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.