Seacrest Petroleo Bermuda

Welcome to the presentation of Seacrest Petroleum's second quarter 2024 results. We are an independent oil and gas production company with a uniquely integrated portfolio of producing fields and export infrastructure in Brazil, where we have commenced the largest onshore drilling program of 300 infill wells. Please review our disclaimer. Today's presentation will be held by myself, José Cotelo, Chief Executive Officer, and Torger Dagslat, Chief Financial Officer. This is my first opportunity to present the company's result as its CEO, and before anything else, I want to share with you a short video on why I was so excited to join this company in the first place. Seacrest Petroleum has an exceptional combination of assets and I cannot wait to unlock their value for our shareholders. Together, we are Seacrest. My name is José Cotelo, and I am welcoming you here at the Terminal Norte Capixaba, one of our assets. This asset has a capacity to store 500,000 barrels of oil, and through this facility, we can export to the Monoboy just behind of me. This facility is one of the only independent companies in Brazil who is able to export Welcome to the presentation of Seacrest Petroleum's second quarter 2024 results. We are an independent oil and gas production company with a uniquely integrated portfolio of producing fields and export infrastructure in Brazil, where we have commenced the largest onshore drilling program of 300 infill wells. Please review our disclaimer. Today's presentation will be held by myself, José Cotelo, Chief Executive Officer, and Torger Dagslat, Chief Financial Officer. This is my first opportunity to present the company's result as its CEO, and before anything else, I want to share with you a short video on why I was so excited to join this company in the first place. Seacrest Petroleum has an exceptional combination of assets and I cannot wait to unlock their value for our shareholders. Together, we are Seacrest. My name is José Cotelo, and I am welcoming you here at the Terminal Norte Capixaba, one of our assets. This asset has a capacity to store 500,000 barrels of oil, and through this facility, we can export to the Monoboy just behind of me. This facility is one of the only independent companies in Brazil who is able to export and sell its own oil. So come with me and enjoy this journey together where I'm going to show to all of you other facilities of Seacrest here in Brazil. We are now in Fazenda Alegre, Jaguaré, Espírito Santo. Fazenda Alegre is one of our onshore infrastructure facility that emphasizes in the application of advanced recovery techniques, such as steam injection and real-time monitoring that enhance our operational efficiency. Behind me, you have a facility that has a capacity of 80,000 barrels a day, and it was acquired when we got the cluster Norte Capixaba. We are now at the Inhambu field at the Norte Capixaba cluster. Behind me you can see a drilling rig which is drilling our 11th well in the 300 infill well campaign that we have initiated. This drilling at the moment is cementing the first phase and we are going to take no more than four days to drill this well. Our average is 4.2 days per well, which is much better than the average that we were estimated. So this is Sequest Petroleum. So this is one of the pads where we load the trucks with oil and we take the oil to our facilities. As you can see, we are fully committed to all the ANP new standards and what we are seeing right here is what was required and what we built in less than two weeks. This pad was initiated the construction of this structure in August the 7th and we just finished this pad in August the 13th. So this is A&P's requirement and we are Sequest. Welcome to the Sequest base in San Mateos. I present all of you a detailed view of the onshore administrative facility that we have and provide logistic support and specialized technical assistance with always, always a focus on operational integration and the safety of all our employees and the service home providers that work at Seacrest. Together we are Seacrest. Here is where we store all the spare parts for our operations, for our facilities and our drilling rig. Welcome to the base in San Mateos and this is how we are Seacrest. This is our control center for our drilling remote operations. We are at the San Mateos Basin and we have the same observations on the criteria being used to drill the well that we just have seen in the previous video. From here in San Mateos, we can control all the parameters at the same time as if we were at the well site. I hope you enjoyed that video. These are the contents of today's presentation. We will start off by going through our operational highlights for the second quarter. Second quarter production was 7,959 barrel of oil equivalent per day, down 5% sequentially as we experienced degraded light oil production facilities performance during the quarter. However, we have since recovered from that and ended the quarter with production at about 8,400 barrel of oil equivalent per day. Petroleum revenues were up 3% versus last quarter because of higher realized price. Production costs rose on a per barrel basis because of our lower production and higher costs, but we expect this to come down as production grows later in the year. We are very happy to announce that we have reached an important milestone, our first positive quarterly earnings. Today, we will also give you an update on our financial strategy, where we have made major progress in supporting the business plan. We have agreed amendments with the lenders and bondholders to remove the second quarter covenant test, And they have also agreed to remove the third quarter covenant test subject to the completion of our convertible bond fundraise, which is in an advantage stage. This means that our next leverage ratio covenant test is not until the end of February 2025. Production fell slightly versus the first quarter as a result of the degraded light oil facilities performance, but with our 300-well infill program now back up and running, we expect to resume growth in the second half. We continued normal offtake operations performance with a 23,000 barrel under lift in quarter two compared to a 41,000 barrel under lift in the prior quarter. We will now discuss our drilling program and operations. Our 300-well infill drilling program, the largest onshore Brazil, is back on track and performing very well. Since mobilizing a new rig in June, we have drilled eight new wells to target that so far. Drilling time is averaging 4.2 days, better than planned assumptions and much better than the performance of our first batch of wells. We are drilling an average of one new well per week, including transport and mobilization time. This performance is just the beginning and we are preparing to build on it as we execute our long-term plan. We are ready to mobilize additional rigs pending the completion of our financial plan, allowing us to accelerate drilling and production growth. Our excellent drilling performance will soon translate into production and revenues. Production from the first batch of our new infill wells is expected to begin next week. We have also increased our work-over capacity, supporting our base production levels in a cost-efficient way. As previously announced, we have to temporarily reduce production in the third quarter due to delivering upgrades to 58 truck loading facilities as ordered by the ANP. Twelve of the loading sites have been completed, of which eight have been approved by ANP, representing 80% of affected production. We are also working towards long-term improvements in production. We have sent requests for quotations to several international rig suppliers for optimized spec rigs that can be mobilized around the beginning of 2025 and are currently assessing submissions. With these new rigs, we expect to be able to demobilize, transport and mobilize at a much faster pace, increasing rig productivity and reducing well costs. Our work has put us in an excellent position to re-establish our production growth trajectory. Drilling is going well and will soon translate into production. However, the A&P mandate upgrades to truck loading sites have had a negative impact on third-quarter production. Workovers which drove our highly successful first wave of growth in 2022 and 2023 are ramping back up with growing capacity and new targets. We are confident that our next wave of growth will begin soon. As you saw in the previous video, Petrobras has several vessels doing the certification of the North Pipeline. These are now on standby due to an ongoing offtake, and certification work will resume after it is completed. At the current pace and depending on weather, we estimate the hydrostatic pressure test on the North Pipeline will be undertaken in the last week of September. Formal certification by Petrobras will then require a further two to three weeks. As you know, VLSFO is historically priced at a premium to Brent. Therefore, sale of on-spec oil will remove $4 per barrel marketing fee for non-spec oil and eliminate off-spec product discount. I will now turn over to Torger, who will discuss our financial strategy.

Thank you, Jose. We have a clear plan to be fully financed and as part of this have taken important steps to strengthen our balance sheets. We have negotiated with our bank lenders and bondholders a waiver of our leverage ratio covenant testing for the second quarter and subject to injecting $20 million into the borrower group the third quarter. This means that our next covenant test is now scheduled for the end of February 2025. providing enough time to refinance or reprofile the amortization of the existing debt obligations in line with our production profile. We are in the advanced stages of a convertible bond issuance which will satisfy the requirements of the covenant waivers and provide much needed short-term liquidity with material contribution from major shareholders as well as the management team. These milestones indicate the level of confidence that the management, investors and creditors have in our assets and business plan. Reflecting the high quality and untapped value of our assets, we are assessing an asset level transaction proposal, which is attractive. We are very pleased to report our first quarter with positive earnings, reflecting the systematic progress across our business. The total operating income in the second quarter increased by 3% from the previous quarter, including a negative impact of realized hedging of $3.1 million. EBITDA increased from $7.9 million in the first quarter to $9.5 million in the second quarter. The depreciation and amortization in the second quarter was $7 million. Interest expense increased by 7.6% quarter on quarter, as second quarter was the first full quarter with the $80 million Nordic bond, resulting in a pre-tax loss of $21.2 million. Finally, cash flow from operations were positive with $184,000 for the quarter, including a $9.5 million invested interest payment. CapEx ended at $9.2 million, including $2.5 million of lease payments. Realized oil prices went up 6% quarter on quarter due to higher oil prices, but were partly offset by a negative effect of $3.1 million in realized hedge losses. In addition, offtake volumes were down 2% due to scheduling of offtakes. In the second quarter, the company recorded a realized hedge loss of $3.1 million in revenues. The forward curve remained flat quarter on quarter at approximately $81 per barrel on average, but the fair value exposure decreased as a result of hedge settlements. The company has also entered into put options for the next three years and remain in compliance with the hedge requirements under our $300 million credit agreements. CapEx for the quarter ended on $9.2 million, including $2.5 million of lease payments. And finally, our cash position went down from first quarter due to the investments in CapEx and a negative development in working capital, and finally, a foreign exchange loss. As previously mentioned, we are working towards refinancing our debt during the six-month covenant waiver window. We are seeking a more fit-for-purpose debt structure that recognizes a more de-risked business and enables more funding for drilling capex investments than what we had at the closing of the $300 million credit agreement, which was essentially an acquisition financing. As part of this, we would also realign covenant testing with our current production profile. And considering Petrobras payments as well as our existing debt structure, this refinancing would not materially increase our overall indebtedness and would still enjoy an asset coverage ratio of almost five times based on our latest CPR. And finally, we have also been exploring the option of a BDR offering to enhance liquidity and achieve re-rating. Given the valuation and trading activity in our local peers, we would expect that such a listing would also support our valuation and liquidity. I'll now pass back to Jose to close out the presentation.

We update our guidance with our trading update in July. Although there has been an impact to third quarter production from A&P order works, we continue to expect the second half of the year to show a second wave of production growth as in-field drilling continues and well count increases. We are starting a new era at Seacrest Petroleum. We have achieved our first quarter of positive earnings and we have made major steps in strengthening the balance sheet to support our long-term growth plan. Our drilling program, the largest onshore Brazil, is now running smoothly with a new well drilled per week. We have a clear plan to be fully financed and are setting the stage for an acceleration in activity. We are looking forward to delivering rapid and profitable growth, and we thank you for your continued support.