Petroreconcavo (RECV3) Q1 2025 earnings summary

Executive summary

• Net revenue reached R$861 million in 1Q25, up 2% sequentially and 16% year-over-year, driven by increased production and operational resilience.

• EBITDA was R$424 million, up 5% from 4Q24 and 20% year-over-year, supported by higher revenue and cost reductions.

• Free cash flow rose 45% sequentially to R$207 million, supporting a R$263.4 million interest on equity distribution (R$0.90/share, ~7% yield).

• Adjusted net income was R$136 million, down 25% from 4Q24 but up 24% year-over-year.

• Production averaged 27.3k boe/day, up 4% from 4Q24, with new wells and operational improvements.

Financial highlights

• Lifting cost decreased to US$12.62/boe, down 5% sequentially, reflecting higher production and cost optimization.

• EBITDA margin improved to 49.2% in 1Q25.

• Net debt reduced to R$1.07 billion, with net debt/EBITDA at 0.62x and average debt cost at 6.7% p.a.

• CapEx for the quarter was R$249 million, down 19% from 4Q24, with 89% invested in reserves.

• Cash position remained strong at R$1.02 billion after capex, acquisitions, and financing outflows.

Outlook and guidance

• Targeting double-digit production growth for 2025, maintaining current operational pace and development plans.

• 50% of production hedged: 25% of oil and 88% of natural gas protected via fixed prices or Brent floor contracts.

• Flexibility to adjust CapEx and investments based on market conditions and oil price scenarios.

• Inventory expected to remain flexible, with a focus on further reduction depending on year-end activity.

• Next major debt amortization is in 2028; contingent earn-out only if Brent averages above US$80 in 2025.