Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PRIO SA (PTRRY, Financial) successfully signed an acquisition for a 40% stake in the Peregrino field, which is expected to enhance production capabilities.
- The company maintains a strong cash position of $2.16 billion, ensuring financial stability and readiness for future investments.
- Despite production challenges, PRIO SA (PTRRY) managed to keep operating expenses optimized, maintaining control over costs.
- The company is actively working on improving operational efficiency, particularly at the Albacora field, with plans to install new turbines and compressors.
- PRIO SA (PTRRY) is committed to sustainability, focusing on reducing emissions and improving health and safety standards across operations.
Negative Points
- Production was negatively impacted, averaging 70,000 barrels daily due to scheduled shutdowns and corrective downtimes.
- The lifting cost increased to $9.8 per barrel due to lower production levels, affecting overall cost efficiency.
- Revenue dropped significantly by 40% due to a decrease in production and lower Brent prices compared to the previous year.
- Environmental licensing delays, particularly for the Wahoo field, are hindering operational progress and potential production increases.
- The company experienced a 52% drop in net income quarter-on-quarter, reflecting the financial impact of operational challenges.
Q & A Highlights
Q: Can you provide an update on the Wahoo production license and the share buyback program?
A: The public consultation period for the Wahoo license ended without feedback, allowing Ibama to proceed with their analysis. We are awaiting their response, and the next step would be the issuance of the license. Regarding the share buyback, we have repurchased half a percent since the Peregrino acquisition announcement. We aim to reach 10% well before August next year, using surplus cash for the buyback while maintaining leverage close to 0.4-0.5 by the end of 2025. - Roberto Bernardes Monteiro, CEO
Q: What are your expectations regarding Ibama's approval process, and how are you managing the water cut at the Frade field?
A: We are hopeful for a resolution by year-end for the TB MT 10 well, which would significantly improve our carbon emissions index. Conversations with Ibama are progressing, and we expect the drilling license for Wahoo soon. Regarding Frade, the increase in water production is managed by controlling reservoir pressure and planning new wells to target areas with more oil separation from water. - Roberto Bernardes Monteiro, CEO and Francisco Francilmar Fernandes, COO
Q: Can you elaborate on the timeline for Wahoo and Peregrino, and how they will impact production?
A: Wahoo's first oil is expected between May and August, depending on the environmental license. We plan to drill in batches, starting with two wells. For Peregrino, we anticipate closing soon, adding approximately 36,000 barrels to our production, with offtakes every two weeks. - Roberto Bernardes Monteiro, CEO
Q: What is the expected production level by the end of 2025, and how does this affect your strategy regarding the Gulf of Mexico?
A: We anticipate reaching around 150,000 barrels per day by the end of 2025, considering declines and additions from Peregrino and Wahoo. This positions us as a significant cash generator, allowing us to deleverage quickly and prepare for potential M&A opportunities, including the Gulf of Mexico. - Roberto Bernardes Monteiro, CEO
Q: How does the company view the trade-off between dividends and share buybacks?
A: We favor share buybacks as we believe our share price does not reflect its true value. Buybacks allow for continuous capital allocation, whereas dividends require accumulating funds for distribution. We see buybacks as a strategic opportunity to enhance shareholder value. - Roberto Bernardes Monteiro, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
