Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Petroreconcavo SA (BSP:RECV3, Financial) reported a net revenue of BRL826 million, marking an 11% increase from the previous quarter.
- The company successfully issued its first debenture of BRL1.1 billion, improving its capital structure and reducing the cost of debt.
- EBITDA reached BRL447 million, a 27% increase quarter over quarter, showcasing strong financial performance.
- The company achieved a dividend yield of 7% with the payment of BRL410 million in JCP and dividends paid in May.
- Operational advancements included the successful sidetrack of the TIE-05 well, now producing robustly as TIE-11, and the commencement of operations at the PR-14 probe.
Negative Points
- The company faced challenges with a backlog of nearly 50 workovers not executed in the first months of the year.
- There was a need to increase execution capacity to address operational backlogs and improve efficiency.
- The lifting cost, although reduced, still presents a challenge in maintaining efficiency and cost-effectiveness.
- The company is navigating the complexities of aligning infrastructure sharing agreements in Potiguar, which could impact future operations.
- Despite improvements, the company acknowledges the need for further efficiency gains and cost reductions to maintain competitive advantage.
Q & A Highlights
Q: Can you explain the dynamic of gas prices this quarter and the reasons for the drop quarter over quarter?
A: Joao Moreira, Chief Commercial Officer, explained that the drop was due to the increased proportion of fixed-price agreements with BahiaGás and the lag effect of Brent prices. The agreements are structured to capture Brent price benefits with a delay, and the expectation is to maintain price alignment as communicated previously.
Q: With recent cash flow generation, is this the new normal for the company, and what are the plans for capital allocation?
A: Rafael Procaci, CFO, stated that the company is in a robust phase of free cash flow generation, with reinvestment around 40-50% of cash flow. CEO Jose De Mello Firmo added that the company is considering a structured approach to capital allocation, including dividends, M&A, and investment in reserves.
Q: What is the status of the São Paulo operation, and is it meeting expectations?
A: Joao Moreira confirmed that the São Paulo operation started in July and is operating within expected parameters. The plant is effectively processing and delivering gas, aligning with the company's production increase expectations.
Q: What are the expectations for production trends in the second semester, and is there potential for an upside?
A: CEO Jose De Mello Firmo indicated that the reserve report curve remains the best proxy for production targets. The company aims to reach this curve by year-end, with potential upsides from drilling and workover programs.
Q: What is the company's leverage strategy concerning dividend payments?
A: CEO Jose De Mello Firmo stated that the company aims to maintain leverage between 0.5 and 0.75 times, allowing flexibility for M&A or significant projects. This strategy supports cash flow availability for dividends or other opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
