Petroreconcavo (RECV3) Q2 2025 earnings summary

Executive summary

• Net revenue for 2Q25 was BRL 806 million, down 6% sequentially, while 1H25 revenue rose 6% year-over-year to BRL 1.67 billion, impacted by a 10% Brent price drop and currency fluctuations.

• EBITDA for 2Q25 was BRL 374 million, down 12% sequentially and 16% year-over-year; 1H25 EBITDA was BRL 798 million, stable year-over-year.

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

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

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

Financial highlights

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

• EBITDA margin in 2Q25 was 46.4%, down 2.9 p.p. sequentially and 7.8 p.p. year-over-year.

• Free cash flow was negative BRL 100 million in 2Q25, impacted by BRL 260 million in interest payments and share repurchases.

• CapEx in 2Q25 totaled BRL 367 million, up 47% sequentially, mainly for reserve development, drilling, and midstream investments.

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

Outlook and guidance

• 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 BRL 950 million (excluding midstream investments).

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

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

• 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.

• Future investment in deep wells and horizontal drilling will depend on ongoing appraisal results.