Offshore staff

(Rio de Janeiro) - Petrobras America Inc., a Houston-based subsidiary of Brazilian international energy company Petrobras, successfully tendered for 10 blocks in the central U.S. sector of the Gulf of Mexico at an auction organized by the Minerals Management Service, the U.S. industry regulator.

Petrobras America bid on 17 blocks, and was the highest bidder on 10, representing a total exposure $22.3 million. The blocks successfully tendered include four prospects situated in ultra deepwaters.

The awards reinforce the Petrobras Group's position as one of the leading corporations in ultra deepwater exploration in the U.S. sector of the GoM, where it already has a stake in three of the largest discoveries made in the region - currently in the phase of demarcation - as well as a further dozen prospects with major potential for additional finds.

In addition, Petrobras America, as the operator with an 80% share, is developing the Cottonwood field located in the Garden Banks 244 block in water depths of approximately 700 m. Cottonwood represents the first gas field to be developed by Petrobras as operator in the deepwaters of the GoM, and production is expected to begin in the 1Q 2007.

The company has been exploring heavily in the extreme western part of the U.S. sector of the GoM in the Corpus Christi, Padre Island and Mustang Island quadrants, with major discovery potential. Following the conclusion of more detailed studies, the company intends to drill the first wells before the end of the 2Q of this year.

Petrobras America Inc. has also been testing new exploratory concepts in shallow offshore waters. Wells are being drilled in this region which will penetrate high temperature and pressure zones with the expectation of substantial economic returns given the potential for the discovery of major reservoirs, the existence of infrastructure for processing and offloading, and demand for gas from the local market.

Petrobras America Inc. estimates this year's capital expenditures at approximately $305 million, and by 2010, approximately $1.5 billion in the exploration and development segment for the production of oil and gas.

03/21/2006