Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Petroreconcavo SA achieved a record EBITDA of BRL1.6 billion in 2024, marking a 29% increase compared to the previous year.
- The company successfully restructured its capital, closing 2024 with a net debt over EBITDA ratio of 0.8 times and a 25% reduction in the average cost of debt.
- Petroreconcavo SA reported a record cash generation of BRL1 billion in 2024, highlighting strong financial performance.
- The company accelerated its drilling program, achieving significant operational milestones, including the operation of three probes simultaneously for the first time.
- Petroreconcavo SA paid a robust dividend of $2.75 per share, with a dividend yield of about 14.5%, reinforcing its commitment to shareholder value.
Negative Points
- The EBITDA for the fourth quarter of 2024 was BRL403 million, representing an 8% decrease compared to the previous quarter.
- There was a 4% increase in the lifting cost, closing the year with an average of $13.60 per oil barrel, reflecting higher operational expenses.
- The adjusted profit for 2024 saw a 4% reduction compared to the previous year, impacted by increased costs and expenses.
- Operational challenges in the first half of 2024 affected production levels, preventing the company from achieving its expected production standards.
- The company faced increased financial expenses and a greater recognition of accounting adjustments, impacting overall profitability.
Q & A Highlights
Q: How does Petroreconcavo plan to balance dividends and M&A activities in the coming years?
A: Jose De Mello Firmo, CEO, explained that the company aims to maintain flexibility in capital allocation. While dividends were prioritized in 2024, the company remains open to M&A opportunities, especially given the evolving Brazilian onshore environment. The strategy is to remain adaptable to capture potential opportunities while ensuring shareholder returns through dividends or stock buybacks.
Q: With the acceleration of drilling activities, is Petroreconcavo seeing more stable operational performance and lower lifting costs?
A: Firmo noted that while the company aims to increase efficiency and reduce lifting costs, 2024 saw strategic investments in operational resilience. Although costs were higher due to these investments, the expectation for 2025 is robust production growth and a reduction in lifting costs as operational efficiencies improve.
Q: Why is there a shift in focus from Potiguar to other assets in reserve certification?
A: Firmo clarified that the reserve certification shows robustness in both Potiguar and Bahia assets. The focus is not shifting away from Potiguar; rather, the company is pragmatically allocating capital based on project returns. Both regions are competing for investment based on their potential returns.
Q: How will the new crude oil sales contract in Potiguar affect pricing and margins?
A: The new contract with Brava moves from a fixed discount model to one seeking efficiency, allowing for potentially lower discounts and more operational flexibility. This partnership aims to optimize logistics and share value from crude oil and derivative spreads, enhancing overall margins.
Q: What are the expectations for midstream costs after the completion of UPGN Miranga and other projects?
A: Firmo indicated that midstream costs are expected to continue decreasing as the company invests in vertical integration and efficient operations. The goal is to align midstream costs with international standards, capturing value through reduced systemic costs and improved operational efficiencies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
