Brava Energia S A S/Adr

Good afternoon, everyone. Welcome to 3R Petroleum First Quarter 2024 Earnings Conference Call. The presentation and comments about the results will be presented by Matheus Dias, CEO, by Rodrigo Pizarro, CFO and IRO, and by Maurizio Diniz, Exploration and Production Officer. We inform that the simultaneous translation feature is available on the platform. To access it, simply click the interpretation button at the bottom of your screen and choose your preferred language. This conference is being recorded and will be available on the company's investor relations website, ri.3opetroleum.com.br, as well as the presentation that we will show here. Please be advised that all participants will be in listen-only mode during the presentation. Then we will begin the question and answer session when further instructions to participate will be provided. Before proceeding, we take this opportunity to stress that forward-looking statements are based on 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 the other operating factors that may cause results to differ materially from those expressed in the forward-looking statements. We will show a brief video with the main ESG actions of the company.

Environmental S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S A S S A S A S A S A S A S A S A S S A S A S A S A S A S Promoting health and well-being activities for employees and the communities Education and Development Coding Workshop S A S A S A

We will now begin the presentation, turning the floor to Matheus Dias, CEO of the company. Mr. Dias, you may proceed. Thank you. Good afternoon, everyone. Welcome to our earnings conference call of 3R Petroleum, referring to the first quarter of 2024. The presentation will be made by myself, Mauricio Diniz, our CEO, and Rodrigo Pizarro, CFO and Investor Relations Officer. We're starting on slide three. We have an introduction of the main events, achievements, and points to be highlighted in First EQ24, which will be better detailed in a moment by Pizarro and Diniz. Firstly, Through the right of governance of the company, we discussed a distribution of 92.6 million in dividends, which represents the minimum compulsory and has as a base the profit recorded in 2023 fiscal year. In terms of total production, in Q124, the company posted 44.4 thousand barrels of oil equivalent daily. A substantial increase year-on-year and quarter-on-quarter, and also compared to the 2023 average production. We had a slight reduction of 3.3% quarter-on-quarter. This drop quarter-on-quarter is explained mainly by Interventions or workovers to replenish ESB pumps at Papa Terra Cluster. This was already something expected for this year. Because these pumps were in operation for quite a while and considering the lifespan of the pumps, the only difference, and this is totally probabilistic, is that we expected to stop these wells in the second quarter. This happened in Q1. But in terms of the annual effect on average production, this should not have any impact on the average production of the year. There were also not very relevant events onshore of intermittencies in the electricity supply in the fields. But this, as I mentioned, had very little impact. On a positive side, sustaining the production increase of 3R, the company continues to execute its CAPEX plan in two main groups. The first, a number of interventions and work-overs performed in this quarter, more than 300. And on another front, maintenance projects and expansion projects for the topside equipment. which support and will support growth coming from these activities and well workovers both in the mid and long term. Regarding financial performance, the company posted 2 billion BRLs in total revenues, including the segments of upstream and middle stream, and Isaho will give you more on that as I said, and an adjusted EBITDA of approximately 725 million BRLs up 4% quarter on quarter. In terms of EBITDA margin, not considering intercompany and corporate effects, upstream segment posted a record margin of 54.1%, an important mark in our production journey. And the middle downstream had a margin of 4.3%, still within the expected range. but a little below our target. We believe that by Q3 we'll reach around 6%. We would also highlight that the lifting cost of the company Convalidated and weighted, remained stable, flat with $18.6 per barrel, quarter on quarter. And we had an already expected increase in the onshore front, given this momentary interruption of production given the workovers, but still we remained with $18.6 per barrel as a lifting cost. Another very important aspect, and now talking about capital structure of the company, was the materialization of some debt instruments, both local and the issuance of bonds. These will bring relevant improvements in balancing the duration of the consolidated debt of the company. Lastly, I would like to stress our perception that the company, through its portfolio and robust business model, has elements that place it in an interesting position in the industry, together with other oil and gas independent companies, particularly with the backdrop that we have seen recently of potential deals of business combinations. And we know that all of these bring and will bring positive results. Because we are always pursuing greater scale and scale is very important in oil in the oil industry. Well, with this overview, let's move to the next slide. Here we have the charts that show in this the financial performance and the operational evolution. As I mentioned, operationally speaking, we reached 44.4 thousand Barrels of oil equivalent of average production with a slight decrease quarter-on-quarter, but with an important increase compared to the average of 2023. As regards the financial performance, I'm just giving a spoiler here, but Pizarro will give you more. I highlight a slight increase of adjusted EBITDA quarter-on-quarter despite the production decrease. which was expected as I mentioned and this is explained by the return of mid downstream and some improvements in trading conditions and in monetizing our products. Moving to the next session and here before I give the floor to Mauricio Diniz who will be giving us operational and commercial highlights, I will just mention the evolution by quarter of our trading conditions. to continue evolution of commercial aspects quarter by quarter regarding the uptakes of oil. In the first quarter, average selling price was $75.5 per barrel, 91% of the average brand price. Overall, Our onshore business line contributes a lot to the consolidated average, mainly given the integrated logistics through the oil pipelines. This model brings us some relevant points in terms of unit cost, but the integrated logistics undoubtedly gives us a positive effect in terms of monetization because of this integration and more flexible production chain. As for the evolution of gas monetization, we continue to be very competitive in monetizing the molecule with a selling price of 13% of the average brand price. This is because of our commercial efforts to diversify our portfolio of customers, but also the selling modalities of the contracts. where we always look for an adequate proportion of those firm ones that bring us safety and the interruptible ones, spot modalities or put modalities where we can capture an upside. Having said that, I now turn the floor to Mauricio Diniz, who will be presenting the main operating highlights. Thank you, Matheus. We'll now speak a little about production divided by cluster. Starting with Potiguar Complex, as we can see in the upper chart, we highlight a continuous and consistent increase in production at Macau cluster. We reached the mark of 7,400 barrels of oil equivalent a day, 81% of that being oil production. If compared with Q1 2023, this means a 68% increase, mainly due to the optimization of well production, the completion of drilling and start of operation of wells linked to the campaign in Salina Crystal, and some workovers in the area. As I will be showing in a minute, the lifting cost of this area maintains a reduction trend, being 6% lower quarter on quarter. For Macau, we also highlight the continuity of the works and adaptation of facilities to increase production, the expansion of processing, processing transport capacity of fluids and gas treatment and processing. On the bottom chart, we can see the progress of production for the whole particular complex, which is slightly higher quarter on quarter along Q1 2024. carried out 265 well activities, supported by a fleet of 12 work-over rigs and one drilling rig on site. The capex of the particular complex amounted to almost 50 million dollars, basically linked to the rig work and adaptation of our facilities. An important project is the steam injection in Alto dos Rodrigues, which includes an overhaul, complete maintenance of the generators, which were inoperable, and revitalization of four steam stations. One of them, station 5, was already revitalized. with a solution of four steam generators that were relocated from other areas. One of them is already operational. In this station, we are going to have two more steam generators expected to arrive in Q3 2024. When the installation of the six generators is complete, in that area we are going to have the injection of another 2,000 tons of steam daily. The works on the other steam generation stations are on the way to receive three new generators starting in Q4 24. With these 2,500 tons that are additional We will have installed and operational all our steam needed for the current production phase at Alto do Rodrigues cluster. I'd like to remind you that replacement of the contract that we had last year. The contract for these new generation generators, the contracts have been signed, they are ready and they are in a commissioning phase and in the preparation phase to be delivered to Brazil. On the next slide, let's speak about Reconcavo complex in the state of Bahia. In this quarter, we maintained a continuous increase of production, and this production has been increasing along many quarters, as you can see. In comparing with Q123, we increased production by 32%. In Bayou, we are operating with 7 work-over rigs. And we'll have another two drilling rigs in this quarter. One of them is already operating in the CXF field that started drilling last week. These seven rigs worked on 36 wells, considering workovers, equipment replacement or exchange, and well reactivations. The CAPEX program is mainly invested in the work over a campaign and on revitalization of the facilities, aiming to have production increase. On the next slide, let's speak a little about Papatea cluster. As mentioned in the presentation of our earnings last quarter, we are acting on the wills, exchanging the wills and working on the umbilicals to resume production. Of these, Papa Terra 12 and 37 have gone through work over rigs and we are working on the umbilicals to put them back into production. The rigs, once they leave Papaterra 17 now in May in the TLWP, the next one will be Papaterra 50. So in the next quarter, we are going to have resumption to normal production at Papaterra. These ESB or seabed pumps operated, as Matteo said, during the expected lifespan of three to four years. The important thing is that we are going to have new pumps in five of the seven wells. Another important well where the pump was not exchanged is in the TLWP. With the new well to be drilled, Papaterra 52, the rig has been contracted and we are waiting for the environmental license to get started. We have been in frequent contact with IBAMA. All documents and studies have been submitted and we are monitoring the process day after day. IBAMA has given our operational licenses. One example is that we are completing the abandonment of five wells. with this rig in Papaterra. A big improvement in Papaterra refers to integrity recovery. It is responsible for a good part of the losses that we had last year. We can highlight the availability of the tanks. I'd like to remind you, we would have offloading every 10 days. Now we can offload every three to four weeks, reducing our cost. The offloading system. As soon as we had the closing, we were operating with an offloading system, an emergency offloading system. Now in Q1, we completed the recovery of the main system and we are now in a commissioning phase for this system. We completed the overhaul and complete maintenance of one of the power generators, ensuring greater reliability for the unity. Maintenance of the others is being performed with new parts, thus also increasing reliability of these other generators. A big change, however, regarding integrity. will be the startup of the maintenance unit. The good news is that this week we got the environmental license to operate this unit and next week it will sail to be close to 3R3. It will be connected for 90 to 120 days with a production stoppage expected to last 15 to 20 days in the beginning of Q3. On the next slide, let's talk about Perua Cluster. Here, we see production that remained stable at around 460,000 cubic meters daily and the lifting cost close to $5 per barrel. The unit underwent the necessary integrity repairs and now produces aligned with gas sale contracts. On the next slide, Here we see the general evolution of our production, as mentioned by Matheus, which reached 44.4 thousand barrels of oil equivalent produced daily. This was impacted by the stoppage of wells at Papa Terra, which are undergoing workovers. This should be regularized in the next quarter. As for oil production, our stake with 34,200 barrels of oil equivalent daily, 70% of that coming from Puteguaya cluster. As shown in the fields that were closed earlier on, the growth of the fields improvements in integrity and management coupled with the quality of our assets will allow us to continue our growth trajectory of our production, getting the most out of our assets. I now turn the floor to Pizarro to detail reserve certification and the financial highlights. Thank you, Denise. Good afternoon. In the next session, we will present an update of reserve certification of the company. I'd like to remind you that The independent expert we use is DeGaulle and McNaughton, and we do this update once a year. Comparing the 2024 results with the previous certification, we had an increment of 29 million barrels of 2p reserves. Partially offset by 15 million consumption of reserves in 2023. We continue with excellent metrics of present value more than six billion dollars. I'd like to remind you that Certification does not consider the value of mid and downstream assets and that the NPV calculation of the company includes income tax and social contribution, which is not always included in the stratification of other companies. Our capex per barrel into P reserves remains very efficient, below $6 per barrel. We maintained a high proportion of oil, 89% of total reserves, and more than 71% of the two P reserves are classified as proved. At the peak production, we have about 14 years of lifespan for the reserves. In other words, well above the average of our comparable peers in Latin America.