Petroreconcavo (RECV3) Q2 2024 earnings summary

Executive summary

• Net revenue reached R$826 million in 2Q24, up 11% from 1Q24, with EBITDA of R$447 million, a 27% increase, and net profit of R$136 million, up 24% sequentially.

• Production grew 5% between March and June, with operational improvements, successful well interventions, and stable average production at 26.3 kboe/day.

• Major investments included the commissioning of the PR-14 rig, expansion of gas treatment capacity, and new projects in the Tiê Field.

• Distributed R$410 million in interest on equity and R$17 million in dividends, with robust free cash flow generation.

• Interim financial statements for H1 2024 reviewed by Deloitte show compliance with accounting standards.

Financial highlights

• Net revenue for H1 2024 reached R$1.57 billion, up 14% from H1 2023; 2Q24 net revenue rose 11% quarter-over-quarter.

• EBITDA for 2Q24 was R$447 million (+27% vs. 1Q24), with margin improving to 54.1%; adjusted EBITDA margin reached 55.9%.

• Net profit for 2Q24 was R$136 million, up 24% sequentially but down 23% year-over-year; H1 2024 net income was R$246 million.

• Lifting costs reduced to US$12.62/boe, down 5% from 1Q24; royalties and SG&A expenses also declined.

• Free cash flow reached R$392 million in 2Q24, up 69% from 1Q24.

Outlook and guidance

• Production is expected to increase in the second semester, with operational cost per barrel targeted to decline further.

• Focus on reserve development, operational excellence, and inventory optimization, with ongoing workover campaigns.

• Expansion of processing capacity and gas monetization in Bahia, and new partnerships to enhance commercialization.