Brava Energia S A S/Adr

Good day, everyone. Welcome to Brava Energia's earnings conference call to discuss second quarter 2025 earnings results. The presentation and comments on the results will be made by the company's chief executive officer, Des Rodoni, and other officers of the company. We would like to point out that simultaneous interpreting is available on the platform. To access it, simply click on the interpretation button at the bottom of the screen and choose your preferred language. This conference call is being recorded and will be available on the company's investor relations website. RI.BRAVAENERGIA.COM as well as the presentation that we will show here. We would like to inform you that all participants will be in the salon in mode during the presentation, after which we will begin the question and answer session when further instructions will be provided. Before proceeding, we take this opportunity to advise that forward-looking statements are based on the beliefs and assumptions of Brava Energia's management and current information available to the company. Forward-looking statements may involve risks and uncertainties since they relate to future events and, therefore, depend on circumstances that may or may not occur. Investors, analysts and journalists should take into account that events related to the macroeconomic environment, market segment and other factors could cause results to differ materially from those expressed in such forward-looking statements. We will now give the floor to Mr. Dessio Odoni to start the presentation. Mr. Odoni, please go ahead. Good afternoon, everyone. To all of you joining us in this conference call to discuss Brava Energia results. This quarter was a good quarter, a quarter of consolidation of the company's trajectory of deliveries of results. A better quarter than the previous one, which had already exceeded Q4 2024, which was The first quarter that we reported as an integrated company, as Brava, We will continue to work to post an even better quarter than this one. Over this time, we maintained excellent safety indicators. We posted record production, record revenue, record EBITDA, and record net income. We increased the margins. We improved our cash position. We reduced our debt. And we lower our costs and lengthened the profile of our debt. Since the beginning of the year, we have achieved successive improvements in production, reaching almost 91,000 barrels of oil equivalent on average in July. On occasion, the company exceeded 100,000 barrels. On July 31st, we produced 101,973 barrels of oil equivalent, a volume that does not represent a weekly or monthly average, but it does break a symbolic barrier that is important in our sector, a company producing over 100,000 barrels daily. This increase in production is due to greater efficiency at Papa Terra, and due to the new wells of the FPSO Atlanta. This production reduced our cost of offshore operations. We reached a lifting cost of $14 per barrel without chartering. In July, we connected the last two wells of phase one of Atlanta. And with this, we are now able to reap the results of the investments we made over the past few years in Atlanta. This phase one of Atlanta was completed on time and on budget, which is rare for a project of this size. The next quarter, which we will report on in November, will better capture this progress in our offshore operations and Travassos will show this in more detail. During the quarter, we also improved the terms of sale for our oil. Pedro will talk about this. Onshore, we continue to optimize operations, reducing costs and capex. Our EBITDA remains a benchmark for the sector and we made progress on tertiary recovery or EOR on enhanced oil recovery projects and Boeri will speak more about this. Our EBITDA totaled $235 million, $250 million if we include the results of the oil hedging operations and we strengthen our cash position in Q2. Bizarro worked hard on liability management operations. We prepaid a higher cost debt instruments and reduced the cost of debt. And we just announced the fully monetization of the creditor position we had with Incent, which helped improve leverage. That's a subsequent event of this quarter. The improvement in operations strengthens cash generation and accelerates deleveraging our focus for the coming quarters, and Pizarro will elaborate more. To end the initial remarks, I'd like to say that on August 1st, we completed one year as a new company. As part of our efforts, To integrate teams and build an environment that seeks to create value, we began working to consolidate a culture of safety. That's very important. A company like ours, to have an efficient operation, we need to have a safe operation. What we are doing is the result of the effort of the whole team. So I thank everyone for their work. Let's move to the slides now, please. As I said, we posted good numbers, record production, record net revenue, record EBITDA, robust cash position and costs declining. This is the trajectory that we have been experiencing at BRAVA the last three quarters, and we will continue to work to continue on this path. Some operating highlights before I turn the floor to the other officers of the company. We had an important increase in production, especially in recent times. We had 50,000 barrels in the end of last year, increasing to a level of around 90,000. And this is the result of increased production offshore. As I mentioned, efficiency, higher efficiency at Papa Terra and new wells starting up at Atlanta. We can see more clearly on the slide, which brings already the start of the third quarter with a July production above 90,000 barrels daily, a trajectory that we believe will continue. That's what we are working for. I'll now turn the floor to Travassos to speak about offshore production. Good afternoon, I'd like to share with you the good operating result of our offshore operation in Q2 2025. At a glance, looking at the chart, we can see that it really translates the title of the slide. We are now on slide seven, Offshore Strong Evolution. Okay, right, now we are on the right, on the correct slide. It's clear to see the strong growth of production, of offshore production, both when we compare with the previous quarter or with the previous quarters, because we include the Q4 24. But when we analyze the last bar, when we compare the operation in July, we can still see growth. This growth is naturally driven by the completion of phase one of the full development of Atlanta. Décio mentioned this in his initial remarks, but this is also due to increase the production and greater efficiency at Papa Terra. And I'll speak more about that in a moment. Now, looking at the graph in detail, we can see that there was a production increase in all of our assets, one by one. And these values are represented in BOE, barrels of oil equivalent. They represent the working interest of BRAVA. So 80% of Atlanta, 62.5% stake of Papaté and so on and so forth. And I'd like to say that that percentage amount will still have a problem with the slides. Okay, so we can see the share. That's the proportion of oil because we have non-associated gas fields included. Now, analyzing individually the results, we can see that in Atlanta alone, there was a production increase greater than 50% quarter on quarter. This increase was driven by the connection of wells four and five. In the previous conference call, we spoke about this. These wells were connected on April the 13th. Basically, these wells represent in full 12.6 thousand barrels of oil daily. On average, in the chart, we see an increase in 10,000 barrels when we compare Q1 with Q2. Again, because the chart represents the Brava Stake. still on Atlanta. When we look at the results of July, the third bar, we can see again a production increase driven by the connection of wells two and three. This production tends to increase even more in August in Q3 because these wells were collected on July the 19th. So on average, they are not represented in total. And we are at a moment of increasing production. and this should be achieved in the coming weeks so in September we will capture the full value of production of phase one of the full development of Atlanta now looking at Papa Terra we can also see significant production increase quarter on quarter we saw 50% increase in in production in this asset Well, this result is straight from Papa Terra. What I would like to highlight in this asset is that in Papa Terra, we had stability and this is something to pay attention to. We had the best semester since the acquisition of this asset. by 3R with an operating efficiency of 86%, which is very relevant for an asset that is this mature and the result of average production of 19,000. Again, that is translating to 12,000 average production represented in the second quarter of 2025 when we consider Brava's stake. When we look at the results for July, it represents really well what I spoke about in terms of efficiency. There is some production increment, but it's kind of in line with the result of the quarter, which shows the kind of stability we are having at Papaterra. It is important to highlight that stability does not mean that in one month we had 80, the other month 90. That's not the case. We have had stable operating efficiency at the asset, which gives us a lot of optimism. We see in Papaterra a good opportunity of extracting value looking forward. Now I'll speak about Parque das Conchas, an asset operated by Shell, which has been showing good operating efficiency. The increase in production we see on the screen is the result of this higher efficiency, and this was obtained After this submersible pump system, the lifting system at Parque das Conchas, there was a campaign there that increased efficiency and increased production a little beyond expected. At the top of the bar, in lighter green, we added production from assets Perua and Manatee. The non-associated gas assets, Perua is operated by Brava, Manetti is operated by Petrobras, and we had a production increase in these two assets. In Perua, we had a reduction of production at TGC that kind of offset the natural decline of the field and increase of approximately 20,000 cubic meters of oil per day. S A S A S A S A S A S A S A S A S A S A S A S That's when Petrobras restarted production. Now we have production superior to 2 million cubic meters a day and we intend to increase production of air in the coming weeks because now the operator is considering a subsea operation in the resumption of two wells. So During August, we expect to have a full operation at Manatee as well. I will end here. Thank you very much for your attention. I'll turn the floor to Boeri, who will present the results of Onshore.

Well, as you can See in the screen, our production chart remains stable, both in the second quarter and in July as well. This was reached due to several different factors. We continue to expand the steam generation process in Rodriguez with a very positive result in the production. And there was also improvement in the secondary recovery in Macau, in Amaro. And we are also seeing the first positive result of a nitrogen injection process in Fazenda Belém. This is a pilot project and it's still too soon to draw any conclusion, but the production had an important push. We also add to production, especially in Reconcavou, Macau, in Rodrigues today. The BRAVA field of production is higher. It's higher, is the highest one in the last five years. So the production reached record levels. We almost doubled the production in the field since the beginning that BRAVA, since the beginning of BRAVA's operation. In terms of CAPEX in the second quarter, we removed three drilling rigs, one was gone in April, then in May and June. And we still continue to produce a good work over rig. And in the second quarter, most part of the CapEx to generate steam was utilized. We acquired the generators and now we are in the final stage of installing the last five ones. So four of them will ramp up this year and the fifth one will start operations in early next year. So in the second half of the year, most of our capex for steam generation will be in place. And also there will be the reduction of the work over rigs that is happening in the third quarter. One left in June and the other one will leave in September. So capex will be much lower than in the second quarter. Now, speak about operating efficiency and OPEX reduction. We are still operating in different fronts onshore. Mainly, the main costs are usually maintenance and operation and Power costs, energy costs and the maintenance of the subsurface of the wall. Speaking about maintenance and the operation, we reduce the number of onshore rigs for different services, always keeping in mind a way to integrate the different assets. Speaking about energy, Pedro will give you more details about all of the actions that we are implementing to ensure our energy Since we are one of the largest ones in that location, in terms of OPEX, we made quite good improvements. To give you an idea, all of these interventions have to do with repairs to the surface of the well, like replacement of pumps or centrifuges, et cetera. Historically, these maintenance usually were done by work over rigs that are There are significant and important moments to maintain a well with these rigs. Usually it takes three to four days for every work over. So we hire a small pooling rig and I think it's the only one that we have available in the country and we made the work over that used to take three to four days. Now it only takes 26 hours and we still have some more room for further improvements. In addition to this reduction in timing and thanks to some of the improvements on the engineering side and the selection of components and the way through which we recover the wells, we also reduce the number of strips in the wall. So if you do things faster, of course that the maintenance to the bottom of the well is expedited. So finally, we continue to reduce costs, capex. We have some important projects ahead of us and EBITDA per barrel is one of the best ones in the industry. And now I turn the floor to Pedro and he will give us some more details on the commercial area. Good afternoon, everyone. So I will talk about new business. And I'll start by speaking about oil exports. There was an important increment in spreads in all of the ship cargo. In relation to the past quarter, this movement in part reflects, especially vis-a-vis the first quarter, the fact that there was a mismatch as previously explained. There was a mismatch in average rent vis-a-vis the period because the majority of the shipments were offload. So the improvement in spreads becomes more visible in the second quarter for that reason. But this was also followed by a recovery in fuel oils of low sulfur, especially in the Asian market, because at the end of the first quarter, they struggled with excess supply. And the Asian market is one of the main destinations of our imports and exports. And this quarter, due to all of these changes in the international market, We were very assertive because we were able to demonstrate the flexibility of all of the shipments associated to Parque das Conchas, which opened good opportunities in the US market. Still speaking about oil, I would like to say that we had a record offload level. We had multiple offloads per week in scatter between Atlanta, Parque das Conchas, Papa Terra, and our refinery unit in Potiguar. Then we also sign a new agreement in Papaterra, which will reflect the investments in the improvements of the platform. And this will bring about a good profitability increments that should start in the third quarter in terms of spread. Number three, in July, we ended the trade contract that we had with Shell at Parque das Conches and now we entered a new phase which is solely managed by Brava and we will be able to show the results throughout the third and fourth quarters. Speaking about products and the margins of the refinery, the results were also very positive. I would like to highlight trading from Brava over trading and contracts with Raising and the results led to better pricing for both JLP and diesel oil in the domestic market. Natural gas, I would like to emphasize number one, the maintenance of positive margins despite market conditions having a surplus of supply and an increment of Availability and ramp up of Route 3. I would like to highlight the trade strategies that were implemented in the second half of last year. And then next we have the signature of a partnership to process natural gas. in Potiguar, and the investment involves $65 million. This is an agreement signed between Brava and Petro Recôncavo, and this was recently approved by CAGI, and we hope to conclude this transaction throughout the third quarter. And number three, So advances that will lead to the opening of Manatee gas process to process gas for Brava in Bahia. And this will lead to better revenues, better costs, then we will make use of idle installations in that area. So I will conclude my presentation here. And now, Pedro, thank you. Good afternoon, everyone. So now let me go through the financial highlights of the second quarter of 2025. Starting with net revenue, the company posted the best in terms of revenue, an all time high reaching $24 million, which is 9% above the revenues from the first quarter. The next slide, we show a breakdown of revenue between offshore and onshore. We now see that the revenue increase vis-a-vis the first quarter comes from offshore. IMPACTED BY INCREASED PRODUCTION IN ATLANTA AND PAPATEJA, WHICH TOTALED $272 MILLION IN THE QUARTER. I mean, onshore, if you look at downstream and revenues of the year, we reached $272 million in the quarter. Next slide. We show adjusted EBITDA that also posted record numbers of $235 million in the second quarter. And if you look at the effects of hedging contracts, which were settled in the period, we would have $250 million. As a reminder, our adjusted EBITDA contemplates other expenses as though they were part of the operation costs. I would like to highlight offshore EBITDA margin, which superseded 50%, and EBITDA Poor Boy of Bravo, which is one of the best in Latin America. Following slide, we show the evolution of lifting costs. with onshore stability and the reduction in offshore assets stemming from higher production in Papaterra and Atalanta. Discounting chartering, we arrive at $12 per barrel in offshore, even though there is further room for reduction, both in Atalanta and Papaterra. Next slide. We show CAPEX for the period with a progressive reduction since the third quarter of 2024. As for onshore, with a reduction in the number of drilling rigs, we achieved $57 million in the quarter. But as mentioned before, the trend is for further reductions since we do not have any program or a scheduled drilling campaign for the third and fourth quarter. And offshore, we concluded Atlanta with a demobilization of PLSG in June, and we started phase two with the acquisition of materials for the next two wells. Next slide. We show the capital structure of the company. Gross debt remains flat vis-a-vis the first quarter. However, with an increase of $100 million in our cash position, net debt contemplating obligations and acquisitions was down by $100 million. We started on our deleverage path. No. And considering prepayment of receivables of FPSO Atlanta, which occurred in the past few days, we would have been below two times, which is our goal for the end of the year. Next slide here, we show the amortization profile Before and after our intense liability management work, we were able to reprofile our obligations. We reduce the average cost of the debt, and now we have enough liquidity to cover all of our obligations until 2028. I would like to emphasize that prepayment of receivables at FPSO Atlanta not only reinforce our cash operation by $260 million, but also this has an effect in cash generation of at least $40 million at present value already contemplating the effects of 2025. As a subsequent event, we also received $16 million related to 25% of the partial sale transaction of PGN in particular. And we also receive some in the amount of $100 million, which should be posted in the third quarter. Next slide. We have the company's cash flow. Maybe this is one of the most important highlights of the second quarter. Our operating cash generation was 1.6 billion BRLs, quite robust. We had investments close to 810 million BRLs and the financial result, if excluding the effect of Exchange rate variation and non-recurring effects like monetization of shares in Treasury and the payment was close to 220 million BRLs, meaning that our free cash flow after financial results was quite robust considering or not considering the non-recurring effects.

On the bottom of the slide, we present our hedging position. We have about 45% of oil production hedged until the end of the year, about 35% in Q1 2026, and we started hedging the last six months of 2026. The biggest part of our position is protected in color type contracts in which we protect at $62 per barrel. However, we do not miss the upside in case the brand price increases to up to $77. For the current hedge position, we have a lot of resilience in our cash position, cash generation, and we continue on the path of deleveraging in the coming months. For this final message, I turn the floor back to Desium. Okay, before we close the presentation, let's speak a little about the next steps for the second half 25. We will continue to focus on free cash generation and deleveraging, which is our number one priority. We have been unlocking synergies after the merge. In the recent moves made, we will accelerate this movement. and we have been working with Pizarro, Boeri, Pedro and Travassos as they said to continue to cut down costs Both in onshore operations, Papa Terra mainly, offshore Papa Terra and onshore and to reduce our GNA. In terms of growth, as Pizarro mentioned, we started preparing the drilling campaign of the next two wells at Papa Terra in Atlanta. We have acquired some equipment for that. and the expectation is to start this by the end of the year to have these two wells connected by 2027 when we are going to have a significant increase in production resulting from the connection of these wells. We are also going to know more with the completion of the pilot project of enhanced oil recovery. These are the projects of nitrogen in Potiguar Basin, and we will start a polymer project as well to try to improve the recovery factor and production of our mature fields onshore. We received some news. which is the individualization of a job party field in the BC 10. So we are going to negotiate a compensation for that with Petrobras. And we will move to the closing of the deal for the partial sale of UPGN at Guamaré so that we can complete this deal and start the year with a new partnership operational. So these are the next steps that we intend to take over the next two quarters. We are in a path of deleveraging. in reducing costs and increasing production. We have a lot of work ahead of us. With that, we end the presentation and open the floor to questions. Thank you very much. We will now begin the question and answer session. If you want to ask a question, please click on the Q&A icon on the bottom of your screen and type in your question. If you want to ask a live question, click on the same icon and type in your name and company or click on raise hand. First question from Vicente Falanga with Bradesco BBI. Go ahead, sir. Good afternoon, Décio, Pizarro, Pedro, Travassos, Boeri, the whole team. I have two questions. You mentioned that you had good results in the pilot project of nitrogen injection in Fazenda Belém. Can you give us more on the results obtained, production, estimate of increased recovery factor? And when will these projects be scaled up to other wells, including those that were closed? And my second question is, you talked about, well, you posted a significant cash generation quarter on quarter. What is the expectation of cash generation in Q3 and Q4? Thank you. Thank you, Vicente. Before I turn the floor to Boeri, we started with the nitrogen injection. Project in Potiguar in Fazenda Belém. And our goal was to identify the parameters that make this injection efficient. The goal is that this operation will be paid by the additional oil volume that we will lift from these wells. We are at the very beginning of the process and hopefully in the coming months we will have a pretty good idea of how the project will perform and the adjustments we'll need to make in injection factors. Hello, Vicente. Thank you for the question. With a nitrogen project, We have finalized the injection in the wells of Fazenda Belém and in the wells in Estreito and we are now injecting nitrogen in Alto Rodrigues wells. And as you said, it is still too early to have any conclusions, but Fazenda Belém has quickly presented a relevant production increase. Fazenda Belém reached the production of 900 odd barrels. An amount that we didn't achieve since 2019, but it is too early to come to any conclusions about the project. It involves logistics, it involves costs, and it's about learning, continuing to learn with the process. As for polymer injection, we haven't started that yet. The A polymer injection plant is ready to arrive in the country and we will start injecting 4 injectors in saline cristal field and next year we will expand to 10 injectors in saline cristal. And with the results, we will see how the rest of the field would evolve. We have potential in Salina, Cristal, and Canto do Amaro. And with nitrogen, we intend to continue to evolve at Fazenda Belém, Alto Rodrigues, Estreito, and then others. So that's what we intend to do for now. As for cash generation, Vicente, I can answer that myself. For the next two quarters, We have a positive outlook in terms of cash generation. We will maintain our efforts to cut down costs. We'll have a production increase, especially at Atlanta with the connection of the last two wells and with that resulting volume and with the reduction of capex. Because we've lived through the phase of highest capex at Atlanta and now it's under control and we expect now to have an acceleration in cash generation and the leveraging. As Pizarro said, we want to finish with net debt over EBITDA below two by year end. Thank you. Thank you. Next question from Monique Greco with Itaú BBA. Ms. Greco, go ahead. Hello. Good afternoon. Thank you for the opportunity to ask questions. I think I'm going to ask three questions. One is a follow up to Falanga's question, but my first question is about CAPEX. This path of reducing CapEx starts becoming more visible now with Q2 results. And Pissarro mentioned that this reduction is going to be even greater in the second half of the year. What can we expect in terms of CapEx for Q3 and Q4? Should we consider that estimate of 450 million maintained for this year? The follow up question is on capex as well. It's about EOR with nitrogen. So I have a question. Once the pilot projects are confirmed and you start scaling up these projects, should this have a reflection on onshore capex increasing again because of the nitrogen projects when they are scaled up? And my third question has also to do with onshore. Now, zooming out of the quarter, how are you thinking about the possibility of resuming the process of divestment of onshore assets in the midterm? Thank you very much. All right. We are working with a CapEx level of about $450 million, perhaps a little more than that this year. This is our target. It will really depend. The final number, I mean, will depend on the evolution of the projects of the four new wells at Atlanta and Papateja that we're expecting until the end of the year. It really depends on when the rig will be released. This operation doesn't rely only on us, but that's the target that we have in mind. 450 million for the year with a significant reduction in the second half for the reasons we have mentioned. If it's not 450 million, it might be a little more, but this is the result of this campaign of the second and third wells at the third and fourth well at Atlanta and Papaterra fields. On short, we should not increase the capex with the EOR project, enhanced oil recovery. We are basically doing some modeling where we would have OPEX, And our evaluation is whether the oil volume coming out of each well will pay for the additional OPEX that we would have with polymer or nitrogen injection, so we should not expect an increase the capex because of that. because of the OPEX and we don't have any onshore divestment in our radar, except for those little fields that are not material in case we identify that it's best to get them out of the portfolio. But a large scale divestment of our assets, that's not in our plan. Thank you very much, Monique. Thank you, Décio.

Next question from Luis Carvalho with BTG. You may proceed, sir. Can you hear me? He says, I think so. Well, thank you for taking my question and congratulations on this turnaround of your results. This was really good to see. I have three, probably three questions. My first question, Travassos, not very long ago, we talked and you express how optimistic you were with Papa Terra. And right after the last developments in the field, can you give me an update about the main opportunities or main challenges? What could the company eventually do to boost production further going, you know, towards the next quarters? And the second question may be to Pizahour Desu. I think you did some very good work in terms of liability management. You have Eielson and your focus was trying to give more predictability to that, you know, deleveraging of the balance sheet. I mean, you also mentioned hedging. I would just like to understand or know whether there is anything else that should merit my attention. Maybe, you know, revisit the discussion of divesting of some assets or maybe thinking about synergies after the merger of the two companies. What do you see down the road that could be, you know, in addition to the process that would allow you to extract something else out of the process? in the Clara Camarón Refinery, you had a contract rising. And from what I noticed from their communication, they decided to terminate the contract or cancel the contract. So how do you impact of that contract termination in the operations you have there, if there is any kind of downside when you look at the previous numbers? Thank you, Luis. I think Travassos can answer the first question because he's working a lot with Papa Terra and he's very excited and eager to answer. Well, thank you. Thank you for your question. My answer will be divided in different phases of Papa Terra. Papa Terra today, Papa Terra in the near future, and Papa Terra in the long run. Presently, we are intensively working in three pillars related to that asset. I mean, security or safety is something that is present in everything we do. But we are working hard to recover the integrity of the asset. We have teams dedicated to do that. You know, inspection teams and construction and assembly teams. This is a constant and ongoing work. We are also doing some work related to increasing efficiency because we are implementing different systems. We had single system. When a pump would stop working, we would, you know, do everything you know, one-off, but today what, see that things are constant and continuous in terms of the efficiency of the asset is very important. And the third pillar is cost reduction. Cost reduction is very important. Efficiency of the equipment also is very important. Papa Terra, there were some equipment that were leased and today I'm returning the equipment. I get rid of that cost and now I use the equipment from the platform itself. This is, you know, Clear example, because today we have the offload system. I used to have a leased boat in the past, but no longer. Now we operate the offload through the unit system. So the first phase involves these three pillars and we measure the performance and the results on a daily basis. Papaterra, the near future, involves two wells. I mean, The 52 and 53 wells, our drilling operation already has the rig confirmed, so it should start by the end of this year. We are looking at it very closely because that involves an IBAMA license. We've got some very positive feedbacks from IBAMA, therefore we do not expect S A S A S A S A S A S A S A S A S A S Also talking about increasing the recovery factor of Papa Terra. So in fact, I am even more optimistic in terms of the results and all of the value that we can still extract from this asset. Thank you for your question. I mean, oil sales, I think I also have some good news. I would just like to add two or three more points, but there is one recent thing we just renewed our resale contract for Papateja already reflecting part of the investments and all of the improvements as Ravasos mentioned, especially to our logistic process. But also we are adopting more creative solutions that reflect the quality of the oil, We believe that starting in the third quarter, we will see improvements in terms of spread against Brent about two high digits. So this is one of the drivers where we see a lot of room for future improvement in the next two, three years. Second question, Louise. I will invert the sequence synergies. Well, we will start capturing synergies after some of the structural movements we recently had.

I mean, divestment of assets.

We don't have it in a rate or anything. We're very pleased with what we have now. The company totally integrated onshore and offshore so we can manage CapEx. in a moment when there is price reduction as the one we experiencing now. That's why we don't have in the radar any kind of changes to that investment strategy. As for liability management, I mean, we often talk about what else can be done. Our cash position is very robust. What we are now discussing it, what kind of cash level we should maintain and what kind of debt position we should have. And then I'll ask Pizarro just to add to my comments. Thank you, Louise. I think there are two aspects that Desu mentioned. One is on synergies. We work hard to get involved in partnerships and you know that we incorporated the old 3R. There was Macau in 3R Potiguar and so we We have a need for Onshore, which the tax regime is optimized. We more recently incorporated Enalta Energia to our holding company. And so with that, Atlanta is part of a corporation that for many years they accumulated tax losses in 2025, but with the prepayment of receivables of Atlanta FPS. So in this respect, now our tax burden is much lower. especially our main asset, Atlanta, for the next few years. We have tax losses in other partner issues, but if you look at the entire base, we have more than 3 billion BRLs, and we are working towards optimizing the utilization in the next coming years. And all in all, we have a 1 billion BRL potential of decreasing our tax burden in the coming years. And this is something that is being done in a coordinated fashion with our liability management. How are we going to get into new debt? How can we integrate the debts of the holding to the different subsidiaries? So all of that is part of a package of liability management. And as you were saying, the second thing that we are also discussing is what are the debts that we can plan for prepayment? or that eventually we can reprofile them with further cost reductions. Well, certainly we did what matters most. Therefore the opportunities are not as large, but we still see opportunities in this 12 month horizon. There are some debentures that can be prepaid in the next quarters. And this is something that we will still pursue in an attempt to reduce the cost of that further that, used to be over 10%, then got close to 9% earlier this year. And in the last quarter, we disclosed something like 8.7. And now we are finally very close to 8, 8.1, 8.2, considering the cost of issuance of the instruments. If you consider the cost of trading, we would be below 8% for the company. So this is continuous work. Of course, we will try to reduce the net financial expense that we have in our cash flow, which is already much lower, but we still see further reduction opportunities. Thank you. And finally, referring to the contract with Raising at Guamaré. We are working well with positive results, but I would like Pedro to give you some more light about our bunker sales in Guamaré. Thank you, Louise, for your question. As you said it yourself, we terminated our contract very high easy. So in the second quarter, everything is already under Brava's management. The bunker produced at Potiguar accounts for 65% of all of the volumes produced in that basin. The product therefore is very important for our sales profile. The agreement is in involved two main things. One, a margin or a fixed long-term spread. And the term was quite long when it was being managed by Raisin with a small premium vis-a-vis Brent. And the second thing was a business plan to develop Potiguar as a sales channel and banker services to the domestic market. we took over the management of this flow. And since then, we already have more than a dozen shipments conducted by Brava with a very diversified range of clients. We have the Caribbean and other countries using our products and our midterm objective still remains the same. We are looking at opportunities in the domestic market because the premium is even more attractive in terms of our product. So far, I don't have much more to say, but we are working diligently and seeing further opportunities. That's very clear. Thank you very much. Thank you, Louise. Our next question comes from Mr. Gabriel Barra with Citi. You can proceed, sir. Hello, Desio and team. Thank you for taking my questions. I have two follow-up questions. One, I think Pizarro talked about the tax benefits you have, and one part came with this prepayment of instant credits. Let's talk about numbers and timeline to recover that credit. We have to consider that with instance credit alone, that involves like $1 million in MPV. And in addition to that, you have the entire rearrangement. with the merger of the two companies, there are some accumulated losses. So if you could give me some light about the timeline for the recovery, this is important so I can discuss numbers. My second question is about the leveraging of the company, liability management, capital allocation, because at the end of the day, We are talking about the future of the company and how the company is to behave, dividend company or what have you. We talked about your dividend payout policy in the future, given the fact that now you are integrating the company You are growing. So I would just like to get a better understanding about that. Now that things are moving along, you know, in the desirable direction with, you know, the integration, I think that moment is approaching. And speaking about the operation, you just, to cover Guamare. So I want to hear from you about what that means in practical terms. Now you are operating the asset and it's no longer in the hands of a third party. So in practical terms, whether this will bring about further synergies or if there is any operating aspect that should merit our attention. Thank you. I will ask Pizarro to talk about tax credits and synergies. Thank you, Bara. At the holding company, we have a base of about 1 billion BRLs of accumulated tax losses. And this comes from something that happened in the past because the previous three are, they incorporated Ouro Preto and later on we made a transaction with Enaltra, which led to Brava. and so this original incorporation already carried some some tax losses and being a holding it continued to accumulate so from then on we already had 1 billion BRLs but but the transaction to prepay receivables led to 800 million BRLs in the base there's 1.8 and is something that we will use up very quickly with Atlanta because Atlanta is our most profitable asset. But if you were to look only receivables from FPSO Atlanta, the optimization of that 40 MPV to $45 million, half of it should be utilized this year. The other half will come you know, less of that $1.8 billion. And this should be utilized between 2027 and 2028 at the most, thinking of a more compressed Brent scenario. So conservatively speaking, this is calculated to be $40 million, but it could come up to, you know, $55 million. From the past, we are also carrying over a tax loss of $800 million. at 3R Offshore, and 360 million BRLs was carried over. This partnership that we have, Parque das Conchas, and looking at onshore assets after the reorganization, we also have about 300 million BRLs, including the payment of the exchange rate, the venture, this last one that we pay, or $500 million that was at 3R Potiguar. If we look at all of that, as I was saying, 3.3 billion BRLs that we intend to utilize in the period of three to four years, this will certainly reduce the effective tax rate of the company coming at the last line of taxes. And this will help the cash generation of the company as a whole. Thank you. And then you'll also ask about capital allocation. As we've been saying, our number one priority is operating delivery and leverage without losing sight of the future. So acquisition opportunity, Not in our radar right now, but we always feel obliged to look at opportunities and evaluate if these opportunities are in line with our company and criteria. In terms of dividend payout policy, when the right time comes, we will discuss that with the board. Your other question I think was about Guamare. We took over the operation of the terminal recently. The operation led to a substantial cost reduction. So I'll ask Pedro to conclude the answer. In fact, this was a very important event for the company. For over a year, we worked to to lead a very smooth transaction. The company made many investments. We use our own resources to, you know, update software and to have all the licenses to verticalize the operation at that terminal. And with that, we would continue with the control we had with Transpetro. As you said, after the third quarter, we should start noticing the financial results of the termination of that contract. We had important savings of cost of some dozens of millions of reais and the results will be disclosed later on. Thank you. Very clear. Thank you very much.

Next question from Tasso Vasconcelos with UBS. Mr. Vasconcelos, please. Good afternoon, Desio, Pizarro, Pedro, Travassos, and Boeri. I have two questions. It's been six or seven months with stabilized operation in both Papaterra and Atlanta, which is very different from what we saw in both fields historically. What were the main lessons learned throughout this process? And looking forward, where do you see the major production risks at these two fields, if by any chance they fall below the current expectations? And my second question is linked to the first one. But looking at the company as a whole, in operational terms and in terms of cash generation, both have improved quite a lot after some quarters when they were kind of below the expectations. What would be the main lessons learned of the company along this process of operating improvement? Thank you. Thank you, Tal. So well, this is the third complete quarter that we are reporting as Brava Energia. So it's a recent story, but a rather rich one. We have seen in our results, the efforts that we have been making. I have guided our management to work professionally, seriously and with great care of our operations. An oil and gas company like ours has results coming from the efficiency of our operation. We need an operation which is safe and efficient. So the main lesson learned The way we've had and we've brought to this company is that if we are not able to operate in a safe and efficient way, our operation is not going to be successful. All of the efforts we've made over this time at the operational level have this goal in mind and we start reaping the results of that effort. We were able to deliver on time and on budget a project as big as Atlanta and In very little time operating as Brava, we were able to stabilize Papateja Traverses, gave us some details on that. We were able to stabilize onshore production, even with a reduced capex and without drilling. And at the same time, we reduced our costs. So it's an ongoing quest for efficiency, and this is what we need to do in all of our operations. From the management standpoint, and Pissarro detailed this, we are making all of these efforts to enable capturing synergies. which was another target with the merge. So efficiency in our operations, either out in the field or in the office, this is our main goal. And that's where we get our best results. And now moving to your second question, we kind of spoke a little about cash generation, this process of increasing production, stabilizing production at Atlanta with six wells. and continued reduction of costs, improvement in the trading conditions of our oil. All of that will facilitate and accelerate our deleveraging process. With that, by year end, we expect to get to net debt over EBITDA ratio below two by year end. Thank you. It's clear. Next question. From Leonardo Marcondes with Bank of America. Mr. Marcondes, please go ahead. Hello. Good afternoon. Thank you for taking my questions. I have two, two questions. The first is for Travassos. I'd like to know if you could give us an evaluation of the Atlanta performance. Until now, now that we've had about six months of operation, could you tell us what has been better or worse than expected? And if you could speak a little about what you're expecting in terms of depletion of the asset in the first 12 months and then in the next 12 months and perhaps with a more long-term focus. My second question is about the drilling campaign at Atlanta in Papaterra next year. I'd like to know whether you could give us more color on what is total capex expected for this campaign? What would be the capex per well? What kind of pump will be used in the new Atlanta wells? and whether there was any change from ENPP if you're going to use mobile or you know if you could speak a little about that and what is the production expectation with the new wells well this is what I had thank you thank you Leonardo Travassos over to you well thank you for the questions Leonardo Well, let me start talking about the performance of Atlanta over the last seven months. I would say that the FPSO performance is very much in line with how the asset started production. We have an operating performance above 90%, which is a very good result. Likewise, performance of the S A S A S A S A S A S A S A S A S A The result shows the lessons learned. We had increased the production. As expected, Desio mentioned that the whales are starting up on time and on budget, so very good efficiency. Naturally, we'll only settle down when we have zero cost and 100% efficiency, so we always want to improve. And we can see already evolution at Atlanta. We had recently a significant reduction in diesel consumption, which reduced our lifting costs. So we've made good progress at the asset. And your second question was about drilling. We had an integral drilling campaign with two wells at Papaterra, two wells in Atlanta. We started with Papaterra. With Papaterra, we have a capex that is lower than that for Atlanta because we are using some equipment. You asked about MPP or MOBO. We use MOBO. We will be using mobile in the next phase. In terms of capex, we have naturally a capex for Papaterra, which is lower, about $230 million, at 100% working interest, and for the project as a whole in Atlanta, something around $435 million, to be more accurate, more precise. This amount does not include only wells, but all the production system, plus the expected contingencies. So that's the order of magnitude for CapEx. And that will be divided a little bit this year, 2026 and 2027. So the CapEx will be for all this time. And the numbers mentioned by Travassos is for 100% working interest of both assets and the CapEx divided for the rest of 2025, 2026 and 2027. Order of magnitude of $440, $460 million, depending on the contingencies for Atlanta. You also asked about the expectation of depletion. That's an excellent question. We get that frequently. When we analyze the decline of the field, any model considers the long term. And we know that fields with heavy oil have a greater decline at the start of production. And then it tends to plateau and decline less in a more constant operation. We are at the moment of the field that we are starting to install the pumps. So we, we did that in wells seven. and eight and this well is presenting a production decline that is lower than expected the result was very positive wells four and five have just started up in april and they've been behaving as expected wells two and three well We haven't had time to analyze that these were wells that operated in the early production system with a petrogel. But when we look in the long term and when we compare with our model, these wells are very much compliant with what we expected. We imagine that further, further out as production increases, we'll be able to measure the model better. But so far, we haven't had any surprises. Very clear. And Marcondes, regarding the older wells 2 and 3, and even wells 4 and 5, I'd like to remind you, particularly 2 and 3, whenever Petrogel had a limitation, and she did have limitations to treat water for a while, 2 and 3 would just stop producing. So if you look at the history at ANP, you might see a very low average compared to the potential of the wells. So these wells already had that initial decline phase and now with practically no limitations with the new FPSO, they will be producing in full capacity. So we have a portion of Atlanta production, a relevant part that has already gone through that initial accelerated decline phase. And when we take an average of production, there were many, many shutdowns, and that does not really represent the real value to be extrapolated. So that observation you made, Pizarro, was very important. I think our investor relations department is available to provide you with any necessary information. You have to be careful about this kind of extrapolation. All right. Thank you very much.

Our next question comes from Bruno Montanari with Morgan Stanley. You may proceed, sir. Good afternoon and thank you for taking my questions. I just have a follow-up on that leverage or deleveraging topic, but what is the target level of the comfort level in terms of leverage and what would be another level that would allow the company to make more, you know, to have a more firm, I would say, dividend payout. And my second question is about lifting costs. What could we expect in terms of consolidated lifting costs in all the assets of the company? Potentially, where is your lifting costs heading to in the long run? Thank you, Bruno. Well, we talked about leverage before. I mean, our concept, we are a commodities company and any oil company should have leverage of around one and 125 so that we would feel very comfortable vis-a-vis price fluctuations that are very common in our industry. We'll get there. Today, we have some limitations in our ventures in terms of buyback and dividend payout, which is 175, 1.5. So when it comes to capital allocation, we will talk about that once we get closer to that level. As for lifting, we are working on a permanent reduction of lifting costs for onshore. We produce heavy oil in Rio Grande do Norte and we work with steam injection. Therefore, we naturally work with slightly higher lifting costs in these fields. We also increase our gas production because this helps our lifting costs because the cost is lower. With our offshore assets, the most important ones, both Atlanta and Papaterra, in both regions with a higher level of production, we will certainly see a significant impact in our lifting costs. We'll be globalized, but we still see room for further cost reductions. I do not want to give you any guidance, but we will certainly work to lower lifting costs. And as Stavastos was saying, As long as it's possible, we will work hard to put it down, to reduce it further. Thank you. Thank you. Our next question is from Conrado Wagner with Stafford Bank. You may proceed, sir. Hello. Good afternoon. And thank you for taking my question. My first question. is I would like to hear what are your strategies for the onshore operations, you know, having in mind, you know, the mobilization of rigs, capex, and then also the conclusion of advanced EOR. So how do you see production going forward with all of these initiatives? Do you think it should be kept constant or you anticipate any drop with the end of the EOR? and other matters of integrity are already totally solved. And my second question is very brief. I know that there's still a lot to happen till then, but what is the deadline for you to make a decision to utilize the rig that has already been contracted? Well, speaking about onshore, we still have room to reduce costs and we are working to that end. And to talk about the outlook, I would like to ask Elliot to answer that. Speaking about onshore production, we are expecting a significant drop, maybe for this year and next year in terms of production. And we also hope to see some increased sales today. Part of the onshore production is still gas in the Socorro field in Bahia. And we have some other initiatives going forward to monetize that gas. So if there is a drop in production, it will be really minimal and it will be compensated by higher gas sales. about the outlook. I mean, these are the perspectives. The EOR project is still in its infant stages. But in fact, we have good expectations going forward. And as for integrity, and thank you for this reminder, we did some extensive work in our assets in Bahia. You might recall that these were the first assets that started operating in Brazil. I mean, in the years of 1940, 1950. So in fact, that asset had a certain level of comfort, but today we find ourselves in a very comfortable level. There are things that have to be reworked, of course, because it's important that we keep maintaining the asset. Like we have to, you know, line to maintain the acid. So in this last year or year and a half, especially in Bahia, the results were quite good and satisfactory. Thank you. Malonga, I think we are evaluating it in the next few months. We will know when the drilling in Malonga will take place. So we don't have anything firm yet. We don't have any rig already contracted for Malombi. Yeah, you talked about contracted rigs. So we do not have any rig already contracted for Malombi. Yeah, I thought there would be an extension from Lone Star, but now it's clear. That's an option. Yeah, there's an option, that extension, but there is nothing already contracted for that. Okay, thank you.

Next question from Regis Cardoso with XP. Mr. Cardoso, go ahead. Good afternoon, everyone. Thank you for the opportunity to ask questions. I'd like to clarify a few things. CapEx, that you mentioned, $450 million. That's for 2025 only or for 2026 as well? And perhaps you could comment a little bit more or give us an update on the expected production curve for Papaterra and Atlanta. Do we maintain the current level of production, the one we saw in July, or is there any increase expected? And that's a discussion between decline and the startup of new wealth in 2026. If you could comment on that equation. And if I may, I'd like to ask a question about the quarter's cash flow. Just trying to understand the level of recurrence in cash generation. In that chart, you showed an operating cash higher than EBITDA, and that would lead to a release of working capital. I don't know if you have advanced offloads or inventory reduction there was a line item of 716 negative applied to others and I don't know what that is and if that has an impact on the working capital is that a recurring thing do we have to make any adjustments so if you could comment on these one-off effects on the cash flow it would be much appreciated thank you thank you well first part about the capex Those 450 is capex expected for the year for the year operations. The final number will depend on how much capex will have for the new wells at Papa Terra in Atlanta along 2025. So There might be something coming from the startup of the of the whales that we are expecting with the campaigns. And as for the production at Papa Terra in Atlanta, I'll ask Travassos to answer that. Well, Papaterra with the producing wells. Well, they have been producing for a long time, so we don't have any severe decline expected for Papaterra. We increase production at Papaterra with the startup of the wells and we'll start drilling by the end of 2025. And then looking forward, our plan for Papaterra is a program to ensure efficiency and to have production relatively stable, considering the natural decline of a mature field and of a field that produces heavy oil, which is a relatively small decline. For Atlanta production expectation, we haven't got the full development in full. Like I said, we are ramping ramping up wells two and three. We can still expect a production increment until the end of this month. Today, we're producing something around 42,000 barrels of oil daily, and we're expecting a better result for August and for Q3. Also at Atlanta. We have not expected a production increment next year, but starting in 2027, that's when we expect the startup of production of the two new wells that we will be drilling. And that is when we will have an expected production increase. And about cash generation, Pizarro? Cash generation, Regis. Obviously, when we have offshore offloads in portico or offloads in bunker, we can have a quarterly oscillation. We might have an end of quarter when we have sold or when we have a full inventory. Or perhaps we have not sold yet or have not received the sales invoice in the end of the quarter. So oscillations in the coming quarters are naturally expected. They are natural to the nature of the business. But we are working, optimizing the offloads, trying to have over the quarter a sold volume similar to volume produced, which is what actually happened in Q2. And We do not have advanced offloads that would exceed in volume what we have in the inventory in stock. So we're very careful about that. We use a lot of discipline looking at working capital and our cash and monitoring up close all of these aspects. But looking forward, Except for some offloading oscillations, we have the right conditions to have operating cash flow at the level that we had in Q2. and in terms of cash generation related to investment activities as we have been mentioning the capex trend is a downward one in the second half of the year and in terms of financial results we are working to reduce the cost of debt of the company But obviously, foreign exchange fluctuation can make our cash generation in BRL fluctuate. And that's why we segregated in the chart. What depends on the foreign exchange rate to make it clear? What is the effect of financial expenses, financial result? And in this quarter was at around 220 million BRL. If you compare to the past, this is represents a decrease because of the effect of our liability management so net of non-recurring events and effects we have cash generation generated in the quarter that was very robust it can be repeated on average in the coming quarters thank you for the questions Regis next question from Rodrigo Almeida with Santander Mr Almeida you can you can talk Your microphone is muted. Good afternoon, everyone. I have some follow up questions for starters. I'd like to go back to the lifting cost and speak a little about Papateja. Perhaps you could help us listing the main OPEX reduction points. We see an OEM still a little high in Papateja. Some things related to the FPSO, which is not handled by you. So perhaps you could list the main OPEX Reduction Drivers at Papaterra if possible if you could give us an order of magnitude it would be very good a second follow-up regarding discounts for Papaterra it's not clear to me what we should expect in terms of discounts for Papaterra Oil in the new conditions and perhaps if we could have an idea of what we saw in Atlanta in this quarter could be projected forward And lastly, I know it's still very much far out. Perhaps this is not the right moment and the right timing for this question, but I'll inevitably ask it because it was a recent interesting move, which is related to Gato do Mato. You have a partner operating the asset and Shell made a recent move of acquiring the remaining stake or actually a higher stake of Gato do Mato. I don't know if you were thinking if people can come to the market selling a part of BC 10, you know, trying to monetize part of the asset and also manatee because there are relevant discussions about manatee in the coming years from the strategic standpoint and M&A standpoint. These are my questions. Thank you very much. Well, regarding the lifting costs at Papa Terra, we've been working to reduce costs. We are working to replace the OEM costs there. And Travasso spoke about the other initiatives of replacing rented equipment and optimizing the operations. So we expect to have good results from Papaterra in the coming quarters with a cost reduction. As regards to the discount, Pedro has talked about it. We had a new contract. We signed a new contract with Pedro Braz with better conditions than before and better lifting cost, the conditions at Papaterra. And as for Gato do Mato, Shell, BC10, that's not in our priorities to make acquisitions of assets. Of course, we have an obligation to look at any possible sales. to see if it meets our acquisition criteria. So if it comes to market, we'll look into that. But for now, there's nothing. Manatee. We are involved in a process to improve the operation of the asset. We are discussing with Petrobras how to optimize the asset. We are discussing the possibility of extending the lifespan of Manatee, making it an asset to store gas. But these are discussions that are ongoing. There's no final conclusion, but the goal is to increase efficiency of the field, reduce costs and extend the lifespan of the field with a possible storage project. Manatee is important to us because the use of manatee facilities can allow a monetization of gas in Bahia state, which is currently difficult to treat. So in the set of our operations, we see a lot of possibilities to optimize manatee. Thank you very much for the questions.

Our next question comes from me. Are you with JP Morgan? You may proceed, ma'am. Hello and good afternoon. Thank you for all the clarification. I know that we are extending the time of this call. You mentioned Jouberti. I mean, you talked about Petrobras saying that the negotiations have started. I don't know if you can share that with me, but what do you expect in terms of timing and receivables? Oh, we have an agreement with Petrobras. The negotiation, is conducted by Shell. They are the negotiator of BC10. Well, we are relevant partners, so we just monitor the negotiation. We hope to have an agreement with Petrobras to receive a financial compensation for our stake in the shared deposit at Jubachi. This negotiation should occur in the next coming months, but we don't have any idea of timing or amount, okay? Okay, thank you. Thanks. The Q&A session is concluded. We would like to turn the floor to Mr. Dessio Odoni for his final remarks. Well, thank you all very much for joining us this afternoon. I know that we had a lot of questions, which is very good. So I hope to see you again next time. And I certainly hope that we will be able to post better results today, next time. And so this conference call is concluded. Thank you very much for joining us and we wish you a very good afternoon.