Brava Energia S A S/Adr

We joined forces to create value and to maximize results. We operate in more than five basins with eight producing assets. We work with safety, efficacy, efficiency. Onshore Offshore Adjusted EBITDA Net Income A thousand employees, direct employees plus 8,000 indirect collaborators to be reserves. Social impact actions in 153 communities with more than 9,000 people benefiting. We are made by Brava people. Brava being also in Portuguese, courageous, brave, courage that takes us beyond. Good day, everyone. Welcome to Brava Energia's conference call to discuss EQ324 earnings results. The presentation and comments about the results will be made by the officers of the company. We highlight that we have simultaneous interpreting available on the platform. To access interpreting, just click on the interpretation button at the bottom of the screen and choose your preferred language. This webcast is being recorded and will be available at Brava's investor relations website, ri.bravaenergia.com, as well as the presentation we are showing here. We inform that all participants will be in listen-only mode during the company's presentation. Then we will have a question and answer session when further instructions to participate will be provided. Before proceeding, let me stress that forward-looking statements are based on the beliefs and assumptions of Bravo Energia's management and on information currently available to the company. Forward-looking statements may involve risks and uncertainties as they refer 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 to the industry. And other factors may lead to results that differ materially from those expressed in such forward looking statements. We will now begin the presentation, giving the floor to Mr. Odoni. Mr. Odoni, you may proceed. Good morning, everyone. I'd like to start thanking all of you for attending this, which is the first conference call of BRAV Energia. Well, you saw the disclaimer slide, which is well known to all. This slide brings the highlight of Q3 24, but I'd like to say that we've been working together for only three months. In this period, we adjusted the team At a 10% reduction in our headcount, we simplified our organizational structures, reducing the number of managers, and we restructured the company so as to reinforce accountability and to improve deliveries. We integrated our onshore and offshore operations. We have clear people responsible for the operations. We have somebody in charge of CapEx and investments. We also implemented the new brand and visual identity of the company. We are rationalizing the portfolio. We plan to divest from assets which are not a priority. We postponed the decision to invest in the Oliver Field. and we have also regard about work position going on. We continue to increase steam generation in Alto do Rodrigues. Jorge, responsible for the onshore operations, will present that part. We continue to advance integration and in capturing synergies brought along by the merger, as Pedro will detail. We completed strategic planning. that we had soon after the merger. We defined the target portfolio and the target financial results of the company and an action plan with more than 130 initiatives to improve the efficiency of our operations and to align the different managements of the company. We all need to be on the same page to improve results and we started preparing the integrated sustainability report of the new company. In addition to all that, We worked hard to get first oil at FBSO Atlanta and to resume production at Papa Terra in a sustainable way. With this, we prepared the company to become a more efficient, pragmatic, meritocratic company that is able to reduce costs and get more value out of our assets. All of that has been done in an unfavorable environment, the reflection of a number of factors. Oil prices have been oscillating. FPSO Atlanta is not in production yet. A and B scheduled the inspection of the mediuming system for the end of the month and Papaterra production was stopped for maintenance services and to guarantee the integrity of the FPSO, as Mastrangelo will explain to us in a moment. The results of this quarter show the importance of a balanced portfolio With the main offshore fields with limited production, still we were able to deliver good results and maintain a robust cash at a moment of elevated capex. Capex will reduce when we complete phase one at Atlanta, as Pizarro will be showing you. The results will improve quickly with the imminent start of production of FPSO Atlanta, the resumption of production at Papa Terre, and the completion of the acquisition of Marquis Desconches. Once that is behind us, we will start reaping the fruits. The ramp up of the offshore production OPEX federal will drop, in fact, and we'll have a strong cash generation expansion and consistent a consistent increase in the remuneration of our shareholders via dividends. The combination produced the company with a robust, diversified and integrated portfolio. More than 500 million barrels of proved reserves in addition to onshore, offshore production assets, midshore, midstream, upstream. This portfolio will allow us to grow in time and we count on different assets at different maturity stages. to have a focus and expertise in managing these assets and especially to ensure the deliveries we structured the company with teams dedicated to upstream, both onshore led by Jorge Boile here and offshore led by Mastrangelo, mid and downstream led by Pedro and exploration led by me. Next slide. We'll start now with the operation highlights. We'll speak a little about production and then I'll turn to our employees to detail. This slide shows the potential production of the company. With both companies together in the first half of the year, we see that even with the early production system of Atlanta and its limitations, production of the combined companies got close to 80,000 barrels daily. In 2025, you're going to have the ramp up of FPSO Atlanta and the result of other actions that we are taking. Now I turn the floor to Mastrangelo to show the evolution of our offshore operations. Next slide. Thank you, Décio. Let's start with Papaterra. On the slide, we have the maintenance timeline. A lot was done. to re-establish the systems to put Papateha back in operation recovery of the power generation system and before I get into details about Papateha we have to understand Papateha as a whole because you can understand what we are doing today and the whole context The reservoir of Papatea has more than two billion barrels of oil in place. Two billion, more than two billion barrels of oil in place. The recovery factor today is less than 3%. So what does this mean? It means that we have to think about the future, what we have to do now to increase the slow recovery fraction. Any extra percentage means a lot of oil. And this is what we are envisioning for the future of Papa Terra. But we cannot think about the future if we don't focus on the present. So we have two phases here. What is being done today at Papa Terra today. We are working on the recovery and integrity of many systems. We were planning to have a certain sequence, but there was a change in the regulation which prevented a joint operation. And we had a waiver to have people on board. But this change in the regulation happened some months ago. And with that, we could not prepare Papaterra for the future if we don't carry out these activities which were scheduled. We are working to end this first phase of integrity, work on integrity and the recovery of some systems. We get into the final stages of this now. We expect this first step or first stage to be completed in December, and then we'll have return of production. And then after that, we'll start working on Papaterra of the future, a number of other actions to increase recovery fraction, for example, to have more wells. And I'll speak more about that later. Another example. would be to start having water injection to increase the recovery of oil in place. But in order to think about the future, we have to work on the present and we're working to resume production in the coming weeks in the month of December. Next slide. Let's give you an update on Atlanta. Atlanta is a greenfield project. It is a big, big project. And in the bottom of the slide, we have the timeline of the deployment of such a project, which is very challenging, but you can see the capacity of deliveries. According to the original schedule with all the wells drilled, the ones that were planned and drilled on time installation of Christmas trees. installation of the multi-phase pumping system. All of them have been installed. So we are on schedule and more. We are on budget. So what's happening now? We already have the license granted by IBAMA. The operation license was obtained with all of the necessary requirements that we had. We have 100% collaboration from ANP. They are putting a lot of effort to meet all of our demands, even with a lot of homework on their plate. But ANP is giving us a lot of attention. They scheduled the inspection of the metering system at the end of the month. Alongside that, at the beginning, we have 70 conditions, starting conditions. These are items that they observe that could bring improvement in terms of safety and operations, and we're meeting those. We still have 19 conditions which are practically met. We just have to get some evidence on board and we're going to do this concomitantly with the inspection of the metering system in a couple of weeks. So I'll schedule for this collaboration with A&B. and we value a lot of participation of the regulator. All of that will be finalized in November and we'll be ready to start production. More importantly, now we have a bigger portfolio of activities, of projects, so that we can increase our firing power in deploying What I said, Papatejo, of the future and the next phases of Atlanta. The Atlanta unit was pre-invested for new wells. There is no pre-investment to be made for the Atlanta unit. It's just about tiebacks. If we were able to deploy the whole project on time for a tieback, it's just to add a rig, the flow lines and connect them. I cannot give you a lot of color on this because we are just completing negotiation with some suppliers, but In about two weeks, you will be hearing from us about the signing of contracts of low and mid items for Phase 2 at two more wells at Atlanta, two more wells at Papaterra, and possibly another well in Malamby. All of that was only possible with the synergy that we have in this new company. It's not going to take too long, maximum two more weeks. You will be hearing from us about phase two of Atlanta and of the future. Next slide. On this slide, what matters is B C 10 Porky does conscious we're getting close to the closing there's very little to be done actually of relevance is that the accounting of the cash flow started in June of last year, actually July of last year. But you know, this is very close to coming to an end. And the rest. And we have two gas platforms are very similar ones on a tee. The operator informed us that they expect production return in the first quarter of 2025. And Perua is ready to produce more. It suffered a little bit because there was a lower demand for gas. Uruguay, Tambaú, now with the portfolio of projects we have, we can be more selective in renegotiating with Petrobras. What to do with the SPA sales purchase agreement and for Oliva in comparing the assets and where it's worth investing and focusing. We decided to revisit this strategy for Oliva and we decided to postpone the final investment. And now I'll turn to Arie to speak about Onshore. Good morning. In Onshore, we had a quarter marked by the start of the drilling campaign. In June, we drilled the first two wells. In this quarter, we drilled 15 wells in Serra Canto do Amara. And we had 108 workovers in addition to the 15 drillings. We are focused on improving uptime of our drilling, work over and pulling rig by hiring rigs specially designed for our operations. Is that the case of the pulling rig which we recently started operating in Alto do Rodrigues? A lightweight, small rig specially designed for our fields. And we heard the drilling rig to drill the standard ridge at Seher Field. This rig has a working system, a system that allows us to mobilize the rig from one well to another in just a matter of 12 hours. And we don't have to demobilize the rig for that. So this is the kind of efficiency we are getting with resistant rigs. We are also planning to reduce the number of rigs to get to an adequate number for our planned activities. In the middle chart, we show you the performance of BRAVA in increasing production at the field when we moved from the former operator to BRAVA. If we compare the last quarter of the previous of the former operator versus Q3 of 2024, you can see that all of our fields So, an increase in oil and gas production, with the exception of Alto de Rodriguez, because that is a field with heavy oil. It is in a phase of re-establishing steam generation. If you don't know, Alto de Rodriguez is part of the Potiguar cluster, which started operating June 8, 2023. In June 30, the steam generation system was discontinued. The field had two sources of steam generation. One that provided 80% of the steam, the rest was supplied by steam generators. After that date, we focused in the revamping and remanaging of the steam generators that existed there. And we are complementing steam injection by acquiring new steam generators, which are ready to start operating. Some of them are.

Moving forward.

This chart shows the evolution of production of Alto do Rodrigues field and Strato field with the steam injection project. We see not only the evolution, but we can see a correlation of the curves. In gray is former operator, in green BRAVA operations. When we started operating the field, we can see a strong reduction in steam generation. That's because we had the thermal soil exit and after that date we started again resuming growth in steam generation. And this will allow us to increase oil production at this field with the new steam generators acquired abroad. six from China, three from the United States. All of these four are in operation and started injecting, will start injecting steam from November to January of next year. The remaining five are still in the final phase of construction. They will be ready to operate starting in August of 2025. So nine in total. With that, We believe that we will continue to grow oil production at Alto de Rodriguez, just like we are doing in the rest of our portfolio. Okay, now I'll turn the floor to Pedro. Thank you, Boeri. Next slide. Good morning, everyone. Here I will speak about the results of trading and speak a little about our plans for the future. Q3 was stronger in terms of realization of average spreads in exporting oil. And we're now working to take advantage of the materiality of our portfolio and possible synergies among the assets and diversification of the company to extract more value, either expanding exposure to the emergence of the chain. I'd like to highlight Low Sulfur Bunker. That's a product that the company produces at Atlanta, a little bit at Parque Desconches, and also the product with the final specification produced at Guamare and live opportunities of optimization and logistic combinations given the change we'll have in the inventory and the storage capacity of our platforms with the operation of FBSO Atlanta and revitalization of our ability to store and offload at Papaterra platform. will form larger batches for exports and new quality combinations to better serve the market. In the gas environment, the trading margins remained stable despite a lower demand by the market. This was due to a slight variation and oscillation in the total production at Perua Field. Now we are working to diversify the base of contracts bringing Brava to new states of Brazil, new distribution companies and serving new clients at the free market and getting more value out of our gas infrastructure. On the next slide, we have our synergy. With the merits that supported the creation of Brava Energia, we had more than $1 billion in present value of potential synergies divided into a very detailed action plan. Here divided into three main areas. First, the capital allocation. Two, operations. Three, trading. In these three months of the integration, we've done a lot in the area of synergies. In terms of capital allocation, we highlight the creation of about 2.3 billion rials in goodwill through the integration of en alta participações. The upgrade, we had Fitch, an S&P rating. It upgraded Brava and all of its securities in the market. the inclusion of four subsidiaries, starting a broad process of organizational simplification, which will allow us to expedite the recovery of tax credits for the combined company and the prepayment of 180 million reals or BRL in debt that is expensive to the company in a process to start liability management. On the operational side, as mentioned by DSU, we had a broad process to optimize our headcount, about 10% reduction in the headcount of the company. Consolidation of the air and sea supply logistics, particularly for offshore. Integration of future campaigns, Atlanta Phase 2, new wells at Papaterra and the area of Peruá and Malumbé, as mentioned by Mastrangelo. regarding trading integration of risk management, considering gas and power, as well as the building of new commercial strategy for gas. As we can see on the right, we have a very detailed action plan that we hope will deliver a lot. And we expect to obtain all of these synergies in the next 12 months. And I'll turn the floor to Pizarro for the financial highlights of the quarter. Thank you, Pedro. Good morning, everyone. We will now move to the financial highlights of Q3-24. I'd like to highlight that the balances presented a pro forma heading in delta and 3R numbers since the third quarter of 2023 for comparatively. So starting with net sales, about 2.2 billion BRLs in Q3, 1.5 in upstream, and practically the same amount in mid and downstream, with 850 million BRL in intercompany venues. The biggest impact in the quarter were the maintenance stoppages at Papa Terra and this connection of the first wells that were connected to Petrogel at Atlanta. On the next slide, we show you, we break down the net revenues onshore and offshore. We can see volatility We see onshore resilience and the impact of the offshore assets as mentioned of the total practically 90% of the revenue to respond to oil and in the year to date evaluation of 42% relative to operations in the Potawatomi Basin and 28% at Atlanta. On the next slide, we present adjusted EBITDA of the company, even with restrictions in offshore assets, which is a little bit over $130 million in EBITDA in Q3. It's important to highlight the potential of the company. comparing the first quarter and adjusted EBITDA even with just three wells in operation at Atlanta. I'd like to remind you with the new FPSO at Atlanta, we are going to have six wells in operation.

On the following slide, we present the lifting cost considering the third ring of FPSO Petrozoa. In Atlanta, we concluded the quarter was about $20 per barrel of equivalent oil and Excluding chart green, it would be slightly below $18 per barrel. On the next slide, we showed the CapEx distribution and an accrual basis in the period by activity and by asset. The higher financial volume refers to the submarine systems in Atlanta and the campaign to connect the six wells to the new FPSO. A relevant amount of this capex, about $165 million, is the forward capex from the multi-phase pumps that will be paid over the next 12 years. The following slide, we see the company's capital structure, concluding the period with $1.2 billion in cash equivalent and $1.3 billion in financial net debt. Adding the earnouts, total net debt is $1.6 billion. It's worth noting that we have $395 million in receivables with Ensign, which will be paid during the partnering contract of FPSO Atlanta. On the next slide, we see the cash flow and the position of oil byproducts in the company. It's worth noting that the operating cash was impacted by production of offshore assets, as well as delinquency of NPA in Papaterra, today with a debtor balance in about 315 million BRLs, in addition to the costs resulting from the transaction. The entry of funds due to the sale of 20% stake in Atlanta was offset by the cash effects of CapEx, highly connected to Atlanta, as well as the payment of dividends and the amortization of the principal sum debt. So we conclude the quarter with about 9.5 billion BRLs in cash. As for derivatives, we have slightly more than 6.7 million in contracts, 565,000 in NGFs concentrated in the next six months and more than 6 million and the color format between 57 and $91 per barrel. So I'll turn the floor back to Decio for his closing remarks. Thank you. So during this period, since the beginning of the combined company in August, we've been dedicating to the planning and the priorities in the short, medium and long-term. There were a lot of discussions. We had the cooperation of the board and I bring you a summary of our priorities and aligned between the management and the board for the coming months and years. Full focus on the short term is to resume production at Papa Terra to have the first soil in Atlanta. and to advance in the corporate optimization so that we can capture the synergies produced by this transaction. And deliver these synergies, adjust the portfolio so that we focus our activity in the most important concessions for us. We have 20% of the concessions responsible or responding for 90% of the companies of Bita We have to rationalize the portfolio through partnerships and divestment and work hard in the improvement of our efficiency, reducing costs and increasing free cash flow per barrel. This will be implemented with capital discipline, prioritizing the most profitable projects we've mentioned, but a few examples of the adjustments being made with the objective to increase cash generation and return on invested capital. And with that, we'll be able to increase the payment of our shareholders through dividends or share buyback. So what we've done today, since the work that's being done and the short amount of time since the merger, I think the presentation details the potential the company has, which is not reflected in the price of the share that suffered with the uncertainties and frustrations caused in recent months with the disappointment in the delivery of offshore production. But this is about to change. The board and the management have developed a consistent plan and the priorities are there on the screen to steer the company in coming years and are aligned in their implementation. Many board members and directors are relevant shareholders of our company. 2025 will be a year to achieve results with a highly trained and able team that we were able to show with the implementation within budget of Atlanta. And we've created the conditions for that with all of the growth potential that we foresee. We will start delivering consistent remuneration compensation to our shareholders via dividends and buyback. That's what we had to share with you in this presentation today. And now it's time to open for questions and answers. Thank you all for your attending. We will now begin the question and answer session. If you'd like to ask a question, please click on the Q&A icon at the bottom of your screen and type your question. And to ask a question through the microphone, please click on the same icon and type your name and company or click on raise hand. First question, Leonardo Marcondes, Bank of America. Please, you may go ahead. Good morning. Good morning, Décio, Pedro, Pizarro, everyone. Thank you for taking my questions. I have two. The first about the asset portfolio, Décio just mentioned the optimization of the portfolio. I'd like to understand the plan for these assets that are not part of the company's core. So in that scope, I'd like to understand whether the divestment of partnerships should already start being implemented in 2025 and whether or not it makes sense for us to be thinking that you may leave the reconquerable basin, which is where I understand you have the smallest assets in terms of reserve. And my second question is about CapEx. I'd like to know whether you can break down the capex for us for next year so that we can understand a little bit better the company's cash generation potential for 2025. These are my questions. Thank you. Good morning, Leonardo. I apologize. We could not hear your first question. If you can say it again. Yes, of course. It's about the asset portfolio. to understand a little bit better what your plan is for the assets that are not part of the company's core. If you can talk a little bit about the divestments and the partnerships, the timeline of that, if we could, we should expect this for 2025 already, and also whether it makes sense for us to think that you may leave the Reconcavo Basin, which is where I understand you have the smallest assets. Well, we concluded now at the end of October, beginning of November, the strategic plan that we developed. And this plan indicates that if we focus efforts in the main assets, we'll have an improvement of our earnings and the company's value. So we are moving in that direction, we'll be prepared for those operations, be it divestment or partnerships. As for Reconcavo, there is no decision to leave the basin of Reconcavo or not. Our goal is to optimize our assets. And the different areas we operate, so there's no decision to leave Reconcavo, but there are assets at Reconcavo and Potiguar that we are reassessing. So I hope we're able to start this process and have results quickly. Your next question was about capex, right? Yes. If you can work on a build up with us of what we can expect in terms of capex, the percentage of capex for each asset, more or less, just so we can understand the company's cash generation potential for 2025. Well, now in 2024, especially this period of implementing Atlanta's phase one production system, a big increase on CapEx that we expect to bring down over the coming months with the connection of the wells to a new FPSO. Our objective is starting in 2025 to have a reduction of CapEx, to have a more sustainable CapEx, that fits in our cash generation comfortably. So I ask Pizarro to add to this information. We don't have data, our final data. We're still working on the budget for the year. It's not finalized. And we also have to be cautious with the guidance that we may give to the market. Thank you. Leonardo, as Décio said, We're working here and reassessing the company's CapEx plan. So, of course, we have a breakdown between onshore and offshore. On offshore CapEx for the year 2024, there will certainly be a significant reduction. considering we don't have any well drilling phase for 2025. Maybe at the end of the year we'll start drilling, but that is not planned for the coming three quarters for 2025. Atlanta is also with a decreasing CapEx level compared to 2024 considering that most of its full development system has already been implemented in 2024. and we have a remaining there for the beginning of 25. Onshore, considering this assessment of the main fields that are in our portfolio, the dedication and reduction of the number of rigs in operation will also allow for a reduction in the total CapEx value. So starting in 2025, definitely we will have cash generation, of course, depending on the oil price conditions and so on, but we will certainly be at a condition with greater operating cash generation when compared to CapEx. So the difference tends to increase with free cash generation available for the payment of financial obligations, as well as this be leveraging past that the company plans to follow in the next 12 months. That's very clear. If I may, just a follow up. Pizarro just mentioned about the remaining capex for the system implementation, the full development system at Atlanta. Can you tell how much capex is still to be done after until the first oil of the new platform? Is there any estimate or? What we can say, Leonardo, is that we have $165 million of deferred capex for the multi-phase pumps installed at the Atlanta field. This is already in our CapEx, but it's going to be for the next 12 years. And during the campaign to reconnect the wells that came from PetroZell, there's still some remaining CapEx of these campaigns. that including the PLC campaign or the support vessel that reconnects this. So the most of this capex will take place in 2024. That's very clear, Pizarro, thank you. Next question comes from Bruno Montanari, Morgan Stanley. Bruno, your microphone's open. Good morning, thank you. I have one follow up and two questions. Talking about the recycling of portfolio, could you share with us the strategy in the company's mind for mid and downstream, especially within those options that you have to monetize that asset better? Where is it headed? What's the direction? My next questions, one is about the priority. If we think about the leverage versus dividends, as Pizarro said, What's the sequence of events? You start generating positive cash at some point of 25, deleverage. I'd like to understand whether that's more for the first half or second half of the year. What's your timing expectation? That'd be very helpful. And the last question, you mentioned you expect to see a lifting cost reduction with the increase in production. That makes total sense. But thinking about those $20.6 per barrel that you mentioned, if you could give us a range for where this lifting cost could be headed with the assets operating in full capacity. Thank you. So our intention, as I mentioned, is to focus on the most important assets onshore. Seeking divestments or partnerships in the assets that are not a priority that also frees the attention of our teams and gives focus to them, reducing OPEX, CAPEX. There's a series of positive outcomes that we'll tap into. Midstream is important for us and downstream and the Potiguar Basin because it allows us to have an adequate outflow of the production that's relevant there. But we're not. We're not considering divestment in the assets and partnerships, maybe we may develop in that region. And downstream and midstream, maybe Pedro can give you more color. He's actively involved in these discussions. Thank you, that's you. So, Bruno, I think it's a great question. Just to put it into context in the midstream today, the company operates a port terminal at Potiguar Basin. It operates and actively participates in the gas outflow process and the processing of gas, both in Potiguar and Reconcavo basins with our participation in the Manatee field. So there's more than 1000 kilometers of pipelines, more than 10,000 cubic meters of gas processing capacity and a broad capacity to for the flow of oil from the particular oil or oil byproducts from the particular basin. So we're working on a strategy to extract more value from this position, either in an integrated or isolated way. There's a discussion ongoing with Petro Reconcavo seeking synergies in the particular basin, especially in the gas infrastructure available there at the basin. And how this partnership can add value to both companies. So we're studying and advancing in this project. We expect to have it concluded shortly. So about the capital structure and the leverage of the company. Bruno, basically the process comes from the beginning of operations in Atlanta or the restart of operations in Papaterra. The relevant increase in production that will occur between the fourth quarter and the first quarter of 25. which will continue in the second quarter of 25 with the entry of an additional two wells in Atlanta that were already producing at Petrozal. And naturally with the increase in production, as you said, during the presentation, we start to be at a production level that's a lot closer to the first quarter of this year in the around 80,000 barrels than we have in the current production. So with that gas generation also gets close to the first quarter of 2025, where we had $250 million EBITDA. So here, if we look back, we can reflect some of what the company will be in 2025. And the capex volume, as I said, is a lot smaller. So with that, we increase cash generation, increase EBITDA, tend to reduce net debt and the company's leverage as a result throughout the year of 2025. So it will gradually drop, noting that we always look at the last 12 months. That's why this drop is not immediate. If we, on an annualized basis, we are able to see a faster perception of that drop, but that will unfold during 2025. Naturally, we also generate income in our operations with the potential to pay out dividends already, even if it is at the minimum mandatory level in 2025 to get to the company's target leverage. We also have a trend to start evaluating the distribution of dividends based on the company's cash generation in 2025. And as this leverage gets closer to the target leverage that we have, we will be able to release and pay out more dividends to our shareholders. I'll ask my friend Alou to complement the lifting costs, especially in Atlanta, because as we have the ramp up of FBSO production, as he mentioned in the presentation, since the fixed cost of the chartering and the operations already are given, the increase in production will reflect into a significant OPEX reduction in Atlanta.

Exactly, Bruno. If we look back, the early production system at Petrogel had a production of 20,000 barrels. Our lifting cost net of the chartering was close to one decimal. But what do we see now looking forward? The investment has been made. So increasing the number of wells, we will dilute our OPEX and reduce our lifting costs. This is our intent, both at Atlanta and Papa Terra. And we also will capture these wells. This has not been captured yet. And we intend to capture the synergies between the fields. When they operate simultaneously. Because one of our highest costs are logistics ones. For example, boats, the vessels. The vessels which are necessary in case we have an emergency oil spill. So today we have individual plants. Every field has its own independent logistics arrangement. So this will take some time. It will take some time for us to consolidate this into just one single plan. But this will have the synergies of operating two fields concomitantly. So this will reduce our operating costs. And this is just one example. Also diesel consumption at Papa Terra. This is already in our plan for Papa Terra today, maximizing the use of gas to reduce diesel consumption because diesel is a high cost item today at Papa Terra. Not to mention that with this, we will contribute to reduce our emissions. So you see a number of actions that we are planning for the next phases to reduce our operating costs. And with a higher production, we'll reduce the lifting costs and we'll enjoy the synergies to reduce our OPEX. Well, thank you for the questions, Bruno. Thank you. Next question from Pedro Soares with BTG Pactual. Mr. Soares, your microphone is enabled. Good morning, everyone in the Bravo team. I have a follow up question about cash generation. I think that you were very clear about the expectation of generating cash in mid of next year and operating cash above the level of investments, which will allow the company to deleverage. But perhaps you could give us more color regarding the oil price that you're using for this assumption. And a second question is regarding dividends. Given the stage of the operation and a series of operating priorities that you still have for the short term, my question is, you mentioned a target leverage. that would allow for dividend payout. What are you envisioning as a target leverage so that you can pay dividends above the minimum required? These are my questions, thank you. Well, to be objective, something we haven't decided yet, Well, conceptually, we expect a leverage of 1 to 1.5 with an oil price of 60, 70 dollars. This is what these are the assumptions we are discussing at the management. So we can think about paying dividends to the shareholders. And I think that we can get to these levels very soon. in terms of cash generation bid rate is exactly the range that we are working with in our projections. In other words, in a more optimistic scenario, close to $70. In a more pessimistic scenario, we are simulating cash generation at $60 per barrel. But we tend to have an operational cash generation that will exceed the volume of investments in our CapEx. Okay, follow up question then. Thank you, Pedro. Can you still hear me? Yes, we can. If I may compliment Pizarro, you just mentioned levels of $60 per barrel and the operating cash flow would be exceeding the investments. But do you understand that the leveraging, if prices stay at these levels, do you think that the leveraging would need to rely on some divestments by the company or not? Pedro, all we've been working with is to optimize the portfolio. And the main effort is to simplify the operation of the company. To have resources coming from divestment of smaller assets, this is not very significant. Of course, we do debate the possibility of divesting some of the operations, perhaps at a greater scale, but this is not the base case. We understand that it is totally feasible to reduce the company's leverage gradually along 2025, even without divestments. Just to give you an example, one more time, if we annualize the first quarter, we have EBITDA above $1 billion. We have a financial net debt, including earnouts, of about $1.6 billion. So leverage is already very low, even if we consider the production situation of the first quarter. What changes from the first quarter to the end of 2025? We'll have FPSO Atlanta in production, have a 20% reduction given the sale to West Lawn. That's a positive balance. And we are at a very final phase of approving BC10. We start having 23% working interest of that field. So it's a new production increment. And lastly, we expect the startup of operations at Manatee, greater stability of production at Papa Terra, increased production mainly in the Potiguar So it's all about increasing production, reducing leverage, and having the possibility of thinking about share buyback and dividend payout for 2026 in a more significant way. You see, Pedro, the reason why we are rationalizing the portfolio is not to get proceeds, but to optimize the portfolio and focus on our core activity and increasing efficiency. It's about fine tuning. It's not because we need the proceeds. Perfect, Pizarro and Desio, thank you. Next question from Ms. Elena Kelm with XP. Ms. Kelm, go ahead. Hello, everyone. Thank you for taking my question. I'd like to know about your challenges. We understand I do want to focus on Papaterra and First Oil of Atlanta for now, but I'd like to hear from you. What are your main concerns you have today? What can go wrong? What should you focus on? Is it licensing? Lack of inputs in the market? Something related to the assets themselves that could be concerning. What are your concerns? Oh, and my second question is about the reserves certificate. I don't know where you are in terms of the reserve certificate. What changes should we expect in terms of investments, development of reserves? If there will be a change of focus from onshore to offshore and what to expect from the production curve? All right, we spoke a lot about the priorities and you yourself mentioned them. Our very short-term focus will be on the main catalysts we have to increase production and cash generation, i.e. FBS O'Atlanta starting up and then ramp up production at FBS O'Atlanta. We start with two wells along 2025. Production will count on six wells. and then Papaterra Resumption stabilizing production at Papaterra. And as Mr. Angelo mentioned, increasing production at Papaterra have a big potential to lift more oil from the Papaterra reservoir. But for that, we need to get ready. We need to be prepared and understand the reservoir better. You asked about difficulties and what can go wrong. Well, right now we are living through a moment where we have the consequence of some delays we had. given the circumstances that happened in the country in the last half year. Now we are overcoming that. We have imminent return of Papa Terra and imminent startup of production at FBSO Atlanta. So we had a difficult period exactly when we were integrating both companies. In addition, we are living in a period of oil price isolation. Looking forward, you asked about the upcoming challenges and what worries us. Well, what we are living today is a situation where at this moment in time, We see the maturing of a number of oil producing projects in Brazil as a result of decisions made in the past, which are materializing now. In the last six to eight months, we saw the simultaneous arrival of a number of platforms and FPSOs to increase oil production in Brazil. And this overloaded the regulatory agency and IBAMA. And they need to give the licenses and authorizations by ENP. We had a number of FPSs arriving in Brazil in recent months. They were fighting with us for the resources of the regulatory agency. That is a concern looking forward because as we continue to move forward, with the next phases of production at Atlanta and Papaterra, we will need agility on the part of the regulatory agencies to continue to give us environmental licenses and production licenses. We started early at Atlanta, a very favorable moment. And all the procedures unfolded really well and fast for the licensing of Atlanta. Never did we have a problem with that. We had the standard operation by A&P. Now, with the simultaneous arrival of FVSOs to Brazil, that brought some difficulties. So looking forward, we expect that the regulatory agencies will strengthen their ability of work. This is important for our activity for the creation of value in Brazil. Something else. Unlike what we had when we approved and developed the Atlanta FBSO project and the six wells connected to the FBSO, the movement of the industry was different then. We had availability of equipment and availability of services. This increase in production in Brazil and increased demand is stressing the supply chain. So recently we have faced some difficulty in contracting equipment and services quickly. So these are difficulties that we might face in the future when we increase our CapEx activities in Papaterra and Atlanta. Regarding stratification, We are working to update the recertification of our two operations, both onshore and offshore. With a combination of TRIOR and Enalta assets, which now became BRAVA, we don't expect great changes in our certifications in the coming months. Thank you for the question.

Next question, Tasso Vasconcelos, UBS. Mr. Vasconcelos, your microphone is enabled. Good morning, Desio and everyone. I'd like to go back to the discussion of dividends. The first question, if you can share the rationale behind the payment of 90, 100 million now this quarter with the performer that of this nine months of this year, the company had a loss of 100 million. So I'd like to understand the build up and the timing of advancing this payment. My second question on the same topic. Can you give us more detail of how this agenda is in terms of management and board the priority of the discussion? And if there's any discussion to Change the frequency or how the payments will be made with a different payout or something more related to the cash flow. And if you allow me a third question, maybe at the opposite end of this discussion, I'd like to try and get your view, Desio and Pizarro. Whether this is a discussion that should be taking place right now, or if it would make more sense to leave it for 2025 after the resumption and after capturing most of the synergies. Thank you. Good morning, Tasu. The dividends that you mentioned, the 90 million were dividends from 3R that were paid out now. Pizarro was there. So it's pertaining to the previous year. So Tasu, that's the minimum mandatory required by law that refers to the previous year. And the planning of this payment was done. It had been planned for the third quarter of 2024, so it was nothing extraordinary. As for the future, I mentioned here that we concluded the strategic plan for the company's coming years. It was done. in cooperation with the board and the management and of course when you plan for the short medium and long term you have to get things organized so all of this discussion occurred with that in mind so adding the short medium and long term priorities as I showed in the long term aligned with the board's guidance and what we're going to do in the management so this issue of capital allocation, payment of dividend, potential buybacks were part of the discussion. They must be part of the discussion and it was important for us to be able to prepare. So at the time that this is a possibility to happen, we've discussed it. So that was the goal. We did all of this work in the planning and based on the board guidance, they gave us the orientation of how to steer the company in coming years. Even including the capex plan, right? Thank you. That's clear, thank you. Next question. Pedro Gama, Citi. Please, you may go ahead. Good morning. Thank you for taking my questions. Basically, two follow-ups. One about leverage. I'd like to understand how it would work when you get to the closing of BC10, if you can Open the result of the EBITDA, whether it could happen on that leverage. And the second point is what's the strategy for you with the clusters of FPSO Atlanta, if you want to do it on the short term or if it's more for 2025-26. And the second question is about the shape of production for 2025. In the year we'll see FPSO Atlanta ramping up production. We'll see Papatejo already operating, but how does it work for the increasing production of the Potiguar and what you expect as an output of production for 2025. Thank you. Good morning, Pedro. Thank you. For leverage, BC-10 is a transaction that was carried out by Enalta in the past, and we haven't had the final ANP approval yet. We are about to get it. And once we do, we'll be able to recognize results from the July 1st, 2023. So all of the production and the resulting EBITDA of PC-10 since those days will be recognized for BRAVA, for covenants purposes. So that helps in leverage for covenants. And we're always discussing the best way to address the receivables that we have. for FPSO Atlanta, Pizarro is dedicated to that as well. So I'll ask him to give you more color so that you have more details. Great, thank you. Pedro, as Décio said, all of this cash generation is something that will be calculated for covenant purposes. So BC-10 really does help considerably for the reduction of leverage as soon as we have the closing on the asset. As for the receivables, from Intel, the $395 million that I mentioned. We've been working with potential strategy to monetize those resources, obviously always evaluating total costs and the benefit of bringing a reinforced cash position to the company. So all of that has been worked by many departments, in particular the financial and legal departments, to evaluate some of the potential ways we can partially monetize that credit. There's a series of potential designs and we're looking at the best timing and the best proposal to bring this in. As for the production that you also asked, during the presentation, we showed some numbers, also some numbers of the first quarter of last year, which are a good proxy of the company's potential for 2025. As I said, We have the restart of Papa Terra, the ramp up at Atlanta, the efforts we're making in Portugal. We have restrictions to accelerate this, but you can get an idea with the information that we're conveying. Thank you. Thank you.

Next question from Rodrigo Almeida Santander. Go ahead. Good morning to the whole Bravo team. I have some questions. Perhaps let's start with what Mastrangelo mentioned. He mentioned the possible campaign in the future and I'd like to ask a couple of points so we can get prepared. or when you announce this possible campaign. First, looking at the status of licensing for these assets, perhaps you could list what is necessary both for Papa Terra, not much there, but looking at Malone B, And what can require environmental license for drilling at Atlanta? And equipment, equipment for the wells or rigs or unnecessary vessels to carry out this campaign. And what is the status in this process of acquiring equipment, services, et cetera?

We can learn a little more.

My second point regards the onshore lifting costs. I want to understand what we can think in terms of trajectory of lifting costs, perhaps already thinking about first and second quarters 25 when we have the steam projects operational in Rio Grande do Norte. And I got a question from one investor. He asked me to ask you, He wants to understand whether there is a strategic plan to be announced to the market formally. I imagine that he's expecting something similar to what Petrobras does for the market.

Good morning, Rodrigo.

Your question is linked to what Elena asked regarding our concerns related to licensing and suppliers. I think that we have been working well in that regard. As relates to environmental license, in the ring fence of Atlanta, Atlanta and Oliva, we have license to drill a large number of wells. So that is not a difficulty for us today. For Papaterra and Malumbi, yes. We need to file for license and get authorizations, the authorizations we still do not have. And again, we have those for Atlanta. We are thinking, and then Mastrangelo can detail this, we are thinking about carrying out an integrated campaign to enjoy the synergies of contracting equipment and services so we can do simultaneously two wells at Atlanta, two at Papa Terre, and possibly one well at Malumbi. As we were saying, phase two of Atlanta and the Oliva project, we took advantage of some letters of intent for the project to We would get the equipment for these wells. If we had not done that, these wells would only be drilled way ahead because today the market of equipment for deep water wells is very much stressed for the big investments being made in Brazil. So we could benefit in these projects that we were considering. to work on these wells at both Atlanta and Papaterra. I think Mastrangelo can detail this a little more. Well, Rodrigo, I think you kind of covered the items, not the lead items, but the critical ones to implement a project. The rig, the Christmas tree, flow lines. For all these critical items, We have contracts signed for already to be signed. That's why I cannot give you a lot of detail at this point. But in a couple of weeks, you will be informed of the details so that we can start the campaign the end of next year with this wider portfolio of drilling. We reduce quite a lot the cost of a daily rate of a rig, for example. In addition to mobilizing, demobilizing and cleaning the holes for one or two wells, we can now dilute among many, many wells. So we are contracting these long lead items to start the campaign in the end of next year. And at Papa Terra, this is on the way. This had been started at the time of 3R. You had filed for the license for two more wells. And at Atlanta, as you mentioned, in the ring fence, we have license to drill 12 wells. We've drilled only six. So this is not critical. in terms of getting a license from IBAM. Of course, we do need some approvals, but it's not a critical thing to start the drilling campaign at Atlanta. What's missing? Well, to have all these long lead item contracts signed. We intend to have them all signed. They were derived from the letters of intents for the joint campaign of Atlanta plus Oliva. This was a big plus in terms of overcoming this market restriction that we're having right now with many simultaneous activities going on. The market is overheated, but still we'll be able to have the campaign starting at the end of next year in December of 2025. The lifting costs for onshore? Ask a Boeri to mention. And Pizarro is planning a Brava Day. That's when we can communicate a plan to the market during our Brava Day. Boeri, the lifting costs? Hello, Rodrigo. The lifting costs for onshore? As I mentioned, we are adding steam injection in the heavy oil fields. And this increase in steam production will lead to an increased oil production and consequently dilution of the cost. But that's not the only thing. We are developing an efficiency plan, as you mentioned it, this We have a number of actions for improvement at Brava. A number of those initiatives are related to onshore. These actions are being developed by our team. They're being monitored by the management and by the board of directors. I mentioned in my speech that we are contracting a pull-in, a light pull-in rig with a much lower cost than a conventional pull-in rig that we use in Brazil. And it is a lot more agile for the operation. So it's a mix of actions that we are developing, aiming to maintain our lifting costs at an acceptable level and obviously in a descending curve. Thank you. Thank you all. Next question from Gustavo Sadka, Bradesco BBI. Mr. Sadka, you may speak. Mr. Sadka, you may proceed. We cannot hear you. Can you hear me? Hello, Gustavo? Can we proceed? Can you hear me now? Yes. My first question is about cash generation this quarter. When we look at the cash generation, excluding the receipt from West Lawn, we see that there was a strong cash consumption. Part of that you explained is capex. But we can see that the operating cash generation apparently was affected by the working capital. Could you explain the working capital dynamic and what we can expect for Q4? My second question is about leverage. Leverage got close to the level of 3 times, 2.7 in the end of Q3. Could this have any implication if the net debt over average ratio exceeds three times in Q4? Thank you, Gustavo, for the questions. In this quarter, indeed, we had a high capex, both at Papaterra, we had a flotel that had a production stoppage that required a capex. And we had a peak of installing FPSO Atlanta, and that led to a capex impact. And Despite the offshore production reduction, we were able to maintain a healthy leverage level in the quarter. Looking forward, we expect the situation to improve. We have BC 10 as Pizarro mentioned. BC 10 will improve Our leverage in terms of the covenants and we are working to have these operations approved as soon as possible. I think Pizarro can give you more color on what to expect in the future. What we see is a continuous deleveraging process for the company as we resume and increase production and as the costs are being reduced. Pizarro? Well, particularly regarding cash generation, as we mentioned, we did not have the payment of the installment, referring to the 37.5% in all the expenses, costs and capex related to Papa Terra. Of course, that obviously impacts the operating cash generation. We had some operational restrictions which tend to be mitigated in 2025. We tend to see production increase in some assets. We also had dividend payout. We had the amortization of some debts and still our cash position showed a slight negative variation quarter on quarter. Although we still have a very robust cash position, we have $1.2 billion in the cash position of the company, which gives us a lot of comfort, a lot of liquidity for the coming years. If we look at our debt obligations along 2025 and 2026, they are much lower than the size of the cash position of the company. As regards leverage in Q4, we'll go through a period which is a little more sensitive regarding the company's leverage. I'd like to remind you, we always look at the last 12 months. If we annualize or if we look forward, we'll always be in a better position. And we are working hard so that we can have alternatives. So we won't get to the cap of leverage of some of our debts. I have a number of debts at the company. Some of them, nothing to speak about in terms of the covenant. We would have no risk in terms of getting to this limit established in the contract. For the other debts, we have some alternatives. For example, BC-10, which is something that will reduce leverage quite a lot. So this is not keeping us awake at night, but we have been working hard so that we can act quickly in terms of leverage and covenants. Thank you.

The questions and answer session is now closed. We'd like to turn the floor to the directors for their closing remarks. Well, thank you for your presence and your patience. It was a interesting conference call for all of us. It's the first by BRAVA. And I hope the next one that will be for the fourth quarter of this year, we can already be here discussing, reaping some of the results that we talked about this hour and a half that we spent together. So thank you all very much and see you next time. Brava Energia's conference call is now closed. We thank you all for your participation. Have a great day.