Equity Research

29 October 2013

Petrobras (PBR/PBR.A)
EARNINGS REVIEW
Still Early Days on Pricing Mechanism
Americas Integrated Oil

Although we understand investors’ optimism surrounding the company’s POSITIVE

Unchanged
announcement that it has officially submitted a new product pricing mechanism for the
Board’s review, we believe yesterday’s (10/28/13) market reaction (PBR up 9% and
For a full list of our ratings, price target and
PBR.A up 7%; S&P500 up 0.1%) was premature and excessive. While we agree this earnings changes in this report, please see
announcement is a step in the right direction and could potentially lead to a significant table on page 2.
transformation in the company’s domestic product pricing policy, we remain skeptical
and think any meaningful change in its pricing mechanism will likely have to wait until Americas Integrated Oil
after Brazil’s presidential election in October 2014. In our opinion, inflation will remain a Paul Y. Cheng, CFA
substantial concern for the Brazilian administration over the next 12 months. It is 1.212.526.1884
important to note that there is no official deadline by which the Board must make a [email protected]
BCI, New York
final decision. The date, November 22, 2013, is merely the next scheduled Board
meeting in which it will further review the proposed mechanism after receiving Eli Bauman, CFA
management’s responses to their current inquiries. There is no guarantee, at least not 1.212.526.4060
that we could find in the press release, or suggestion that the Board will make a final [email protected]
decision by November 22. As the market further digests the news, we expect the shares BCI, New York
may give back the bulk of the gains in the coming days. Anthony Kit
1.212.526.1887
On the earnings front, 3Q13 result came in much below our estimate and consensus
[email protected]
expectation primarily due to higher DD&A and exploratory charges in its upstream
BCI, New York
operation, lower-than-expected oil price realization (Brent rose US$8.4/bl sequentially
versus its Brazilian oil realization gain of only US$4.7/bl), an unexpected loss in the Gas
& Energy operation as well as higher corporate charges. The shortfall was only partially
offset by the smaller-than-expected domestic refining loss and the asset sales gain of
US$243 million.

Overall, our thesis remains relatively unchanged. While we acknowledge the potential
benefits of improved cash flow predictability associated with any new pricing
mechanism proposal, we think it may be premature to give the company full credit until
additional details and potential timing on implementation are revealed. As noted above,
we believe the upcoming Brazilian presidential election in 2014 will serve as a headwind
for the shares through mid/late 2014. We think the company will also likely continue to
face cash burn in the coming months with its net debt/net capital above 35% and net
debt/EBITDA in excess of 3.0x. In addition, despite management’s assurance, we
believe the market may be concerned that the giant offshore Libra field (first oil as soon
as 2020) could potentially strain the company’s debt burden as well as potentially delay
other projects in the company’s portfolio. Over the next 12 months, we think Suncor,
ConocoPhillips, and Husky Energy offer better risk/reward.

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies
covered in its research reports. As a result, investors should be aware that the firm may have a
conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment decision.
PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 26.
Barclays | Petrobras (PBR/PBR.A)

Summary of our Ratings, Price Targets and Earnings Changes in this Report (all changes are shown in bold)
Company Rating Price Price Target EPS FY1 (E) EPS FY2 (E)

Old New 28-Oct-13 Old New %Chg Old New %Chg Old New %Chg

Americas Integrated Oil Pos Pos

Petroleo Brasileiro S.A. (PBR) EW EW 17.35 20.00 20.00 - 1.90 1.75 -8 1.80 1.80 -
Petroleo Brasileiro S.A. (PBR/A / PBRA) EW EW 18.24 21.00 21.00 - 1.90 1.75 -8 1.80 1.80 -
Source: Barclays Research. Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the reporting currency.
FY1(E): Current fiscal year estimates by Barclays Research. FY2(E): Next fiscal year estimates by Barclays Research.
Stock Rating: OW: Overweight; EW: Equal Weight; UW: Underweight; RS: Rating Suspended
Industry View: Pos: Positive; Neu: Neutral; Neg: Negative

29 October 2013 2
Barclays | Petrobras (PBR/PBR.A)

Americas Integrated Oil Industry View: POSITIVE

Petroleo Brasileiro S.A. (PBR) Stock Rating: EQUAL WEIGHT

Income statement ($mn) 2012A 2013E 2014E 2015E CAGR Price (28-Oct-2013) USD 17.35
EBITDA (adj) 29,993 30,506 33,402 43,965 13.6% Price Target USD 20.00
EBIDA (adj) 23,237 24,748 27,665 35,507 15.2% Why Equal Weight? We believe Petrobras is attractive
Net income (op basis) 11,034 11,482 11,775 17,458 16.5% for longer term shareholders but will be challenged
EPS (adj) ($) 1.69 1.75 1.80 2.70 16.9% over the next twelve months by continuing losses in
Diluted shares (mn) 6,522.2 6,522.2 6,522.2 6,522.2 0.0% the downstream segment and may overspend the
DPS ($) 0.50 0.58 0.58 0.72 12.9% budget target.

Return data Average Upside case USD 34.00

ROACE (%) 4.7 4.8 4.7 6.2 5.1 Our upside scenario assumes a long-term oil price
deck of $110/bl Brent in our NAV analysis.
ROAE (%) 6.4 6.6 6.5 9.1 7.2
ROMC (%) 5.5 6.1 6.0 8.2 6.5
Downside case USD 11.00
Balance sheet and cash flow ($mn) CAGR Our downside scenario assumes a long-term oil price
deck of $70/bl Brent in our NAV analysis from our
Shareholders' equity 169,039 176,732 184,739 197,484 5.3%
current assumption of $100/bl.
Net debt/(funds) 82,547 100,296 115,410 123,280 14.3%
Total debt 96,067.0 114,094.0 127,587.0 134,942.0 12.0%
Upside/Downside scenarios
Market capital employed 90,583 100,089 105,884 109,042 6.4%
Cash flow from operations 27,888 27,646 35,121 43,310 15.8%
Capital expenditure -40,430 -46,834 -46,466 -46,466 N/A
Dividends paid -3,272 -3,789 -3,768 -4,714 N/A
Free cash flow -12,542 -19,188 -11,345 -3,156 N/A
Net cash surplus/(deficit) -5,537 278 -1,620 -515 N/A

Valuation and leverage metrics Average

P/E (adj) (x) 10.3 9.9 9.6 6.4 9.1
EV/EBITDA (adj) (x) 6.5 7.0 6.8 5.4 6.4
EV/EBIDA (adj) (x) 8.4 8.6 8.3 6.7 8.0
Equity FCF yield (%) -11.1 -17.0 -10.0 -2.8 -10.2
Dividend yield (%) 2.9 3.3 3.3 4.2 3.4
Total debt/capital (%) 36.2 39.2 40.9 40.6 39.2
Total debt/equity (%) 56.8 64.6 69.1 68.3 64.7
NAV per share ($) N/A 28.89 N/A N/A 28.89 POINT® Quantitative Equity Scores
EV/boe ($) N/A 15.1 N/A N/A 15.1 Value

Selected operating metrics

Upstream Quality
Oil production (000 b/d) 2,125.0 2,081.1 2,305.0 2,519.7
Gas production (000 cf/d) 2,834.4 2,914.7 3,028.9 3,156.3
Total production (000 boe/d) 2,597.4 2,566.9 2,809.8 3,045.8 Sentiment
Realisations ($/boe) 92.7 87.5 86.3 84.0
Downstream
Refining capacity (000 b/d) N/A N/A N/A N/A
Refining throughput (000 b/d) 1,944.0 2,089.0 2,100.0 2,225.4 Low High
Source: POINT. The scores are valid as of the date of this
report and are independent of the fundamental analysts'
views. To view the latest scores, click here.

Source: Company data, Barclays Research

Note: FY End Dec

29 October 2013 3
Barclays | Petrobras (PBR/PBR.A)

Americas Integrated Oil Industry View: POSITIVE

Petroleo Brasileiro S.A. (PBRA) Stock Rating: EQUAL WEIGHT

Income statement ($mn) 2012A 2013E 2014E 2015E CAGR Price (28-Oct-2013) USD 18.24
EBITDA (adj) 29,993 30,506 33,402 43,965 13.6% Price Target USD 21.00
EBIDA (adj) 23,237 24,748 27,665 35,507 15.2% Why Equal Weight? We believe Petrobras is attractive
Net income (op basis) 11,034 11,482 11,775 17,458 16.5% for longer term shareholders but will be challenged
EPS (adj) ($) 1.69 1.75 1.80 2.70 16.9% over the next 12 months by continuing losses in the
Diluted shares (mn) 6,522.2 6,522.2 6,522.2 6,522.2 0.0% downstream segment and may overspend the budget
DPS N/A N/A N/A N/A N/A target. We now think that the preferred shares will
continue to trade at a slight premium over the
common stock over the next couple years.
Return data Average
ROACE (%) 4.7 4.8 4.7 6.2 5.1
Upside case USD 34.00
ROAE (%) 6.4 6.6 6.5 9.1 7.2
Our upside scenario assumes a long-term oil price
ROMC (%) 5.5 6.1 6.0 8.2 6.5
deck of $110/bl Brent in our NAV analysis.

Balance sheet and cash flow ($mn) CAGR

Downside case USD 11.00
Shareholders' equity 169,039 176,732 184,739 197,484 5.3%
Our downside scenario assumes a long-term oil price
Net debt/(funds) 82,547 100,296 115,410 123,280 14.3% deck of $70/bl Brent in our NAV analysis from our
Total debt 96,067.0 114,094.0 127,587.0 134,942.0 12.0% current assumption of $100/bl.
Market capital employed 90,583 100,089 105,884 109,042 6.4%
Cash flow from operations 27,888 27,646 35,121 43,310 15.8% Upside/Downside scenarios
Capital expenditure -40,430 -46,834 -46,466 -46,466 N/A
Dividends paid -3,272 -3,789 -3,768 -4,714 N/A
Free cash flow -12,542 -19,188 -11,345 -3,156 N/A
Net cash surplus/(deficit) -5,537 278 -1,620 -515 N/A

Valuation and leverage metrics Average

P/E (adj) (x) 10.8 10.4 10.1 6.8 9.5
EV/EBITDA (adj) (x) 6.7 7.2 7.0 5.5 6.6
EV/EBIDA (adj) (x) 8.7 8.9 8.5 6.8 8.2
Equity FCF yield (%) -10.5 -16.1 -9.5 -2.7 -9.7
Dividend yield (%) N/A N/A N/A N/A N/A
Total debt/capital (%) 36.2 39.2 40.9 40.6 39.2
Total debt/equity (%) 56.8 64.6 69.1 68.3 64.7
NAV per share ($) N/A 28.89 N/A N/A 28.89
EV/boe ($) N/A 15.1 N/A N/A 15.1
POINT® Quantitative Equity Scores
Selected operating metrics Value
Upstream
Oil production (000 b/d) 2,125.0 2,081.1 2,305.0 2,519.7
Gas production (000 cf/d) 2,834.4 2,914.7 3,028.9 3,156.3 Quality
Total production (000 boe/d) 2,597.4 2,566.9 2,809.8 3,045.8
Realisations ($/boe) 92.7 87.5 86.3 84.0
Downstream Sentiment
Refining capacity (000 b/d) N/A N/A N/A N/A
Refining throughput (000 b/d) 1,944.0 2,089.0 2,100.0 2,225.4

Low High
Source: POINT. The scores are valid as of the date of this
report and are independent of the fundamental analysts'
views. To view the latest scores, click here.

Source: Company data, Barclays Research

Note: FY End Dec

29 October 2013 4
Barclays | Petrobras (PBR/PBR.A)

Macro View
Since dipping below $100 in April, Brent prices increased steadily through the summer,
reaching a high of over $115 in late August as Middle East tensions boiled over the situation in
Syria. Brent has since reversed course as geopolitical tensions have eased to the $105-$110
per barrel range in the last month. Despite uncertainties related to the duration of quantitative
easing in the U.S. and concerns over slower growth in emerging economies, the outlook for
China growth has stabilized while sluggishness in Europe appears to be lifting. Finally, while
we have seen relative stability on the geopolitical front, violence in oil producing countries
including Libya, Nigeria, and Sudan highlight near term risks to oil supply. Therefore, absent
unforeseen macro-economic shocks such as a break-up of the European Union or a collapse
in the Chinese economy to way below 7% growth, we think Brent will continue to trade in a
relatively tight range of $90-$120 per barrel while averaging on a rolling 12-month basis
roughly $100-$110 per barrel over the next 2-3 years. In terms of the big picture, we see
support for both a “glass half empty” and “glass half full” outlook.

On one hand, we agree that global economies could remain challenged over the next couple
of years which will likely lead to a below trend line worldwide oil consumption growth outlook.
Adding to the problem is the rapidly rising oil supply in North America driven by the shale oil
revolution as well as increasing oil sands production. We believe these developments have
significantly reduced previous tail risk of a runaway oil price scenario in the next several years.

On the other hand, we think easy central bank monetary policy (reinforced most recently by
Federal Reserve extension of quantitative easing contrary to market expectation for tapering
to begin in early fall) could provide a floor to prices. We also think that the U.S. economy could
surprise the market on the upside driven by the housing recovery. In addition, while we believe
that the U.S. and Canada will continue to enjoy rapid production increase at least through the
next couple of years, production outlook for the rest of non-OPEC countries remains tepid
with close to zero growth. Recent violence in Libya, Nigeria have also highlighted that many
major oil exporting countries remain politically challenged and are not a reliable source of
secure supply. As a result, we believe Saudi Arabia currently remains in the driver’s seat to
dictate the low end of the oil price range given its ability to swing the market from balance to a
net short position by withdrawing 0.5-1.0 million b/d of supply. In view of the Kingdom’s
budget requirement, we believe Saudi Arabia will defend the market should Brent fall below
$90/bl.

In regards to the North America regional crude environment, we estimate that Brent/WTI will
narrow to $5-$8/bl in 1H14 due to the start-up of the Keystone XL Southern Leg and Seaway
Twin Line before widening out to $8-$12/bl in 2H14. We think the oil making its way down to
the Gulf Coast via take-or-pay contract volume requirements will contribute to a new supply
glut in Houston before moving East to St. James, LA. As a result of this crude supply shift, we
estimate that Houston will trade at parity with Cushing and at a $3-$4/bl discount versus LLS,
while LLS will settle to a $2-$4/bl structural discount versus Brent by early 2014 as Gulf Coast
light oil imports are reduced. At this point, Brent/WTI should trade in the $5-$8/bl range.
That said, any upset at pipelines or refineries could potentially result in a much wider
differential. In addition, it is possible Brent-LLS differential may stay wider than our
assumption if there are insufficient vessels to clear the Gulf Coast of its excess light oil. By
2H14, we think production growth will exceed existing take-or-pay contract volume
requirement. As a result, Houston may begin to trade at a $3-$4/bl premium to Cushing
reflecting spot tariff transportation costs, which will correspondingly contribute to the
widening in the Brent/WTI differential to $8-$12/bl. In the longer-run, as production
continues to swell from the North American unconventional plays, we anticipate another
major widening in the Brent/WTI could occur by 2015/2016.

29 October 2013 5
Barclays | Petrobras (PBR/PBR.A)

Company Outlook
Although we understand investors’ optimism surrounding the company’s announcement
that it has officially submitted a new product pricing mechanism for the Board’s review, we
believe yesterday’s (10/28/13) market reaction (PBR up 9% and PBR.A up 7%) was
premature and excessive. While we agree this announcement is a step in the right direction
and could potentially lead to a significant transformation in the company’s domestic
product pricing policy, we remain skeptical and think any meaningful change in its pricing
mechanism will likely have to wait until after Brazil’s presidential election in October 2014.
In our opinion, concerns about potentially stoking inflation will remain a substantial concern
for the Brazilian administration over the next 12 months. It is important to note that there is
no official deadline by which the Board must make a final decision. The date, November 22,
2013, is merely the next scheduled Board meeting in which the Board will further review the
proposed mechanism after receiving management’s responses to their current inquiries.
There is no guarantee, at least not that we could find in the press release, or suggestion that
the Board will make a final decision by November 22. As the market further digests the
news, we expect the shares may give back the bulk of the gains in the coming days.

On the earnings front, 3Q13 result came in much below our estimate and consensus
expectation primarily due to higher DD&A and exploratory charges in its upstream
operation, lower-than-expected oil price realization (Brent rose US$8.4/bl sequentially
versus its Brazilian oil realization gain of only US$4.7/bl), an unexpected loss in the Gas &
Energy operation as well as higher corporate charges. The shortfall was only partially offset
by the smaller-than-expected domestic refining loss and the asset sales gain of US$243
million.

Overall, our thesis remains relatively unchanged. While we acknowledge the potential
benefits of improved cash flow predictability associated with any new pricing mechanism
proposal, we think it may be premature to give the company full credit until additional
details and potential timing on implementation are revealed. As noted above, we believe the
upcoming Presidential election in 2014 in Brazil will serve as a headwind for the shares
through mid/late 2014. We think the company will also likely continue to face cash burn in
the coming months with its net debt/net capital above 35% and net debt/EBITDA in excess
of 3.0x. In addition, despite management’s assurance, we believe the market may be
concerned that the giant offshore Libra field (first oil as soon as 2020) could potentially
strain the company’s debt burden as well as potentially delay other projects in the
company’s portfolio. Over the next 12 months, we think Suncor, ConocoPhillips, and Husky
Energy offer better risk/reward.

29 October 2013 6
Barclays | Petrobras (PBR/PBR.A)

Macro Assumption Changes

We have modestly adjusted our commodity price deck assumptions. We slightly decrease
our 2013 WTI assumption by 1% while increase our 2014 WTI assumption by 5%. Our
Brent price assumption is unchanged for 2013 but up 5% in 2014. The figure below shows
the changes to our macro assumptions.

FIGURE 1
Macro Assumption Changes
2Q13A 3Q13A 4Q13E 2013E 2014E Average
% Old New % Old New % Old New % 2002-2012
Macro Assumption
Oil Prices (WTI Midland spot) $93.95 $106.08 2% $102.00 $99.00 -3% $98.28 $97.53 -1% $92.62 $97.62 5% $65.50
Oil Prices (Brent spot) $102.36 $110.78 2% $105.00 $107.00 2% $107.66 $108.16 0% $100.00 $105.00 5% $67.83
WTI Midland/Brent Discount ($/b) ($8.41) ($4.70) -8% ($3.00) ($8.00) -167% ($9.38) ($10.63) -13% ($7.38) ($7.38) 0% ($2.33)
WTI Midland/LLS Discount ($/b) ($10.44) ($4.31) 6% ($3.00) ($3.25) -8% ($10.17) ($10.23) -1% ($4.63) ($4.63) 0% ($4.89)
LLS/Maya Spread ($/b) $6.60 $10.71 -3% $10.43 $10.49 1% $9.75 $9.76 0% $11.08 $11.36 3% $12.42
LLS/Mars Spread ($/b) $5.25 $5.05 -3% $4.93 $5.46 11% $4.98 $5.11 3% $5.19 $5.80 12% $5.78
WTI Cushing/WTI Midland ($/b) $0.09 $0.33 14% $0.25 $1.25 400% $0.98 $1.23 26% $0.25 $0.25 0% $0.44
WTI Midland/Bakken ($/b) $2.31 $4.59 15% $7.67 $10.27 34% $3.28 $3.93 20% $5.92 $9.90 67% NA
WTI Midland/Syncrude ($/b) ($3.73) ($0.23) 89% $3.35 $1.85 -45% ($1.65) ($2.03) -23% $1.35 ($1.15) -185% NA
WTI Midland/WCS Discount ($/b) $16.82 $22.48 7% $20.27 $23.33 15% $20.79 $21.56 4% $19.92 $18.94 -5% NA
WTI Midland/WTS Discount ($/b) ($0.06) ($0.06) 71% $0.82 $0.97 19% $1.05 $1.09 4% $1.00 $1.15 15% $3.00
US Spot Composite ($/mmbtu) $4.02 $3.54 4% $3.60 $3.60 0% $3.65 $3.65 0% $3.70 $3.70 0% $5.36

Refining Margin ($/b)

Merchant Centers
US Gulf Coast LLS 6-3-2-1 $5.83 $5.09 -16% $4.41 $5.41 23% $5.14 $5.39 5% $6.16 $5.89 -4% $3.88
US Gulf Coast WTI 3-2-1 $27.03 $18.76 -13% $13.62 $15.43 13% $24.11 $24.56 2% $19.37 $18.48 -5% $13.74
NW Europe (medium) $2.73 $1.52 -27% $1.92 $1.39 -27% $2.38 $2.25 -5% $2.49 $2.84 14% $2.41
Singapore (medium) $7.40 $5.61 -12% $5.76 $4.73 -18% $7.11 $6.85 -4% $7.33 $7.43 1% $5.84
Other Centers
US - Northeast $6.87 $4.77 -18% $4.48 $2.93 -34% $5.99 $5.61 -6% $5.85 $5.91 1% $4.53
US - Midwest $32.39 $24.04 5% $20.44 $23.59 15% $26.58 $27.36 3% $23.66 $23.17 -2% $15.07
US - Mid-Continent $24.87 $15.86 -8% $12.21 $13.95 14% $20.76 $21.19 2% $17.16 $16.54 -4% $11.60
US - Rocky Mountain $28.24 $19.15 6% $19.72 $21.24 8% $22.84 $23.22 2% $23.11 $23.86 3% NA
US - California $10.08 $6.08 -8% $7.55 $7.31 -3% $8.62 $8.56 -1% $9.17 $9.97 9% $11.46
US - Pacific NW $18.59 $14.22 -3% $12.55 $10.81 -14% $14.64 $14.21 -3% $15.17 $14.97 -1% $13.29
Japan $5.68 $2.83 -36% $2.98 $1.70 -43% $4.21 $3.89 -8% $4.68 $4.40 -6% $4.24
0% 0%
U.S. Integrated Marketing Margins ($/gallon)
PADD I $0.439 $0.325 10% $0.355 $0.339 -5% $0.370 $0.366 -1% $0.366 $0.339 -7% $0.338
PADD II $0.309 $0.255 13% $0.293 $0.296 1% $0.295 $0.295 0% $0.300 $0.304 1% $0.263
PADD III $0.359 $0.254 15% $0.285 $0.275 -3% $0.288 $0.285 -1% $0.289 $0.280 -3% $0.266
PADD IV $0.387 $0.276 20% $0.349 $0.400 15% $0.283 $0.296 4% $0.297 $0.316 7% $0.289
PADD V ex. CA $0.290 $0.261 -9% $0.289 $0.257 -11% $0.262 $0.254 -3% $0.297 $0.270 -9% $0.256
California $0.554 $0.522 1% $0.483 $0.488 1% $0.512 $0.514 0% $0.493 $0.499 1% $0.362

* Barclays Research includes oil price assumptions that are used for the purpose of forecasting company earnings and cash flows, for valuing equity and equity derivative instruments, and for
providing equity research recommendations and associated equity investment advice. These assumptions may differ from the oil price forecast of Barclays Commodities Research.

Source: Barclays Research, Company Data, Platts Oilgram Price Report

29 October 2013 7
Barclays | Petrobras (PBR/PBR.A)

EPS Changes
We fine-tune our 4Q13 EPS estimate for PBR/PBR.A to US$0.48/ADS, while keeping our
2014 EPS estimate the same at US$1.80/ADS.

Petroleo Brasileiro S.A.(PBR): Quarterly and Annual EPS (USD)

PBR
2012 2013 2014 Change y/y
Stock Rating
EQUAL WEIGHT FY Dec Actual Old New Cons Old New Cons 2013 2014

Industry View Q1 0.80A 0.59A 0.59A 0.59A N/A 0.39E 0.52E -26% -34%
POSITIVE Q2 -0.11A 0.46A 0.46A 0.46A N/A 0.40E 0.45E 518% -13%
Price Target Q3 0.42A 0.38E 0.23A 0.42E N/A 0.40E 0.51E -45% 74%
USD 20.00 Q4 0.58A 0.46E 0.48E 0.45E N/A 0.63E 0.47E -17% 31%
Price (28-Oct-2013) Year 1.69A 1.90E 1.75E 1.93E 1.80E 1.80E 2.02E 4% 3%
USD 17.35 P/E 10.3 9.9 9.6
Potential Upside/Downside Source: Barclays Research.
Consensus numbers are from Thomson Reuters
+15%

Petroleo Brasileiro S.A.(PBRA): Quarterly and Annual EPS (USD)

PBR/A / PBRA
2012 2013 2014 Change y/y
Stock Rating
EQUAL WEIGHT FY Dec Actual Old New Cons Old New Cons 2013 2014

Industry View Q1 0.80A 0.59A 0.59A 0.30A N/A 0.39E 0.45E -26% -34%
POSITIVE Q2 -0.11A 0.46A 0.46A 0.46A N/A 0.40E 0.16E 518% -13%
Price Target Q3 0.42A 0.38E 0.23A 0.38E N/A 0.40E 0.60E -45% 74%
USD 21.00 Q4 0.58A 0.46E 0.48E 0.47E N/A 0.63E 0.61E -17% 31%
Price (28-Oct-2013) Year 1.69A 1.90E 1.75E 2.04E 1.80E 1.80E 2.03E 4% 3%
USD 18.24 P/E 10.8 10.4 10.1
Potential Upside/Downside Source: Barclays Research.
+15% Consensus numbers are from Thomson Reuters

29 October 2013 8
Barclays | Petrobras (PBR/PBR.A)

FIGURE 2
Comparative Valuations
Price P/E EV/EBITDA EV/EBIDA + Def. Tax ROMC% Dividend
Rating 10/28/13 2014E 2015E 2014E 2015E 2014E 2015E 2014E 2015E Yield
Industry View:
Americas Majors Positive
Cenovus (CVE-TSE) OW C$30.69 21.9 x 21.2 x 7.3 x 7.2 x 8.0 x 8.1 x 3.7% 3.8% 3.2%
Chevron (CVX) EW $120.91 10.8 x 10.5 x 5.1 x 5.1 x 6.5 x 6.4 x 8.6% 8.7% 3.3%
ConocoPhillips (COP) OW $73.89 12.3 x 11.4 x 4.9 x 4.8 x 6.2 x 6.1 x 7.1% 7.6% 3.7%
Exxon Mobil (XOM) EW $88.23 12.1 x 12.3 x 4.9 x 5.0 x 8.1 x 8.2 x 7.8% 7.5% 2.9%
Hess (HES) OW $83.16 15.7 x 14.5 x 5.4 x 5.0 x 6.2 x 6.1 x 5.8% 6.2% 1.2%
Husky Energy (HSE-TSE) OW C$29.52 15.5 x 15.1 x 5.3 x 5.1 x 6.1 x 5.7 x 5.9% 6.1% 4.1%
Imperial Oil (IMO-TSE) OW C$45.75 11.6 x 12.2 x 7.7 x 8.0 x 8.6 x 9.0 x 7.8% 7.8% 1.0%
Marathon Oil (MRO)* OW $36.07 14.8 x 16.2 x 3.4 x 3.5 x 5.6 x 5.4 x 5.8% 6.1% 2.1%
Murphy Oil (MUR) EW $62.11 11.3 x 10.7 x 4.0 x 3.8 x 4.7 x 4.4 x 7.1% 7.4% 2.0%
Petrobras (PBR-ADR) EW $15.91 8.8 x 5.9 x 6.6 x 5.2 x 6.8 x 5.7 x 6.3% 8.6% 2.6%
Petrobras (PBRA-ADR) EW $17.06 9.5 x 6.3 x 6.8 x 5.3 x 7.0 x 5.9 x 6.1% 8.3% 5.0%
Suncor Energy (SU-TSE) OW C$37.46 12.5 x 13.1 x 5.3 x 5.5 x 6.4 x 6.6 x 7.2% 6.9% 2.1%
Americas Majors Median 12.2 x 12.3 x 5.3 x 5.1 x 6.5 x 6.1 x 6.7% 7.5% 2.7%
Large Cap E&P Average* 21.9 x NA 6.1 x NA 6.7 x NA N/A N/A N/A

Macro Assumptions Major Oil / Refiners European Integrateds

Brent Average Spot Price ($/bl) $105.00 $100.00 $112.12 $107.70
WTI Midland Average Spot Price ($/bl) $97.62 $88.25 $94.29 $97.10
U.S. Natural Gas Spot Price ($/mcf) $3.77 $3.93 $2.75 $3.81
Refining Margins ($/bl)
U.S. Gulf Coast LLS 6-3-2-1 $5.89 $5.39
U.S. East Coast $5.91 $5.16
U.S. Mid-Continent $16.54 $20.16
U.S. West Coast $9.97 $10.27 $11.31 $13.72
NW Europe (Medium) $2.84 $2.39 $2.61 $1.33
Singapore (Medium) $7.43 $6.98 $8.45 $8.70
Crude Differentials ($/bl)
WTI/Brent ($7.38) ($11.75) -$17.82 -$10.60
WTI/LLS ($4.63) ($8.75)
LLS/Maya $11.36 $11.95
LLS/Mars $5.80 $6.04
WTI/WCS $18.94 $19.16
WTI/WTS $1.15 $1.15
WTI Cushing/WTI Midland $0.25 $0.25

Source: Company Data, Barclays Research

* Covered by Large Cap E&P Analyst Tom Driscoll

Stock rating: OW = Overweight; EW= Equal Weight; UW = Underweight.

For full disclosures on each covered company, including details of our company-specific valuation methodology and risks, please refer to
http://publicresearch.barcap.com

29 October 2013 9
Barclays | Petrobras (PBR/PBR.A)

FIGURE 3
Stock Price Performance
10/28/13 % Change Since 1 Yr Return
Closing 12/31/12 12/31/11 12/31/10 12/31/09 12/31/08 12/31/07 12/31/06 2012 2011 2010 2009 2008 2007 2006
Cenovus (ADS) $29.64 (12)% (11)% (11)% 18% -- -- -- 1% (0)% 32% -- -- -- --
Cenovus C$30.69 (8)% (9)% (8)% 16% -- -- -- (2)% 2% 26% -- -- -- --
Chevron $120.59 12% 13% 32% 57% 63% 29% 64% 2% 17% 19% 4% (21)% 27% 30%
ConocoPhillips $74.06 28% 2% 9% 45% 43% (16)% 3% (20)% 7% 33% (1)% (41)% 23% 24%
ExxonMobil $87.97 2% 4% 20% 29% 10% (6)% 15% 2% 16% 7% (15)% (15)% 22% 36%
Hess $83.20 57% 46% 9% 38% 55% (18)% 68% (7)% (26)% 27% 13% (47)% 103% 17%
Husky Energy C$29.52 0% 20% 11% (2)% (4)% (34)% (24)% 20% (8)% (12)% (3)% (31)% 15% 32%
Imperial Oil (ADS) $43.89 2% (1)% 8% 14% 30% (20)% 19% (3)% 10% 5% 15% (38)% 49% 11%
Imperial Oil C$45.75 7% 1% 13% 13% 12% (16)% 7% (6)% 12% (0)% (1)% (25)% 27% 12%
Marathon $35.59 16% 22% (4)% 14% 30% (42)% (23)% 5% (21)% 19% 14% (55)% 32% 52%
Murphy $61.75 4% 11% (17)% 14% 39% (27)% 21% 7% (25)% 38% 22% (48)% 67% (6)%
Petro-Canada (ADS) NA -- -- -- -- 89% (23)% 1% -- -- -- 89% (59)% 31% 2%
Petro-Canada NA -- -- -- -- 70% (15)% (5)% -- -- -- 70% (50)% 12% 2%
Suncor (ADS) $35.99 9% 25% (6)% 2% 85% (34)% (9)% 14% (25)% 8% 81% (64)% 38% 25%
Suncor C$37.46 15% 28% (2)% 1% 58% (31)% (19)% 11% (23)% 3% 57% (56)% 17% 25%
Average North America 10% 12% 4% 20% 45% (19)% 9% 2% (5)% 16% 27% (42)% 36% 20%

BP $43.66 5% 2% (1)% (25)% (7)% (40)% (35)% (3)% (3)% (24)% 24% (36)% 9% 4%
Royal Dutch Shell A $68.83 (0)% (6)% 3% 15% 30% (18)% (3)% (6)% 9% 11% 14% (37)% 19% 15%
Total $61.35 18% 20% 15% (4)% 11% (26)% (15)% 2% (4)% (16)% 16% (33)% 15% 14%
Average Europe 8% 5% 6% (5)% 11% (28)% (17)% (2)% 1% (10)% 18% (35)% 14% 11%
Avg (N. America and Europe) 10% 10% 4% 15% 38% (21)% 4% 1% (4)% 11% 25% (41)% 32% 19%

Petrobras $15.91 (18)% (36)% (58)% (67)% (35)% (72)% (38)% (22)% (34)% (21)% 95% (57)% 124% 45%
Petrobras Preferred $17.06 (12)% (27)% (50)% (60)% (16)% (65)% (26)% (18)% (31)% (19)% 108% (58)% 107% 44%
Petro-China $113.70 (21)% (9)% (14)% (4)% 28% (35)% (19)% 16% (5)% 11% 34% (49)% 25% 72%
Sinopec $77.60 (32)% (26)% (19)% (12)% 26% (48)% (16)% 9% 10% 9% 43% (58)% 60% 87%
CNOOC $195.50 (11)% 12% (18)% 26% 105% 17% 107% 26% (27)% 53% 63% (43)% 77% 39%
LukOil $65.94 (2)% 24% 15% 17% 99% (24)% (25)% 27% (7)% 1% 70% (62)% (2)% 51%
Average Emerging Market (16)% (10)% (24)% (17)% 34% (38)% (3)% 6% (16)% 6% 69% (55)% 65% 56%
Average Integrateds 3% 5% (3)% 6% 37% (26)% 2% 3% (7)% 9% 37% (45)% 41% 29%

XOI 1,462.1 18% 19% 21% 37% 49% (6)% 23% 1% 1% 14% 9% (37)% 31% 20%
XLE 86.6 21% 25% 27% 52% 81% 9% 48% 3% 1% 20% 19% (40)% 35% 17%
OSX 283.2 29% 31% 16% 45% 133% (6)% 42% 2% (12)% 26% 61% (60)% 51% 10%
EPX 502.4 30% 20% 8% 32% 113% 16% 64% (8)% (10)% 22% 61% (45)% 41% 5%
SPX 1,759.8 23% 40% 40% 58% 95% 20% 24% 13% (0)% 13% 23% (38)% 4% 14%

Commodity Price
Brent ($/b) $105.9 (5)% (1)% 12% 36% 132% 13% 74% 3% 13% 22% 71% (51)% 54% 3%
WTI ($/b) $96.7 5% (2)% 6% 22% 117% 1% 58% (7)% 8% 15% 78% (54)% 57% 0%

- IMO share price adjusted to reflect 3:1 stock split on 5/17/2006.

- HSE share price adjusted to reflect 2:1 stock split on 7/27/2007.
- MRO share price is reflective of the MRO/MPC spin-off on 6/30/2011. Adjusting for the spin-off is MRO's share price + 50% of MPC's share price.
Adjusting for the spin-off, MRO's 2011 return would be +24%. Percent change since 12/31/10 would be +90%.
- COP share price is reflective of the COP/PSX spin-off on 5/1/2012. Adjusting for the spin-off is COP's share price + 50% of PSX's share price.
Adjusting for the spin-off, COP's percent change since 12/31/11 would be +45%.
- MUR share price is reflective of the MUR/MUSA spin-off on 5/1/2012. Adjusting for the spin-off is MUR's share price + 25% of MUSA's share price.
Adjusting for the spin-off, MUR's percent change since 12/31/12 would be +21%.
- HFC share price adjusted to reflect 2:1 stock split on 9/1/2011.
- VLO share price is reflective of the VLO/CST spin-off on 5/1/2013. Adjusting for the spin-off, VLO's percent change since 12/31/12 would be +26%.

Source: Bloomberg, Thomson One, Barclays Research

29 October 2013 10
Barclays | Petrobras (PBR/PBR.A)

FIGURE 4
NAV Calculation
Major Oil Companies' Net Asset Value Calculation
Average WTI Price (Cushing), $/b 95.2
Average Brent Price, $/b 111.9 Year-End Exchange Rates Current Exchange Rates
Average US Natural Gas Price (Henry Hub), $/mcf 2.9 EUR/$ 0.76 EUR/$ 0.76
Average UK Natural Gas Price, $/mcf 9.4 CAD/$ 1.00 CAD/$ 1.03
WTI Price (Cushing) Discounted in the NAV Estimate 90.8
Brent Price Discounted in the NAV Estimate 100.0 Avg. 2012 Exchange Rates Est. WTI Cushing, $/bl
US Natural Gas Price Discounted in the NAV Estimate 4.6 EUR/$ 0.78 2Q13 94.04
UK Natural Gas Price Discounted in the NAV Estimate 8.3 CAD/$ 1.00 Est. Brent, $/bl
Assumed Cost Impact (6)% 0.005 2Q13 102.36
Value of Total Resource as % of PV10 15% Discount Rate 10%
Value of Resources as % of PV10 (excl. identifiable projects) 2%

PBR/
CVE CVX COP XOM HES HSE IMO MUR PBRA SU
Cenovus Chevron ConocoPhillips Exxon Mobil Hess Husky Energy Imperial Oil Murphy Petrobras Suncor

2012 PV10 of Reserves, $ mm (excl. Imperial Oil and LukOil) 155,518 73,912 199,944 20,559 C$10,710 C$24,836 8,113 198,449
Adjustments
Revenue Impact, $ mm (65,691) (20,391) (65,733) (10,826) (430) (9,771) (1,438) (116,855)
Future Production & Transportation Costs, $ mm 212,019 219,383 431,630 32,529 18,845 83,600 14,869 475,113
Future Development Costs, $ mm 97,927 67,599 120,405 17,363 9,431 31,051 6,787 66,406
Assume Change in Cost, $ mm 18,411 17,047 32,791 2,964 1,680 6,810 1,286 32,166
Future Income Tax Provision, $ mm 204,829 105,218 324,194 44,201 5,394 25,902 6,791 209,839
Future Net Cash Flows, $ mm 312,791 144,574 442,229 32,510 15,238 86,700 15,363 401,591
Assumed Tax Rate, % 40% 42% 42% 58% 26% 23% 31% 34%
Net Impact of Revenue and Costs Change (post-tax), $ mm (28,571) (1,935) (19,007) (3,332) 923 (2,280) (105) (55,624)
Discount @ 10% Annual Rate, $ mm 157,273 70,662 240,285 11,951 6,471 61,864 7,434 203,142
Discount from Net Income to get PV10, % (50)% (49)% (54)% (37)% (42)% (71)% (48)% (51)%
Net Addition (reduction), $ mm (14,205) (989) (8,680) (2,107) 531 (653) (54) (27,487)
Proved Reserves Adjusted NPV @ $100/b Brent & $91/b WTI C$19,097 141,313 72,923 191,264 18,452 C$11,241 C$24,183 8,059 170,962 C$48,474

Implied Proved Reserve Value (XOM excl. IMO), $/boe C$11.2 12.5 8.4 8.9 11.9 C$11.5 C$6.8 13.3 13.3 C$11.9

R&M & Retail 2014 EBITDA, $ mm (After Corporate Allocations) 678 4,693 6,713 49 C$926 C$863 4,692 1,669
Refiners & Retail 2014 EV/EBITDA , x 5.5 5.5 5.5 8.7 5.5 5.5 5.5 5.5
R&M & Retail EV, $ mm C$3,705 25,629 36,659 426 C$5,059 C$4,712 25,623 C$9,118

Adjustments
Hess Port Reading, Midstream, Energy Marketing & Others, $ mm 1,375
Murphy UK Downstream Value, $ mm 243
Petrobras After-Tax Loss (2013-2015), $ mm (11,291)
Downstream EV, $ mm C$3,705 25,629 36,659 1,801 C$5,059 C$4,712 243 14,333 C$9,118

Chemicals 2014 EBITDA, $ mm 1,781 5,883 C$223

Chemicals 2014 EV/EBITDA, x 6.5 6.5 6.5
Chemicals EV, $ mm 11,574 38,240 C$1,452

Integrated Gas 20,409 5,452 71,740 C$9,054

Hong Kong Power, Coal, etc. 5,000
Other Marketable Securities Outside Current Assets 5,202
Imperial Oil Calculated Equity Value 27,186
Total Other Segments EV, $ mm 20,409 5,452 103,926 C$9,054 5,202

Cash and Cash Equivalent, $ mm C$1,024 21,913 11,709 4,483 1,575 C$1,607 C$542 1,754 25,963 C$5,230
Working Capital, $ mm (excl. cash) C$206 778 4,208 (11,425) 3,434 (C$280) (C$2,976) (461) 4,207 (C$920)
LIFO Reserve, $ mm* C$0 6,040 0 13,004 730 C$0 C$1,327 170 0 C$0
Mark-to-Market LIFO Reserve Gain/(Loss) to Latest Quarter, $ mm** C$0 (688) 0 (1,420) 0 C$0 C$48 0 (650) C$0
Long-term Debt, $ mm (C$4,830) (17,960) (21,721) (4,019) (5,446) (C$3,240) (C$3,566) (3,046) (112,497) (C$10,510)
Net Pension Liability, $ mm (C$153) (9,694) (2,936) (25,454) (715) (C$33) (C$769) (382) (19,438) (C$1,839)
Net Balance Sheet Adjustment, $ mm (C$3,753) 389 (8,740) (24,831) (422) (C$1,946) (C$5,394) (1,964) (102,415) (C$8,039)

Total Equity Value based on Proved Reserves, $ mm C$19,049 199,314 69,635 345,258 19,831 C$23,408 C$24,952 6,338 88,081 C$49,553
Total Equity Value/Share (Without Any Non-Proved Resource), $/share C$25.2 102.9 56.3 77.9 57.6 C$23.8 C$29.3 33.4 13.5 C$32.9

Total Non-Proved Resources (excl. Imperial Oil & Proved Reserves), mmboe 9,471 53,653 34,358 52,110 4,173 15,836 13,300 2,696 33,946 26,244
Proved Reserves at Year End 2012 (XOM excl. Imperial Oil), mmboe 1,706 11,347 8,642 21,590 1,553 975 3,574 604 12,895 4,060
Total Non-Proved Resource to Proved Ratio 5.6 4.7 4.0 2.4 2.7 16.2 3.7 4.5 2.6 6.5
Total Non-Proved Resources Value, $/b C$1.0 1.9 1.3 1.3 3.3 C$0.9 C$1.1 2.1 3.1 C$0.8
% of Proved Reserve Unit Value 9% 15% 15% 15% 28% 7% 16% 16% 23% 7%
Total Non-Proved Resource Value (excl. Imperial Oil), $ mm C$9,579 100,229 43,488 69,245 13,782 C$13,570 C$14,097 5,706 105,125 C$20,779

Less: Estimated Asset Sales Value Included in Prior Calculation, $ mm C$0 0 5,825 0 2,362 C$0 C$0 137 0 C$700

Total Equity Value (including Non-Proved Resource & Asset Sales), $ mm C$28,628 299,543 107,298 414,503 31,251 C$36,978 C$39,048 11,907 193,206 C$69,632
Shares Outstanding (Latest Quarter) 757 1,937 1,237 4,433 344 983 851 190 6,522 1,507
Total Equity Value Per Share, $/share C$37.8 154.7 86.7 93.5 90.8 C$37.6 C$45.9 62.7 29.6 C$46.2
Current Share Price C$30.7 120.9 73.9 88.2 83.2 C$29.5 C$45.8 62.1 17.3 C$37.5
NAV Estimate/Price, above/(under)% 23% 28% 17% 6% 9% 27% 0% 1% 71% 23%
Price/NAV Estimate, above/(under)% (19)% (22)% (15)% (6)% (8)% (22)% (0)% (1)% (41)% (19)%
* European and Canadian companies use FIFO accounting so their inventory value already fairly reflecting the last quarter.
** COP, HES and MUR actually reported the LIFO value on a quarterly basis so this calculation does not apply to them.
*** Balance sheet adustments and estimated asset sales include announced deals to be closed in 2013.

Source: Company Data, Barclays Research

29 October 2013 11
Barclays | Petrobras (PBR/PBR.A)

3Q13 Results
Petrobras announced that it has officially submitted a new product pricing mechanism for
the Board to review which in turn has requested additional analysis on the methodology.
Petrobras will report back by November 22, 2013. Although we agree this announcement is
a step in the right direction and could potentially significantly alter the company’s future
pricing mechanism, we believe yesterday’s (10/28) market reaction was premature and
excessive. Given the upcoming Presidential election in Brazil as well as concerns about
potentially stoking inflation, we believe that any meaningful changes in the pricing
mechanism will likely have to wait until after the presidential election in October 2014.

Positive
• New Product Pricing Mechanism: Management is working on a new pricing mechanism
that could better align its domestic product price with international pricing which in turn
will provide better predictability in generating cash flow. The Board has requested
additional analysis on the methodology for which the company will report back by
November 22.

• Brazil refining lost US$2,414 million compared to our estimate of US$3,301 million,
contributing a positive variance of US$0.14/ADS.

• Upstream Operating Efficiency: According to management, the PROEF program

contributed 8.0% to operating efficiency in the Campos Basin and 1.2% in Rio, while
overall production contribution from the program was 55 mboe/d across the portfolio
in the 3Q13.

Negative
• Headline EPS of US$0.23/ADS compare to ours and consensus estimate of
US$0.38/ADS.

• Total E&P result of US$5,207 million came in lower than our estimate of US$5,811
million, driven by lower-than-expected liquids realizations as well as higher-than-
expected exploration and DD&A expense.

• Oil and gas realizations of US$80.7/boe (excluding hedges) came in below our estimate
of US$83.9/boe, driven by lower-than-expected Brazil and international liquids
realization, while total natural gas realizations were in-line.

• Higher-than-expected exploration expense of US$968 million pre-tax versus our

estimate of US$525 million pre-tax, contributing a negative after-tax variance of
approximately US$0.04/ADS.

• 2013/2014 Brazilian Oil Guidance: While not providing specifics, management expects
2014 production will ramp up “significantly” relative to 2013 as a result of some slight
delays of upcoming FPSOs into 4Q13/1Q14. Management also indicated that they are
hopeful to reach their previous low-end guidance for 2013 Brazil oil production level
(+/- 2% vs. 2012 level or 1,940-2,020 mb/d).

• Debt Targets: Net Debt/EBITDA of 3.05x as of 3Q13 compared to management’s target

threshold of 2.5x. Net debt to net capital increased to 36% at the end of 3Q13 from the
2Q13 level of 34% and the internal target threshold of 35%.

• 3Q13 cash burn of US$7.1 billion.

Neutral
• Total oil and gas production was 2,522 mboe/d in line compared to our estimate of
2,519 mboe/d.

29 October 2013 12
Barclays | Petrobras (PBR/PBR.A)

• Higher-than-expected corporate charges of US$1,319 million compared to our US$494

million estimate contributed a negative US$0.13/ADS impact to the bottom line.

• Libra Field: Management believes that the development of the Libra field will not delay
or impact any other projects in its portfolio and expects Libra first oil by 2020.

Additional 3Q13 Highlights

• PBR earned US$0.23/ADS compared to ours and consensus estimates of US$0.38/ADS.
Reported earnings included US$243 million in asset sales gain from the disposal of BS-4
Atlanta and Oliva blocks in the Santos Basin and the Coulomb block in the Gulf of
Mexico.

• Versus our estimate, the negative variance was driven by lower E&P and Gas & Energy
result and higher corporate charges, partially offset by a smaller R&M loss.

• Worldwide E&P unit profit was US$22.4/boe compared to our estimate of US$25.4/boe
and 2Q13 and 3Q12 levels of US$22.6/boe and US$24.9/boe, respectively. We estimate
that Petrobras ranks 3rd among our group of 10 global major oil companies compared
to a ranking of 1st in both 2Q13 and 3Q12.

• Excluding government take, Petrobras’ domestic cash lifting cost averaged US$15.0/boe
versus our estimate of US$16.1/boe. Including government take, domestic cash lifting
cost was US$33.3/boe compared to our estimate of US$34.1/boe.

• Brazil E&P earned US$5,074 million compared to our estimate of US$5,604 million,
contributing a negative variance of US$0.08/ADS versus our forecast.

• Brazil oil & gas production averaged 2,314 mboe/d (000s boe/d) compared with our
estimate of 2,308 mboe/d.

• International oil & gas production averaged 208 mboe/d compared to our estimate of
211 mboe/d.

• Global oil & gas production averaged 2,522 mboe/d compared to our estimate of 2,519
mboe/d.

• Worldwide R&M (including distribution) reported a unit loss of US$11.3 per barrel of
throughput compared to a loss of US$4.9 per barrel in 2Q13 and a loss of US$13.2 per
barrel in 3Q12. We estimate that Petrobras ranks 8th among our group of 8 global
integrated oil companies compared to a ranking of 8th in both 2Q13 and 3Q12.

• Brazil refining lost US$2,414 million compared to our estimate of a loss of US$3,301
million, contributing a positive variance of US$0.14/ADS. Brazil refining throughput
averaged 2,072 mb/d compared to our estimate of 2,025 mb/d, 2Q13 level of 2,102
mb/d and 3Q12 level of 1,974 mb/d. Refining result benefited from the lower-than-
expected upstream oil price realization (Petrobras domestic oil realization rose only
US$4.7/bl sequentially compared to a gain of US$8.4/bl in Brent oil price). Domestic
crude oil accounted for 81% of its refining feedstock processed.

• Gas and Energy lost US$85 million compared to our estimate of US$306 million in
positive earnings.

• On October 21, 2013, PBR was awarded a 40% interest in the Libra block auction,
located in the pre-salt area of the Santos Basin, with a US$3 billion signature bonus to
be paid relative to its share of the investment. Management anticipates first oil to occur
in 2020. No other details in terms of FPSO size or rate of production for this field have
been provided yet.

29 October 2013 13
Barclays | Petrobras (PBR/PBR.A)

FIGURE 5
Segment Earnings (in millions of R$, except EPS data)
3Q13A 3Q13E EPS variance 3Q12A y-o-y change 2Q13A q-o-q change
E&P
Brazil 11,613 12,819 (0.18) 10,808 7% 8,909 30%
International 308 637 (0.05) 902 (66)% 1,968 (84)%
Total E&P 11,921 13,456 (0.24) 11,710 2% 10,877 10%
R&M
R&T (5,527) (7,549) 0.31 (5,652) (2)% (2,516) 120%
Biofuels (96) (74) (0.00) (44) 118% (74) 30%
Distribution 312 500 (0.03) 413 (24)% 459 (32)%
Total R&M (5,311) (7,123) 0.28 (5,283) 1% (2,131) 149%
Gas & Energy (192) 700 (0.14) 345 (156)% 576 (133)%
Corporate Others (3,023) (1,617) (0.22) (1,205) 151% (3,121) (3)%
Net Income Attributable to PBR shareholder 3,395 5,416 (0.31) 5,567 (39)% 6,201 (45)%
Non-controlling interest 147 0 0.02 68 116% (522) (128)%
Net Income (reported) 3,542 5,416 (0.29) 5,635 (37)% 5,679 (38)%
ADRs outstanding (fully diluted) 6,522 6,522 0.00 6,522 0% 6,522 0%

EPS (Attributable to PBR shareholder) 0.52 0.83 (0.31) 0.85 (39)% 0.95 (45)%
Earnings/ADS, US$ 0.23 0.38 (0.16) 0.42 (46)% 0.46 (50)%

Earnings/ADS (Reported Basis), R$ 0.54 0.83 (0.29) 0.86 (37)% 0.87 (38)%
Earnings/ADS (Reported Basis), US$ 0.23 0.38 (0.16) 0.42 (46)% 0.46 (50)%

Source: Company Data, Barclays Research

FIGURE 6
Segment Earnings (in millions of US$, except EPS data)
3Q13A 3Q13E EPS variance 3Q12A y-o-y change 2Q13A q-o-q change
E&P
Brazil 5,074 5,604 (0.08) 5,331 (5)% 4,303 18%
International 133 207 (0.01) 445 (70)% 950 (86)%
Total E&P 5,207 5,811 (0.09) 5,776 (10)% 5,253 (1)%
R&M
R&T (2,414) (3,301) 0.14 (2,789) (13)% (1,215) 99%
Biofuels (42) (32) (0.00) (21) 100% (35) 20%
Distribution 137 219 (0.01) 204 (33)% 222 (38)%
Total R&M (2,319) (3,114) 0.12 (2,606) (11)% (1,028) 126%
Gas & Energy (85) 306 (0.06) 173 (149)% 280 (130)%
Corporate Others (1,319) (494) (0.13) (599) 120% (1,509) (13)%
Net Income Attributable to PBR shareholder 1,484 2,509 (0.16) 2,744 (46)% 2,996 (50)%
Non-controlling interest 64 0 0.01 34 88% (252) (125)%
Net Income (reported) 1,548 2,519 (0.15) 2,778 (44)% 2,744 (44)%
ADRs outstanding (fully diluted) 6,522 6,522 0.16 6,522 0% 6,522 0%

Earnings/ADS, US$ 0.23 0.38 (0.16) 0.42 (46)% 0.46 (50)%

Earnings/ADS (Reported Basis), R$ 0.54 0.83 (0.29) 0.86 (37)% 0.87 (38)%
Earnings/ADS (Reported Basis), US$ 0.23 0.38 (0.16) 0.42 (46)% 0.46 (50)%

Source: Company Data, Barclays Research

29 October 2013 14
Barclays | Petrobras (PBR/PBR.A)

Upstream Result
• Worldwide E&P unit profit was US$22.4/boe compared to our estimate of US$25.4/boe,
2Q13 level of US$22.6/boe, and 3Q12 level of US$24.9/boe. Petrobras ranks 3rd among
our group of 10 global major oil companies compared to a ranking of 1st in both 2Q13
and 3Q12. Excluding the US$243 million gain on asset sales, we estimate PBR would
have earned US$21.4/boe and rank 3rd.

• Excluding government take, Petrobras’ domestic cash lifting cost averaged

US$15.0/boe, compared to our estimate of US$16.5/boe. Including government take,
domestic cash lifting cost was US$33.3/boe compared to our estimate of US$34.1/boe.

• Brazil E&P earned US$5,074 million compared to our estimate of US$5,604 million.

• Brazil oil & gas production averaged 2,314 mboe/d (000s boe/d) compared with our
estimate of 2,308 mboe/d.

− 2013 Brazil Oil Production Guidance: Management hopes to achieve the low-end of
their previous estimate of +/- 2% vs. 2012 level or 1,940-2,020 mb/d.

− 2014 Brazil Oil Production Guidance: While not providing specifics, management
expects 2014 production will ramp up “significantly” relative to 2013 as a result of
some slight delays of upcoming FPSOs into 4Q13/1Q14.

− Management noted that its rolling 12 month decline rate was 9% compared to its
previous guidance of 10-11%.

• Brazil E&P unit DD&A averaged US$9.5/boe in the quarter compared to our estimate of
US$9.9/boe, the 2Q13 level of US$9.4/boe, and the 3Q12 level of US$7.6/boe.

• International oil & gas production averaged 208 mboe/d compared to our estimate of
211 mboe/d.

• Global oil & gas production averaged 2,522 mboe/d compared to our estimate of 2,519
mboe/d, down 1% sequentially and flat y-o-y.

29 October 2013 15
Barclays | Petrobras (PBR/PBR.A)

FIGURE 7
Upstream Operating Data
Variance vs
3Q13A 3Q13E forecast 3Q12A y-o-y change 2Q13A q-o-q change
Unit Profitability, $/boe
Brazil 23.8 26.7 (11)% 25.4 (6)% 20.4 17%
International 7.0 10.8 (36)% 20.0 (65)% 44.4 (84)%
Total 22.4 25.4 (11)% 24.9 (10)% 22.6 (1)%
Liquid Realization ($/b)
Brazil 98.9 102.6 (4)% 101.8 (3)% 94.2 5%
International 86.0 98.3 (13)% 90.4 (5)% 89.8 (4)%
Total 98.1 102.4 (4)% 101.0 (3)% 93.9 5%
Gas Realization ($/mcf)
Brazil 7.7 7.7 0% 8.0 (3)% 8.4 (8)%
International 3.1 3.3 (6)% 2.9 5% 3.6 (14)%
Total 6.8 6.8 0% 6.9 (2)% 7.5 (9)%
Total Realization, ($/boe)
Brazil 83.5 86.6 (4)% 86.3 (3)% 79.8 5%
International 49.3 53.8 (8)% 56.4 (13)% 56.8 (13)%
Total 80.7 83.9 (4)% 83.4 (3)% 77.7 4%
Liquids Production (mb/d)
Brazil 1,924 1,920 0% 1,904 1% 1,931 (0)%
International 116 112 3% 148 (22)% 145 (20)%
Total 2,040 2,032 0% 2,052 (1)% 2,076 (2)%
Gas Production (mmcf/d)
Brazil 2,340 2,328 1% 2,262 3% 2,334 0%
International 552 591 (7)% 564 (2)% 540 2%
Total 2,892 2,919 (1)% 2,826 2% 2,874 1%
Total Oil & Gas production 2,522 2,519 0% 2,523 (0)% 2,555 (1)%
Exploration Expenses ($ mms) 968 525 84% 638 52% 581 67%

Source: Company Data, Barclays Research

FIGURE 8
Upstream Earnings Comparison
3Q13A 2Q13A V% 3Q12A V%
NI NI NI
Production $/boe Rank Production $/boe Rank NI $/boe Production $/boe Rank NI $/boe
($ mms) ($ mms) ($ mms)
COP* $2,127 1,481 $15.6 9 $1,914 1,552 $13.6 7 11% 15% $1,911 1,525 $13.6 6 11% 15%
CVE C$444 248 $18.7 6 C$222 248 $9.6 10 99% 95% C$234 246 $10.4 9 89% 80%
CVX* $5,050 2,601 $21.1 4 $4,949 2,582 $21.1 2 2% 0% $4,540 2,516 $19.6 3 11% 8%
HES* $479 313 $16.7 8 $600 341 $19.3 3 -20% -14% $546 402 $14.8 5 -12% 13%
HSE C$430 308 $14.6 10 C$283 310 $9.8 9 52% 49% C$110 285 $4.2 10 290% 244%
IMO* C$646 268 $25.3 1 C$397 246 $17.3 4 63% 46% C$498 249 $21.8 2 30% 16%
MUR* $322 198 $17.7 7 $289 207 $15.3 6 11% 15% $219 182 $13.1 7 47% 35%
PBR/PBRA $5,207 2,522 $22.4 3 $5,253 2,555 $22.6 1 -1% -1% $5,776 2,523 $24.9 1 -10% -10%
SU* C$1,240 568 $22.8 2 C$595 507 $12.6 8 109% 82% C$620 539 $12.6 8 100% 82%
XOM* $6,935 3,966 $19.0 5 $6,305 4,074 $17.0 5 10% 12% $5,973 3,960 $16.4 4 16% 16%
Total $28,595 17,687 $17.6 $26,589 17,838 $16.4 8% 7% $29,110 18,582 $17.0 -2% 3%

* Denotes that 3Q13 values are Barclays Research estimates

Source: Company Data, Barclays Research

29 October 2013 16
Barclays | Petrobras (PBR/PBR.A)

Upstream Outlook
• 2013/2014 Activities

− Papa Terra (P-63): Papa Terra first production has been delayed from September
2013 to the first week of November 2013. The platform design capacity is 140 mb/d
of oil and 35 mmcf/d of natural gas at a working interest of 63%. The delay is
caused by change in design to avoid damaging the surrounding coral reef.

− Parque das Baleaias (P-58): Currently navigating to its site. First oil expected in 1H of
December, according to management. Production capacity is 180 mb/d of oil and
212 mmcf/d of natural gas at a working interest of 100%.

− Roncador Mod. II (P-55): Currently being anchored. The project is ready for first oil
now. This compares to a previous start-up date of late September 2013. Production
capacity is 180 mb/d of oil and 212 mmcf/d of natural gas at a working interest of
100%.

− Papa-Terra (P-61): Currently navigating to its site by the 1st week of November. We
assume first oil will remain at the end of December 2013. Production capacity is 140
mb/d of oil and 35 mmcf/d of natural gas at a working interest of 63%.

− Roncador Module IV (P-62): Platform will come out of the shipyard at the beginning
of November. First oil is expected in 1Q14 (management previously assumed start-
up of March 2014, which we maintain in our model). Production capacity is 180
mb/d of oil and 212 mmcf/d of natural gas at a working interest of 100%.

• We forecast total upstream net income at US$4,956 million in 4Q13 compared to

$5,207 million in 3Q13 and $5,292 million in 4Q12.

FIGURE 9
2013 Production – Oil & NGL in Brazil

Source: Petrobras

29 October 2013 17
Barclays | Petrobras (PBR/PBR.A)

FIGURE 10
Petrobras Project Backlog
Start-Up Peak Peak Production Working
Project/Field Year Year Oil, mb/d Gas, mmcf/d Gross, mboe/d Interest, %
2013-2017
Sapinhoa (Guara) Phase 1 (Piloto de Guara) - FPSO Cidade de São Paulo Brazil January 2013 2014 120 177 149 45
Bauna & Piracaba (Cidade de Itajai) Brazil February 2013 2014 80 71 92 100
Lula NE (Nordeste) Pilot Project (Tupi NE) (FPSO Cidade de Paraty) Brazil May 2013 2015 120 175 149 65
Lucius United States 2H14 2015 100 85 114 10
Roncador Module 3 (P-55) Brazil September 2013 2015 180 212 215 100
Papa-Terra Module 1 (P-61) Brazil December 2013 2015 140 35 149 63
Norte Parque das Baleias (P-58) Brazil December 2013 2014 180 212 215 100
Block 15/06 (Eastern Hub) - Cabaca Norte, Cabaca SW e Mpungi Angola 2013 2013 90 90 5
Lula NE Pilot (Cid. Paraty) Brazil 2013 2014 120 177 149 65
Pre-salt EWT (2013) Brazil 2013 60 60 100
Roncador Module 4 (P-62) Brazil March 2014 2016 180 212 215 100
Sapinhoa Norte (Cid. Ilhabela) Brazil September 2014 2016 150 212 185 45
Iracema Sul (Lula Project) (FPSO Cidade de Mangaratiba) Brazil November 2014 2016 150 283 197 65
Papa-Terra Module 1 (P-63) Brazil November 2014 2015 140 35 146 63
Cernambi (BM-S-11) Brazil 2014 2015 150 212 185 65
Parque das Baleias (FPSO P-58) Brazil 2014 2015 180 212 215 100
Pre-salt EWT (2014) Brazil 2014 100 100 100
Jack/St. Malo United States 2014 2015 70 145 94 13
Guaiama Brazil 2015 2016 100 100 100
Iracema Norte (FPSO Cid. Itaguai) Brazil 2015 2016 150 283 197 65
Pre-salt EWT (2015) Brazil 2015 100 100 100
Replicant 1 (P-66, BMS-9 or 11 Block) Brazil 2015 2016 150 150 100
Replicant 2 (P-67, BMS-9 or 11 Block) Brazil 2015 2016 150 150 100
Franco 1 (P-74) Brazil 2016 2017 150 75 163 100
Franco SW (P-75) Brazil 2016 2017 150 75 163 100
Lula Alto Brazil 2016 2017 150 212 185 65
Lula Central Brazil 2016 2017 150 212 185 65
Lula Norte (FPSO-67) Brazil 2016 2017 150 212 185 65
Lula Sul (FPSO-66) Brazil 2016 2017 100 177 129 65
Franco NW (P-77) Brazil 2017 2018 150 75 163 100
Franco Sul (P-76) Brazil 2017 2018 150 75 163 100
Iara Horst (P-70) Brazil 2017 2018 150 212 185 65
Lula Oeste (FPSO-69) Brazil 2017 2018 150 212 185 65
Lula Sul Ext. (FPSO-68) Brazil 2017 2018 50 35 56 65
Egina Nigeria 2017 2018 150 150 16
Stones Phase 1 United States 2017 50 50 25
Subtotal 4,660 4,307 5,381

Post 2017
Iara NW (P-71) Brazil 2018 2019 150 212 185 65
Maromba (FPSO) Brazil 2018 2020 100 100 70
Franco Leste Brazil 2019 2020 150 75 163 100
Libra Field Brazil 2020
Subtotal 400 287 448
Total 5,060 4,594 5,829
Source: Company Data, Barclays Research

29 October 2013 18
Barclays | Petrobras (PBR/PBR.A)

Downstream Result & Outlook

• Worldwide R&M (including distribution) reported a unit loss of US$11.3 per barrel of
throughput compared to unit losses of US$4.9/bl and US$13.2/bl in 2Q13 and 3Q12,
respectively. We estimate that Petrobras ranks 8th among our group of 8 global
integrated oil companies compared to a ranking of 8th in both 2Q13 and 3Q12.

• Brazil refining lost US$2,414 million compared to our estimate of US$3,301 million.
Based on 3Q13 reported result and market environment, to reach breakeven level,
Petrobras local gasoline and diesel price would need to increase by US$24.9/bl from the
3Q13 level.

− According to management, the differential between domestic price and international

price of refined products increased during the quarter as a result of the depreciation
of the Brazilian real against the U.S. dollar and higher international prices of oil
products. In addition, losses were further hurt by record diesel demand levels which
were partially met by domestic production with the remaining portion met by
imports.

− 3Q13 refining utilization was 96%. Imports of oil product averaged 382 mb/d in
3Q13 compared to 436 mb/d in 2Q13 and 364 mb/d in 3Q12.

• Petrobras will be 100% owner of the Abreu e Lima refinery (RNEST). Originally,
Venezuela’s PDVSA was supposed to be a partner, but failed to provide financing.
Management says that this does not change the project status or capabilities of the two
refineries.

• Brazil refining throughput averaged 2,072 mb/d compared to our estimate of 2,025
mb/d, 2Q13 level of 2,102 mb/d and 3Q12 level of 1,974 mb/d.

• We forecast total downstream (including distribution and biofuel) net loss at US$1,524
million in 4Q13 compared to a loss of US$2,319 million in 3Q13 and US$2,491 million in
4Q12.

FIGURE 11
Downstream Operating Data
Operating data
Variance vs
3Q13A 3Q13E forecast 3Q12A y-o-y change 2Q13A q-o-q change
Refining Throughput (mb/d)
Brazil 2,072 2,025 2% 1,974 5% 2,102 (1)%
International 149 195 (24)% 170 (12)% 181 (18)%
Total 2,221 2,220 0% 2,144 4% 2,283 (3)%
R&M profit per bl of throughput, $/bl (11.3) (15.3) (26)% (13.2) (14)% (4.9) 129%

Product Sales Volume (mb/d)

Diesel 1,031 1,043 (1)% 984 5% 978 5%
Gasoline 587 609 (4)% 569 3% 583 1%
Fuel Oil 71 104 (32)% 78 (9)% 103 (31)%
Naphtha 172 177 (3)% 169 2% 170 1%
LPG 243 234 4% 232 5% 233 4%
Jet Fuel 108 107 1% 106 2% 104 4%
Other 305 303 1% 297 3% 284 7%
Natural Gas, mmcf/d 2,352 2,514 (6)% 2,046 15% 2,610 (10)%
Total Domestic Market (mb/d) 2,909 2,997 (3)% 2,776 5% 2,890 1%
Exports 402 411 (2)% 563 (29)% 361 11%
International 505 540 (6)% 548 (8)% 501 1%
Total International (mb/d) 907 951 (5)% 1,111 (18)% 862 5%
Total Products (mb/d) 3,816 3,947 (3)% 3,887 (2)% 3,752 2%

Source: Company Data, Barclays Research

29 October 2013 19
Barclays | Petrobras (PBR/PBR.A)

FIGURE 12
Majors Downstream Earnings Comparison
3Q13A 2Q13A V% 3Q12A V%
NI NI NI
Throughput $/bl Rank Throughput $/bl Rank NI $/bl Throughput $/bl Rank NI $/bl
($ mms) ($ mms) ($ mms)
Oil Majors**
CVE C$83 232 $3.7 2 C$186 123 $16.3 1 -56% -77% C$343 123 $30.7 1 -76% -88%
CVX* $183 1,744 $1.1 6 $532 1,686 $3.5 5 -66% -67% $233 1,688 $1.5 7 -22% -24%
HSE C$65 208 $3.3 3 C$207 218 $10.2 3 -69% -68% C$298 207 $15.8 3 -78% -79%
IMO* $109 440 $2.6 4 $167 435 $4.1 4 -35% -37% $536 449 $13.1 4 -80% -80%
MUR* ($17) 138 ($1.3) 7 ($6) 133 ($0.5) 7 -194% -181% $25 138 $2.0 6 -166% -166%
PBR/PBRA ($2,319) 2,221 ($11.3) 8 ($1,028) 2,283 ($4.9) 8 -126% -129% ($2,606) 2,144 ($13.2) 8 11% 14%
SU* C$226 426 $5.5 1 C$432 415 $11.2 2 -48% -50% C$708 442 $17.5 2 -68% -68%
XOM* $842 4,860 $1.9 5 $396 4,466 $1.0 6 113% 93% $3,190 4,929 $7.0 5 -74% -73%
Majors Subtotal $2,603 15,639 $1.8 $2,335 14,380 $1.8 11% 1% $6,190 15,489 $4.3 -58% -58%

** Downstream earnings for the Majors includes refining and marketing operations
* Denotes that 3Q13 values are Barclays Research estimates

Source: Company Data, Barclays Research

FIGURE 13
Domestic and International Price Comparison

Source: Petrobras
* Considers Diesel, Gasoline, LPG, Jet Fuel, and Fuel Oil
** USGC price with domestic market prices.

29 October 2013 20
Barclays | Petrobras (PBR/PBR.A)

Other Segments
• Gas & Energy: Gas and energy reported a loss of US$85 million compared to our
estimate of positive earnings of US$306 million, contributing a negative variance of
US$0.06/ADS versus our forecast.

− We forecast gas & energy net income at US$185 million in 4Q13 compared to
negative earnings of US$85 million in 3Q13 and positive earnings of US243 million in
4Q12.

• Distribution: Distribution earned US$137 million compared to our estimate of US$219

million, contributing a negative variance of US$0.01/ADS.

− We forecast distribution net income at US$208 million in 4Q13 compared to US$137

million in 3Q13 and US$264 million in 4Q12.

• Corporate & Others: Corporate & others reported a charge of US$1,319 million
compared to our estimate of a US$494 million charge, contributing a negative variance
of US$0.13/ADS, respectively.

− We forecast corporate & others at US$471 million loss in 4Q13 compared to a

charge of US$1,319 million in 3Q13 and a gain of US$719 million in 4Q12.

• Balance Sheet: The chart below shows Petrobras’ key balance sheet items.

FIGURE 14
Petrobras Key Balance Sheet Items
(USD millions) Variance Variance
3Q13 2Q13 V$ V$/share 3Q12 V$ V$/share
Cash & Gov't Securities 25,955 32,840 (6,885) (1.1) 25,913 42 0.0
Total Debt 112,497 112,403 94 0.0 91,873 20,624 3.2
Net Debt 86,542 79,563 6,979 1.1 65,960 20,582 3.2

Equity 153,857 153,468 389 0.1 169,726 (15,869) (2.4)

Debt/Capital 42% 42% 0% 35% 7%

Net Debt/Net Capital 36% 34% 2% 28% 8%

Source: Company Data, Barclays Research

29 October 2013 21
Barclays | Petrobras (PBR/PBR.A)

Forecasts
The tables below show our forecasts in detail.

FIGURE 15
Global Macro Assumptions
2002-2012
2010 2011 2012 2013E 2014E 2015E 2016E 2017E Average
Petroleum Prices:
WTI Midland Average Spot Price ($/b) $79.08 $94.82 $90.16 $97.53 $97.62 $88.25 $88.50 $92.00 $65.50
Brent Average Spot Price ($/b) $79.43 $111.56 $111.61 $108.16 $105.00 $100.00 $100.00 $100.00 $67.83
U.S. Natural Gas Spot Price ($/Mcf) 4.43 4.05 2.79 3.72 3.77 3.93 4.08 4.34 $5.47

Cash Refining Margins ($/b):

Merchant Refining Centers
U.S. Gulf Coast LLS 6-3-2-1 $2.13 $3.29 $6.65 $5.39 $5.89 $5.39 $5.64 $5.89 $3.88
U.S. Gulf WTI 3-2-1 $10.16 $26.67 $36.09 $24.56 $18.48 $22.02 $21.90 $18.65 $13.74
N.W. Europe (Medium) $2.25 $2.16 $4.51 $2.25 $2.84 $2.39 $2.61 $2.67 $2.41
Singapore (Medium) $4.93 $8.49 $8.39 $6.85 $7.43 $6.98 $7.20 $7.26 $5.84
Niche Refining Markets
U.S. East Coast $4.02 $4.83 $8.20 $5.61 $5.91 $5.16 $5.41 $5.66 $4.53
U.S. Mid-Continent $7.00 $23.16 $29.90 $21.19 $16.54 $20.16 $20.16 $16.91 $11.60
U.S. Rocky Mountain $11.92 $26.33 $35.18 $23.22 $23.86 $26.13 $26.33 $24.57 NA
U.S. Midwest $12.13 $22.25 $30.35 $27.36 $23.17 $24.84 $25.06 $23.87 $15.07
U.S. West Coast $7.34 $6.25 $9.72 $8.56 $9.97 $10.27 $10.99 $11.55 $11.46
U.S. Pacific NW $11.76 $12.79 $15.75 $14.21 $14.97 $15.27 $15.99 $16.55 $13.29
Japan $3.75 $4.61 $4.76 $3.89 $4.40 $3.95 $4.17 $4.23 $4.24

Integrated Marketing Margins ($/gallon):

PADD I $0.337 $0.374 $0.346 $0.366 $0.339 $0.353 $0.352 $0.352 $0.338
PADD II $0.285 $0.304 $0.311 $0.295 $0.304 $0.296 $0.293 $0.307 $0.263
PADD III $0.254 $0.270 $0.259 $0.285 $0.280 $0.285 $0.286 $0.291 $0.266
PADD IV $0.267 $0.247 $0.292 $0.296 $0.316 $0.319 $0.319 $0.327 $0.289
PADD V (excluding California) $0.272 $0.257 $0.309 $0.254 $0.270 $0.277 $0.276 $0.279 $0.256
California $0.405 $0.452 $0.549 $0.514 $0.499 $0.511 $0.509 $0.508 $0.362

Crude Oil Differentials ($/b):

Brent/LLS ($3.29) ($1.13) ($0.24) $0.40 $2.75 $3.00 $3.00 $3.00 ($2.56)
Brent/ANS ($0.37) $1.26 $0.45 $0.67 $2.46 $3.34 $4.34 $4.34 $0.04
LLS/Maya $12.45 $13.70 $12.17 $9.76 $11.36 $11.95 $11.89 $11.52 $12.42
LLS/Mars $4.79 $4.69 $4.77 $5.11 $5.80 $6.04 $6.01 $5.86 $5.78
WTI Cushing/WTI Midland $0.31 $0.45 $3.98 $1.23 $0.25 $0.25 $0.25 $0.25 $0.44
WTI Midland/Brent ($0.35) ($16.74) ($21.46) ($10.63) ($7.38) ($11.75) ($11.50) ($8.00) ($2.33)
WTI Midland/Bakken NA ($3.01) $1.88 $3.93 $9.90 $6.70 $6.70 $10.70 NA
WTI Midland/LLS ($3.64) ($17.87) ($21.70) ($10.23) ($4.63) ($8.75) ($8.50) ($5.00) ($4.89)
WTI Midland/Syncrude $0.90 ($9.21) ($2.13) ($2.03) ($1.15) ($1.15) ($1.15) $1.85 NA
WTI Midland/WCS $14.57 $16.24 $18.62 $21.56 $18.94 $19.16 $19.35 $19.98 NA
WTI Midland/WTS $1.88 $1.51 $1.51 $1.09 $1.15 $1.15 $1.15 $1.15 $3.00

RINs ($/gallon):
Ethanol RIN NA NA $0.05 $0.61 $0.30 $0.30 $0.30 $0.30 NA

Source: Bloomberg, Platts, Barclays Research

29 October 2013 22
Barclays | Petrobras (PBR/PBR.A)

FIGURE 16
Operating Data
CAGR
2010 2011 2012 2013E 2014E 2015E 2016E 2017E
2012-17E
Net Liquids Production (mb/d) :
Brazil 2,004 2,022 1,980 1,950 2,186 2,385 2,354 2,586 5.5%
Other 151 148 145 131 119 135 137 139 (0.8)%
Total Net Liquids Production 2,155 2,170 2,125 2,081 2,305 2,520 2,491 2,725 5.1%
Natural Gas Production (mmcf/d):
Brazil 2,003 2,127 2,252 2,363 2,489 2,648 2,707 2,814 4.6%
Other 566 582 582 551 540 508 477 452 (4.9)%
Total Natural Gas Production 2,569 2,709 2,834 2,915 3,029 3,156 3,184 3,266 2.9%
Worldwide Oil Equivalent Production (mboe/d) 2,583 2,622 2,597 2,567 2,810 3,046 3,021 3,269 4.7%
Price Per Unit of Sales
Crude and Other Liquids ($/bbl)
Brazil $74.66 $102.24 $104.60 $98.48 $96.09 $92.30 $92.05 $92.14 (2.5)%
Others $66.42 $91.37 $94.37 $88.49 $80.19 $81.60 $81.30 $81.17 (3.0)%
Total Worldwide $74.08 $101.50 $103.90 $97.85 $95.27 $91.73 $91.46 $91.58 (2.5)%
Natural Gas ($/mcf)
Brazil $2.60 $9.43 $8.08 $8.05 $8.45 $8.62 $8.79 $8.97 2.1%
Others $2.36 $4.02 $3.00 $3.43 $3.35 $3.42 $3.48 $3.55 3.5%
Total Worldwide $2.51 $7.63 $6.45 $6.67 $7.01 $7.27 $7.50 $7.74 3.7%
Petroleum Product Sales (mb/d)
Wholesalers 479 475 470 465 460 456 451 447 (1.0)%
Retail Distributors 2,112 2,176 2,241 2,308 2,377 2,449 2,522 0 NM
Total Product Sales 2,592 2,650 2,711 2,773 2,838 2,904 2,973 447 (30.3)%
Total Refinery Throughput (mb/d) 1,806 1,845 1,944 2,089 2,100 2,225 2,314 2,314 3.5%

Source: Company Data, Barclays Research

FIGURE 17
Segment Operating Earnings (Dollars and share count in millions, except per share data)
CAGR
2010 2011 2012 2013E 2014E 2015E 2016E 2017E
2012-17E
Exploration and Production
Brazil $16,351 $24,314 $23,406 $19,070 $17,845 $17,544 $17,576 $19,884 (3.2)%
International 799 1,191 719 1,703 1,005 1,162 1,162 1,150 9.9%
Exploration and Production $17,150 $25,505 $24,125 $20,773 $18,850 $18,705 $18,738 $21,033 (2.7)%
Refining and Marketing
Refining and Wholesale $1,539 ($5,803) ($11,718) ($7,448) ($5,058) $1,215 $2,454 $2,058 NM
Distribution & Biofuel 727 776 802 781 632 669 632 669 (3.6)%
Subtotal Refining and Marketing $2,266 ($5,027) ($10,916) ($6,667) ($4,426) $1,884 $3,086 $2,727 NM
Gas and Energy and others $734 $1,864 $861 $821 $740 $777 $816 $857 ($0)
Corporate (966) (2,234) (3,036) (3,445) (3,389) (3,908) (4,250) (4,577) 8.6%
Net Income (Operating Basis) $19,184 $20,108 $11,034 $11,482 $11,775 $17,458 $18,390 $20,040 12.7%
Special Items -- -- -- -- -- -- -- -- NM
Net Income (Reported Basis) $19,184 $20,108 $11,034 $11,482 $11,775 $17,458 $18,390 $20,040 12.7%

EPS Calculation
Preferred Dividend $0 $0 $0 $0 $0 $0 $0 $0 NM
Avg. Shares -- Fully Diluted 4,936 6,522 6,522 6,522 6,522 6,522 6,522 6,522 Unch
Earnings Per Share (Operating Basis) $3.88 $3.09 $1.69 $1.75 $1.80 $2.70 $2.80 $3.05 12.5%

Memo :
EBITDA (Operating Basis) $34,703 $43,582 $29,993 $30,506 $33,402 $43,965 $45,736 $46,021 8.9%
EBITDA/Share (Operating Basis) $7.03 $6.70 $4.60 $4.70 $5.10 $6.75 $7.00 $7.05 8.9%
Aftertax CF (Operating Basis) $28,186 $32,306 $23,237 $24,748 $27,665 $35,507 $36,928 $36,500 9.5%
Aftertax CF/Share (Operating Basis) $5.71 $4.95 $3.55 $3.80 $4.25 $5.45 $5.65 $5.60 9.5%
P/E 9.7 8.0 9.6 9.9 9.6 6.4 6.2 5.7
EV/EBITDA 8.3 5.1 6.4 7.1 6.9 5.4 5.4 5.5
EV/After-tax CF + Deferred Taxes 7.5 6.2 7.5 7.4 7.2 6.0 6.0 6.4

Source: Company Data, Barclays Research

29 October 2013 23
Barclays | Petrobras (PBR/PBR.A)

FIGURE 18
Cash Flow Statement (Dollars in millions)
CAGR
2010 2011 2012 2013E 2014E 2015E 2016E 2017E
2012-17E
Operating Activities
Net Income $19,184 $20,108 $11,034 $11,482 $11,775 $17,458 $18,390 $20,040 12.7%
Depreciation,Depletion and Amortization 8,507 10,535 11,119 13,077 16,530 19,088 19,831 18,017 10.1%
Deferred Income Tax Provision 2,960 3,599 2,254 4,246 4,549 4,497 3,790 3,097 6.6%
Translation Loss, Foreign Exchange and Monetary Los (401) 3,799 4,308 942 0 0 0 0 NM
Changes in Working Capital (4,178) (7,060) (6,546) (4,369) 0 0 0 0 NM
Petroleum and Alcohol Account 0 0 0 0 0 0 0 0 NM
Other 2,423 2,717 5,719 2,267 2,267 2,267 2,267 2,267 (16.9)%
Net Cash Flow From Operating Activities $28,495 $33,698 $27,888 $27,646 $35,121 $43,310 $44,277 $43,421 9.3%
Investing Activities
Capital and Exploratory Expenditures ($45,078) ($41,302) ($40,430) ($46,834) ($46,466) ($46,466) ($46,466) ($46,466) 2.8%
Others, Net 0 6,683 2,051 11,842 0 0 0 0 NM
Net Cash Flow From Investing Activities ($63,020) ($34,619) ($38,379) ($34,992) ($46,466) ($46,466) ($46,466) ($46,466) 3.9%
Financing Activities
Net Borrowings of Short-Term Obligations $460 $0 $0 $0 $0 $0 $0 $0 NM
Proceeds From Issuance of Long-Term Debt 20,189 23,951 25,205 33,907 18,000 14,000 20,000 20,000 (4.5)%
Repayment of Long-Term Debt (9,898) (8,750) (11,347) (15,699) (4,326) (6,464) (13,191) (13,191) 3.1%
Project Financings 0 0 0 (149) (149) (149) (149) (149) NM
Payment of lease Obligations 0 0 0 (32) (32) (32) (32) (32) NM
Cash Dividend Paid To stockholders (5,299) (6,422) (3,272) (3,789) (3,768) (4,714) (4,782) (5,010) 8.9%
Cash Dividend Paid To Minority Interests 0 0 0 0 0 0 0 0 NM
Equity Offering 30,284 0 0 0 0 0 0 0 NM
Others, Net (350) (6,434) (4,517) (5,449) 0 0 0 0 NM
Net Cash Flow From Financing Activities $35,386 $2,345 $6,069 $8,789 $9,725 $2,641 $1,846 $1,618 (23.2)%
Effect of Exchange Rate Changes on Cash and Cash E $603 $0 ($1,115) ($1,165) $0 $0 $0 $0 NM
Change in Cash and Cash Equivalents $1,464 $1,424 ($5,537) $278 ($1,620) ($515) ($342) ($1,427) (23.8)%
Cash and Cash Equivalents NM
At Beginning of Year $16,169 $17,633 $19,057 $13,520 $13,798 $12,177 $11,662 $11,320 (9.9)%
At End of Year 17,633 19,057 13,520 13,798 12,177 11,662 11,320 9,893 (6.1)%
Memo: Marketable Securities 15,612 8,961 10,431 0 0 0 0 0

Source: Company Data, Barclays Research

FIGURE 19
Capital Structure (Dollars in millions)
CAGR
2010 2011 2012 2013E 2014E 2015E 2016E 2017E
2012-17E
Capital Structure
Short-Term Debt $9,065 $10,111 $7,497 $7,497 $7,497 $7,497 $7,497 $7,497 Unch
Long-Term Debt 60,588 72,816 88,570 106,597 120,090 127,445 134,073 140,701 9.7%
Shareholders' Equity 181,494 177,110 169,039 176,732 184,739 197,484 211,092 226,122 6.0%
Total Capital $251,147 $260,037 $265,106 $290,826 $312,326 $332,426 $352,662 $374,320 7.1%
Total Debt As a Percentage of Total Capital 28% 32% 36% 39% 41% 41% 40% 40%
Memo :
Return on Average Total Equity 13.9% 11.2% 6.4% 6.6% 6.5% 9.1% 9.0% 9.2%
Return on Average Total Invested Capital 10.1% 8.2% 4.7% 4.8% 4.7% 6.2% 6.2% 6.4%
Return on Average Market Capitalization 7.2% 7.7% 5.5% 6.1% 6.0% 8.2% 8.4% 8.9%

Source: Company Data, Barclays Research

29 October 2013 24
Barclays | Petrobras (PBR/PBR.A)

Valuation Methodology and Risks

Americas Integrated Oil

Petroleo Brasileiro S.A. (PBR)

Valuation Methodology: Our 12-month price target is based on a 30% discount to our NAV analysis using our long-term oil price assumption of
$100/bl Brent.
Risks which May Impede the Achievement of the Barclays Research Price Target: Petrobras is a market oriented company, therefore impacted
by political news flow and potential changes in management in every election cycle. Negative news flow on development delays or production
target misses might bring volatility to the stock. High international oil prices combined with domestic inflationary pressure could potentially
delay the pass-through of oil prices in Brazil (which is indirectly controlled by the government), bringing short-term volatility on the back of
political news flow. Petrobras could potentially participate / operate assets that are less economic under the upcoming "sharing production"
model for further pre-salt E&P/new ANP rounds, as the company would necessarily be the operator for such assets with at least a 30% stake
(under economics not necessarily decided by Petrobras). Further capex plan announcements by Petrobras could potentially bring volatility to its
share price.
Petroleo Brasileiro S.A. (PBR/A / PBRA)
Valuation Methodology: Our 12-month price target is based on a 30% discount to our NAV analysis using our long-term oil price assumption of
$100/bl Brent. Given the change in the dividend structure where preferreds will now pay more than the common shares, we assume PBR.A will
trade at a $1/ADS premium to PBR.
Risks which May Impede the Achievement of the Barclays Research Price Target: Petrobras is a market oriented company, therefore impacted
by political news flow and potential changes in management in every election cycle. Negative news flow on development delays or production
target misses might bring volatility to the stock. High international oil prices combined with domestic inflationary pressure could potentially
delay the pass-through of oil prices in Brazil (which is indirectly controlled by the government), bringing short-term volatility on the back of
political news flow. Petrobras could potentially participate / operate assets that are less economic under the upcoming "sharing production"
model for further pre-salt E&P/new ANP rounds, as the company would necessarily be the operator for such assets with at least a 30% stake
(under economics not necessarily decided by Petrobras). Further capex plan announcements by Petrobras could potentially bring volatility to its
share price.
Source: Barclays Research.

29 October 2013 25
Barclays | Petrobras (PBR/PBR.A)

ANALYST(S) CERTIFICATION(S):
I, Paul Y. Cheng, CFA, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of
the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly
related to the specific recommendations or views expressed in this research report.
The POINT® Quantitative Equity Scores (POINT Scores) referenced herein are produced by the firm’s POINT quantitative model and Barclays
hereby certifies that (1) the views expressed in this research report accurately reflect the firm's POINT Scores model and (2) no part of the firm's
compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.

IMPORTANT DISCLOSURES CONTINUED

Barclays Research is a part of the Corporate and Investment Banking division of Barclays Bank PLC and its affiliates (collectively and each
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The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total
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The Corporate and Investment Banking division of Barclays produces a variety of research products including, but not limited to, fundamental
analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ
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otherwise.
Primary Stocks (Ticker, Date, Price)
Petroleo Brasileiro S.A. (PBR, 28-Oct-2013, USD 17.35), Equal Weight/Positive, C/D/J/K/L/M
Petroleo Brasileiro S.A. (PBRA, 28-Oct-2013, USD 18.24), Equal Weight/Positive, C/D/J/K/L/M
Materially Mentioned Stocks (Ticker, Date, Price)
ConocoPhillips (COP, 28-Oct-2013, USD 73.89), Overweight/Positive, A/C/D/J/K/L/M/N
Husky Energy, Inc. (HSE.TO, 28-Oct-2013, CAD 29.52), Overweight/Positive, D/J/K/L/M
Suncor Energy (SU.TO, 28-Oct-2013, CAD 37.46), Overweight/Positive, C/D/J/K/L/M/O

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to the research report's issuance.
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and/or an affiliate.
N: This issuer is, or during the past 12 months has been, a non-investment banking client (non-securities related services) of Barclays Bank PLC

29 October 2013 26
Barclays | Petrobras (PBR/PBR.A)

IMPORTANT DISCLOSURES CONTINUED

and/or an affiliate.
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Our coverage analysts use a relative rating system in which they rate stocks as Overweight, Equal Weight or Underweight (see definitions below)
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should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone.
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Overweight - The stock is expected to outperform the unweighted expected total return of the industry coverage universe over a 12-month
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Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the industry coverage universe over a 12-
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Industry View
Positive - industry coverage universe fundamentals/valuations are improving.
Neutral - industry coverage universe fundamentals/valuations are steady, neither improving nor deteriorating.
Negative - industry coverage universe fundamentals/valuations are deteriorating.
Below is the list of companies that constitute the "industry coverage universe":

Americas Integrated Oil

Cenovus Energy Inc. (CVE.TO) Chevron Corporation (CVX) ConocoPhillips (COP)
Exxon Mobil Corp. (XOM) Hess Corp. (HES) Husky Energy, Inc. (HSE.TO)
Imperial Oil Ltd. (IMO.TO) Murphy Oil (MUR) Petroleo Brasileiro S.A. (PBR)
Petroleo Brasileiro S.A. (PBRA) Suncor Energy (SU.TO)

Distribution of Ratings:
Barclays Equity Research has 2475 companies under coverage.
44% have been assigned an Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 50% of
companies with this rating are investment banking clients of the Firm.
39% have been assigned an Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 45% of
companies with this rating are investment banking clients of the Firm.
14% have been assigned an Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 40% of
companies with this rating are investment banking clients of the Firm.
Guide to the Barclays Research Price Target:
Each analyst has a single price target on the stocks that they cover. The price target represents that analyst's expectation of where the stock will
trade in the next 12 months. Upside/downside scenarios, where provided, represent potential upside/potential downside to each analyst's price
target over the same 12-month period.
Guide to the POINT® Quantitative Equity Scores:

29 October 2013 27
Barclays | Petrobras (PBR/PBR.A)

IMPORTANT DISCLOSURES CONTINUED

The POINT Quantitative Equity Scores (POINT Scores) are based on consensus historical data and are independent of the Barclays fundamental
analysts’ views. Each score is composed of a number of standard industry metrics.
A high/low Value score indicates attractive/unattractive valuation. Measures of value include P/E, EV/EBITDA and Free Cash Flow.
A high/low Quality score indicates financial statement strength/weakness. Measures of quality include ROIC and corporate default probability.
A high/low Sentiment score indicates bullish/bearish market sentiment. Measures of sentiment include price momentum and earnings revisions.
These scores are valid as of the date of this report. To view the latest scores, which are updated monthly, click here.
For a more detailed description of the underlying methodology for each score, please click here.
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Tokyo
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Barclays Bank PLC, Singapore branch (Barclays Bank, Singapore)

29 October 2013 28
Barclays | Petrobras (PBR/PBR.A)

IMPORTANT DISCLOSURES CONTINUED

Petroleo Brasileiro S.A. (PBR) Stock Rating Industry View
USD 17.35 (28-Oct-2013) EQUAL WEIGHT POSITIVE
Rating and Price Target Chart - USD (as of 28-Oct-2013) Currency=USD

Date Closing Price Rating Price Target

55 09-Jan-2013 19.65 20.00

31-Oct-2012 21.21 31.00
50
17-Feb-2012 29.32 Equal Weight 33.00
45
19-Sep-2011 25.99 38.00
40 18-Aug-2011 27.65 43.00
17-May-2011 34.27 Overweight 53.00
35
07-Apr-2011 40.47 49.00
30
02-Mar-2011 40.88 41.00
25 10-Feb-2011 36.04 40.00

20
10-Jan-2011 36.12 37.00
15-Dec-2010 33.33 33.00
15

10

Jan- 2011 Jul- 2011 Jan- 2012 Jul- 2012 Jan- 2013 Jul- 2013

Closing Price Target Price Rating Change

Link to Barclays Live for interactive charting

C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Petroleo Brasileiro S.A. or one of its
affiliates.
D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Petroleo Brasileiro S.A. in the past 12
months.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Petroleo Brasileiro S.A..
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Petroleo Brasileiro S.A. within the past
12 months.
L: Petroleo Brasileiro S.A. is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.
M: Petroleo Brasileiro S.A. is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays
Bank PLC and/or an affiliate.
Valuation Methodology: Our 12-month price target is based on a 30% discount to our NAV analysis using our long-term oil price assumption of
$100/bl Brent.
Risks which May Impede the Achievement of the Barclays Research Price Target: Petrobras is a market oriented company, therefore impacted
by political news flow and potential changes in management in every election cycle. Negative news flow on development delays or production
target misses might bring volatility to the stock. High international oil prices combined with domestic inflationary pressure could potentially delay
the pass-through of oil prices in Brazil (which is indirectly controlled by the government), bringing short-term volatility on the back of political
news flow. Petrobras could potentially participate / operate assets that are less economic under the upcoming "sharing production" model for
further pre-salt E&P/new ANP rounds, as the company would necessarily be the operator for such assets with at least a 30% stake (under
economics not necessarily decided by Petrobras). Further capex plan announcements by Petrobras could potentially bring volatility to its share
price.

29 October 2013 29
Barclays | Petrobras (PBR/PBR.A)

IMPORTANT DISCLOSURES CONTINUED

Petroleo Brasileiro S.A. (PBR/A / PBRA) Stock Rating Industry View
USD 18.24 (28-Oct-2013) EQUAL WEIGHT POSITIVE
Rating and Price Target Chart - USD (as of 28-Oct-2013) Currency=USD

Date Closing Price Rating Price Target

50 30-Apr-2013 19.97 21.00
09-Jan-2013 19.33 19.00
45
31-Oct-2012 20.53 30.00
40 17-Feb-2012 27.98 Equal Weight 32.00
19-Sep-2011 23.75 37.00
35
18-Aug-2011 25.43 42.00
30 17-May-2011 30.56 46.00
07-Apr-2011 35.80 48.00
25
02-Mar-2011 35.58 40.00
20 10-Feb-2011 32.13 Overweight 39.00
10-Jan-2011 32.44 36.00
15
15-Dec-2010 30.26 32.00
10

Jan- 2011 Jul- 2011 Jan- 2012 Jul- 2012 Jan- 2013 Jul- 2013

Closing Price Target Price Rating Change

Link to Barclays Live for interactive charting

C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Petroleo Brasileiro S.A. or one of its
affiliates.
D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Petroleo Brasileiro S.A. in the past 12
months.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Petroleo Brasileiro S.A..
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Petroleo Brasileiro S.A. within the past
12 months.
L: Petroleo Brasileiro S.A. is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.
M: Petroleo Brasileiro S.A. is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays
Bank PLC and/or an affiliate.
Valuation Methodology: Our 12-month price target is based on a 30% discount to our NAV analysis using our long-term oil price assumption of
$100/bl Brent. Given the change in the dividend structure where preferreds will now pay more than the common shares, we assume PBR.A will
trade at a $1/ADS premium to PBR.
Risks which May Impede the Achievement of the Barclays Research Price Target: Petrobras is a market oriented company, therefore impacted
by political news flow and potential changes in management in every election cycle. Negative news flow on development delays or production
target misses might bring volatility to the stock. High international oil prices combined with domestic inflationary pressure could potentially delay
the pass-through of oil prices in Brazil (which is indirectly controlled by the government), bringing short-term volatility on the back of political
news flow. Petrobras could potentially participate / operate assets that are less economic under the upcoming "sharing production" model for
further pre-salt E&P/new ANP rounds, as the company would necessarily be the operator for such assets with at least a 30% stake (under
economics not necessarily decided by Petrobras). Further capex plan announcements by Petrobras could potentially bring volatility to its share
price.

29 October 2013 30
Barclays | Petrobras (PBR/PBR.A)

IMPORTANT DISCLOSURES CONTINUED

ConocoPhillips (COP) Stock Rating Industry View
USD 73.89 (28-Oct-2013) OVERWEIGHT POSITIVE
Rating and Price Target Chart - USD (as of 28-Oct-2013) Currency=USD

Date Closing Price Rating Price Target

85 02-Aug-2013 67.23 83.00

80
05-Jun-2013 61.62 Overweight 80.00
26-Apr-2013 58.91 67.00
75
07-May-2012 53.35 62.00
70 24-Apr-2012 54.80 61.75
28-Apr-2011 59.04 64.80
65
07-Apr-2011 61.29 67.08
60 24-Mar-2011 60.76 62.51
18-Feb-2011 58.41 59.46
55
10-Jan-2011 50.98 57.17
50

45

40
Jan- 2011 Jul- 2011 Jan- 2012 Jul- 2012 Jan- 2013 Jul- 2013

Closing Price Target Price Rating Change

Link to Barclays Live for interactive charting

A: Barclays Bank PLC and/or an affiliate has been lead manager or co-lead manager of a publicly disclosed offer of securities of ConocoPhillips in
the previous 12 months.
C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by ConocoPhillips or one of its affiliates.
D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from ConocoPhillips in the past 12 months.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of ConocoPhillips.
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from ConocoPhillips within the past 12
months.
L: ConocoPhillips is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.
M: ConocoPhillips is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC
and/or an affiliate.
N: ConocoPhillips is, or during the past 12 months has been, a non-investment banking client (non-securities related services) of Barclays Bank
PLC and/or an affiliate.
Valuation Methodology: Our 12-month price target implies a 7.7% ROMC under a long term nominal oil price deck of $100/bl Brent from 2015,
representing an equity risk premium of 3.2% based on our current estimated 10-year Treasury yield of 7.0%, or 4.5% after-tax, compared to our
target risk premium of 2.5% for XOM, 2.8% for Chevron, and 3.5% for Murphy and Hess. We also add $12/share for its long cycle discovered
known resource.
Risks which May Impede the Achievement of the Barclays Research Price Target: Our earnings estimates are based on Barclays Research's
current commodity price assumptions, including oil & gas prices, refining and marketing margins as well as chemical product margins. Thus,
results will be subject to change due to fluctuations in the macro commodity market environment.

29 October 2013 31
Barclays | Petrobras (PBR/PBR.A)

IMPORTANT DISCLOSURES CONTINUED

Husky Energy, Inc. (HSE CT / HSE.TO) Stock Rating Industry View
CAD 29.52 (28-Oct-2013) OVERWEIGHT POSITIVE
Rating and Price Target Chart - CAD (as of 28-Oct-2013) Currency=CAD

45 Date Closing Price Rating Price Target

26-Jul-2013 30.21 42.00
42
05-Jun-2013 29.12 Overweight 40.00
39 08-May-2013 30.37 35.00
09-Jan-2013 29.90 32.00
36
19-Sep-2011 23.48 28.00
33 07-Apr-2011 29.00 30.00
10-Jan-2011 26.13 27.00
30
10-Dec-2010 25.04 Equal Weight 26.00

27

24

21

Jan- 2011 Jul- 2011 Jan- 2012 Jul- 2012 Jan- 2013 Jul- 2013

Closing Price Target Price Rating Change

Link to Barclays Live for interactive charting

D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Husky Energy, Inc. in the past 12
months.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Husky Energy, Inc..
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Husky Energy, Inc. within the past 12
months.
L: Husky Energy, Inc. is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.
M: Husky Energy, Inc. is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank
PLC and/or an affiliate.
Valuation Methodology: Our 12-month price target is based on a 5% premium to our estimated NAV based on a long-term oil price assumption
of $100/bl Brent.
Risks which May Impede the Achievement of the Barclays Research Price Target: Our earnings estimates are based on Barclays Research's
current commodity price assumptions, including oil & gas prices, refining and marketing margins as well as chemical product margins. Thus,
results will be subject to change due to fluctuations in the macro commodity market environment.

29 October 2013 32
Barclays | Petrobras (PBR/PBR.A)

IMPORTANT DISCLOSURES CONTINUED

Suncor Energy (SU CT / SU.TO) Stock Rating Industry View
CAD 37.46 (28-Oct-2013) OVERWEIGHT POSITIVE
Rating and Price Target Chart - CAD (as of 28-Oct-2013) Currency=CAD

Date Closing Price Rating Price Target

55
19-Sep-2011 29.40 Overweight
29-Jul-2011 36.62 48.00
50
04-May-2011 41.80 52.00
07-Apr-2011 43.29 50.00
45
18-Feb-2011 44.28 42.00

40
10-Jan-2011 36.85 40.00

35

30

25

Jan- 2011 Jul- 2011 Jan- 2012 Jul- 2012 Jan- 2013 Jul- 2013

Closing Price Target Price Rating Change

Link to Barclays Live for interactive charting

C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Suncor Energy or one of its affiliates.
D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Suncor Energy in the past 12 months.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Suncor Energy.
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Suncor Energy within the past 12
months.
L: Suncor Energy is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.
M: Suncor Energy is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC
and/or an affiliate.
O: Barclays Capital Inc., through Barclays Market Makers, is a Designated Market Maker in Suncor Energy stock, which is listed on the New York
Stock Exchange. At any given time, its associated Designated Market Maker may have "long" or "short" inventory position in the stock; and its
associated Designated Market Maker may be on the opposite side of orders executed on the floor of the New York Stock Exchange in the stock.
Valuation Methodology: Our 12-month price target of CAD 48 is based on our NAV analysis using our long-term oil price assumption of $100/bl
Brent.
Risks which May Impede the Achievement of the Barclays Research Price Target: Our earnings estimates are based on Barclays Research's
current commodity price assumptions, including oil & gas prices, refining and marketing margins as well as chemical product margins. Thus,
results will be subject to change due to fluctuations in the macro commodity market environment.

29 October 2013 33
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