Board Approval of LFT Valuation and Increase of Company's Share Capital

Rio de Janeiro, September 29 2010. Petróleo Brasileiro S.A - Petrobras announces that its Board of Directors, in a meeting held today, decided to:

The Company also informs that, in compliance with the corporate approval above, the Offering of 2,293,907,960 Common Shares and of 1,788,515,136 Preferred Shares was settled on the same date.

Additionally, the Company provides below a table showing in detail the final allocation of the Offering, without taking into consideration the potential exercise of the over-allotment options by the Global Coordinators which, are for an aggregate of up to an additional 187,997,094 Common Shares and/or Preferred Shares issued by the Company, including Common Shares and Preferred Shares in the form of American Depositary Shares (the "Over-allotment"), as announced in the preliminary prospectus supplement, dated September 3 2010, as well as in the final prospectus supplement for the Offering, dated September 23, 2010 (collectively, the "Offering Documents"):

Of the total amount of the Offering of R$115,052,319,090.80, R$67,815,921,649.51 was received in the form of LFTs. As described in the Offering Documents, the proceeds of the Offering are to be used to pay for the Assignment Contract and to finance the Company's Business Plan. As such, following the completion of the settlement of the Offering, the Company has transferred to the Brazilian federal government, all of the LFTs it has received and the additional amount of R$6,991,694,757.49 to pay for the initial purchase price in the amount of R$74,807,616,407, as specified in the Assignment Contract.

The following tables provide the Company's share capital breakdown before the Offering and after the settlement, which took place today.

Share Capital Breakdown Before the Offering⁽¹⁾

(1) Excludes the effects of Decree No. 7295, of September 8, 2010.

Share Capital Breakdown After the Offering
(excluding the over-allotment shares)

Finally, Petrobras announces that it remains in the quiet period, as determined under art. 48 of CVM Instruction 400, until the closing of the Offering has been posted and that it will continue to disclose data to the market regarding the normal course of its activities, and information about the Offering, under the terms of the applicable regulations.

This communication does not constitute an offer to sell or the solicitation of an offer to buy the securities described, nor shall there be any sale of such securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Petrobras has an effective registration statement on file with the SEC. Copies of the final prospectus supplement for the international offering may be obtained from Bank of America Merrill Lynch at 1-866-500-5408, Bradesco Securities, Inc. at isabela@bradescosecurities.com, Citigroup Global Markets Inc. at 1-800-831-9146, Itaú Securities collect at 1-212-710-6766, Morgan Stanley & Co. Incorporated at 1-866-718-1649 or Santander Investment Securities at 1-212-350-3649, or by visiting EDGAR on the SEC Web site at www.sec.gov. Before you invest, you should read the prospectus supplement and other documents that Petrobras has filed and will file with the SEC for more complete information about Petrobras and the offering.

 www.petrobras.com.br/ri/english

Contacts: PETRÓLEO BRASILEIRO S. A. – PETROBRAS

 Investor Relations Department I E-mail: petroinvest@petrobras.com.br / acionistas@petrobras.com.br

Av. República do Chile, 65 – 22^nd floor - 20031-912 - Rio de Janeiro, RJ  I Tel.: 55 (21) 3224-1510 / 9947

This document may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act) 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 forward-looking statements. 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.

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act) that are not based on historical facts and are not assurances of future results.  These forward-looking statements are based on management's current view and estimates of future 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 o f 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 occur. 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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