Brava Energia (BRAV3) Q3 2024 earnings summary

Executive summary

• Completed the merger of Enauta, 3R, and Maha, forming a leading independent oil and gas company in Latin America with a diversified portfolio and over 500 million barrels of 1P reserves.

• First consolidated results post-merger, with integration and synergy capture underway, including a 10% headcount reduction and organizational simplification.

• Achieved average daily production of 58 kboe/d in 3Q24, with 81% oil and strong onshore resilience despite offshore maintenance impacts.

• Significant asset sale: 20% of Atlanta/Oliva to Westlawn for R$1,287 million (US$309 million), generating a non-recurring gain.

• Ratings upgrades by Fitch (AA-) and S&P (brAA-) with positive outlooks.

Financial highlights

• Proforma net revenue for 3Q24 was R$2,193.5 million, with oil accounting for over 89% of revenues.

• Adjusted EBITDA reached R$727.4 million, up 7.7% YoY but down 29.5% QoQ; margin improved to 33.2% (+5.7 p.p. YoY).

• Net profit was R$498.3 million, reversing a loss of R$349.9 million in 3Q23 and R$582.1 million in 2Q24, driven by non-recurring gains from asset sales and provision reversals.

• Lifting cost averaged US$20.0/boe, down 14.7% YoY and 11.3% QoQ, with further reduction to US$17.9/boe excluding chartering costs.

• Cash and equivalents at quarter-end were R$9,488.9 million (US$1.2 billion), with net debt at R$7,300.2 million and leverage at 2.7x Adjusted 12M EBITDA.

Outlook and guidance

• Management prioritizes restarting Papa-Terra production and launching FPSO Atlanta in 4Q24, with full well reconnections by 2Q25.

• CapEx to decrease in 2025 as Atlanta phase I completes; focus on sustainable CapEx aligned with cash generation and accelerated deleveraging.

• Cash generation expected to exceed investments in 2025, supporting deleveraging and potential for increased dividends and/or buybacks.

• Production ramp-up at FPSO Atlanta and Papa-Terra, plus BC-10 (Parque das Conchas) acquisition, to drive EBITDA and cash flow growth.

• Focus remains on the ten largest concessions, representing 90% of value and reserves, with disciplined capital allocation.