Petroreconcavo (RECV3) Q1 2025 earnings summary

Executive summary

• Net revenue reached R$861 million in 1Q25, up 16% year-over-year and 2% sequentially, driven by increased production and operational resilience.

• EBITDA was R$424 million, up 5% sequentially and 20% year-over-year, with a margin of 49.2%.

• Net income surged to R$228 million, up 107% year-over-year, while adjusted net income was R$136 million, up 24% year-over-year.

• Free cash flow rose 45% sequentially to R$207 million, supporting a R$263.4 million interest on equity distribution (R$0.90/share, ~7% yield).

• Production averaged 27.3k boe/day, up 4% from 4Q24, with growth driven by drilling and workover activities.

Financial highlights

• Lifting cost decreased to US$12.62/boe, down 4-5% sequentially, reflecting higher production and cost optimization.

• Net debt stood at R$1.07 billion, with net debt/EBITDA at 0.62x, improved from 0.80x in 4Q24.

• Operating cash flow reached R$505 million, a significant increase from R$302.1 million in Q1 2024.

• CapEx for the quarter was R$249 million, down 19-29% from the previous quarter, with 89% invested in reserves.

• Dividend yield for the quarter at ~7% based on R$0.90/share distribution.

Outlook and guidance

• Targeting double-digit production growth for 2025, maintaining current operational pace and development plans.

• 50% of production hedged: 25% of oil and 88% of natural gas protected via fixed prices or Brent floor contracts.

• Company maintains flexibility to adjust investments and CapEx in response to market conditions.

• Inventory expected to remain flexible, with a focus on further reduction depending on year-end activity.

• Next major debt amortization is in 2028; contingent earn-out only if Brent averages above US$80 in 2025.