q3 to US$ 10.85/bbl in 2005-Q4.

Also contributing to the decrease in operating profit was a R$ 754 million increase in expenses for prospecting and drilling due to the drop in dry wells and/or subcommercial wells, aside from the updating of provisions for abandonment of the area.

14


SUPPLY – In 2005, net income for the Supply segment was R$ 5.556 million, 118% higher than net income recorded in 2004 (R$ 2.553 million), reflecting the R$ 4.859 million increase in gross profit, as highlighted by the following factors:

Part of these effects was offset by the following:

In 2005-4Q, net income accounted for by the Supply segment was R$ 1.272 million, 62% higher than the net income accounted for in the preceding quarter (R$ 784 million), due to an increase of R$1.458 million in gross profit, impacted by the following factors:

Part of these effects were offset by a 4% decrease in the sales volumes of oil products in the domestic market. .

GAS AND ENERGY – In 2005 results for sales of energy showed improvement, bolstered by the signing of new contracts. Operating income for natural gas sales continued to be positive. This takes into consideration the 9% increase in sales volume and the sales price realignment process for natural gas, despite the higher operating expenses.

Increased revenues were not enough to offset losses in energy generation, as a result of continued low prices for thermo-electric capacity as well as the costs incurred in 2005 to renegotiate existing contracts and making up for thermo-plant short fall in the Northeast.

Together, these factors resulted in the Gas and Energy segment reporting a loss of R$ 624 million in 2005, but 21% higher than the R$ 517 million loss incurred in the previous year.

Excluding the extraordinary expenses, Gas and Energy segment would reach in 2005 a R$ 38 million operating profit (R$108 million operating profit in 2004).

15


In the 2005-4Q the Gas and Energy segment posted a loss of R$ 476 million, compared with a loss of R$ 42 million in the previous quarter, due to the impact on indebtedness of the devaluation of the real in relation to the U.S. dollar, as well as to expenses realized in the quarter and the negotiation of contractual deferred charges and to the acquisition of thermoelectric plants and making up for thermo-plant short fall in the Northeast.

DISTRIBUTION – In 2005, the Distribution business posted a net income of R$ 784 million, 26% above the net income posted for 2004 (R$ 623 million), due to an increase of R$ 636 million in gross profit, largely from the consolidation of Liquigás (purchased in August 2004), which had a positive impact on the volumes sold, 10% greater than in 2004.

These effects were partially offset by an increase of R$ 226 million in operating expenses, particularly the increase in commercial and distribution expenses for products and for personnel.

The market share of distribution of fuels in 2005 was 33.8% (552 thousand bbl/day), including the company Liquigás, whereas in 2004 it was 31.6% (500 thousand bbl/day).

In 2005, Liquigás contributed gross and net incomes of R$ 548 million and R$ 111 million, respectively. From August to December 2004, the contribution of Liquigás to gross and net incomes of R$ 319 million and R$ 155 million, respectively.

In relation to the previous quarter, when the net income posted in the area of Distribution was R$ 205 million, the net income in the 2005-Q4 was 44% greater, due to a reduction of R$ 36 million in operating expenses.

The market share for distribution of fuels was 33.8% in the 2005-Q4 (561 thousand bbl/day), including the company Liquigás, and was 33.6% in the 2005-Q3 (568 thousand bbl/day).

INTERNATIONAL – In 2005, the International business posted a net income equivalent to R$ 567 million, 63% greater than the equivalent net income of R$ 347 posted in 2004.

This increase in net income was due principally to the following factors:

16


These effects were partially offset by the increase in operating expenses, in the amount of R$ 106 million, due to reduction of tax credits in Ecuador, and to the increase in general and administrative expenses.

In 2005-Q4, the International business posted a net income equivalent to R$ 47 million, in comparison to the equivalent net income of R$ 1 million posted in the previous quarter.

This increase in net income was due principally to the following factors:

This increase was partially offset by the increase in operating expenses, in the amount of R$ 152 million, highlighted by the abandonment of dry and/or sub-commercial wells and expenses with geological studies.

CORPORATE – The corporate activities of the PETROBRAS System produced a loss of R$4,096 million in 2005, 11% above the loss posted for 2004 (R$ 3,677 million), highlighted by greater spending on personnel, advertising, publicity, and with the change to the assumptions in the actuarial revision of the Health Plans (Supplementary Medical Assistance) and Retirement (“Petros”), regarding retired persons and pensioners.

A part of these effects were offset by a decrease of R$ 767 million in the net financial result, concerning loans and financing, principally as a result of the rise of the real in relation to the U.S. dollar in 2005 (12%), when compared with the previous year (8%).

In 2005-Q4 a net income of R$ 948 million was posted in comparison with the loss in the previous quarter of R$ 2,014 million, highlighted by the gains obtained from assets exposed to exchange variation (R$ 2,651 million), as a result of the 5% devaluation of the real in relation to the U.S. dollar.

17


Consolidated Debt

    R$ Million 
 
    12.31.2005    12.31.2004    D
Short-term Debt (1)   11.116    9.575    16 
Long-term Debt (1)   37.126    46.228    (20)
       
Total    48.242    55.803    (14)
Net Debt (2)   24.825    35.816    (31)
Net Debt/(Net Debt + Shareholder's Equity) (1)   24%    32%    (8)
Total Net Liabilities (1) (3)   163.404    148.701    10 
Capital Structure             
(Third Parties Net / Total Liabilities Net)   52%    58%    (6)

(1)      Includes debt assumed through leasing contracts (R$ 3,300 million on 12.31.2005 and R$ 4,021 million on 12.31.2004).
(2)      Total Debt – Net available.
(3)      Net total liabilities of cash/financial applications.
 

Net Debt of PETROBRAS System on 12.31.2005 totaled R$ 24,825 million, a reduction of 31% in relation to 12.31.2004. The increase of the Brazilian real in relation to the U.S. dollar has contributed to the reduction of the debt. The reduction in net debt caused an improvement in our leverage as measured by Net Debt/EDITDA, which fell from 0.97 on 12.31.2004 to 0.52 on 12.31.2005. Debt/Equity is now at 52% as of 12.31.2005, a reduction of 6 percentage points in comparison with 12.31.2004.



18


Consolidated Investments

R$ Million
    Fiscal Year 
    2005    %    2004    %    D 
• Own Investments    22.927    90    21.151    93    8 
           
Exploration & Production    13.934    54    12.441    55    12 
Supply    3.286    13    3.907    17    (16)
Gas and Energy    1.527      625      144 
International    3.153    12    2.331    10    35 
Distribution    495      1.223      (60)
Corporate    532      624      (15)
• Special Purpose Companies (SPCs)   2.385    9    775    4    208 
           
• Ventures under Negotiation    311    1    454    2    (31)
           
• Structured Projects    87    -    169    1    (49)
           
Exploration & Production    87    -    169    1    (49)
Espadarte/Marimbá/Voador    52      32      63 
Cabiúnas             -      45     
Marlim / Nova Marlim             -      17     
PCGC    35      75      (53)
           
 
Total Investments    25.710    100    22.549    100    14 
           

R$ Million
    Fiscal Year 
    2005    %    2004    %    D 
International                     
Exploration & Production    2.758    87    2.017    87     37 
Supply    212      41      417 
Gas and Energy    79      98      (19)
Distribution    38      39         (3)
Others    66      136      (51)
           
Total Investments    3.153    100    2.331    100     35 
           

R$ Million
    Fiscal Year 
    2005    %    2004    %     D 
Projects Developed by SPCs                    
Marlim Leste    789    33           
PDET Off Shore    231    10       
Barracuda & Caratinga    288    12    597    77    (52)
Malhas    834    35    153    20    445 
Cabiúnas        25      (80)
Amazônia    238    10       
           
Total Investments    2.385    100    775    100    208 
           

In line with its strategic objectives, PETROBRAS acts in consortium with other companies as a concessionaire of exploration, development, and production rights for petroleum and natural gas. Currently, the Company has partnerships in 104 blocks, through 62 consortia. Total investment on the order of US$ 8,547 million are forecast for these ventures.

PETROBRAS, in fulfillment of the goals outlined in its strategic plan, continues to give priority to investment in the development of its capacity to produce petroleum and natural gas, through its own investments and the structuring of ventures with partners. In 2005, total investments attained R$ 25,710 million, which represented an increase of 14% in relation to the resources applied in 2004.

19


PETROBRAS SYSTEM  Financial Statements 


Income Statement – Consolidated

R$ Million
Fourth Quarter        Fiscal Year 
3Q-2005 (1)   2005 (1)   2004 (2)       2005 (1)   2004 (2)
 
46.555    50.066    39.225    Gross Operating Revenues    179.065    150.440 
(10.844)   (11.428)   (9.823)   Sales Deductions    (42.460)   (39.312)
           
35.711    38.638    29.402    Net Operating Revenues    136.605    111.128 
(20.589)   (22.030)   (18.123)      Cost of Goods Sold    (77.108)   (65.069)
           
15.122    16.608    11.279    Gross Profit    59.497    46.059 
            Operating Expenses         
(1.247)   (1.709)   (1.287)      Sales    (5.477)   (4.752)
(1.302)   (1.660)   (1.174)      General & Administrative    (5.431)   (4.144)
(386)   (1.253)   (407)      Exploratory Costs    (2.223)   (1.683)
  (126)   (55)      Losses on recovery of assets    (126)   (55)
(248)   (271)   (187)      Research & Development    (935)   (696)
(202)   (275)   (229)      Taxes    (895)   (1.255)
(584)   (456)   (360)      Health and Pension Plans    (2.011)   (1.321)
(248)   (713)   (732)      Other    (2.626)   (2.223)
           
(4.217)   (6.463)   (4.431)       (19.724)   (16.129)
           
               Net Financial Expenses         
(132)   1.289    (86)                  Income    1.351    1.276 
(827)   (1.322)   (1.126)                  Expenses    (4.564)   (5.180)
(593)   1.057    (267)                  Monetary & FX Correction - Assets    (1.112)   185 
841    (1.357)   952                   Monetary & FX Correction - Liabilities    1.482    398 
           
(711)   (333)   (527)       (2.843)   (3.321)
           
(4.928)   (6.796)   (4.958)       (22.567)   (19.450)
(259)   292    (270)   Gains from Investments in Subsidiaries    (250)   (145)
           
9.935    10.104    6.051    Operating Profit    36.680    26.464 
14    68    (92)   Non-operating Income (Expenses)   (124)   (207)
(3.485)   (2.442)   (1.143)   Income Tax & Social Contribution    (10.802)   (6.904)
(558)   763    (448)   Minority Interest    (1.023)   (1.683)
(274)   (351)   (131)   Employee Profit Sharing Plan    (1.006)   (783)
           
5.632    8.142    4.237    Net Income    23.725    16.887 
           

(1)      Beginning on 01.01.2005, the Special Purpose Entities, whose activities are directly or indirectly controlled by PETROBRAS, were included in the Consolidated Financial Statements, as per CVM Instruction No. 408/2004.
(2)      To facilitate comparability, the Special Purpose Entities were also included in the financial statements of 2004-Q4 and of 2004.
 
  Some values related to prior periods were reclassified for the purpose of aligning the financial statements to the current period, thus facilitating comparability.
 

20


Balance Sheet - Consolidated

Assets    R$ Million 
    Dec 31, 2005    Sep 30, 2005    Dec 31, 2004 
       
Current Assets    60.235    55.612    52.786 
       
Cash and Cash Equivalents    23.417    21.210    19.987 
Accounts Receivable    13.029    11.779    10.909 
Inventories    13.607    14.655    14.264 
Taxes Recoverable    4.956    4.577    3.901 
Other    5.226    3.391    3.725 
       
Long-Term Assets    14.102    14.676    14.908 
       
Petroleum & Alcohol Account    770    765    749 
Advances to Suppliers    684    661    959 
Marketable Securities    618    739    859 
Deferred Taxes and Social Contribution    4.292    3.932    3.486 
Advance for Pension Plan Migration    1.205    1.203    1.218 
Prepaid Expenses    1.363    1.465    1.513 
Accounts Receivable    1.588    1.341    1.915 
Deposits - Legal Matters    1.818    2.093    1.815 
Taxes Recoverable    45    265    662 
Other    1.719    2.212    1.732 
Fixed Assets    109.184    101.872    96.972 
       
Investments    2.281    1.975    2.079 
Property, Plant & Equipment    105.429    98.735    93.323 
Deferred    1.474    1.162    1.570 
       
Total Assets    183.521    172.160    164.666 
       

Liabilities    R$ Million 
    Dec 31, 2005    Sep 30, 2005    Dec 31, 2004 
       
Current Liabilities                   42.360                   35.076    36.726 
       
Short-term Debt    10.503    8.391    8.805 
Suppliers    9.207    9.839    9.268 
Taxes and Social Contribution Payable    8.931    8.867    7.854 
Project Finance and Joint Ventures    28    855    64 
Pension Fund Obligations    483    396    441 
Dividends    7.166    2.277    5.141 
Payroll    1.196    1.312    874 
Other    4.846    3.139    4.279 
Long-Term Liabilities                   55.714                   54.893    60.497 
       
Long-term Debt    34.439    36.042    42.977 
Pension Fund Obligations    1.938    1.702    696 
Health Care Benefits    7.031    6.736    5.674 
Deferred Taxes and Social Contribution    8.462    7.407    7.474 
Other    3.844    3.006    3.676 
Provision for Future Earnings    483    544    502 
Minority Interest    6.179    5.895    4.811 
 
Shareholders’ Equity    78.785    75.752    62.130 
       
Corporate Capital    33.235    33.235    33.235 
Reserves    21.825    26.934    12.008 
Net Income    23.725    15.583    16.887 
       
Total Liabilities    183.521    172.160    164.666 
       

As of 1.1.2005, the Special Purpose Entities, whose activities are directly or indirectly controlled by PETROBRAS, were included in the Consolidated Financial Statements, as per CVM Instruction No. 408/2004.

To facilitate comparability, the Special Purpose Entities were also included in the financial statements of 2004-Q4 and of 2004.

Some values related to prior periods were reclassified for the purpose of aligning the financial statements to the current period, thus facilitating comparability.

21


Statement of Cash Flow - Consolidated

R$ Million
Fourth Quarter        Fiscal Year 
       
3Q-2005 (1)   2005 (1)   2004 (2)       2005 (1)   2004 (2)
           
5.632    8.142    4.237    Net Income (Loss)   23.725    16.887 
5.483    988    1.221    (+) Adjustments    13.486    6.266 
           
1.858    2.271    2.010       Depreciation & Amortization    8.035    6.868 
(231)   1.722    (2.309)      Charges on Financing and Related Companies    (1.477)   (39)
558    (763)   448       Minority Interest    1.023    1.683 
259    (292)   270       Result of Participation in Material Investments    250    145 
1.813    (1.778)   1.546       Exchange Rate Variations of Fixed Assets    4.000    1.774 
152    (265)   (546)      Deferred Income Tax and Social Contribution    890    974 
(448)   1.210    66       Inventory Variation    657    (4.129)
1.549    (947)   (3.353)      Supplier Variations    (484)   (255)
(27)   (170)   3.089       Other Adjustments    592    (755)
11.115    9.130    5.458    (=) Net Cash Generated by Operating Activities    37.211    23.153 
4.323    7.641    8.400    (-) Cash used for Capital Expenditures    23.026    22.707 
           
3.788    5.329    6.053       Investment in E&P    16.062    14.970 
774    1.061    1.364       Investment in Refining & Transport    3.445    4.893 
769    262    21       Investment in Gas and Energy    1.732    921 
133    144    733       Distribution    528    994 
(30)   (59)   (79)      Dividends    (130)   (134)
(1.111)   904    308       Other investments    1.389    1.063 
           
6.792    1.489    (2.942)   (=) Free Cash Flow    14.185    446 
2.777    (718)   (2.450)   (-) Cash used in Financing Activities    10.755    8.036 
2.564    (768)   (2.457)      Financing    5.604    2.566 
213    50         Dividends    5.151    5.470 
4.015    2.207    (492)   (=) Net Cash Generated in the Period    3.430    (7.590)
           
17.195    21.210    20.479    Cash at the Beginning of Period    19.987    27.577 
21.210    23.417    19.987    Cash at the End of Period    23.417    19.987 

(1) As of 1.1.2005, the Special Purpose Entities, whose activities are directly or indirectly controlled by PETROBRAS, were included in the Consolidated Financial Statements, as per CVM Instruction No. 408/2004.
(2) To facilitate comparability, the Special Purpose Entities were also included in the financial statements of 2004-Q4 and of 2004.

Some values related to prior periods were reclassified for the purpose of aligning the financial statements to the current period, thus facilitating comparability.

22


Statement of Value Added – Consolidated

    R$ Million 
    Fiscal Year 
    2005 (1)   2004 (2)
Description         
Sales of Products and Services and Non-Operating Revenues    179.391    150.638 
Raw Materials Used    (4.004)   (4.823)
Products for Resale    (29.035)   (30.177)
Materials, Energy, Services & Others    (23.594)   (14.642)
     
Added Value Generated    122.758    100.996 
 
Depreciation & Amortization    (8.035)   (6.868)
Participation in Related Companies, Goodwill & Negative Goodwill    (250)   (145)
Financial Result    239    1.045 
Rent and Royalties    599    376 
     
Total Distributable Added Value    115.311    95.404 
 
Distribution of Added Value         
Personnel         
Salaries, Benefits and Charges    9.643    7.516 
     
    9.643    7.516 
     
Government Entities         
Taxes, Fees and Contributions    49.336    44.688 
Government Take    14.474    11.327 
     
    63.810    56.015 
     
Financial Institutions and Suppliers         
Financial Expenses, Interest, Rent & Freight    17.110    13.303 
     
 
Shareholders         
   Dividends / Interest on Own Capital    7.051    5.044 
   Retained Earnings    16.674    11.843 
     
    23.725    16.887 
   Minority Interest    1.023    1.683 
     
    24.748    18.570 
     

(1) As of 1.1.2005, the Special Purpose Entities, whose activities are directly or indirectly controlled by PETROBRAS, were included in the Consolidated Financial Statements, as per CVM Instruction No. 408/2004.
(2) To facilitate comparability, the Special Purpose Entities were also included in the financial statements of 2004-Q4 and of 2004.

Some values related to prior periods were reclassified for the purpose of aligning the financial statements to the current period, thus facilitating comparability.

23


Consolidated Result by Business Area - December 31, 2005

  R$ MILLION 
 
           GAS                     
                             
  E&P    SUPPLY    ENERGY   DISTRIB.   INTERN.   CORPOR.   ELIMIN.    TOTAL 
INCOME STATEMENTS                               
 
Net Operating Revenues  69.487    109.599    8.088    38.309    11.468    -    (100.346)   136.605 
                 
 Intersegments  65.007    30.027    2.402    545    2.365      (100.346)    
 Third Parties  4.480    79.572    5.686    37.764    9.103        136.605 
Cost of Goods Sold  (29.682)   (97.452)   (6.447)   (34.620)   (7.350)     98.443    (77.108)
                 
Gross Profit  39.805    12.147    1.641    3.689    4.118    -    (1.903)   59.497 
Operating Expenses  (3.287)   (3.665)   (2.097)   (2.451)   (1.931)   (6.427)   134    (19.724)
Sales, General & Administrative  (873)   (3.000)   (1.365)   (2.314)   (1.131)   (2.359)   134    (10.908)
Taxes  (30)   (79)   (61)   (164)   (129)   (432)     (895)
Exploratory Costs  (1.877)         (346)       (2.223)
Losses on Recovery of Assets  (49)           (77)       (126)
Research & Development  (372)   (134)   (53)   (2)   (5)   (369)     (935)
Health and Pension Plans            (2.011)     (2.011)
Others  (86)   (452)   (618)   29    (243)   (1.256)     (2.626)
                 
Operating Profit (Loss) 36.518    8.482    (456)   1.238    2.187    (6.427)   (1.769)   39.773 
Interest Income (Expenses) (1.007)   119    89    21    (1.263)   (794)   (8)   (2.843)
Equity Income    200    (42)     100    (508)     (250)
Monetary corretion               
Non-operating Income (Expense) (98)   (19)   (38)   (9)   (6)   46      (124)
                 
 
Income (Loss) Before Taxes and Minority Interests  35.413    8.782    (447)   1.250    1.018    (7.683)   (1.777)   36.556 
Income Tax & Social Contribution  (11.732)   (2.868)   87    (390)   (307)   3.792    616    (10.802)
Minority Interests  (613)   (74)   (237)     (99)       (1.023)
Employee Profit Sharing Plan  (369)   (284)   (27)   (76)   (45)   (205)     (1.006)
                 
Net Income (Loss) 22.699    5.556    (624)   784    567    (4.096)   (1.161)   23.725 
                 

Consolidated Result by Business Area - December 31, 2004

  R$ million  
 
           GAS                     
                             
  E&P    SUPPLY    ENERGY   DISTRIB.   INTERN.   CORPOR.   ELIMIN.    TOTAL 
 
INCOME STATEMENTS                               
 
Net Operating Revenues  55.220    82.931    5.944    30.507    10.593    -    (74.067)   111.128 
                 
 Intersegments  47.826    22.933    1.159    508    1.641      (74.067)  
 Third Parties  7.394    59.998    4.785    29.999    8.952        111.128 
Cost of Goods Sold  (23.816)   (75.643)   (4.606)   (27.454)   (6.830)     73.280    (65.069)
                 
Gross Profit  31.404    7.288    1.338    3.053    3.763    -    (787)   46.059 
Operating Expenses  (2.303)   (3.684)   (1.296)   (2.225)   (1.825)   (4.796)   -    (16.129)
Sales, General & Administrative  (686)   (2.889)   (693)   (1.818)   (1.062)   (1.748)     (8.896)
Taxes  (21)   (77)   (60)   (158)   (133)   (806)     (1.255)
Exploratory Costs  (1.166)         (516)       (1.682)
Losses on Recovery of Assets  (56)               (56)
Research & Development  (306)   (143)   (23)   (7)   (4)   (213)     (696)
Health and Pension Plan            (1.321)     (1.321)
Others  (68)   (575)   (520)   (242)   (110)   (708)     (2.223)
                 
Operating Profit (Loss) 29.101    3.604    42    828    1.938    (4.796)   (787)   29.930 
Interest Income (Expenses) (1.000)   161    360    (7)   (1.239)   (1.561)   (35)   (3.321)
Equity Income    191    18      21    (375)     (145)
Non-operating Income (Expense) (248)   119    (8)   (6)   (44)   (20)     (207)
                 
Income (Loss) Before Taxes and Minority                               
Interests  27.853    4.075    412    815    676    (6.752)   (822)   26.257 
Income Tax & Social Contribution  (9.362)   (1.265)   281    (134)   50    3.229    297    (6.904)
Minority Interests  (76)   (41)   (1.206)     (360)       (1.683)
Employee Profit Sharing Plan  (332)   (216)   (4)   (58)   (19)   (154)     (783)
                 
Net Income (Loss) 18.083    2.553    (517)   623    347    (3.677)   (525)   16.887 
                 

(1)      With the objective of adapting the segmented results to the new procedures as a result of implementing SAP-R/3 [software applications], beginning in 2005 the receipts from the sale of petroleum to third parties will be allocated according to where the sale is actually realized, which may be either the Exploration and Production or Supply segment. Until 2004, the sale of petroleum was allocated only to the Exploration and Production segment.
 
  Considering that the methodology of internal prices for transfers of oil is based on market parameters and that all the petroleum sold by the area of Supply originates in transfer from the area of Exploration and Production, this adaptation practically produces no effects on the profit or loss of the areas; it is limited to an increase of the Net Intersegmented Operational Revenues of the area of Exploration and Production balanced by a reduction on the line of Net Operating Revenues with Third Parties as well as increases on the line of Net Operating Revenues with Third Parties and on the Cost of Products and Services Sold from Supply.
 

24


Statement of Other Operating Revenues (Expenses) 12.31.2005

    R$ Million 
 
    E&P    SUPPLY    GAS
&
ENERGY
  DISTRIB.    INTERN.    CORPOR.    ELIMIN.    TOTAL 
 
Operating expenses with thermoelectric plants        (1.126)           (1.126)
Institutional relations and cultural projects      (7)     (99)     (872)     (978)
Losses and Contingencies related to Legal
    Procedures
 
  (28)   (316)     83    (31)   (51)     (343)
Unscheduled stoppages at installations and
     production equipment
 
  (68)   (89)             (157)
Contractual losses from ship-or-pay transport
     services
 
          (147)       (147)
Result from hedge operations      (18)   419            401 
Rent revenues          51          51 
 
Others    10    (22)   89    (6)   (65)   (333)     (327)
                 
 
    (86)   (452)   (618)   29    (243)   (1.256)   -    (2.626)
                 

Statement of Other Operating Revenues (Expenses) 12.13.2004

    R$ Million 
 
    E&P    SUPPLY    GAS
&
ENERGY
  DISTRIB.    INTERN.    CORPOR.    ELIMIN.    TOTAL 
 
Operating expenses with thermoelectric plants        (597)           (597)
Institutional relations and cultural projects      (9)     (102)     (646)     (757)
Losses and Contingencies related to Legal
     Procedures
 
  (43)   (122)   (2)   (106)       (52)     (325)
Unscheduled stoppages at installations and
     production equipment
 
  (118)   (127)             (245)
Contractual losses from ship-or-pay transport
     services
 
          (169)       (169)
Result from hedge operations      (272)   259            (13)
Rent revenues          45          45 
Statutory Social Plan (INSS) Contigencies    (135)               (135)
                               
Others    228    (45)   (180)   (79)   59    (10)       (27)
                 
 
    (68)   (575)   (520)   (242)   (110)   (708)   -    (2.223)
                 

25


Statement of Extraordinary Items in 12.31.2005

    R$ Million 
 
    E&P    SUPPLY    GAS
&
ENERGY
  DISTRIB.    INTERN.    CORPOR.    ELIMIN.    TOTAL 
 
Operating Income (Loss) by Business Segment     36.518       8.482       (456)    1.238     2.187       (6.427)    (1.769)   39.773 
Extraordinary Items:                                 
Contractual Losses from Ship-or-Pay Transport Services                 147         -    147 
Net Profit in Assets Exchange              (146)      -    (146)
Lawsuit Loss Related to ICMS Tax           286               -    286 
Regulatory Framework Changes Effect            23         -    23 
Making up for thermo-plant short fall in the Northeast        118             -    118 
Costs incurred to renegotiate existing contracts with thermo-plants        376             -    376 
                 
Extraordinary Items Subtotal    -    286    494    -    170    (146)      -    804 
                 
Operating Income (Loss) by Business Segment before Extraordinary Items    36.518    8.768    38    1.238    2.357    (6.573)    (1.769)   40.577 
                 
Net Income (Loss) by Business Segment    22.699    5.556    (624)   784    567    (4.096)   1.161    23.725 
Extraordinary Items    -    286    494    -    170    (146)      -    804 
Tax Effects    -    (98)   (93)   -    (87)   50       -    (228)
                 
Net Income (Loss) by Business Segment before Extraordinary Items    22.699    5.744    (223)   784    650    (4.192)    (1.161)   24.301 
                 

Statement of Extraordinary Items in 12.31.2004

    R$ Million 
 
    E&P    SUPPLY    GAS
&
ENERGY
  DISTRIB.    INTERN.    CORPOR.    ELIMIN.    TOTAL 
 
Operating Income (Loss) by Business Segment     29.101       3.604           42       828     1.938       (4.796)      (787)   29.930 
 
Extraordinary Items:                                 
Contractual Losses from Ship-or-Pay Transport
     Services
 
               169       -    169 
Statutory Social Plan (INSS) Contigencies    135               -    135 
Provision for Abandonment of Wells and Disassembling of Areas         (412)              -    (412)
Write-off on Signature Bonus in Angola                 192       -    192 
Fiscal Credit PEPSA               (239)      -    (239)
Statutory Pension Plan Credits Recovery              165     -    165 
Fiscal Indebtedness      94             -    94 
Costs incurred to renegotiate existing contracts with
     thermo-plants
 
             69           -    69 
                 
 
 
Extraordinary Items Subtotal    (277)   94    69    -    122    165     -    173 
                 
 
 
Operating Income (Loss) by Business Segment before
     Extraordinary Items
 
  28.824    3.698    111    828    2.060    (4.631)      (787)   30.103 
                 
 
Net Income (Loss) by Business Segment    18.083    2.553    (517)   623    347    (3.677)   (525)   16.887 
Extraordinary Items    (277)   94    69    -    122    165     -    173 
Tax Effects    94    (32)   (23)   -    (123)   (56)    -    (140)
                 
 
Net Income (Loss) by Business Segment before Extraordinary Items    17.900    2.615    (471)   623    346    (3.568)      (525)   16.920 
                 

26


Consolidated Assets by Business Segment - 12.31.2005

    R$ Million 
 
    E&P    SUPPLY    GAS
&
ENERGY
  DISTRIB.    INTERN.    CORPOR.    ELIMIN.    TOTAL 
 
ASSETS    68.312    40.438    21.404    8.815    21.025    39.018    (15.491)   183.521 
                 
 
CURRENT ASSETS    7.528    20.766    4.677    4.865    6.289    23.181    (7.072)   60.234 
                 
    CASH AND CASH EQUIVALENTS    1.640    1.458    1.960    371    1.499    16.489      23.417 
    OTHERS    5.888    19.308    2.717    4.494    4.790    6.692    (7.072)   36.817 
NON-CURRENT ASSETS    3.336    1.186    2.158    1.097    777    13.624    (8.075)   14.103 
                 
    PETROLEUM AND ALCOHOL ACCT.              770      770 
    MARKETABLE SECURITIES    310            300      618 
    OTHERS    3.026    1.181    2.158    1.095    776    12.554    (8.075)   12.715 
FIXED ASSETS    57.448    18.486    14.569    2.853    13.959    2.213    (344)   109.184 
                 

Consolidated Assets by Business Segment - 09.30.2005

    R$ Million 
 
    E&P    SUPPLY    GAS
&
ENERGY
  DISTRIB.    INTERN.    CORPOR.    ELIMIN.    TOTAL 
 
ASSETS    60.492    41.831    22.193    8.641    19.602    37.177    (17.776)   172.160 
                 
CURRENT ASSETS    5.939    22.756    4.143    4.858    5.937    20.722    (8.743)   55.612 
                 
    CASH AND CASH EQUIVALENTS    1.203    1.412    961    250    1.356    16.028      21.210 
    OTHERS    4.736    21.344    3.182    4.608    4.581    4.694    (8.743)   34.402 
NON-CURRENT ASSETS    2.993    1.565    2.441    982    962    14.422    (8.689)   14.676 
                 
    PETROLEUM AND ALCOHOL ACCT.              765      765 
    MARKETABLE SECURITIES    320            411      739 
    OTHERS    2.673    1.560    2.441    980    961    13.246    (8.689)   13.172 
FIXED ASSETS    51.560    17.510    15.609    2.801    12.703    2.033    (344)   101.872 
                 

Consolidated Assets by Business Segment - 12.31.2004

    R$ Million 
 
    E&P    SUPPLY    GAS
&
ENERGY
  DISTRIB.    INTERN.    CORPOR.    ELIMIN.    TOTAL 
 
ASSETS    60.307    37.161    19.145    8.173    21.286    42.888    (24.294)   164.666 
                 
 
CURRENT ASSETS    6.516    19.564    3.604    4.610    5.751    17.465    (4.724)   52.786 
                 
    CASH AND CASH EQUIVALENTS    2.330    1.338    787    304    1.387    13.841      19.987 
    OTHERS    4.186    18.226    2.817    4.306    4.364    3.624    (4.724)   32.799 
NON-CURRENT ASSETS    5.032    1.639    2.329    903    985    23.237    (19.217)   14.908 
                 
    PETROLEUM AND ALCOHOL ACCT.              749      749 
    MARKETABLE SECURITIES    425          12    5.649    (5.235)   859 
    OTHERS    4.607    1.634    2.329    900    973    16.839    13.982    13.300 
FIXED ASSETS    48.759    15.958    13.212    2.660    14.550    2.186    (353)   96.972 

27


Consolidated Results – International Business Area - 12.31.2005

    R$ Million
INTERNATIONAL
                         
    E&P    SUPPLY    G&E    DISTRIB.    CORPOR.    ELIMIN.    TOTAL 
INTERNATIONAL AREA                             
ASSETS    14.633    3.293    4.208    487    6.461    (8.057)   21.025 
               
Income Statement                             
Net Operating Revenues    5.583    5.399    2.296    2.486    51    (4.347)   11.468 
               
    Intersegments    3.399    2.915    390        (4.347)   2.365 
    Third Parties    2.184    2.484    1.906    2.478    51      9.103 
Operating Profit (Loss)   2.175    187    370    (21)   (575)   51    2.187 
Net Income (Loss)   655    154    310    (14)   (580)   42    567 

Consolidated Results – International Business Area

    R$ Million
INTERNATIONAL
                         
    E&P    SUPPLY    G&E    DISTRIB.    CORPOR.    ELIMIN.    TOTAL 
INTERNATIONAL AREA                             
ASSETS (09.30.2005)   13.171    3.199    3.801    479    5.409    (6.457)   19.602 
               
Income Statement (12.31.2004)                            
Net Operating Revenues    4.779    5.833    2.061    2.428    47    (4.555)   10.593 
               
   Intersegments    2.872    2.962    323    39      (4.555)   1.641 
   Third Parties    1.907    2.871    1.738    2.389    47      8.952 
Operating Profit (Loss)   1.577    628    467    (388)   (383)   37    1.938 
Net Income (Loss) (1)   341    569    365    (276)   (691)   39    347 
ASSETS (12.31.2004)   13.576    3.339    4.231    589    5.506    (5.955)   21.286 

28



PETROBRAS SYSTEM  Appendices 

1. Changes in the Petroleum and Alcohol Accounts

R$ Million
    Fourth Quarter        Fiscal Year
3Q-2005   2005   2004       2005   2004
 
758    765    754    Initial Balance    749    689 
-    -    -    Reimbursement to Petrobras    -   
7    5    3    Intercompany Lending Charges    21    14 
-    -    (8)   Partial Settlement- STN    -               (8)
-    -        Regularization - GTI*    -    50 
           
765    770    749    Final Balance    770    749 
           
* GOVERNMENTAL AUDITING WORK GROUP

SETTLING OF ACCOUNTS WITH THE FEDERAL GOVERNMENT

As defined in Law no. 10.742 of October 06, 2003, the settling of accounts with the Federal Government should have taken place by June 30, 2004. PETROBRAS, working with the Ministry of Mines and Energy – MME, is seeking to balance the differences still remaining with the Secretary of the National Treasury – STN, with a view to concluding the operation in accordance with the provision of Temporary Measure no. 2.181 -45 of August 24, 2001.

The balance of the account may be paid by means of the issuing of National Treasury bonds, of a value equal to the final balance of the settled accounts or with other amounts that PETROBRAS may, by chance, be owing the Federal Government, including those relating to taxes, or a combination of the previous options.

29


2. Analysis of the Consolidated Gross Margin

Main Items    Net Revenues    Cost of
 Goods Sold 
  Gross 
Income 
     
 
. Domestic Market:    - Effect of Volumes Sold    (537)   321    (216)
    - Effect of Prices    1.904      1.904 
. Intl. Market:    - Effect of Export Volumes    657    (7)   650 
    - Effect of Export Price    (1.038)     (1.038)
. Increase expenses:    - Oil, Gas and Oil Product Imports      150    150 
    - Third-Party Services      (151)   (151)
    - Domestic Government Take      (885)   (885)
    - Salaries, Perquisites and Benefits      (230)   (230)
    - Materials, Services and Depreciation      (138)   (138)
. Increase in Profitability of Distribution Segment       
. Increase (Decrease) Operations of Commercialization Abroad    (655)   615    (40)
. Increase (Decrease) in International Sales    639    (399)   240 
. FX Effect on Controlled Companies' Revenues and Costs Abroad    197    (187)   10 
. Others    1.754    (530)   1.224 
         
        2.927    (1.441)   1.486 
         

30


3. Consolidated Taxes and Obligations

The economic contribution of PETROBRAS to the Nation, measured by means of the generation of taxes, duties, and current social obligations, totaled R$ 45,758 million in 2005.

R$ million
    Fourth Quarter        Fiscal Year
3Q-2005    2005    2004    D%        2005    2004    D% 
                Economic Contribution - Country             
3.982    4.248    3.810    11    Value Added Tax (ICMS)   15.518    14.189   
1.915    1.888    1.869      CIDE (1)   7.444    7.647    (3)
2.558    2.926    2.826      PASEP/COFINS    10.385    11.021    (6)
3.316    2.363    1.285    84    Income Tax & Social Contribution    10.401    6.500    60 
658    407    340    20    Others    2.010    1.756    14 
               
12.429    11.832    10.130    17    Subtotal    45.758    41.113    11 
               
792    1.021    906    13    Economic Contribution - Foreign    3.578    3.575   
               
13.221    12.853    11.036    16    Total    49.336    44.688    10 
               
(1) CIDE – CONTRIBUTION FOR INTERVENTION IN THE ECONOMIC DOMAIN.

4. Payments to Governments

R$ million
    Fourth Quarter        Fiscal Year
3Q-2005    2005    2004    D%        2005    2004    D% 
                Country             
1.769    1.712    1.435    19    Royalties    6.366    5.020    27 
2.035    2.003    1.776    13    Special Participation    7.279    5.717    27 
18    58    20    190    Surface Rental Fees    110    87    26 
               
3.822    3.773    3.231    17    Subtotal    13.755    10.824    27 
               
188    249    105    137    Foreign    719    503    43 
               
4.010    4.022    3.336    21    Total    14.474    11.327    28 
               

The payments to governments in the Nation increased 28%, in comparison to 2004, reflecting the increase by 38% in the reference prices for domestic petroleum, which averaged US$ 41.85 (US$ 30.26 in 2004).

31


5. Consolidated Reconciliation of Shareholders’ Equity and Net income

    R$ Million 
         
    Shareholders' Equity    Result 
. According to PETROBRAS information as of December 31, 2005    80.703    23.450 
. Profit in the sales of products in affiliated inventories    (302)   (302)
. Reversal of profits on inventory in previous years      384 
. Capitalized interest    (604)   (168)
. Absorption of negative net worth in affiliated companies (*)   (255)   295 
. Other eliminations    (757)   66 
     
. According to consolidated information as of December 31, 2005    78.785    23.725 
     

* In accordance with the Brazilian Securities and Exchange Commission (CVM) Instruction no. 247/96, losses that are considered to be of a non-permanent (temporary) nature, on investments evaluated by the equity method and which do not present signs of paralyzation or of need of financial support by the investor, should be limited to the value of the investment of the parent company. Therefore, the losses that were caused by excess of liabilities over assets (negative shareholder equity) of controlled companies do not influence the profit and the shareholders’ equity of PETROBRAS in the 2005, and produce an item of reconciliation between the Financial Statements of PETROBRAS and the Consolidated Financial Statements.

6. Trends of PETROBRAS Shares and ADR [American Depository Receipts]

Nominal Change
    Fourth Quarter        Fiscal Year
3Q-2005    2005    2004        2005    2004 
32,71%    2,61%    2,70%    Petrobras ON    55,09%    26,63% 
32,87%    4,38%    3,54%    Petrobras PN    53,19%    27,17% 
37,14%    -0,31%    12,85%    ADR- Level III - ON    79,16%    36,05% 
38,47%    0,97%    13,44%    ADR- Level III - PN    77,77%    35,82% 
26,08%    5,93%    12,70%    IBOVESPA    27,71%    17,81% 
2,86%    1,41%    6,97%    DOW JONES    -0,61%    3,15% 
4,61%    2,49%    14,69%    NASDAQ    1,37%    8,59% 

The equity value of a share of PETROBRAS on December 31, 2005 reached R$ 18.40.

7. Statement of the Base Profit of the Parent Company for the Purposes of Dividends

    R$ Million
    Fiscal Year 
     2005 
   Net Income in the Fiscal Year    23.450 
   Appropriation:     
         Legal Reserve    (1.173)
   
    22.277 
   (+) Reversal of Reserves/Adjustments:     
               Re-evaluation Reserve   
   
   (=) Basic Profit for Dividend Purposes    22.286 
   
 
Proposed dividend, equivalent to 31.78% of basic profit - R$1,60 per share     
(29.88% in 2004, R$ 1.15 per share), comprised of:     
     Interest on Own Capital    5.483 
     Dividend    1.535 
   
Total Dividends Proposed    7.018 
   

32


The dividends proposed for the year 2005, in the amount of R$ 7,018 million (R$ 1.60 per share), are composed of the following:

    Value per Share
 
ON and PN 
  Value 
R$ Million
 
DIVIDENDS TO BE DELIBERATED AT THE GENERAL ORDINARY MEETING     
 
 
Interest on Own Capital - Approved by the Board of Directors on 06.17.2005 - Paid on         
01.05.2006, on the shareholder position of 06.30.2005    0,50                   2.193 
 
Interest on Own Capital - Approved by the Board of Directors 12.16.2005, to be held up         
to 03.31.2006, on the shareholder position of 12.31.2005    0,50                   2.193 
 
Interest on Own Capital - Proposed by the Board of Directors 02.17.2006 -The payment         
date will be established at the General Ordinary Meeting to be held on 04.03.2006, on the         
shareholder position of the same date    0,25                   1.097 
 
Dividends - Proposed by the Board of Directors on 02.17.2005 - The payment date will         
be determined at the General Ordinary Meeting to be held 04.03.2006, on the         
shareholder position of the same date    0,35                   1.535 
     
 
TOTAL DIVIDENDS    1,60                   7.018 
     

Dividends and interest on shareholders’ capital to be made available will have their monetary value adjusted for inflation, beginning on 12.31.2005 and up to the date when distribution begins, according to the variation of the rate of the Special System for Settlement and Custody (SELIC).

The management of PETROBRAS is proposing to the Extraordinary Shareholders’ Meeting the increase of the capital stock of the Company from R$ 32.896 million to R$ 48.248 million without the issue of new shares .This will be done by means of capitalization of part of the excess of profit reserve, in the amount of R$ 15.012 million, being R$ 844 million from the statutory reserves and R$ 14.169 million from the retained earning reserves. Other R$ 339 million will be capitalized from the balance of the monetary correction on paid in capital reserve.

33


8. Exchange Exposure

The exchange exposure of the PETROBRAS System is measured according to the following table:

Assets    R$ Million 
 
    12.31.2005    09.30.2005    12.31.2004 
       
 
Current Assets    17.531    18.401    18.765 
       
     Cash and Cash Equivalents    4.658    7.172    9.843 
     Others Current Assets    12.873    11.229    8.922 
       
 
Non-current Assets    3.009    3.803    2.499 
       
 
Fixed Assets    29.097    26.656    25.747 
       
     Investments    (272)   184    145 
     Property, Plant & Equipment    28.777    25.959    24.806 
     Others Fixed Assets    592    513    796 
       
 
Total Assets    49.637    48.860    47.011 
       

Assets    R$ Million 
 
    12.31.2005    09.30.2005    12.31.2004 
       
Current Liabilities    15.141    15.602    13.874 
       
       Short-term Debt    7.393    6.130    7.560 
       Suppliers    4.583    5.737    3.587 
     Others Current Liabilities    3.165    3.735    2.727 
Long-term Liabilities    30.802    30.900    37.000 
       
     Long-term Debt    28.498    29.367    35.177 
     Others Long-term Liabilities    1.584    1.533    1.823 
       
Total Liabilities    45.223    46.502    50.874 
       
Net Liabilities in Reais    4.414    2.358    (3.863)
       
(+) Investment Funds - Exchange    11.469    9.572    8.349 
(-) FINAME Loans - dollar-indexed reais    627    651    870 
       
Net Assets in Reais    15.256    11.279    3.616 
       
Net Assets in Dollar    6.518    5.076    1.362 
       
Exchange rate (*)   2,3407    2,2222    2,6544 
(*) Conversion of values into reais is done considering the selling price of the dollar on the closing day of the period.

34


PETROBRAS SYSTEM  Financial Statements 

Income Statement – Parent Company

R$ Million 
    Fourth Quarter        Fiscal Year
3Q-2005    2005    2004        2005    2004 
37.871    39.014    32.225    Gross Operating Revenues    143.666    120.025 
(9.779)   (9.954)   (9.335)   Sales Deductions    (37.843)   (34.450)
           
28.092    29.060    22.890    Net Operating Revenues    105.823    85.575 
(15.030)   (15.899)   (13.462)      Cost of Goods Sold    (57.512)   (48.608)
           
13.062    13.161    9.428    Gross Profit    48.311    36.967 
            Operating Expenses         
(1.223)   (1.296)   (636)      Sales   (4.195)   (2.859)
(894)   (908)
(880)      General & Administrative    (3.454)   (2.599)
(334)   (1.089)   (304)      Cost of Prospecting, Drilling & Lifting    (1.899)   (1.166)
    (27)   (54)    Loss in Assets Recovery    (27)   (54)
(247)   (271)   (188)      Research & Development    (933)   (689)
(114)   (120)   (101)      Taxes    (443)   (808)
(457)   (519)   (321)    Health and Pension Plan    (1.889)   (1.240)
(230)   (681)   (440)      Others    (2.692)   (2.805)
            Net Financial Expense         
337    1.522    (451)          Income    2.369    1.611 
(555)   (522)   (618)          Expense    (2.243)   (2.253)
(1.750)   2.239    (2.212)          'Monetary & Foreign Exchange Correction - Assets    (4.069)   (2.414)
1.349    (1.985)   2.551           'Monetary & Foreign Exchange Correction - Liabilities    2.882    2.492 
           
(619)   1.254    (730)       (1.061)   (564)
86    693    21    Gains from Investment in Subsidiaries    1.782    1.350 
           
9.030    10.197    5.795    Operating Profit    33.500    25.533 
  15    (161)   Non-operating Income (Expense)   (200)   (228)
(3.115)   (1.944)   (1.499)   Income Tax & Social Contribution    (9.004)   (6.891)
(237)   (303)   (97)   Employee Profit Sharing Plan    (846)   (660)
           
5.679    7.965    4.038    Net Income (Loss)   23.450    17.754 
           

To facilitate comparability, some amounts regarding previous periods were reclassified in order to adapt them to statements for the current period.

35


Balance Sheet – Parent Company

Assets    R$ Million 
    Dec. 31, 2005   Sep. 30, 2005   Dec. 31, 2004
       
Current Assets    44.695    41.053    35.443 
       
Cash and Cash Equivalents    17.482    15.146    11.580 
Accounts Receivable    10.676    9.451    7.421 
Inventories    10.338    11.621    11.556 
Dividends    946    168    440 
Recoverable Taxes and Contributions    2.902    2.773    2.117 
Diferred Taxes and Social Contributions    1.135    475    849 
Others    1.216    1.419    1.480 
       
 
Non-current assets    37.601    39.478    45.128 
       
Petroleum & Alcohol Account    770    765    749 
Subsidiaries, Controlled Companies and Affiliates    28.117    29.701    35.182 
Ventures under Negotiation    443    1.325    1.211 
Advances to Suppliers    684    661    959 
Advance for Pension Plan Migration    1.205    1.203    1.218 
Deferred Taxes and Social Contribution    2.334    2.070    2.030 
Judicial Deposits    1.444    1.344    1.069 
Antecipated Expenses    1.061    1.122    1.076 
Others    1.543    1.287    1.634 
       
 
Fixed assets    71.717    66.495    57.065 
       
Investments    20.367    18.422    14.049 
 Property, Plant & Equipment    50.772    47.558    42.582 
 Deferred    578    515    434 
       
Total Assets    154.013    147.026    137.636 
       

Liabilities   R$ Million 
    Dec. 31, 2005   Sep. 30, 2005   Dec. 31, 2004
       
Current Liabilities    47.696    44.603    47.937 
       
Short-term Debt    1.656    1.154    1.310 
Suppliers    24.865    26.722    26.950 
Taxes & Social Contribution Payable    7.292    7.429    6.583 
Dividends    7.018    2.193    5.044 
Project Finance and Joint Ventures    2.422    3.917    4.652 
Pension fund obligations    462    362    415 
Others    3.981    2.826    2.983 
       
 
Long-term Liabilities    25.614    24.867    25.445 
       
Long-term Debt    6.409    6.948    8.589 
Subsidiaries & Controlled Companies    1.925    1.968    3.420 
Pension fund obligations    1.749    1.561    601 
Health Care Benefits    6.477    6.208    5.214 
Deferred Taxes & Social Contribution    6.270    6.094    5.264 
Others    2.784    2.088    2.357 
       
Shareholders' Equity    80.703    77.556    64.254 
       
Capital Stock    33.235    33.235    33.235 
Reserves    47.468    44.321    31.019 
       
Total liabilities    154.013    147.026    137.636 
       

36


Statement of Cash Flow – Parent Company

                R$ Million 
    Fourth Quarter        Fiscal Year
3Q-2005    2005    2004        2005    2004 
5.679    7.965    4.038    Net Income (Loss)   23.450    17.754 
4.249    (3.203)   3.520    (+) Adjustments    774    8.020 
           
930    992    1.063         Depreciation & Amortization    3.739    3.807 
1.119    (1.055)   (525)      Oil and Oil Products Supply - Foreign    (962)   4.801 
675    (1.534)   1.470       Charges on Financing and Affiliated Companies    (808)   1.163 
(87)   (692)   (21)      Results of Participation in Material Investments    (1.782)   (1.350)
1.612    (914)   1.533       Other Adjustments    587    (401)
9.928    4.762    7.558    (=) Net Cash Generated by Operating Activities    24.224    25.774 
3.335    6.138    5.045    (-) Cash used for Cap.Expend.    16.024    14.142 
           
2.543    2.948    2.988       Investment in E&P    9.895    9.126 
666    2.669    931       Investment in Refining & Transport    4.404    3.845 
493    (483)   372       Investment in Gas and Energy    850    508 
93    217    430       Structured Projects Net of Advance    591    411 
(234)          Dividends    (531)   (560)
(226)   787    324       Other Investments    815    812 
           
6.593    (1.376)   2.513    (=) Free Cash Flow    8.200    11.632 
2.942    (3.712)   4.070    (-) Cash used in Financing Activities    2.298    20.275 
           
3.651    2.336    (1.557)   (=) Cash Generated in the Period    5.902    (8.643)
           
11.495    15.146    13.137    Cash at the Beginning of Period    11.580    20.223 
15.146    17.482    11.580    Cash at the End of Period    17.482    11.580 

37


Statement of Value Added – Parent Company

           R$ million 
           Fiscal Year 
Description    2005     2004 
Gross Operating Revenue from Sales &/ Services    143.987    120.341 
Raw Materials Used    (11.964)   (14.428)
Products for Resale    (6.961)   (7.660)
Materials, Energy, Services & Others    (20.081)   (12.432)
     
Value Added Generated    104.981    85.821 
 
Depreciation & Amortization    (3.739)   (3.807)
Participation in Associated Companies    1.782    1.350 
Financial Income Net    1.923    1.531 
Rents and Royalties    400    377 
     
Total Distributable Value Added    105.347    85.272 
     
 
Distribution of Value Added         
Personnel         
Salaries, Benefits and Charges    7.498    5.614 
Government Entities         
Taxes, Fees and Contributions    48.045    41.912 
Government Participation    13.754    10.824 
Income Tax & Social Contribution- Diferred    422    1.692 
     
    62.221    54.428 
 
Financial Institutions and Suppliers         
Financial Expenses, Interest    2.984    2.096 
Monetary and FX Liabilities Variation    9.194    5.380 
     
    12.178    7.476 
 
 
Shareholders         
Dividends    7.018    5.044 
Reatained Earnings    28.610    20.186 
     
Net Income    35.628    25.230 
     

To facilitate comparability, some amounts regarding previous periods were reclassified in order to adapt them to statements for the current period.

38


PETROBRAS S.A  


http: //www.petrobras.com.br/ri


For more information, please contact:

PETRÓLEO BRASILEIRO S.A – Petrobras
Investor Relations
Raul Adalberto de Campos– Executive Manager
E-mail:
petroinvest@petrobras.com.br
Av. República do Chile, 65 - 2202-B
20031-912 – Rio de Janeiro, RJ
Telephone: (55-21) 3224-1510 / 9947
0800-282-1540





This document may contain forecasts that 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 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.

39


 

 
SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 21, 2006

 
PETRÓLEO BRASILEIRO S.A--PETROBRAS
By:
/S/  Almir Guilherme Barbassa

 
Almir Guilherme Barbassa
Chief Financial Officer and Investor Relations Officer
 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually oc cur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.