Keo Capital (KEOC) Q3 2024 earnings summary

Executive summary

• Illinois Basin oil production rose 54% to 276 BOEPD in Q3 2024 year-over-year, driven by new wells and facility upgrades.

• Completed major M&A activities, including roll-up of 15% in 3R Offshore into Brava Energia, now holding 4.76% of Brava and becoming the 4th largest shareholder.

• Management remains confident in the long-term outlook, shifting focus from aggressive growth to optimizing cash flow and shareholder returns.

• Approval for change of control in Venezuela was secured, with plans to acquire up to 40% of PetroUrdaneta and ongoing government engagement.

• Maha became debt-free after repaying $15M in bank debt in November 2024.

Financial highlights

• Q3 2024 revenue: $1.8M (+44% YoY); 9M 2024 revenue: $6.2M (+52% YoY).

• OPEX per barrel decreased by 23% year-over-year, improving netback margins.

• Q3 2024 EBITDA: $(1.6)M, impacted by non-recurring expenses and Brava share losses.

• An unrealized loss of $40.6M was recorded due to Brava share price decline, partially offset by a $17.9M gain from discontinued operations.

• Cash and equivalents at $25.7M, liquid investments at $77.4M, and net cash plus liquid investments at $88.2M as of Q3 2024.

Outlook and guidance

• Brava Energia expected to reinstate Papa Terra and Atlanta production in December 2024, targeting stable production around 100,000 boepd in 2025.

• Dividend capacity projected at up to $3.0B over the next six years, representing up to three times the current market cap.

• Selective pursuit of high-return opportunities in Latin America and ongoing efforts to secure OFAC license for Venezuela operations.

• Management remains optimistic about the Venezuela project, with no major changes expected from the U.S. administration.

• Illinois Basin production expected to continue ramping up, supporting free cash flow.