Q2 2026 Petroreconcavo SA Earnings Call Transcript
Key Points
- Net revenue grew 18% quarter-over-quarter to BRL808 million, driven by higher Brent prices and improved oil sales contracts at the Potiguar Asset.
- EBITDA increased 28% quarter-over-quarter to BRL396 million, with margin expanding from 45% to 49%.
- Signed a long-term oil offtake agreement with BRAVA (effective Oct 2026-Dec 2030), providing predictability and reducing the average fixed discount by ~40%.
- Adjusted free cash flow grew consistently, reaching BRL146 million in Q2 2026, supported by strong operating cash flow of BRL252 million.
- Announced BRL100 million in dividends (BRL0.34 per share), reinforcing commitment to shareholder returns.
- Continued efficiency gains: operational and administrative costs fell for the fifth consecutive quarter, down to BRL285 million from BRL333 million year-over-year.
- Water injection volumes increased significantly (Tiê +40%, Sabiá da Mata 7x, Sabiá-Bico-de-Osso 3x), supporting long-term reserve recovery and production sustainability.
- Low leverage at 1.01x net debt/EBITDA with a comfortable cash position of BRL1.620 billion and average debt cost of 6.12% in USD.
- Received Pro-Ethics Company 2025-2026 recognition, highlighting strong governance and integrity practices.
- No new hedge positions were added, allowing the company to capture upside from rising Brent prices while maintaining cash flow predictability.
- Average production declined 1% quarter-over-quarter and 12% year-over-year to 24,100 BOE/d, primarily due to lower output at Tiê and Miranga.
- Production in the first half of 2026 was approximately 86% below initial expectations, leading to a downward revision of full-year production outlook.
- Net income fell 15% year-over-year to BRL203 million, impacted by mark-to-market losses on hedging instruments and swaps.
- Lifting cost per barrel increased to $16.8/BOE from $15.82, due to BRL appreciation and lower production dilution.
- Extraordinary gas purchases of BRL44 million during the Guamaré UPGN downtime negatively impacted costs and EBITDA.
- CapEx was reduced significantly (down ~40% year-over-year in reserve development), slowing drilling activities and potentially limiting short-term production growth.
- The company's production stability is challenged by scheduled and unscheduled downtimes, as seen in July with gas plant maintenance.
- Hedge settlements resulted in a negative impact of BRL89 million on revenue in Q2, and zero-cost dollar transactions added BRL50 million in financial losses.
- The average realized gas price was impacted by lower NGL sales due to the Guamaré downtime, and gas price adjustments lag Brent movements.
- Free cash flow reported was slightly lower quarter-over-quarter (BRL74 million vs BRL80 million) due to seasonal interest payments on debentures.
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Good morning, everyone, and thank you for waiting. My name is MarÃlia. I'm Investor Relations Director at the company. We'll be starting our results call for the second quarter of 2026. The presentation will be conducted by our CEO, José Firmo; and our CFO, Rafael, followed by a Q&A session with our executives.
This call is being broadcast exclusively online and will be made available on our company's Investor Relations website. (Event Instructions)
Before we continue, I just would like to clarify that all the statements presented during this call related to business perspectives of the company, projections, operational, and financial goals are based in beliefs and premises from the executives at PetroRecon, containing information that is currently available for the company. Future considerations are not a guarantee of performance and/or involve risks.
I'll hand the floor to Firmo so we can get started.
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