PetroRio, The Largest Independent Oil And Gas Company In Brazil, Achieves Record Revenue Of R$ 1.6 Billion

With Profit of R$ 1.6 Billion, PetroRio Breaks Revenue Record. Acquisitions and Cost Rationalization Drive Highlights of the Company

PetroRio, the largest independent oil and gas company in the country, reported record financial results in 2019, a year marked by significant acquisitions, with a strong positive impact on the company’s production and reserves. For the year, net income reached R$ 688.4 million, up 236% compared to 2018.

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Net revenue, in turn, reached R$ 1.644 billion in 2019, a growth of 94% compared to 2018, and adjusted EBITDA reached R$ 792 million, following the acquisition of the Frade Field and capturing synergies with the Polvo Field, operated by PetroRio. The company, which aims to acquire and invest in producing fields, has as its pillars cost rationalization, high efficiency, focus on increasing production, and capital discipline—always with operational safety and respect for the environment.

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“In 2019, we presented significant increases in our production and relevant reductions in costs per barrel, benefiting the results of the year. We had another year of overcoming and deliveries, despite the eight-dollar drop in the average Brent during the period.” highlighted Nelson Queiroz Tanure, CEO of PetroRio.

“The year 2019 was marked by M&A highlights. We conducted four transactions throughout the year, which we believe will generate value for the company, allowing us to carry out even more transactions in the future. Our continuous efforts in cost rationalization and capturing synergies in the new assets reduced the cost per barrel for the company to US$ 20/barrel in the last quarter, which implies a new cash generation capacity, even in scenarios of high volatility in Brent oil. PetroRio believes that reducing the cost per barrel is its best hedge strategy and will continue to have the indicator as a pillar in its projects”, added the company’s main executive.

With new acquisitions, efficiency gains, and investments in field revitalization, PetroRio’s average oil and gas production jumped from 11,673 thousand barrels/day in 2018 to 19,209 thousand barrels/day in 2019, an increase of 65%.

ACQUISITIONS

The year 2019 was marked by strategic acquisitions, which continued into this year. In November 2019, PetroRio signed an agreement to purchase 30% of the Frade Field from Petrobras, thus holding 100% of the asset. Upon completion of the operation, the interest will add about 5.8 thousand barrels per day to PetroRio’s total production, further reducing oil extraction costs. PetroRio plans to start the Frade Field Revitalization Plan in 2020, which aims to increase the recovery factor of the asset and meet ANP conditions for extending the concession until 2041.

In February 2020, the Company signed contracts for the purchase of the vessel OSX3 (an FPSO), for US$ 140 million, and 80% (“farm-in”) of the Tubarão Martelo Field, where OSX-3 is chartered. These operations will allow the interconnection between the Polvo and Tubarão Martelo fields, simplifying the production system and creating a private hub in the region, which will generate significant synergies, cost reductions, and extend the economic life of the fields.

Since completing the acquisition of the operation and 52% of Frade (in March 2019), PetroRio has implemented cost reduction measures through operational and logistical synergies with the Polvo Field. In October 2019, PetroRio announced the completion of the acquisition of the remaining 18% of Frade, which added about 3.5 thousand barrels to the company’s daily production.

Operational efficiency, another differentiator of PetroRio, reached 99.7% in Frade in the last quarter of 2019.

SOCIAL INVESTMENTS

With the intention of sharing its results with society, PetroRio helps fund the Reação Institute, an NGO created in 2003 by Olympic medalist Flávio Canto and his coach Geraldo Bernardes, which encourages the practice of judo. At the end of 2018, the company played a leading role in launching the PetroRio Theater of Arts, aimed at financing sociocultural activities in the theater for the next two years. In the field of inclusive music, PetroRio launched the sponsorship of the NEOJIBA Orchestra, which promotes the development and integration of youth in Bahia through collective music practice.

“After a year with important deliveries, we believe PetroRio is well-positioned to continue its trajectory of economic and social growth. We will continue to explore potential acquisitions and seek attractive returns by rationalizing the costs of already acquired assets while seeking creative ways to contribute to a more inclusive society”, emphasizes PetroRio’s CEO.