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 FIRST HALF 2006 RESULTS

(Rio de Janeiro – August 11, 2006) – PETRÓLEO BRASILEIRO S.A. – PETROBRAS today announced its consolidated results stated in millions of reais, in accordance with Generally Accepted Accounting Principles in Brazil.

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PETROBRAS earned consolidated net income of R$ 6,959 million in the second quarter of 2006, 41% higher than the net income generated in the second quarter of 2005.

In the first half of 2006, consolidated net income was R$ 13,634 million, 37% higher than the net income achieved in the first half of 2005. The growth in net income was supported by a 7% increase in the domestic production of oil and NGL´s. Operating cash flow (EBITDA) was R$ 27,727 million, generating sufficient resources to meet the Company’s investment plan, while reducing debt.

The equity market value of the Company on June 30, 2006 totaled R$ 202,635 million, an appreciation of 17% in relation to December 31, 2005.

• Consolidated operating net revenue totaled R$ 37,948 million during 2Q-2006, a 17% increase over 2Q-2005.
  
  
• 2Q-2006 consolidated net income totaled R$ 6,959 million, 41% higher than 2Q-2005, mainly due to higher realization prices for the company’s oil products in its internal and external markets, following similar price increases in international markets.
  
  
• Total production of oil, NGL, and natural gas in 2Q- 2006 averaged 2,273 thousand barrels of oil equivalent per day, similar to the levels of 2Q-2005. Production from the P-43 (Barracuda) and P-48 (Caratinga) platforms, whose production stabilized at full capacity in June 2005, as well as the production from P-50 (Albacora Leste) and FPSO-Capixaba (Golfinho) platforms which began producing in 2Q-2006, were offset by scheduled maintenance stoppages in several production systems during June of 2006.
  
  
• Oil and NGL production in Brazil averaged 1,757 thousand barrels/day, 76% of which was produced from Bacia de Campos (1,441 thousand barrels/day).

• As a result of a higher capacity utilization factor, production of refined products in Brazil averaged 1,795 thousand barrels/day during 2Q-2006, an increase of 8% when compared with 2Q-2005.
  
  
• Petrobras’ net debt as of June 30, 2006 was R$ 20,808 million, 3% lower than net debt as of March 31, 2006, (R$ 21,523 million) reflecting payments of scheduled amortizations. Net Debt/EBITDA ratio was 0.38 (unchanged from 1Q - 2006).
  
  
• In the 1H-2006, the Petrobras System invested R$ 13,644 million (24% higher than in the same period of the prior year), of which R$ 7,195 million was invested in developing oil and gas reserves in Brazil.
  
  
• Value-added by the Petrobras System in the 1H-2006 reached R$ 64,605 million, an increase of 18% over the 1H-2005, of which R$ 36,819 million (57%) is destined for government participation and other federal, state and municipal taxes, R$ 8,332 million to suppliers and financial institutions for financial charges, rent and charters, R$ 14,586 million to shareholders, and R$ 4,868 million to salaries, bonuses and benefits.

This document is divided into 5 topics:

PETROBRAS SYSTEM		Índice		PETROBRAS		Índice
Financial Performance		4		Accounting Statements		36
Operating Performance		9
Financial Statements		22
Appendices		30

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PETROBRAS SYSTEM

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

In the second quarter of 2006, we achieved a consolidated net profit of R$ 7.0 billion, an increase of 41 % in relation to the same period of 2005. The consolidated profit for the first half of 2006, at R$ 13.6 billion, was up 37% in comparison with that of the first half of 2005.

This was a quarter of consolidation, marked by the start up of operations for platform P-50, in the Albacora Leste field, and the FPSO Capixaba in the Golfinho field. FPSO Capixaba is particularly important, because its light oil output, which enjoys a substantially higher commercial value, will increase the share of this kind of oil in the company’s production portfolio. We point out that R$ 13,6 billion were invested in first half of 2006, representing 24% increase in relation to the same period of last year.

Oil production during the semester averaged 1,754 thousand bpd, 7% higher than the figure for the same period of 2005. In the second quarter, the average of 1,757 thousand bpd was stable compared to the previous quarter, as a result of the programmed stoppages carried out in May and June at nine production units.

The company’s refineries continue to show outstanding performance, operating at 91% of installed capacity, while the proportion of domestic oil in the throughput of our Brazilian refineries remained stable, at 80%. These strong indicators were made possible by the ongoing capital expenditure program in our refinery segment, as well as by the start of light oil production from Golfinho.

The scheduled stoppages, the accumulation of inventory at the new production units, the increase in the operational inventory of top quality diesel oil for metropolitan areas, and the government mandated reduction of ethanol content in domestic gasoline (which in turn restricted the availability of gasoline for export), all contributed to a slow down in the growth of our net exports of oil and oil products. During the first half of this year, net exports totalled 76 thousand bpd (including exports in progress), versus 54 thousand bpd in the same period of 2005.

In the petrochemical segment we concluded the operation to incorporate the shares of PETROQUISA into PETROBRAS. This measure will increase the existing synergies and rationalize the investments in this segment.

During the second quarter, we were also faced with changes in Bolivian hydrocarbon policy. To date, gas sales have fully complied with the existing provisions of our supply agreement, including a price increase in accordance with the terms of the contract. We will continue to pursue all legal means, both within Bolivia and internationally, to preserve the company’s rights and to protect its assets.

In order to increase the availability of natural gas for the Brazilian market, we presented a plan to expand natural gas production in the southeast of Brazil. Our goal is to raise current production in the southeast from 15.8 million m³ /day to 40 million m³ /day by year-end 2008. To meet this target, we are developing two new oil and gas fields in Espírito Santo. The company also intends to increase its gas output from the Marlim and Merluza fields in Campos Basin.

Work has begun on the Coari-Manaus gas pipeline, which will transport natural gas from the production area of Urucu to the Amazon state capital. The work is expected to be completed by March 2008. Additionally we signed the contracts for the construction of the Cabiúnas-Vitória (Gascav) pipeline, the first stage of the Gasene gas pipeline project, which will transport natural gas between the southeast and northeast regions of Brazil.

2

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In the energy segment, we have completed the acquisition of the Macaé thermoelectric plant, having fully resolved all disputes related to the plant. With this acquisition, the company has eliminated all contingency payments to plants where we do not have an equity stake.

At the international level, of particular note is our acquisition of a stake in exploratory Block 18, located in deep waters off the coast of Angola, which has great potential for new discoveries. Petrobras will be the operator of the block.

At the end of June, we released our updated Business Plan, which covers the period from 2007-2011. In the new Plan we retained the aggressive growth targets for oil and gas production, maintaining a balance between production and refining capacity. Additionally we are expanding our business in the areas of petrochemicals and fertilizers, renewable energy and international operations, in an integrated manner with the company’s other operations.

Achieving the production targets established in the Plan will require intensive exploration. To this end, we have already made important discoveries of light oil in the Espírito Santo Basin, thus raising our potential reserves in that basin to 600 million boe. In the Santos Basin, a new discovery was announced in July, marking a historical benchmark in Brazilian exploration by passing through a salt layer more than 2,000 meters thick.

With respect to the development of renewable energy sources, it is worth highlighting the initial testing of a new process at our refineries that will increase diesel production by the addition of vegetable oil. Referred to as H-Bio, this patented process uses vegetable oil as an input for obtaining a diesel oil of a superior quality that generates less pollution.

The Executive Board, following meetings with union representatives, put forward a proposal to resolve the company’s Supplementary Pension Plan. The proposal seeks to balance the existing Petros Plan, and envisions a new plan to be introduced. This new model is fundamental to the long term management of the company, and must be an attractive, self sustaining program that will motivate and retain the employees in the Group’s companies.

Finally, I would just like to point out that our ongoing efforts at transparency and sound corporate governance practices continue to be recognized by the market. In June, Investor Relations Magazine, awarded Petrobras the titles of Best Investor Relations Website, Best Program of Relations with Individual Investors, and Best Annual Report.

Our shares began trading on the Buenos Aires stock exchange, thus enabling local Argentine investors to invest directly in Petrobras, as well as allowing the company to diversify its shareholder base and raise its profile among the people of Argentina.

For us at Petrobras, the results achieved this quarter reflect our focus on the quality, transparency and seriousness by which we conduct our activities, both in Brazil and countries where we operate. We believe these qualities contribute to the solid foundation that will sustain our growth into the future.

3

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PETROBRAS SYSTEM	Financial Performance

Net Income and Consolidated Economic Indicators

Petrobras, its subsidiaries and controlled companies, improved net income in the 1H-2006 to R$ 13,634 million, 37% higher than the net income achieved in the 1H-2005.

R$ Million
		Second Quarter								First Half
1Q - 2006		2006		2005		D%				2006		2005		D%
46,768		49,633		42,646		16		Gross Operating Revenue		96,401		82,444		17
35,886		37,948		32,359		17		Net Operating Revenue		73,834		62,256		19
12,010		11,267		9,458		19		Operating Profit (1)		23,277		18,268		27
(444)		(141)		(683)		(79)		Financial Result		(585)		(1,725)		(66)
6,675		6,959		4,899		42		Net Income for the Period		13,634		9,951		37
1.52		1.59		1.12		42		Net Income per Share		3.11		2.27		37
197,995		202,674		126,543		60		Market Value (Parent Company)		202,674		126,543		60
45		44		44		-		Gross Margin (%)		45		45		-
33		30		29		-		Operating Margin (%)		32		29		3
19		18		15		3		Net Margin (%)		18		16		2
14,113		13,614		11,706		16		EBITDA – R$ million		27,727		22,174		25
								Financial and Economic Indicators
61.75		69.62		51.59		35		Brent (US$/bbl)		65.69		49.54		33
2.1944		2.1840		2.4850		(12)		US Dollar Average Price - Sale (R$)		2.1892		2.5741		(15)
2.1477		2.1643		2.3504		(8)		US Dollar Last Price - Sale (R$)		2.1643		2.3504		(8)

(1)	Income before financial income, equity income and taxes.
(2)	For purposes of comparison, net income per share was recalculated for the prior periods, due to the stock split which was approved by AGE on 07/22/2005.
(3)	Operating income before the financing results and the equity income + depreciation/amortization/ well write-offs.

R$ Million
		Second Quarter								First Half
1Q-2006		2006		2005		%				2006		2005
11,140		11,243		8,321		35		Operating Income as per Brazilian Corporate Law		22,383		16,260
444		141		683		(79)		(-) Financial Result		585		1,725
426		(117)		485		(124)		(-) Equity Income Result		309		283
12,010		11,267		9,489		19		Operating Profit		23,277		18,268
2,103		2,347		2,233		5		Depreciation & Amortization		4,450		3,906
14,113		13,614		11,722		16		EBITDA		27,727		22,174
39		36		36		-		EBITDA Margin (%)		38		36

4

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The increase in consolidated net income in the 1H-2006 was mainly due to the realization of higher domestic and international market prices, as well as other factors detailed below:

• Increase of gross profit of R$ 5,163 million:

			R$ Million
			Changes  1H-2006 X 1H-2005
Main Items			Net		Cost of		Gross
			Revenues		Goods Sold		Profit
. Domestic Market:	- Effect of Volumes Sold		1,455		(1,022)		433
	- Effect of Prices		5,252		-		5,252
. Intl. Market:	- Effect of Export Volumes		(148)		101		(47)
	- Effect of Export Price		1,453		-		1,453
. Increase in expenses (*)			-		(1,141)		(1,141)
. Increase in Profitability of Distribution Segment			1,245		(1,179)		66
. Increase (Decrease) in Operations of Commercialization Abroad			1,284		(1,248)		36
. Increase (Decrease) in International Sales			890		(789)		101
. FX Effect on Controlled Companies Abroad			(677)		503		(174)
. Others			824		(1,640)		(816)
			11,578		(6,415)		5,163

(*) Expenses Composition:		Value
- Oil, Gas and Oil Product Imports		(363)
- Third-Party Services		(229)
- Domestic Government Take		(927)
- Transportation: Maritime and Pipelines		65
- Salaries, Perquisites and Benefits		44
- Materials, Services and Depreciation		269
		(1,141)

• reduction in spending on contractual contingencies that occurred in 2005 (R$ 261 million), due to thermoelectric Merchant type acquisitions;
  
  
• Lower expenses from judicial fiscal contingencies (R$ 183 million), basically by the effect of the extrajudicial settlement in March 2005 with the Public Treasury for the State of São Paulo.

These reductions in expenses were partially offset by the following increases:

• Exploration and Production (R$ 104 million) mainly due to exploratory costs (assets write-offs/ dry holes)
  
  
• Research and development costs (R$ 321 million) mainly due to a charge of R$ 203 million in respect of a regulatory agreement with the ANP;
  
  
• Tax expenses (R$ 227 million) in relation to the increase of operations and the PASEP/COFINS on other revenues (R$ 101 million), of which R$ 73 million is related to the regularization of prior periods.

5

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• General and administrative expenses for salaries, bonuses, and benefits for personnel (R$ 73 million) and third party services (R$ 57 million), including information services, consulting services connected with the implementation of information solutions systems for projects and services in the area of new businesses and environmental management.

Financial income increased R$ 1.140 million as a result of the following factors:

•	Ending of hedge contracts related to sales of PESA, which in the same period of 2005 generated a loss of R$ 276 million;
•	Improved performance of financial variations (R$ 449 million), resulting from reduced losses associated with monetary assets and liabilities linked to the U.S. dollar (R$ 259 million), given the lower appreciation of the real against the U.S. dollar (7.54%) in the 1H-2006 compared to the 1H-2005 (11.45%). Also contributing was the higher profitability of securities held abroad, as a result of a decrease in Brazilian Risk (R$ 93 million);
•	Reduction of financing charges on financings (R$ 164 million);
•	Financial gains related to the operating partnership negotiation in Nigeria (R$ 81 million);
•	Financial charges related to the renegotiation of securities received in arrears (R$ 90 million);
•	These effects were partially offset by the positive reduction in exchange rate (R$ 161 million), on monetary assets & liabilities originating from the lower appreciation of the real against the U.S. dollar during 1H-2006 (7.54%) as compared to 1H-2005 (11.45%).

       Non-operating expenses declined with platforms idleness (R$ 126 million).

Higher income tax and social contribution expense in the 1H06 resulted from the effect of the provisioning of Interest on own capital in June 2005, which improved 1H05 profitability in R$ 746 million.

 

Net income for the 2Q-2006 increased 4% when compared to the 1Q-2006, reaching R$ 6,959 million. The principal explanation for the variation between 1Q-2006 and 2Q-2006 was the increase in average prices of oil and oil products in the domestic and international markets, largely offset by a reduction in exported volumes and an increase in average unit costs (due to generally higher costs throughout the oil industry). The table below details the variations:

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CHANGES 2Q-2006 X 1Q-2006
Main Influences

			R$ Million
Main Items			Net		Cost of		Gross
			Revenues		Goods Sold		Income
. Domestic Market:	- Effect of Volumes Sold		511		(339)		172
	- Effect of Prices		312		-		312
. Intl. market:	- Effect of Export Volumes		(764)		346		(418)
	- Effect of Export Price		442		-		442
. Increase Expenses (*):			-		(888)		(888)
. Increase in Profitability of Distribution Segment			132		(119)		13
. Increase (Decrease) Operations of Commercialization Abroad			748		(781)		(33)
. Increase (Decrease) in International Sales			300		(357)		(57)
. FX Effect on Controlled Companies Abroad			(29)		22		(7)
. Others			410		500		910
			2,062		(1,616)		446

(*) Expenses Composition:		Value
- Oil, Gas and Oil Product Imports		(815)
- Third-Party Services		28
- Domestic Government Take		(438)
-Transportation: Mritime and Pipelines		25
- Salaries, Perquisites and Benefits		131
- Materials, Services and Depreciation		181
		(888)

The increase in operating income was partially offset by an increase in the following expenses:

• General and Administrative (R$ 229 million), due to: the increase in personnel spending, principally as a result of the increase in the workforce (R$ 38 million); spending for information services and environmental management (R$ 46 million); spending for personnel training (R$ 23 million); increase of operations (R$ 22 million); and higher consulting costs related to new exploratory projects (R$ 24 million).
  
  
• Research and Development (R$ 253 million) mainly to comply regulatory demands from ANP (R$ 203 million).
  
  
• Other Operating Income and Expense, due to Contingency provisions (R$ 103 million), as well as expenses relating to institutions and cultural projects (R$ 40 million).

7

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A positive impact of R$ 303 million on the net financial results is mainly due to the improvement in the net financial results from reduced losses associated with monetary assets and liabilities (R$ 220 million), as a result of the lower appreciation of the real in the 2Q-2006 (0.37%) compared to the 1Q-2006 (7.19%) .

Reduction in the loss with exchange rate variation (R$ 375 million) calculated on stockholders’ equity from companies headquartered outside of Brazil, as a result of the lower appreciation of the real against the U.S. dollar in the 2Q-2006 (0.37%) versus the 1Q-2006 (7.19%);

8

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PETROBRAS SYSTEM	Operating Performance

Phsyical Indicators

		Second Quarter							First Half
1Q-2006		2006		2005		%			2006		2005		%
Exploration & Production - thousand bpd
1,909		1,895		1,893		-		Oil and LNG production	1,902		1,802		6
1,751		1,757		1,730		2		Domestic	1,754		1,637		7
158		138		163		(15)		International	148		165		(10)
369		378		382		(1)		Natural Gas production (1)	374		373		-
270		282		284		(1)		Domestic	276		275		-
99		96		98		(2)		International	98		98		-
2,278		2,273		2,275		-		Total production	2,276		2,175		5

(1) Does not include liquified gas and includes reinjected gas

Refining, Transport and Supply - thousand bpd
344		354		332		7		Crude oil imports	349		327		7
115		88		160		(45)		Oil products imports	102		105		(3)
459		442		492		(10)		Import of crude oil and oil products	451		432		4
262		267 (2)		343		(37)		Crude oil exports	264 (2)		252		(6)
257		269 (2)		230		-		Oil products exports	263 (2)		234		4
519		536		573		(22)		• Export of crude oil and oil products (2)	527		486		(1)
60		94		81		(95)		Net exports (imports) crude oil and oil products	76		54		(43)
148		149		135		10		Import of gas and others	148		131		13
2		7 (2)		9		(33)		Others Exports	5 (2)		10		(60)
1,916		1,900		1,767		8		Output of oil products	1,908		1,791		7
1,812		1,795		1,668		8		• Brazil	1,803		1,688		7
104		105		99		6		• International	105		103		2
2,115		2,114		2,114		-		Primary Processed Installed Capacity	2,115		2,114		-
1,986		1,985		1,985		-		• Brazil (3)	1,986		1,985		-
129		129		129		-		• International	129		129		-
								Use of Installed Capacity (%)
91		91		83		10		• Brazil	91		85		7
80		81		75		8		• International	81		79		3
81		80		81		(1)		Domestic crude as % of total feedstock processed	80		80		-

(2) Volumes of oil and oil products exports include ongoing exports
(3) As per ownership recognized by the ANP

Sales Volume - thousand bpd

1,649		1,684		1,665		1		Total Oil Products	1,666		1,627		2
30		13		23		(45)		Alcohol, Nitrogens and others	21		26		(20)
232		239		222		8		Natural Gas	236		218		8
1,911		1,936		1,910		1		Total domestic market	1,923		1,871		3
519		536		573		(6)		Exports	527		486		(2)
437		459		334		37		International Sales	448		376		19
956		995		907		10		Total international market	975		862		7
2,867		2,931		2,817		4		Total	2,898		2,733		4

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Price and Cost Indicators

		Second Quarter							First Half
1Q-2006		2006		2005		%			2006		2005		%
Average Oil Products Realization Prices
153.16		154.20		138.43		11		Domestic Market (R$/bbl)	153.69		136.22		13
Average Sales price - US$ per bbl
								Oil (US$/bbl)
53.69		58.20		43.04		35		Brazil (4)	55.92		40.39		38
38.47		47.30		34.05		39		International	42.43		32.65		30
								Natural Gas (US$/bbl)
15.53		15.61		12.23		28		Brazil (5)	15.57		11.98		30
11.50		12.33		9.16		35		International	11.91		8.59		39

(4)	Average of the exports and the internal transfer prices from E&P to Supply
(5)	Internal transfer prices from E&P to Gas & Energy

Cost - US$/barril
								Lifting cost
								• Brazil (6)
6.32		6.12		5.45		12		• • without government participation	6.22		5.70		9
17.28		17.47		13.85		26		• • with government participation	17.37		13.72		27
2.96		3.14		2.80		12		• International	3.04		2.65		15
								Refining cost
1.90		2.07		1.96		6		• Brazil (6)	1.99		1.85		8
1.57		1.36		1.34		1		• International	1.46		1.23		19
426		455		335		36		Corporate Overhead (US$ million) Holding Company (5)	881		648		36

(6) 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, as already mentioned on 4Q05 Report.

Cost - R$/barril

								Lifting cost
								• Brazil (7)
13.84		13.16		13.37		(2)		• • without government participation	13.50		14.56		(7)
36.89		38.18		32.90		16		• • with government participation	37.54		34.31		9
								Refining cost
4.19		4.55		4.36		4		• Brazil (7)	4.37		4.52		(3)

(7) 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, as already mentioned on 4Q05 Report.

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Exploration and Production – Thousands Barrels/day

Domestic oil and NGL production in the 1H-2006 increased 7% when compared to the 1H-2005, mainly due to the start of production in various platforms, including P-43 (Barracuda), on December 21, 2004, P-48 (Caratinga), on February 28, 2005, P-50 (Albacora Leste), on April 21, 2006, and FPSO-Capixaba (Golfinho), on May 6, 2006. The stabilization of production at full capacity on the P-43 and P-48 platforms was only reached in June 2005.

In the 2Q-2006, domestic oil and NGL production was relatively flat when compared to 1Q-2006 production levels.

In the 1H-2006, international oil production declined 10% when compared to the same period of 2005, due to the natural decline of mature fields in the Angola unit, the closing of main fields in the U.S. due to production drainage problems after hurricanes Katrina and Rita and the loss of control in Venezuelan operations due to the shift from an operating agreement to a mixed company, in which the Venezuelan government assumed a majority interest through the PDVSA. There was no variation in the production of gas in relation to the same period of 2005.

International oil production in the 2Q-2006 declined 13%, in comparison with the 1Q-2006, due to above mentioned changes in the Venezuelan operations. Gas production declined 3% in relation to the previous quarter mainly because of a ruptured line in the San Antonio field in the Bolivian unit, as a result of heavy rains during the month of April 2006.

Refining, Transport, and Supply – Thousands Barrels/day

Feedstock processed in domestic refineries during the 1H-2006 increased 7% when compared to the 1H-2005, due to the improvements in operational reliability and the reduced number of scheduled maintenance stoppages in 2006.

In the 2Q-2006, processed feedstock by the domestic refineries was virtually flat, increasing 1% in relation to the 1Q-2006.

Feedstock processed (primary processing) by international refineries in the 1H-2006, increased by 1.4% versus the same period of the prior year, due to a lower number of scheduled maintenance stoppages in the refineries in the Argentine and Bolivian units in 2006.

In the 2Q-2006, feedstock processed by the international refineries increased 3.2%, when compared to 1Q-2006, mainly because of the lower number of scheduled maintenance stoppages, in relation to the prior quarter, in the San Lorenzo refinery in Argentina.

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Costs

Lifting Cost (US$/barrel)

In the 1H-2006, the domestic lifting cost, excluding government take, expressed in US$ increased 9% in relation to the 1H-2005. After adjusting for the 15% appreciation of the real for lifting costs denominated in reais, lifting cost declined 8% in relation to the 1H-2005. The decline was a result of the increase in oil and gas production, at the Barracuda, Caratinga, Albacora Leste and Golfinho fields.

In relation to the 1Q-2006, domestic lifting cost, excluding governmental take, declined 3% in US$, due to higher spending during the first quarter on materials for turbine maintenance, gas line repairs and substitution of collection and drainage lines.

Including government take, 1H-2006 lifting cost increased 27% in relation to the 1H-2005, because of the increase in average reference price used to calculate royalties and Special Participation of domestic oil, in line with the increased international oil prices. Additionally the increased productivity at the Barracuda and Caratinga fields after production startup in June 2005, increased Special Participation because of the higher tax bracket associated with these fields.

Including government take, domestic lifting costs for the 2Q-2006 were in line with the previous quarter, recording an increase of 1%.

In the 1H-2006, international lifting costs increased 15% in comparison with the same period of the prior year due to higher costs for third party services and materials for the Argentine unit.

For the 2Q-2006, international lifting costs increased 6% in relation to 1Q-2006 mainly because of higher costs for third party services in Argentina and higher security and environmental costs in Ecuador.

12

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Refining Costs (US$/Barrel)

Domestic unit refining costs in the 1H-2006 expressed in US$, increased 8% when compared to the same period of 2005. After adjusting for the effects of the 15% appreciation of the real for expenses denominated in Reais, domestic refining costs declined 6% mostly because of a larger number of scheduled stoppages in the prior period.

Compared with the 1Q-2006, unit refining costs for the 2Q-2006 increased 9%, mainly because of a larger number of scheduled maintenance stoppages and increased expenses for catalysts and chemical products.

In the 1H-2006, average international refining costs increased 19% in relation to the same period of 2005, due to higher costs for materials, equipment maintenance and personnel in the refineries in Bolivia and Argentina.

The average international refining cost in the 2Q-2006 declined 13% compared with the 1Q-2006. This decline was mainly due to lower costs for third party services, materials and personnel at the Argentina unit and lower costs with scheduled maintenance stoppages in Bolivia.

Corporate Overhead – Parent Company(US$ millions)

In comparison with the 1H-2006, corporate overhead increased 36%, primarily due to higher expenses for agreements, consulting, publicity and advertising, besides the higher expenses for personnel in relation to health plans, salary adjustments, and the growing workforce. Discounting the effects of the 15% appreciation of the real, with all of the costs for this activity in reais, corporate overhead increased 20% when compared with 1H-2005.

The corporate overhead in 2Q-2006 increased 7%, when compared with 1Q-2006, mainly due to sponsorships, social programs, information technology and personnel expenses associated to workforce increase.

13

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Sales Volume – Thousands Barrels/day

Domestic sales volume increased 3% in the 1H-2006 compared to the 1H-2005.

The improved sales during the period was mainly related to higher volumes sold of gasoline and nafta. The increase in gasoline is associated with many factors, including: reduced competitiveness of alcohol due to increased prices; reduced use of alcohol in the gasoline mix and the increase of the domestic vehicle fleet.

There was an increase in sales of nafta due to more attractive domestic prices relative to the international market, thereby leading to increased delivery to major clients in Brazil.

International sales volume increased 19%, mainly due to increased offshore trading operations, which were able to take advantage of international commercial opportunities that were partially offset by sales in the international segment.

14

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Result by Business Area R$ million (1)

Second Quarter										First Half
1Q-2006		2006		2005		D %				2006		2005		D %
												(3)
6,774		6,915		6,070		14		EXPLORATION & PRODUCTION		13,689		10,466		31
2,000		1,642		2,135		(23)		SUPPLY		3,642		3,739		(3)
(78)		(222)		(121)		83		GAS & ENERGY		(300)		(192)		56
163		132		128		3		DISTRIBUTION		295		322		(8)
236		257		324		(21)		INTERNATIONAL (2)		492		858		(43)
(1,862)		(1,149)		(2,123)		(46)		CORPORATE		(3,009)		(3,521)		(14)
(558)		(616)		(1,483)		(58)		ELIMINATIONS AND ADJUSTMENT		(1,175)		(1,721)		(32)
6,675		6,959		4,930		41		CONSOLIDATED NET INCOME		13,634		9,951		-

(1) Financial statements by business area and their respective comments are presented starting on page 26.

(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. As a result, there may be significant variations in reais, principally arising from and reflecting changes in the exchange rate.

(3) In order to align the financial statement of each business segment with the best practices of companies in the Oil & Gas sector and to improve the understanding of Petrobras management, the Company switched to allocating all financial results and items of financial nature to the corporate level. As a result of this change, the income tax, social contribution and minority interest line items were adjusted.

To facilitate comparisons, we have presented segmented financial statements for prior periods in accordance with new criteria.

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RESULTS BY BUSINESS AREA

Petrobras is a company that operates in an integrated manner, with a high percentage of oil and gas production in the Exploration and Production area being sold/transferred to other internal areas of the Company.

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

a) Net operating revenue: revenues related to sales made to external clients were considered, plus the billing and transfers between business areas, using 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 areas 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) Financial results are allocated to the corporate group;

d) Assets: includes the assets identified in each area. The equity accounts of a financial nature are allocated to the corporate group.

E&P - In the 1H-2006, net income for the Exploration and Production segment were R$ 13,689 million, 31% higher than in the same period of the previous year (R$ 10,466 million), due to the R$ 4,663 million increase in gross profits from oil sales and transfers, reflecting the 5% increase in sales/transfer volume of petroleum and NGL, as well as the rise in international petroleum prices. The improvement occurred despite the lower value of heavy oil in relation to lighter oil, and the 15% appreciation in the average exchange rate of the real against the U.S. dollar.

The spread between the average price of sold/transferred domestic oil and the average Brent price increased from US$ 9.15/bbl in the 1H-2005 to US$ 9.77/bbl in the 1H-2006.

In comparison with the previous quarter, net income increased by 2%, due to the R$ 936 million increase in gross profit, reflecting an increase in international oil prices, despite the 2% reduction in sales/transfers of oil and NGL and the increase in the spread between the average domestic oil price and the average Brent price from US$ 8.06/bbl in the 1Q-2006 to US$ 11.42/bbl in the 2Q-2006.

These results were partially offset by the following factors:

• R$ 175 million increase in prospecting and drilling expenses, as a result of the write-off of non-economic wells and the increase in costs for geological and geophysical exploration projects; 
• Research & Development expenses (R$ 183 million) resulting primarily from allocating R$ 122 million in accordance with regulation of the ANP. 

SUPPLY – In the 1H-2006, net income for the Supply segment was R$ 3,642 million, a 3% decline in net income when compared to the same period of the previous year (R$ 3,739 million), reflecting the R$ 85 million reduction in gross profit, as highlighted by the following factors:

• Rise in cost of acquisition and transfer of oil and oil products, pressured by the increase in international prices; 

• 4% increase in imports of oil and oil products; 

• Sales, in the 1H-2005, of lower cost inventories from the previous period. 

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Part of these effects were offset by the following factors:

• Increase in the average realization price of oil products in the domestic and international markets; 

• 7% increase in oil product production due to the increased refinery utilization; 

• Lower value of heavy oil versus light oil. 

In the 2Q-2006, net income for the Supply segment was R$ 1,642 million, 18% lower than the net income reported for the prior quarter (R$ 2,000 million), due to the R$ 278 million reduction in gross profit as a consequence of the following factors:

• Rise in international oil prices; 

• 3% increase in oil imports. 

These effects were partially offset by the following factors: 

• Sales of lower cost inventories from the previous period. 

• Increase in the average realization price for oil products in the domestic and international market; 

• Lower value of heavy oil versus light oil. 

GAS AND ENERGY – In the 1H-2006, the Gas and Energy segment reported a loss of R$ 300 million, 56% higher than the loss reported in the same period of 2005 (R$ 192 million), due to the following factors:

• Reduction of R$ 43 million in gross profit, mostly because of lower margins in energy commercialization, due to the increase in energy buying prices in the spot market, but not being able to pass these increased costs along in the fixed sales price contracts; 

• Increase of R$ 41 million in research and development expenses, in accordance with the regulatory agreement with the ANP. 

In the 2Q-2006, the Gas and Energy segment reported a loss of R$ 222 million, compared with the R$ 78 million loss reported in the previous quarter, due to the R$ 165 million reduction in gross profit, in function with lower margins for energy commercialization and increased costs for the acquisition of imported natural gas.

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DISTRIBUTION – In the 1H-2006, the Distribution segment reported a net income of R$ 295 million, 8% lower than the net income reported in the same period of the previous year (R$ 322 million), due to the R$ 70 million increase in selling, general and administrative expenses, due to higher shipping costs and product commercialization and distribution, and the R$ 27 million in increase in other operating revenues (expenses), mainly to the higher costs related to institutional relations and cultural projects.

These effects were partially offset by the R$ 66 million increase in gross profit, in light of the rise in average realization price of oil products.

Participation in the fuels distribution market n the 1H-2006 was 32.5% (530 thousand bbl/day), whereas in the same period of the prior year, it was 33.9% (538 thousand bbl/day).

In relation to the previous quarter, net income for the 2Q-2006 was 19% lower due to an increase of R$ 32 million in selling, general and administrative expenses, due to higher costs for product commercialization and distribution, as well as R$ 17 million in other operating revenues (expenses), in light of the increased costs related to institutional relations and cultural projects.

These effects were partially offset by the R$ 13 million increase in gross profit, in light of the 2% increase in oil product sales volume despite the loss of market share.

Participation in the fuels market was 32.2% in the 2Q-2006 (532 thousand bbl/day) and 32.5% in the 1Q-2006 (528 thousand bbl/day).

INTERNATIONAL – In the 1H-2006 the International segment reported a net income in the amount equivalent to R$ 492 million, 43% lower than the net income equivalent of R$ 858 million reported in the same period of the previous year.

This decline in net income was mainly due to the following:

• A decrease of R$ 70 million in gross profit for the following reasons: i) 8% appreciation of the real against the U.S. dollar used in the currency conversion process for the financial statements; ii) closing of the main U.S. fields caused by production flow problems following the hurricanes Rita and Katrina; iii) decline in mature fields in Angola; iv) loss of control of Venezuelan operations due to the migration of operating contracts to a mixed company type, with majority control by the Venezuelan government through PDVSA; and v) an increase in production costs in Bolivia due to the increase of taxes imposed on hydrocarbons from 18% to 50%, as of May 2005, and from 50% to 82% as of May 2006. This reduction was partially mitigated by the increase of international oil prices, by the higher volume and price for commercial electricity in Argentina and by the higher volume of gas sales in Bolivia to Brazil and Argentina; and

• An increase of R$ 192 million in costs related to exploration and drilling as a result of the write-off of exploration costs in the U.S. and Bolivia.

In the 2Q-2006, the International business segment reported a net income of R$ 256 million, R$ 21 million (9%) higher than the net income of R$ 236 million reported in the previous quarter, mainly as a result of the reduction of R$ 107 million in prospecting and drilling expenses, in light of the recognition, in the previous quarter, of the write-off of exploration costs in the U.S. and Bolivia. This increase was partially offset by a reduction in gross

18

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profit of R$ 67 million due to the reduction of our stake in Venezuelan operations and by the increased production costs in Bolivia.

CORPORATE – The corporate activities of the Petrobras system generated a loss of R$ 3,009 million in the 1H-2006, 15% lower than the loss reported in the same period of the prior year (R$ 3,521 million), mainly due to the following factors:

• Reduction of R$ 1,140 million in net financing expenses, as commented on page 6; 

• R$ 385 million reduction in costs associated with the participation of minority shareholders, due to the lower financial results reported by the Special Purpose Company and controlled companies, where Petrobras and its subsidiaries do not have a 100% stake.

These effects were partially offset by the reduction of R$ 1,167 million in the income after taxes and social contributions due to fiscal savings of R$ 746 million in the 1H-2005, as a result of provision for interest on shareholders equity.

In relation to the previous quarter, when the loss reported by the corporate group was R$ 1,862 million, the loss recorded in the 2Q-06 was R$ 1,147 million, for the following reasons:

• R$ 47 million gain in the currency conversion for equity investments abroad in the 2Q-2006. In the 1Q-2006, there was a R$ 457 million loss due to the 7% appreciation of the Real against the U.S. dollar;

• Reduction of R$ 303 million in net financial expenses due to the generation of financial revenues on the back of currency exchange effect on applications.

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Consolidated Debt

		R$ Million
		06.30.2006		03.31.2006		D%
Short-term Debt (1)		12,214		11,399		7
Long-term Debt (1)		31,307		33,107		(5)
Total		43,521		44,506		(2)
Net Debt (2)		20,808		21,523		(3)
Net Debt/(Net Debt + Shareholder's Equity) (1)		18%		20%		(2)
Total Net Liabilities (1) (3)		170,624		166,029		3
Capital Structure
(Third Parties Net / Total Liabilities Net)		45%		48%		(3)

(1)	Included in debt through leasing contracts (R$ 2.815 million on June 30, 2006 and R$ 2.981 million on March 31, 2006).
(2)	Total debt – Cash and cash equivalents.
(3)	Net short term liabilities/financial applications.

Net debt of the Petrobras system on June 30, 2006 reached R$ 20,808 million, a 3% reduction when compared to March 31, 2006, mainly due to scheduled debt payment. The Net Debt/EBITDA ratio on June 30, 2006 was stable when compared to March 31, 2006 (0.38) . The portion of the capital structure represented by third parties is 45% at June 30, 2006, a three basis point reduction when compared to March 31, 2006.

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Consolidated Investments

R$ Million
		First Half
		2006		%		2005		%		D%
• Own Investments		12,345		91		9,790		89		25
Exploration & Production		7,195		53		5,786		53		24
Supply		1,538		11		1,350		12		14
Gas and Energy		1,041		8		940		9		11
Internacional		1,889		14		1,231		11		53
Distribution		333		2		242		2		10
Corporate		349		3		241		2		45
• Special Purpose Companies (SPCs)		1,156		8		1,008		9		15
• Ventures under Negotiation		142		1		111		1		28
• Structured Projects		1		-		81		1		(99)
Exploration & Production		1		-		81		1		(99)
Espadarte/Marimbá/Voador		1		-		52		-		(98)
Others		-		-		29		-		-
Total Investments		13,644		100		10,990		100		24

R$ Million
		First Half
		2006		%		2005		%		D%
International
Exploration & Production		1,460		77		1,076		87		36
Supply		127		7		67		5		90
Gas and Energy		33		2		46		4		(28)
Distribution		26		1		11		1		136
Others		243		13		31		3		684
Total Investments		1,889		100		1,231		100		53

R$ Million
		1º Half
		2006		%		2005		%		D%
Special Purpose Companies (SPCs)
Marlim Leste		447		39		-		-		-
PDET Off Shore		37		3		276		27		(87)
Barracuda e Caratinga		40		3		259		26		(85)
Malhas		243		21		407		40		(40)
Cabiúnas		-		-		6		1		-
Gasene		330		29		-		-		-
EVM		32		3		-		-		-
Amazônia		27		2		60		6		(55)
Total Investments		1,156		100		1,008		100		15

In line with its strategic objectives, PETROBRAS acts in consortiums with other companies as a concessionaire of oil and natural gas exploration, development and production rights. The Company currently has partnerships in 162 blocks through 89 consortiums. Total investment of US$ 11,488 million is projected for these undertakings.

In fulfillment of the goals outlined in its strategic plan, PETROBRAS continues to prioritize investments in developing its oil and natural gas production capabilities through its own investments and the structuring of undertakings with partners. In the 1H-2006, total capital expenditures were R$ 13,644 million, which is a 24% increase over the amount invested in the same period of 2005.

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PETROBRAS SYSTEM	Financial Statements

Income Statement - Consolidated

R$ Million

Second Quarter								First Half
1Q-2006		2006		2005 (1)				2006		2005 (1)
46,768		49,633		42,646		Gross Operating Revenues		96,401		82,444
(10,882)		(11,685)		(10,287)		Sales Deductions		(22,567)		(20,188)
35,886		37,948		32,359		Net Operating Revenues		73,834		62,256
(19,644)		(21,260)		(17,979)		Cost of Goods Sold		(40,904)		(34,489)
16,242		16,688		14,380		Gross Profit		32,930		27,767
						Operating Expenses
(1,342)		(1,353)		(1,251)		Sales		(2,695)		(2,521)
(1,186)		(1,415)		(1,229)		General and Administratives		(2,601)		(2,469)
(310)		(378)		(341)		Cost of Prospecting, Drilling & Lifting		(688)		(584)
(242)		(495)		(222)		Research & Development		(737)		(416)
(240)		(405)		(199)		Taxes		(645)		(418)
(484)		(485)		(587)		Pension and Health Plan		(969)		(1,070)
(428)		(890)		(1,062)		Other		(1,318)		(2,021)
(4,232)		(5,421)		(4,891)				(9,653)		(9,499)
						Net Financial Expenses
370		602		46		Income		972		269
(1,084)		(734)		(1,064)		Expenses		(1,818)		(2,416)
(228)		(1,345)		(1,753)		Monetary & FX Correction - Assets		(1,573)		(1,532)
498		1,336		2,088		Monetary & FX Correction - Liabilities		1,834		1,954
(444)		(141)		(683)				(585)		(1,725)
(4,676)		(5,562)		(5,574)				(10,238)		(11,224)
(426)		117		(485)		Gains from Investments in Subsidiaries		(309)		(283)
11,140		11,243		8,321		Operating Profit		22,383		16,260
(93)		29		(79)		Non-operating Income (Expenses)		(64)		(206)
(3,868)		(3,865)		(2,068)		Income Tax & Social Contribution		(7,733)		(4,875)
(504)		(448)		(1,244)		Minority Interest		(952)		(1,228)
6,675		6,959		4,930		Net Income		13,634		9,951

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

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Balance Sheet - Consolidated

Assets		R$ Million
		06.30.2006		03.31.2006
Current Assets		62,023		61,939
Cash and Cash Equivalents		22,713		22,983
Accounts Receivable		12,193		13,909
Inventories		17,316		15,313
Taxes Recoverable		5,576		5,273
Others		4,225		4,461
Non-current Assets		14,576		14,075
Petroleum & Alcohol Account		777		774
Advances to Suppliers		715		613
Marketable Securities		598		599
Deferred Taxes and Social Contribution		4,219		4,010
Advance for Pension Plan Migration		1,228		1,241
Prepaid Expenses		1,865		1,207
Accounts Receivable		1,478		1,988
Deposits - Legal Matters		1,849		1,781
Taxes Recoverable		131		355
Others		1,716		1,507
Fixed Assets		113,923		110,017
Investments		4,075		2,235
Property, Plant & Equipment		107,785		106,110
Deferred		2,063		1,672
Total Assets		190,522		186,031
Liabilities		R$ Million
		06.30.2006		03.31.2006
Current Liabilities		38,632		41,477
Short-term Debt		11,670		10,845
Suppliers		10,614		10,451
Taxes and Social Contribution Payable		9,718		10,336
Project Finance and Joint Ventures		29		23
Pension Fund Obligations		411		415
Dividends		188		2,816
Salaries, Benefits and Charges		1,373		1,124
Others		4,629		5,467
Long-term Liabilities		51,448		52,059
Long-term Debt		29,036		30,680
Pension Fund Obligations		2,538		2,266
Health Care Benefits		7,728		7,374
Deferred Taxes and Social Contribution		8,489		8,178
Other		3,657		3,561
Provision for Future Earnings		406		457
Minority Interest		6,872		5,851
Shareholders’ Equity		93,164		86,187
Capital Stock		48,248		33,235
Reserves		31,282		46,277
Net Income		13,634		6,675
Total Liabilities		190,522		186,031

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Statement of Cash Flow - Consolidated

R$ Million

Second Quarter								First Half
1Q-2006		2006		2005 (1)				2006		2005 (1)
6,675		6,959		4,930		Net Income (Loss)		13,634		9,951
3,469		4,406		5,588		(+) Adjustments		7,875		4,780
2,103		2,347		2,233		Depreciation & Amortization		4,450		3,906
(1,078)		654		(3,227)		Charges on Financing and Connected Companies		(424)		(2,968)
504		448		1,244		Minority interest		952		1,228
426		(117)		485		Result of Participation in Material Investments		309		283
2,575		189		4,268		Foreign Exchange on Fixed Assets		2,764		3,965
775		(175)		432		Deferred Income Tax and Social Contribution		600		967
(1,707)		(2,003)		(195)		Inventory Variation		(3,710)		43
1,290		77		754		Supplier Variation		1,367		(1,255)
604		622		704		Pension and Health Plan Variation		1,226		1,361
(2,023)		2,364		(1,110)		Other		341		(2,750)
10,144		11,365		10,518		(=) Net Cash Generated by Operating Activities		21,509		14,731
6,020		6,640		6,285		(-) Cash used for Cap.Expend.		12,660		11,061
4,419		4,738		4,690		Investment in E&P		9,157		7,986
755		960		780		Investment in Refining & Transport		1,715		1,610
297		361		384		Investment in Gas and Energy		658		701
144		260		130		Project Finance		404		252
(21)		(32)		(33)		Dividends		(53)		(41)
426		353		334		Other investments		779		553
4,124		4,725		4,233		(=) Free cash flow		8,849		3,670
4,558		4,995		4,666		(-) Cash used in Financing Activities		9,553		6,462
499		1,472		2,859		Financing		1,971		1,574
4,059		3,523		1,807		Dividends		7,582		4,888
(434)		(270)		(433)		(=) Net cash generated in the period		(704)		(2,792)
23,417		22,983		17,628		Cash at the Beginning of Period		23,417		19,987
22,983		22,713		17,195		Cash at the End of Period		22,713		17,195

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

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Statement of Value Added – Consolidated

		R$ million
		First Half
		2006		2005
Description
Sales of Products and Services and Non-Operating Revenues		96,891		82,490
Raw Materials Used		(9,628)		(5,664)
Products for Resale		(11,756)		(7,701)
Materials, Energy, Services & Others		(7,651)		(11,135)
Added Value Generated		67,856		57,990
Depreciation & Amortization		(4,450)		(3,906)
Participation in Related Companies, Goodwill & Negative Goodwill		(309)		(282)
Financial Result		1,233		691
Rent and Royalties		275		254
Total Distributable Added Value		64,605		54,747
Distribution of Added Value
Personnel
Salaries, Benefits and Charges		4,868		4,731
		4,868		4,731
Government Entities
Taxes, Fees and Contributions		28,355		23,220
Government Take		8,464		6,441
		36,819		29,661
Financial Institutions and Suppliers
Interest, FX Rate and Monetary Changes		1,819		2,416
Rent and Freight Expenses		6,513		6,760
		8,332		9,176
Minority Interest		952		1,228
Shareholders
Dividens/Interest on Own Capital		-		2,193
Retained Earnings		13,634		7,758
		13,634		9,951
		14,586		11,179

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

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Consolidated Result by Business Area - 1H-2006

	R$ MILLION
					GAS
					&
	E&P		SUPPLY		ENERGY		DISTRIB.		INTERN.		CORPOR.		ELIMIN.		TOTAL
INCOME STATEMENTS
Net Operating Revenues	38,808		59,631		4,607		19,152		5,834		-		(54,198)		73,834
Intersegments	35,900		15,231		1,396		324		1,347		-		(54,198)		-
Third Parties	2,908		44,400		3,211		18,828		4,487		-		-		73,834
Cost of Goods Sold	(15,974)		(52,257)		(3,860)		(17,311)		(3,865)		-		52,363		(40,904)
Gross Profit	22,834		7,374		747		1,841		1,969		-		(1,835)		32,930
Operating Expenses	(1,373)		(1,875)		(879)		(1,388)		(965)		(3,229)		56		(9,653)
Sales, General & Administrative	(447)		(1,448)		(387)		(1,196)		(577)		(1,285)		44		(5,296)
Taxes	(28)		(107)		(60)		(84)		(72)		(294)		-		(645)
Exploratory Costs	(387)		-		-		-		(301)		-		-		(688)
Research & Development	(365)		(137)		(67)		(5)		(2)		(161)		-		(737)
Health and Pension Plans	-		-		-		-		-		(969)		-		(969)
Others	(146)		(183)		(365)		(103)		(13)		(520)		12		(1,318)
Operating Profit (Loss)	21,461		5,499		(132)		453		1,004		(3,229)		(1,779)		23,277
Interest Income (Expenses)	-		-		-		-		-		(585)		-		(585)
Equity Income	-		49		12		(8)		48		(410)		-		(309)
Non-operating Income (Expenses)	(117)		(15)		(6)		6		(6)		74		-		(64)
Income (Loss) Before Taxes and Minority
Interests	21,344		5,533		(126)		451		1,046		(4,150)		(1,779)		22,319
Income Tax & Social Contribution	(7,257)		(1,865)		47		(156)		(322)		1,217		604		(7,733)
Minority Interests	(398)		(26)		(221)		-		(231)		(76)		-		(952)
Net Income (Loss)	13,689		3,642		(300)		295		493		(3,009)		(1,175)		13,634

Consolidated Result by Business Area - 1H-2005

	R$ MILLION
					GAS
					&
	E&P		SUPPLY		ENERGY		DISTRIB.		INTERN.		CORPOR.		ELIMIN.		TOTAL
INCOME STATEMENTS
Net Operating Revenues	31,711		49,421		3,714		17,907		5,447		-		(45,944)		62,256
Intersegments	29,666		13,887		1,119		273		999		-		(45,944)		-
Third Parties	2,045		35,534		2,595		17,634		4,448		-		-		62,256
Cost of Goods Sold	(13,540)		(41,962)		(2,924)		(16,132)		(3,408)		-		43,477		(34,489)
Gross Profit	18,171		7,459		790		1,775		2,039		-		(2,467)		27,767
Operating Expenses	(1,291)		(2,004)		(780)		(1,285)		(791)		(3,208)		(140)		(9,499)
Sales, General & Administrative	(421)		(1,450)		(348)		(1,126)		(538)		(1,107)		-		(4,990)
Taxes	(7)		(40)		(30)		(81)		(55)		(205)		-		(418)
Exploratory Costs	(475)		-		-		-		(109)		-		-		(584)
Research & Development	(157)		(55)		(26)		(2)		(2)		(174)		-		(416)
Health and Pension Plan	-		-		-		-		-		(1,070)		-		(1,070)
Others	(231)		(459)		(376)		(76)		(87)		(652)		(140)		(2,021)
Operating Profit (Loss)	16,880		5,455		10		490		1,248		(3,208)		(2,607)		18,268
Interest Income (Expenses)	-		-		-		-		-		(1,725)		-		(1,725)
Equity Income	-		141		(16)		-		103		(511)		-		(283)
Non-operating Income (Expense)	(192)		22		(46)		(2)		10		2		-		(206)
Income (Loss) Before Taxes and
Minority Interests	16,688		5,618		(52)		488		1,361		(5,442)		(2,607)		16,054
Income Tax & Social Contribution	(5,674)		(1,862)		12		(166)		(453)		2,382		886		(4,875)
Minority Interests	(548)		(17)		(152)		-		(50)		(461)		-		(1,228)
Net Income (Loss)	10,466		3,739		(192)		322		858		(3,521)		(1,721)		9,951

In order to align the financial statement of each business segment with the best practices of companies in the Oil & Gas sector and to improve the understanding of Petrobras management, starting in the 1Q-2006, the Company switched to allocating all financial results and items of financial nature to the corporate level. As a result of this change, the income tax, employee profit share and minority interest line items were adjusted.

To facilitate comparisons, we have presented segmented financial statements for prior periods in accordance with new criteria.

26

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Statement of Other Operating Revenues (Expenses) - 1H-2006

	R$ MILLION
					GAS
					&
	E&P		SUPPLY		ENERGY		DISTRIB.		INTERN.		CORPOR.		ELIMIN.		TOTAL
Institutional relations and cultural projects	-		(21)		-		(45)		-		(384)		-		(450)
Operating expenses with thermoelectric plants	-		-		(401)		-		-		-		-		(401)
Losses and Contingencies related to Legal Procedures	(7)		(29)		(5)		(2)		(3)		(114)		-		(160)
Contractual losses from ship-or-pay transport services	-		-		-		-		(63)		-		-		(63)
Unscheduled stoppages at installations and production equipment	(9)		(43)		-		-		-		-		-		(52)
Rent revenues	-		-		-		32		-		-		-		32
Result from hedge operations	-		(8)		39		-		-		-		-		31
Others	(130)		(82)		2		(88)		53		(22)		12		(255)
	(146)		(183)		(365)		(103)		(13)		(520)		12		(1,318)

Statement of Other Operating Revenues (Expenses) - 1H-2005

	R$ MILLION
					GAS
					&
	E&P		SUPPLY		ENERGY		DISTRIB.		INTERN.		CORPOR.		ELIMIN.		TOTAL
Institutional relations and cultural projects	-		(4)		-		(38)		-		(313)		-		(355)
Operating expenses with thermoelectric plants	-		-		(492)		-		-		-		-		(492)
Losses and Contingencies related to Legal Procedures	8		(292)		(13)		(28)		(11)		(46)		-		(382)
Contractual losses from ship-or-pay transport services	-		-		-		-		(68)		-		-		(68)
Unscheduled stoppages at installations and production equipment	(84)		(58)		-		-		-		-		-		(142)
Rent revenues	-		-		-		29		-		-		-		29
Result from hedge operations	-		(3)		94		-		-		-		-		91
Others	(155)		(102)		35		(39)		(8)		(293)		(140)		(702)
	(231)		(459)		(376)		(76)		(87)		(652)		(140)		(2,021)

27

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Consolidated Assets by Business Area - 06.30.2006

	R$ MILLION
					GAS
					&
	E&P		SUPPLY		ENERGY		DISTRIB.		INTERN.		CORPOR.		ELIMIN.		TOTAL
ASSETS	72,280		42,669		20,075		7,811		19,341		37,148		(8,802)		190,522
CURRENT ASSETS	7,010		21,815		3,158		4,270		5,158		28,573		(7,961)		62,023
CASH AND CASH EQUIVALENTS	-		-		-		-		-		22,713		-		22,713
OTHERS	7,010		21,815		3,158		4,270		5,158		5,860		(7,961)		39,310
NON-CURRENT ASSETS	4,541		1,178		2,037		636		836		6,189		(841)		14,576
PETROLEUM AND ALCOHOL ACCT.	-		-		-		-		-		777		-		777
MARKETABLE SECURITIES	258		5		-		-		-		335		-		598
OTHERS	4,283		1,173		2,037		636		836		5,077		(841)		13,201
FIXED ASSETS	60,729		19,676		14,880		2,905		13,347		2,386		-		113,923

Consolidated Assets by Business Area - 03.31.2006

	R$ MILLION
					GAS
					&
	E&P		SUPPLY		ENERGY		DISTRIB.		INTERN.		CORPOR.		ELIMIN.		TOTAL
ASSETS	68,618		41,724		19,743		8,752		18,720		36,540		(8,066)		186,031
CURRENT ASSETS	6,875		21,305		3,171		4,809		4,775		28,357		(7,353)		61,939
CASH AND CASH EQUIVALENTS	-		-		-		-		-		22,983		-		22,983
OTHERS	6,875		21,305		3,171		4,809		4,775		5,374		(7,353)		38,956
NON-CURRENT ASSETS	3,988		1,163		2,107		1,037		923		5,570		(713)		14,075
PETROLEUM AND ALCOHOL ACCT.	-		-		-		-		-		774		-		774
MARKETABLE SECURITIES	287		5		-		2		-		305		-		599
OTHERS	3,701		1,158		2,107		1,035		923		4,491		(713)		12,702
FIXED ASSETS	57,755		19,256		14,465		2,906		13,022		2,613		-		110,017

In order to align the financial statement of each business segment with the best practices of companies in the Oil & Gas sector and to improve the understanding of Petrobras management, starting in the 1Q-2006, the Company switched to allocating all financial results and items of financial nature to the corporate level. As a result of this change, the income tax, employee profit share and minority interest line items were adjusted.

To facilitate comparisons, we have presented segmented financial statements for prior periods in accordance with new criteria.

28

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Consolidated Results – International Business Area - 1H-2006

		R$ Million INTERNATIONAL
		E&P		SUPPLY		G&E		DISTRIBUTION		CORPOR.		ELIMIN.		TOTAL
INTERNATIONAL AREA
ASSETS		13,828		3,020		4,093		683		1,233		(3,516)		19,341
Income Statement
Net Operating Revenues		2,692		2,802		1,248		1,418		23		(2,349)		5,834
Intersegments		1,855		1,636		200		5		-		(2,349)		1,347
Third Parties		837		1,166		1,048		1,413		23		-		4,487
Operating Profit (Loss)		928		152		292		(126)		(271)		29		1,004
Net Income (Loss)		497		85		172		(53)		(229)		20		492

Consolidated Results – International Business Area

		R$ Million INTERNATIONAL
		E&P		SUPPLY		G&E		DISTRIBUTION		CORPOR.		ELIMIN.		TOTAL
INTERNATIONAL AREA
ASSETS (03/31/2006)		13,777		2,896		3,911		458		1,024		(3,346)		18,720
Income Statement (1H-2006)
Net Operating Revenues		2,642		2,664		1,084		1,233		3		(2,179)		5,447
Intersegments		1,541		1,473		161		3		-		(2,179)		999
Third Parties		1,101		1,191		923		1,230		3		-		4,448
Operating Profit (Loss)		1,204		139		205		(42)		(251)		(7)		1,248
Net Income (Loss)		722		68		157		(19)		(66)		(4)		858

In order to align the financial statement of each business segment with the best practices of companies in the Oil & Gas sector and to improve the understanding of Petrobras management, starting in the 1Q-2006, the Company switched to allocating all financial results and items of financial nature to the corporate level. As a result of this change, the income tax, employee profit share and minority interest line items were adjusted.

To facilitate comparisons, we have presented segmented financial statements for prior periods in accordance with new criteria.

29

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PETROBRAS SYSTEM

Appendices

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1. Changes in the Petroleum and Alcohol Accounts

R$ million
		Second Quarter						First Half
1Q-2006		2006		2005				2006		2005
770		774		752		Initial Balance		770		749
4		3		6		Intercompany Lending		7		9
774		777		758		Final Balance		777		758

SETTLING OF ACCOUNTS WITH THE FEDERAL GOVERNMENT

In accordance with Law Number 10,742 of October 6, 2003, final account reconciliation with the government should have occurred by June 30, 2004. PETROBRAS, after having furnished all the information required by the National Treasury Secretary – STN, is in discussion with the Ministry of Mines and Energy – MME, seeking to resolve the disparities that still exist between the parties in an effort to conclude the offset of accounts with the government, as per Provisionary Measure Number 2,181-45, dated August 24, 2001.

The amount of the account may be paid through the issuance of National Treasury bonds in a value equal to the final amount of the account rectification or with other amounts that PETROBRAS may owe to the federal government, including tax amounts or a combination of the aforementioned options.

30

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2. Consolidated Taxes and Obligations

The economic contribution of PETROBRAS to Brazil, measured by generation of taxes, duties and current social contributions, in the 1H-2006 totaled R$ 25,911 million.

R$ million
										First Half
1Q-2006		2006		2005		D%				2006		2005		D%
								Economic Contribution - Country
4,085		4,463		3,571		25		Value Added Tax (ICMS)		8,548		7,288		17
1,847		1,930		1,862		4		CIDE (1)		3,777		3,642		4
2,645		2,982		2,475		20		PASEP/COFINS		5,627		4,900		15
2,973		3,911		1,630		140		Income Tax & Social Contribution		6,884		3,710		86
590		485		484		-		Others		1,075		948		13
12,140		13,771		10,022		37		Subtotal		25,911		20,488		26
843		1,001		758		32		Economic Contribution - Foreign		1,844		1,765		4
12,983		14,772		10,780		37		Total		27,755		22,253		25

(1) CIDE – CONTRIBUIÇÃO DE INTERVENÇÃO DO DOMÍNIO ECONÔMICO.

3. Payments to Governments

R$ million
				Second Quarter						First Half
1Q-2006		2006		2005		D%				2006		2005		D%
								Country
1,758		1,981		1,580		25		Royalties		3,739		2,885		30
2,000		2,146		1,658		29		Special Participation		4,146		3,240		28
24		29		15		97		Surface Rental Fees		53		34		58
3,782		4,156		3,253		28		Subtotal		7,938		6,159		29
216		310		148		109		Foreign		526		282		87
3,998		4,466		3,401		31		Total		8,464		6,441		31

The government take in the country increased 29% in 1H-2006 over the same period of 2005, reflecting the higher tax bracket in the calculation of Special Participation for the higher production levels a the Barracuda and Caratinga fields, and the 33% increase in the reference price for domestic oil, which reached the average price of R$ 115.64 (US$ 53.43) in 1H-2006 versus R$ 87.04 (US$ 37.03) in the 1H-2005, as a result of the linkage with the price of Brent in the international markets.

31

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4. Consolidated Reconciliation of Shareholders’ Equity and Net Income

		R$ Million
		Shareholders' Equity		Result
. According to PETROBRAS information as of June 30, 2006		95,213		14,014
. Profit in the sales of products in affiliated inventories		(525)		(525)
. Reversal of profits on inventory in previous years		-		326
. Capitalized interest		(661)		(104)
. Absorption of negative net worth in affiliated companies *		(292)		(29)
. Other eliminations		(571)		(48)
. According to consolidated information as of June 30, 2006		93,164		13,634

* As per CVM Instruction Number 247/96, the losses that are considered to be of a non-permanent type (temporary) on investments evaluated by the equity in results of non-consolidated companies method, whose invested company does not show signs of paralysis or need for financial help from the investor company, should be limited to the value of the controlling company’s investment. Therefore, the losses occasioned by unfunded liabilities (negative net shareholder’s equity) of controlled companies did not affect the results and the net shareholder’s equity of PETROBRAS in 2005, generating a conciliatory item between the Financial Statements of PETROBRAS and the Consolidated Financial Statements.

5. Performance of PETROBRAS shares and ADRs

R$ million
		Second Quarter						First Half
1Q-2006		2006		2005				2006		2005
12.83%		3.86%		3.23%		Petrobras ON		17.19%		13.89%
15.94%		0.09%		4.03%		Petrobras PN		16.04%		10.46%
21.61%		3.05%		17.99%		ADR- Level III - ON		25.31%		31.05%
24.05%		-0.01%		19.68%		ADR- Level III - PN		24.03%		27.15%
13.44%		-3.48%		-5.86%		IBOVESPA		9.49%		-4.37%
3.66%		0.37%		-2.18%		DOW JONES		4.04%		-4.71%
6.10%		-7.17%		2.89%		NASDAQ		-1.51%		-5.45%

Book value of a PETROBRAS share on June 30, 2006 reached R$ 21.70.

6. Increase of Capital Stock and Incorporation of PETROQUISA shares

a) At the extraordinary general shareholders meeting held on April 3, 2006, shareholders approved the increase of capital stock for incorporation in part of net reserves in the amount of R$ 15,012 million, and the monetary correction of realized capital in the amount of R$ 339 million, increasing capital stock from R$ 32,896 million to R$ 48.248 million, without a change in the number of shares issued, which continue to be 2,536,673,672 common shares and 1,849,478,028 preferred shares, all subscribed and without nominal value.

b) At the Extraordinary General Meeting held on June 1, 2006, shareholders approved the operation for incorporating the shares of PETROQUISA by PETROBRAS, in the manner specified in the Re-ratification of the Justification Protocol of the operating for incorporating shares established between the two companies. For the implementation of the operation in relation to the exchange of shares utilized is based on the book value of both companies on the date of December 31, 2005, attributing 4,496 preferred shares issued by Petrobras for each lot of 1,000 common shares or for each lot of 1,000 preferred shares issued by Petroquisa.
Five Petroquisa`s shareholders, totaling 1.015.910 shares exercised the withdraw right within the term established (up to June, 05, 2006) and therefore they were reimbursed by the value of R$ 153,47 per thousand of shares, paid on July, 10, 2006. Thereafter, Petrobras acquired these shares for the same value, certifying the ownership transfer. Up to July, 07, 2006 none Petrobras` shareholders exercised their withdraw right.

32

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7. Currency Exposure

Currency exposure of the PETROBRAS System is measured as per the following table:

Assets		R$ million
		06.30.2006		03.31.2006
Current Assets		18,266		17,917
Cash and Cash Equivalents		6,834		6,744
Others Current Assets		11,432		11,173
Non-current Assets		4,939		4,731
Fixed Assets		27,430		29,373
Investments		279		(451)
Property, Plant & Equipment		26,507		29,495
Others Fixed Assets		644		329
Total Assets		50,635		52,021

Liabilities		R$ million
		06.30.2006		03.31.2006
Current Liabilities		16,138		16,982
Short-term Debt		8,859		8,662
Suppliers		4,687		4,486
Others Current Liabilities		2,592		3,834
Long-term Liabilities		24,230		28,027
Long-term Debt		22,764		23,952
Others Long-term Liabilities		1,466		4,075
Total Liabilities		40,368		45,009
Net Liabilities in Reais		10,267		7,012
(+) Investment Funds - Exchange		6,931		7,504
(-) FINAME Loans - dollar-indexed reais		535		592
Net Assets in Reais		16,663		13,924
Net Assets in Dollar		7,699		6,410
Exchange rate (*)		2.1643		2.1724

(*) Conversion into reais from the U.S. Dollar is done at the selling price at the closing date of the period.

33

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8. Change in Accounting Practices

Beginning in January 2006, in accordance with Deliberation CVM No. 489/2005 and the Technical Interpretation No. 1/2006 of IBRACON, the Company reversed the reserve balance for programmed shut-downs and adopted the practice of registering the amounts related to the maintenance of industrial units and boats in Property, Plant & Equipment, which includes spare parts, assembly and disassembly services, amongst others.

Regarding the change in accounting policy, the reversal of amounts provisioned through of December 31, 2005 for depreciation of a portion of the relevant maintenance costs, capitalization of expenses incurred and accumulated depreciation on these expenses, through December 31, 2005, was made directly to the retained earnings, net of taxes, as a prior period adjustment in the amount of R$ 529,406 thousand.

34

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Income Statement – Parent Company

R$ million
		Second Quarter						First Half
1Q-2006		2006		2005				2006		2005
37,920		38,872		35,426		Gross Operating Revenues		76,792		66,781
(9,809)		(10,431)		(9,321)		Sales Deductions		(20,240)		(18,110)
28,111		28,441		26,105		Net Operating Revenues		56,552		48,671
(14,025)		(14,562)		(14,531)		Cost of Goods Sold		(28,587)		(26,583)
14,086		13,879		11,574		Gross Profit		27,965		22,088
						Operating Expenses
(1,163)		(1,176)		(858)		Sales		(2,339)		(1,679)
(832)		(969)		858		General & Administrative		(1,801)		(1,647)
(106)		(281)		(291)		Cost of Prospecting, Drilling & Lifting		(387)		(476)
0		0				Losses on Recovery of Assets
(240)		(492)		(222)		Research & Development		(732)		(415)
(116)		(218)		(102)		Taxes		(334)		(209)
(456)		(456)		(456)		Health and Pension Plans		(912)		(1,013)
(484)		(686)		(1,164)		Others		(1,170)		(2,184)
						Net Financial Expense
302		776		107		Income		1,078		707
(489)		(499)		(587)		Expense		(988)		(1,166)
(2,463)		123		(4,776)		Monetary & Foreign Exchange Correction - Assets		(2,340)		(4,515)
1,971		(134)		3,854		Monetary & Foreign Exchange Correction - Liabilities		1,837		3,475
(679)		266		(1,402)				(413)		(1,499)
343		713		87		Gains from Investment in Subsidiaries		1,056		1,003
10,353		10,581		8,024		Operating Profit		20,934		13,969
(85)		31		(64)		Non-operating Income (Expense)		(54)		(216)
(3,354)		(3,513)		(1,559)		Income Tax & Social Contribution		(6,867)		(3,946)
6,914		7,100		6,401		Net Income (Loss)		14,014		9,806

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

35

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PETROBRAS	Financial Statements

Balance Sheet – Parent Company

Assets		R$ million
		06.30.2006		03.31.2006
Current Assets		44,269		46,485
Cash and Cash Equivalents		16,264		17,898
Accounts Receivable		9,140		10,562
Inventories		13,800		12,483
Dividends Receivable		253		798
Taxes recoverable		3,024		2,956
Deferred Taxes & Social Contribution		664		512
Others		1,124		1,276
Non-current assets		38,963		36,504
Petroleum & Alcohol Account		777		774
Subsidiaries, Controlled Companies and Affiliates		29,671		26,950
Ventures under Negotiation		585		476
Advances to Suppliers		571		613
Advance for Pension Plan Migration		1,228		1,241
Deferred Taxes and Social Contribution		2,429		2,362
Deposits - Legal Matters		1,455		1,391
Antecipated Expenses		959		995
Others		1,288		1,702
Fixed assets		79,422		75,218
Investments		22,563		20,756
Property, Plant & Equipment		56,177		53,862
Deferred		682		600
Total Assets		162,654		158,207

Liabilities		R$ million
		06.30.2006		03.31.2006
Current Liabilities		40,725		44,115
Short-term Debt		1,658		1,574
Suppliers		25,790		25,307
Taxes & Social Contribution Payable		8,106		8,716
Dividends		0		2,644
Project Finance and Joint Ventures		953		975
Pension fund obligations		394		396
Clients Anticipation		276		1,414
Others		3,548		3,089
Long-term Liabilities		26,716		25,979
Long-term Debt		5,828		5,944
Subsidiaries & Controlled Companies		1,831		1,868
Pension fund obligations		2,303		2,056
Health Care Benefits		7,128		6,795
Deferred Taxes & Social Contribution		6,936		6,596
Others		2,691		2,720
Shareholders' Equity		95,213		88,113
Capital Stock		48,248		33,235
Reserves		32,952		47,964
Net Income		14,014		6,914
Total liabilities		162,654		158,207

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

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Statement of Cash Flow – Parent Company

								R$ million
		Second Quarter						First Half
1Q-2006		2006		2005				2006		2005
6,914		7,100		4,699		Net Income (Loss)		14,014		9,806
1,920		1,000		(904)		(+) Adjustments		2,920		(272)
943		1,273		915		Depreciation & Amortization		2,216		1,817
(4)		(3)		(5)		Oil and Alcohol Accounts		(7)		(9)
1,207		1,678		(2,456)		Oil and Oil Products Supply - Foreign		2,885		(1,026)
1,055		(154)		668		Charges on Financing and Affiliated Companies		901		167
(1,281)		(1,793)		(26)		Other Adjustments		(3,074)		(1,221)
8,833		8,100		3,795		(=) Net Cash Generated by Operating Activities		16,934		9,534
(3,841)		(4,092)		3,327		(-) Cash used for Cap.Expend.		(7,933)		6,551
(2,947)		(2,785)		2,241		Investment in E&P		(5,732)		4,404
(545)		(751)		475		Investment in Refining & Transport		(1,296)		1,069
(136)		(811)		427		Investment in Gas and Energy		(947)		840
(153)		(210)		186		Structured Projects Net of Advance		(363)		281
171		665		(297)		Dividends		836		(297)
(231)		(200)		295		Other Investments		(431)		254
4,992		12,192		468		(=) Free Cash Flow		9,001		2,983
(4,576)		(5,643)		(1,007)		(-) Cash used in Financing Activities		(10,219)		3,068
416		6,550		1,475		(=) Cash Generated in the Period		(1,218)		(85)
17,481		17,898		10,020		Cash at the Beginning of Period		17,482		11,580
17,898		24,448		11,495		Cash at the End of Period		16,264		11,495

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

37

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Statement of Value-Added – Parent Company

		R$ million
		First Half
Description		2006		2005
Gross Operating Revenue from Sales & Services		77,328		66,817
Raw Materials Used		(6,763)		(5,093)
Products for Resale		(4,114)		(2,605)
Materials, Energy, Services & Others		(6,842)		(9,795)
Value Added Generated		59,608		49,324
Depreciation & Amortization		(2,216)		(1,817)
Participation in Associated Companies		1,056		1,003
Financial Income Net from affiliated companies		562		7
Rent and royalties		195		210
Total Distributable Value Added		59,206		48,727
Distribution of Value Added
Personnel
Salaries, Benefits and Charges		3,790		3,750
Government Entities
Taxes, Fees and Contributions		27,415		21,855
Government Participation		7,938		6,159
Deferred Income Tax & Social Contribution		680		947
		36,033		28,961
Financial Institutions and Suppliers
Interest, FX Rate and Monetary Changes		976		1,506
Rent and Freight Expenses		4,393		4,703
		5,369		6,209
Shareholders
Dividends		-		2,193
Net Income		14,014		7,613
		14,014		9,806

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

38

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PETROBRAS

 

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

Contacts:

Petróleo Brasileiro S.A – PETROBRAS
Investor Relations Department
Raul Adalberto de Campos– Executive Manager
E-mail: petroinvest@petrobras.com.br
Av. República do Chile, 65 - 22^nd floor
20031-912 – Rio de Janeiro, RJ
(55-21) 3224-1510 / 9947

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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 evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein.

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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.

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