Brava Energia S A S/Adr

Good day everyone and welcome to 3R Petroleum fourth quarter and full year 2023 earnings conference call. The presentation and comments about the results will be presented by the CEO Matheus Dias, by the CFO and investor relations officer Rodrigo Pizarro and by the exploration and production officer Mauricio Diniz. We inform that the simultaneous translation tool is available on the platform. To access it, simply click the interpretation button at the bottom of the screen and choose your preferred language. This conference is being recorded and will be available on the company's investor relations website, ri.3rpetroleum.com.br, as well as the presentation that we will show here. Be advised that all participants will be in listen-only mode during the presentation and then we will begin the question and answer session when further instructions will be provided. Before proceeding, we take this opportunity to stress that forward-looking statements are based on the beliefs and assumptions of 3R's management and on current information available to the company. Forward-looking statements may involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors, analysts, and journalists should understand that events related to the macroeconomic environment, the industry, and other factors may cause results to differ materially from those expressed in such forward-looking statements. Good afternoon, everyone. Welcome to 3R Petroleum conference call to discuss fourth quarter and full year 2023 earnings results. The presentation will be made by myself, by Maurício Diniz, Chief Operations Officer, and Rodrigo Pizarro, Chief Financial and Investor Relations Officer. We begin on page 3 with some highlights that provide an overview of the robustness of 3R's portfolio and the main achievements not only in the fourth quarter but also in the full year 2023. Firstly, This year marked the consolidation of the company's asset portfolio with emphasis on the latest deal completed, Potiguar Cluster, which brings in addition to the aspects and relevance in production and reserves for 3R, its infrastructure. which promotes integration of practically the entire production chain between upstream and midstream, a strong point of comparative advantage, capillarity and operational and commercial flexibility. The company ended 2023 with daily average production of 47,000 barrels of oil equivalent and with significant organic growth. If we disregard the Potiguar cluster, which was the latest deal completed, we had an increase of approximately 40%, the result of a well-executed planning for workovers in existing wells, both onshore and at Papaterra, and the start of drilling at Macau and Areia Branca. As well as numerous maintenance projects and expansion of the capacity of surface systems and equipment. I would also like to underscore the fast track projects carried out in the industrial assets of the mid downstream and the particular complex, both in the refining and gas processing units and in the tank farm. In terms of financial performance, the company reached approximately 700 million BRLs of adjusted EBITDA in Q4 and 1.9 billion BRLs in the full year. This is a very important milestone in the growth and development path of the company's portfolio. It is worth noting that, considering the second half of 2023 on an annualized basis, and that in this period we already had this entire portfolio under operation by 3R, a leverage of 2.2 times. We would also highlight the story of the dilution of fixed costs in the composition of the company's lifting cost. driven largely by the upward production curve, bringing more scale over the period. In figures, we ended the year with $18 per barrel. Finally, regarding our capital structure. Since 2023, the company has been making a great effort to improve interest rate conditions, covenants, and amortization profile and balance of the duration of our consolidated debt. And in this context, the 3R had its first bond issuance, as well as the issuance of two local debenture instruments. With this introduction, we move on to the next slide with graphs showing the company's operating and financial performance. In general terms, on the operational side, the result for the fourth quarter was an average production of 45,900 barrels of oil equivalent per day, with a positive trend seen in each quarter, not only because of the conclusion of deals, but also, as I mentioned earlier, because of significant organic growth. The result of execution in line with the planning of facilities, projects, workovers in existing wells and successful drilling. Regarding financial performance at the bottom of the slide, we have the same observation, with important marks in the fourth quarter and in the full year, both in terms of revenue, EBITDA and lifting costs. Now, let's move on to the next part, when we will look at commercial and operational aspects. On page 6, we have an overview of the Potiguar complex, with emphasis on what can be easily seen in the highlighted graph, i.e., the integration of the production and logistics chain. Again, a few observations to clarify this element of strength in our chain. A large part of the production from the fields in Rio Grande do Norte is connected via pipelines, which are extremely advantageous when compared to others in terms of operational risks and costs. So, it is connected via pipelines to the Guamaré industrial complex where all the production is offloaded, both oil and gas. In Guamaré asset, which includes primary oil processing units, S A S-Adr S A S-Adr S A S-Adr or whether by-products or crude oil itself, enables inbound and outbound operations, i.e., for the domestic market or exports via two monoboys for mooring vessels. In fact, once again, this integration brings not only commercial flexibility and greater control and management of costs in the chain, but also a great deal of independence for 3R's operations, as well as a leading role in the region's logistics flows. On the next slide, still on the subject of the relevance of the Rio Grande do Norte assets to 3R's portfolio, there are some additional highlights. As regards our commercial aspects and given what has already been said, the infrastructure also represents an advantageous solution for other companies operating in the region. And in this context, the 3R provides services and or acquires oil and gas from third parties for processing, basing the prices charged on the costs of the infrastructure and market conditions. Still on the commercial side, but regarding sale of the products marketed post-processing. In other words, oil products, 3R also operates within market pricing policies. I would just like to highlight the off-taker agreement signed in January 2024 for bunker fuel, which accounts for 50% of the refinery's total production, with a term of 36 months and a fixed price modality. from the 13th month of the contract in addition to the fixed price there will also be a profit sharing relating to the operation with our partner with regard to these structural aspects of the cluster in the vision of the future of Upstream a large part of the company's total reserves are concentrated in the Rio Grande do Norte region with a significant proportion of 1b reserves compared to the total of proved and probable reserves which at the end of the day basically translates into a great prospect and potential for organic growth. On the next page, we present the quarterly evolution of the monetization of crude oil and processed gas molecule. In oil, we are still at around 90% of the unit value compared to the brand. And this slight decrease compared to the last quarter is basically justified by maintenance carried out at the refinery in Potiguar so that we necessarily had to market crude oil directly and that the first cargo offloads generally have a slightly higher discount until the oil is better known in the market. In our case, we carried out operations not only in the domestic market through cabotage, but also exporting this cargo to refineries outside the country. As for gas, we had an improvement and reached 12% of the reference value, which is the brand. I will now hand over to Mauricio Diniz, our Chief Operations Officer, so that he can explain the operational aspect. Thank you very much. Thank you, Matheus. Let us now talk about our operation and upstream information in the four clusters where we operate. And they are Potiguar Complex, which is made up of assets in the states of Rio Grande do Norte and Ceará. A merger of those assets from the start of the company and the others integrated in June of June. 2003, the Bahia Cluster Espírito Santo based Caliperoa Field and Rio de Janeiro Papaterra Field. Starting with the particular cluster, I'd like to highlight our first and iconic field, Macau. As we have often mentioned, with greater knowledge of each area, both in the subsurface, in the reservoirs, and in improving the integrity and adaptation of these surface facilities, we have proven the great potential of our assets. Macau is a great example. After those initial problems, mainly carrying out works and difficulties in contracting rigs, in 2023 we had a large number of workovers and drilling at the field and adjustments to its facilities, mainly construction works at the two collecting stations. The field's production, as shown in the graph, rose by 80% over the year, now reaching, in January 2024, 7,300 barrels of oil equivalent daily. More than 80% of which being oil. In addition, we have achieved significant reduction in our lifting cost, reaching single-digit figures at Macau field over the last few months. In the following graph, we can see the progress of our production at the entire Potiguar complex, highlighting the closing of Potiguar cluster at the beginning of June 2023. To make all of these activities possible, 13 rigs worked at the field in Q4, carrying out the workovers, reactivations and equipment changes. And we had two rigs in charge of drilling, with a total of 219 wells that underwent some kind of intervention in Q4 2023. I would note the drilling of 38 new wells in the area. CAPEX was distributed between work on wells and facilities, which is really paying off, as shown in the production indicators. I would also like to point out that eight months of operation have elapsed at this latest complex closing in Canto do Amaro and Alto Rodrigues fields, with no significant safety or environmental events, as has been the case throughout the company. Another highlight in the area is the steam injection project in Streito and Alto Rodrigues. We recall that due to the high cost we terminated the steam supply contract with a thermal electric plant at the time of the closing. An internal 3R project was then set up divided into four phases. The first of these is the overhaul of the GVs that were not in operation at the time of the closing. This project is underway and some GVs are already in operation. The second phase is the revitalization of four steam stations, the first of which consisting of four generators is ready and awaiting an operating license in March. The third phase is the purchase of three steam generators, with 45% of their manufacturing process already concluded. And the final phase is the purchase of three other generators, already manufactured, that are in the process of having their purchase agreement signed. In short, we started the operation with an injection rate of 1,800 tons daily. Today, we are already injecting around 3,000 tons, and we will reach by the end of the last quarter 7,500 tons per day required for this phase of the project. Moving on to the next slide we will talk about the Reconcavo Complex where in December we reached the ninth quarter of continuous production increase at the Bahia fields and the highest oil production since the start of our activities in the area. In the Bahia fields we are working with seven work over rigs that worked in 53 wells in Q4 and two more rigs that are completing assembly, one of them already licensed to operate Operation should start next month and the other are awaiting an operating license to start its activities. At Reconcavo we are also carrying out an important CAPEX program for revitalization with the aim of preparing the facilities for the increase in production that lies ahead. On the next slide, we'll talk about Papaterra, where we can clearly see the first two graphs and increase the production and operating efficiency of the field's two platforms. Total daily production of the field, including our partner's stake, reached 16,400 barrels of oil in the last quarter, a significant increase compared to the beginning of the year. In the graph on the right, we can see production efficiency. This is an indicator that shows what has been produced in relation to the potential of the wells. In other words, those problems that we have already talked about on several occasions over the past year are being resolved satisfactorily, and there has been a substantial improvement in operating efficiency since the closing. I would like to highlight an average efficiency of 22% in the last 12 months of the previous operator and now, at the end of the year, we are reaching 93% operating efficiency at Papa Terra. Several of those works that were mentioned have already been carried out and we are now completing inspection and maintenance of the second boiler, one of the power generators with overhaul reaching the final stages, transfer pumps repaired, and the main offload system in its final stage of maintenance. Another important integrity program at the FBS03R3 We'll now begin the second quarter with the hiring of a maintenance unit working for 90 to 120 days with a 15 day production stoppage in Q3. Another important point that Papa Terra, which has been reflected in production now in these early months of the year, is the work over at some wells to exchange the pumps after three to four years of operation. One of the rigs that can work on a wet Christmas tree has already carried out two successful work overs on Papa Terra 22 and Papa Terra 12, exchanging the ESPs and is now working on Papa Terra 37. Another point that also caused a lot of concern in the past was having a rig available to operate in the TLWP, which has achieved by setting up a structure that allowed this rig to be placed on top of the 3R2 itself.

The rig is much cheaper than the old T A D tender assisted that operated alongside the three R two, allowing the work over in the main wells of the field. We have already started the work over of Papaterra 17 and then Papaterra 50. These three wells, Papaterra 37, 17 and 50, will resume production during the second quarter. We also plan to drill a new well in the second quarter. which is only waiting for the environmental license. This license is not similar to that of a new well, as it will use the same subsea line of an existing well in the same field where several wells have already been drilled. And it is adjacent to a well that produce around 5,000 barrels a day, but it has been inactive due to mechanical problems by the former operator. Finally, we have the Perua cluster where production remains stable in line with the sales contract. We should highlight the improved monetization of gas over the quarter due to the new contract price with consumers. In the next slide, the two charts show an overview of production with three hours work interest. In the upper chart, we have oil and gas, and in the lower one, only oil. Since the startup of three hours operation, we've always had a quarter on quarter increase in production. And in the fourth quarter of 2023, oil production accounted for almost 80% of total production and 55% comes from Portugal. We reach 45,900 barrels a day. And now in January, We will continue to increase with 47,200 barrels a day, of which more than 37,000 refers to oil production. In our review, the synergies between onshore and offshore is quite significant. There is a great exchange of knowledge and experience between the technical areas. And on the other hand, there is a production aspect. While onshore production continues to grow at a steady pace, we were able to activate peaks of increasing offshore production and cushion ourselves when there is a drop in production. In this last slide, in terms of operating, we put the organic growth throughout 2023. As Mattel's mentioned before, our production was up 43%, not including the conclusion of new transactions. The knowledge that has been acquired, the quality of our assets, Workovers carried out, production optimizations, improved integrity and management have resulted in 43% growth in 2023, one of the best operating results among operators in Latin America. We now hand over the floor to Pizarro to present our main financial KPIs. Good afternoon, everyone. We will now initiate the part related to financial highlights for 2023. On slide 16, we show the company's net revenues. We ended 2023 with around 5.6 billion BRLs in net revenues, of which 1.85 billion in the last quarter alone. Due to the scheduled maintenance of the refining units and the NGPU natural gas processing unit in Rio Grande do Norte, revenues from the midstream and downstream segments were lower, but upstream revenues increased by 7% compared to the third quarter. On the next slide, we detailed the evolution of upstream revenues by basin and the breakdown of the fourth quarter by type of product. Of the $1.6 billion in net upstream revenues, around $1.25 billion barrels came from onshore basins and the rest from offshore assets. 87% are oil revenues and 13% gas. Again, reinforcing the importance of having a portfolio anchored in oil. On slide 18, we show The company's EBITDA evolution, even considering the scheduled maintenance of the refining units, adjusted EBITDA totaled around US$140 million in the fourth quarter and more than US$300 million, considering the second half of 2023. This means the first half of the year in which the company operates its entire portfolio. Moving to the next slide, a further highlight in the company's lifting cost. Once again, we managed to reduce our lifting cost, averaging $18 per barrel of oil equivalent in the fourth quarter. Lifting costs for onshore assets were close to $16.7 per barrel, Bear in mind that our lifting cost includes logistics via our own pipelines until the product is sold or transferred to the midstream and downstream segments, which is often not taken into account by other Latin American onshore operators, precisely because they don't have their own logistics capacity. In practice, for these operators, logistics costs are not allocated to lifting costs. But they do have an impact on the sale price of the product or are allocated as a service paid to third parties apart from the lifting cost. Offshore, the intense work to improve the facilities and increase production in Papaterra has contributed to the dilution of costs, reaching US$21.8 per barrel of oil equivalent, both in Papaterra and Peruá on a consolidated basis. As we often point out, we are still working on recovering the integrity of the FPSO, mobilizing the main suppliers on board, And this phase should be completed by the end of the third quarter. On slide 20, we show the evolution of the company's investments. In 2023, we allocated around $283 million to CAPEX projects, including the onshore drilling campaign, infrastructure, and corporate investments in IT systems. And around US$42 million for future CAPEX, mainly in the last quarter to invest in drilling projects, first workovers of offshore wells, and the revitalization of facilities throughout 2024, totaling US$325 million in 2023. The following slide shows the company's capital structure. We ended 2023 with a robust cash position, compatible with our investment plan after an intense commitment to liability management. We have extended our debts, reduced costs, and made our obligations and covenants more flexible with the latest issues. We no longer have coverage ratio covenant, for example. and we have maintained the company's net debt close to 1 billion US dollars considering financial debts and around 1.4 billion dollars if we also consider obligations related to acquisitions. The level of leverage remains quite under control close to 2.2 times considering the adjusted EBITDA for the second half of 2023. Even with the recent issue of the seven-year bond and the new institutional debenture at the beginning of 2024, as the amounts were fully used to repay debt instruments of equal amount, no changes are expected in the company's net debt position at the beginning of the year. On the next slide, we summarize the effects of the $500 million bond issue made at the beginning of 2024 and the prepayment of a private debt in the same amount hired for the acquisition of the Portuguese cluster. It is worth noting that the bond market has not seen a new Latin American issue since early 2022, which is once again the result of the company's intense efforts to present our investment thesis to the international market and look for ways to diversify funding sources and optimize our capital structure. with our cash position and the reprofiling of the payment flow of the principal amount, we are in a comfortable position to proceed with the investment projects, even considering oil curves that are more conservative than the current ones. On slide 23, we show our hedge position, totaling around 7,800,000 barrels contracted in line with our hedge policy. The NDF contracts are close to 80.4 U.S. dollars, and the zero-cost collar contracts have a floor of 55 U.S. dollars and a ceiling close to 95 U.S. dollars per barrel on average. In the next session, we present the ESG initiatives and we revisit the fundamentals of the three-hour thesis. And as usual, we reinforce the management's priorities for 2024. On slide 25. In what concerns the ESG aspects, it's worth noting that in 2023, the company published its first sustainability report. We coordinated the Reflorecer project in Rio Grande do Norte for the restoration of 60 hectares of preservation land. We launched the 3R Capacita project in partnership with SENAI in Rio Grande do Norte that offers more than 380 seats for technical training courses. And in addition to the Clean Company seal, we also joined the select list of 84 companies recognized by the Federal Comptroller General's Office for their commitment to preventing corruption and fraud for which around 300 organizations have applied. On the next slide, we reinforce the pillars of 3R's investment thesis with the acquisition of Papaterra Cluster in December of 2022 and Potiguar in June of 2023. We then became one of the largest independent companies in Latin America. Fortunately, as the largest assets were recently acquired, we still have a lot of low hanging fruits, both onshore and offshore, with opportunities for cost reduction, increased efficiency of surface systems, and dozens of reactivations of onshore wells. Another important aspect is that we are a company whose growth does not depend on new acquisitions. It does not depend on exploration or third parties. We have a portfolio of more than 500 million barrels of 2P reserves. A low recovered factor of assets, and we have already demonstrated in 2023 that the efficient use of CapEx brings relatively quick results. We have a very efficient operating cost, bearing in mind that our lifting cost includes logistics, as we recently mentioned, and is calculated in a very conservative way. In a comparative analysis, it's important to consider logistics and processing costs for both gas and oil. And precisely because we have an integrated portfolio, we have a very competitive total operating cost. It's worth noting that at the end of 2023, we received the Sudeni benefit for all the assets in Rio Grande do Norte, Bahia and Espírito Santo, including a reduction in the income tax rate that also contributed to a better free cash flow per barrel. And finally, With the liability management effort, which we implemented in a very intense and dedicated way between the end of 2023 and the beginning of 24, we are prepared for the company's investment plan with any major concerns regarding the covenants. On the last slide, as a management priority for 2024, we can highlight the plan to increase the efficiency of onshore and offshore surface systems, which contemplates the integrity recovery plan for the Papateja FPSO and the expansion of the water processing and steam injection systems in the Potiguar Basin. Another important aspect is the intensification of onshore and offshore drilling and workover campaigns, which have already shown excellent results in 2023. Another priority is to maximize the value of midstream and downstream assets by expanding strategic partnerships, evaluating M&A opportunities, and increasing service revenues. And finally, we are committed to evaluating portfolio optimization alternatives, always with a focus on maximizing value in the medium and long term for our shareholders. Thank you very much for joining us. And now we will move on to the Q&A session.

We will now begin the Q&A session. If you wish to ask a question, please click on the Q&A icon on the bottom part of your screen and type your question. To ask questions live, click on the raise hand button. Please hold as we collect the questions. Our first question comes from Mr. Leonardo Marcondes with Bank of America. Mr. Marcondes, you may speak. Good morning, everyone. Can you hear me well? Great. I have some questions here. My first being regarding the M&A with Reconcavo cluster from 3R's perspective. Could you tell us what have been the main pushbacks and feedbacks that you have received from the market regarding the deal and whether you have more concrete expectation regarding the timing for the deal to happen? My second question has to do with the liability management done by the company recently. Pizarro kind of spoke about this, but I just want to make sure you understood this well. Is there any covenant that may limit you from investing in increasing production this year? And perhaps you can remind us of the break even for cash generation for the year. And if I may ask a third question, we saw the lifting cost declining one more time this quarter. I'd like to know. What is the expected lifting cost by year-end? And Pissarro kind of spoke a little about it, but how do you see the cost structure of your lifting cost? If we can compare with your reported structure. with the structure of your peers. Excellent, Leonardo. Thank you for the questions. To answer your first question regarding M&A with Petro Reconcavo, what we can say is a little bit of what we have reported to the market. We engaged Itaú as our advisor. And we have other legal advisors also following the evaluation of this possible deal. At this point, we are in the validation, verification and technical due diligence stage on both sides. Petro Reconcav also engaged their own advisors, as they mentioned, in their own earnings calls. And we have a technical period of joint evaluation, so we cannot really say what is the right timing and what's coming next. All we can tell you though is that we do not have any consolidated view regarding structure, governance and the deadline for the deal. On the other hand, on our end, and on their end as well we have full engagement and alignment in terms of the deal making sense and we'll step on the gas because companies in the process of a merge without a defined deadline Well, that's something that can get in the way of the execution plans of both companies. In a nutshell, that's what we can say at this point about this M&A deal. Regarding liability management, basically, we did intense work in-house. It started in 2023, the beginning of 2023. when we structured the company for the acquisition of Poti Guar Cluster. I'd like to remind you that in the past, we even considered keeping 70, 80, 90% of the asset In the end, fortunately, our governance and our management defined that we should have 100% of Poti Agua Cluster. For that, we had to structure a slightly higher debt than originally thought of. We also had a capital injection to support the capital structure adequately for the company. Unfortunately, all along 2023 and the beginning of 2024, we were able to replace that debt that we had. It was a relatively small debt compared to our CAPEX Execution Plan, so we were able to replace it by a long-term debt, which is a seven-year bond with a competitive rate re-opening the debt market for new issuers in Latin America since February of 2022. Regarding the covenants, Not only have we replaced that debt and naturally flex or eased the covenants because a bond always has restrictions or much lighter restrictions and obligations. Just to give you two examples, both in coverage ratio or we used to call that service cover ratio. We don't have that covenant anymore. In all of our debts, we have no obligation to measure the cover ratio, which is normally the covenant that limits capex execution in any company. We need we need to evaluate our free cash and how much capex we're implementing vis-a-vis our financial obligations. So we do not have that obligation any longer. And for the bond, we don't have the obligation to measure the covenant periodically. It is what we call. Incurrence covenant, if we want to issue a new debt, But the company and still we have some flexibility to issue a debt, even if we achieve certain levels. In a nutshell, we have a covenant and obligations structure, which is a lot more flexible. We have no concern, even if the brand drops 15, 10, 20% compared to the current price. As for the break even for the year, as we normally stress, Having a portfolio structure concentrated onshore, we always have great flexibility to reduce the pace. of CAPEX execution onshore. We currently have about $300 million planned for onshore, about $100 million planned for offshore. These $300 million for onshore can be reduced to $200 or $200 million, depending on the short to mid-term of the future curve of oil. This is a differential compared to companies which are positioned exclusively on offshore projects. We have this ability to adjust the capex also upwards. Of course, the flexibility to reduce is greater than to increase the capex, but we have a lot of flexibility in the calculation of the breakeven. Well, if we get to a structure of $52, $54, we still have the ability to have a positive EBITDA. We still have the ability to implement a fraction of the CAPEX, of course, not the full CAPEX. But I'd like to remind you that we reinforced the company's cash position, and that's why we have a lot of flexibility to serve the financial obligations for the next three years, which are very low, as we showed in the pro forma slide that shows that in the next few years, financial obligations and obligations with Petrobras are a lot lower than they were three months ago. Regarding the lifting cost, that's also an excellent question. The cost structure of the company. Because we have mid and downstream assets in Rio Grande do Norte. which is where we operate most of our assets. And also in Papaterra in Perua because we have the floating units and the fixed Perua unit. In other words, the equipment is ours. We do not have to pay daily rates to third parties. We don't have to pay for natural gas processing to third parties. So all of that in our cost structure is accounted for in the lifting cost. When we compare this with other companies that do not own these structures, do not have an FBSO, do not have the pipeline structure, everything we have in Rio Grande do Norte, which is storage, pipelines, processing of natural gas, etc. This comparison is not always Comparing apples with apples to give you some examples. All lifting costs in Rio Grande do Norte comprises the logistics by pipeline until we get to the mid downstream. This logistics can cost seven, eight, nine, sometimes even more, even in Brazilian players as well as Colombian players to give you another example abroad. So ideally, when you compare, you should evaluate the lifting cost, the logistics, whether the logistics is embedded in the selling price of the product, which is the case of third parties here in Brazil. They sell their asset oil and gas to 3R and you have to evaluate processing costs. Just to give you another example, $1, $2, $3 per million BDUs of processing can represent $5, $10 or $15 per barrel of oil equivalent when it's time to sell the gas. So reinforcing the pillars of our thesis. As we have most of our assets concentrated onshore, concentrated on oil, and with our own infrastructure, women, consider these three aspects. Lifting costs to logistics and processing. It is very hard to find any employer in Latin America with a cost structure as streamlined as that of 3R. Now for you to analyze whether we are the best or the second best, You have to be very cautious in your analysis, in your evaluation. But undoubtedly, we are not the best. We are among the top two, top three best in terms of operating efficiency cost. And as we mentioned in the presentation, we have a lot of low hanging fruits. We still have a lot of improvements to make. And the trend is that costs will decrease, not necessarily quarter after quarter will reduce the cost in all basins because there are workovers and improvements in all of the assets separately. But the trend is that by the end of 2025, we'll have a lifting cost structure that will be even more streamlined between $15, $16, $17 per barrel of oil equivalent in Q4 of this year. Okay, super clear. Thank you for the answer.