GuruFocus - Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Petroreconcavo SA (BSP:BVMF:RECV3) reported a record revenue of 850 million for the quarter, marking a 3% increase from the previous quarter.
- The company successfully concluded the investment in a new natural gas plant in Bahia, enhancing midstream consolidation.
- Petroreconcavo SA achieved a 20% increase in accumulated EBITDA for the first nine months of 2024 compared to the same period last year.
- The company announced a dividend payment of 379 million reais, representing a dividend yield of approximately 7.5% for the distribution.
- Petroreconcavo SA has made significant advances in operational resilience and logistics flexibility, including new routes for oil flow and strategic partnerships.
- The company experienced an increase in lifting costs due to greater expenses related to asset integrity and operational resilience.
- There was a negative impact from hedge instruments, with oil hedges decreasing since the second semester of 2024.
- Petroreconcavo SA faced challenges with production growth, not meeting the average growth expectations for the year.
- The company had to manage increased costs related to the transport of oil due to production increases in certain fields.
- There is uncertainty regarding future production estimates and reserve reports, with management cautious about providing specific forecasts.
A: Although our lifting cost is seen as a reference in Brazil, we expect to improve efficiency and have a decline in the lifting cost. The main factor for the increase this quarter was the growth in production and investments in flexibility and robustness. We anticipate a decline in lifting costs as production accelerates and efficiency mechanisms are implemented. (Answered by CFO Rafael)
Q: What is the expectation of conversion of MOUs, and what benefits do you have in terms of pricing of oil with this infrastructure?
A: The MOUs are the first step in developing logistics solutions with strategic partners. After MOUs, we move forward with technology, equipment, infrastructure, and contracts. The main objective is to ensure flow alternatives to avoid production interruptions, maintaining commercialization margins. (Answered by CEO FMO)
Q: The company has attractive dividends in 2024. Is there space to pay more dividends this year, and how should we think about paying shareholders in 2025?
A: Our strategy is flexibility, evaluating free cash flow, cash needs, and opportunities for capital use. We discuss with the board and decide the best alternative. There's no fixed dividend policy, but we aim to balance shareholder returns with strategic investments. (Answered by CEO FMO)
Q: How does the company see the evolution in production over the next few months, and what is the output expected for the year?
A: We have stabilized production and are re-accelerating the perforation program. Although we won't meet the average growth expected this year, we aim to deliver the starting point according to our reserve report. We plan to align production growth with our strategic goals for next year. (Answered by CEO FMO)
Q: What are the lessons learned with the operation of Pr 14 in terms of efficiency, safety, and costs?
A: The commissioning and start of production with Pr 14 were successful, focusing on efficacy and safety. We aim to improve efficiency in future wells, benchmarking against international standards. The challenge is to enhance technology and processes for deeper wells, critical for reserve development. (Answered by CEO FMO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.