Petroreconcavo (RECV3) Q2 2025 earnings summary

Executive summary

• Net revenue for 2Q25 was R$806 million, down 6% sequentially, while 1H25 revenue rose 6% year-over-year to R$1.67 billion, driven by higher oil and gas sales despite increased costs.

• EBITDA for 2Q25 reached R$374 million, a 12% decrease from 1Q25 and 16% year-over-year, with 1H25 EBITDA stable year-over-year at R$798 million.

• Net income in 2Q25 was R$238 million, up 5% sequentially and 75% year-over-year; 1H25 net income surged 89% year-over-year to R$466 million.

• Production averaged 27.4 thousand boe/day in 2Q25, stable sequentially and up 4% year-over-year for the semester.

• Strategic advances included completion of three deep wells, acquisition of 50% of gas midstream assets, and a R$500 million debenture issuance.

Financial highlights

• Adjusted net income for 2Q25 was R$139 million, 2% higher than 1Q25; 1H25 adjusted net income was R$275 million, down 18% year-over-year.

• EBITDA margin in 2Q25 was 46.4%, down from 49.2% in 1Q25; net income margin was 29.5%.

• Free cash flow was negative R$100 million in 2Q25, with 1H25 free cash flow at R$107 million, down 83% year-over-year.

• Net debt as of June 30, 2025, was R$1.28 billion, with a net debt/EBITDA ratio of 0.78x.

• Capex in 2Q25 totaled R$367 million, up 47% sequentially, mainly for reserve development and midstream investments.

Outlook and guidance

• Final phase of 2025 drilling program to include two horizontal wells, aiming to maximize asset value and recovery efficiency.

• CapEx for the second semester is expected to be much lower, focusing on workover and maintenance, with full-year CapEx projected to match last year's R$950 million (excluding midstream investments).

• New oil hedges using zero-cost collars set a floor of US$60/bbl and cap of US$70/bbl through 2026, covering about 50% of production.

• Production growth expectations for the year have been revised down from 10% to around 4%, with a focus on maintaining current production levels.

• The company reinforced its cash position with a third debenture issuance of R$497.8 million in July 2025, aimed at supporting working capital, expansion, and strategic investments.