Petroreconcavo (RECV3) Q4 2024 earnings summary

Executive summary

• 2024 was a challenging but positive year, marked by operational resilience, record EBITDA of R$1.6 billion (up 29% YoY), and record free cash flow of R$1 billion, driven by higher revenue and stable production.

• Net revenue reached R$3.3 billion, a 16% increase year-over-year, with adjusted net income of R$681 million, down 4% due to higher costs, mark-to-market, and tax effects.

• Strategic focus on flexibility in capital allocation, balancing dividends, CapEx, and M&A opportunities, with operational investments improving efficiency and resilience.

• Accelerated drilling programs and operational reliability improvements contributed to production and cost efficiencies, with production growth in the Tiê field.

• Distributed R$806 million in dividends, yielding 14.5%, and maintained average production at 26.3 thousand boe/day, a 1.4% increase YoY.

Financial highlights

• EBITDA margin improved to 52.2% in 2024 (vs. 50.2% in 2023), with quarterly EBITDA at R$403 million (-8% QoQ).

• Net debt at year-end was R$1.3 billion, with a leverage ratio of 0.80x net debt/EBITDA.

• Dividend per share was R$2.75, with a dividend yield of 14.5%.

• Lifting cost averaged US$13.60/boe in 2024, up 4% YoY, and US$14.52 in Q4.

• Free cash flow generation totaled R$1.0 billion in 2024.

Outlook and guidance

• Expect robust production growth and a reduction in lifting costs in 2025, with continued focus on operational efficiency and resilience.

• NGPU Miranga project approved, with US$60 million investment and operations expected by end of 2027.

• 2025 gas sales contracts cover 87% of average 2024 gas production, providing revenue predictability.

• Additional ZCC oil hedge contracts in place for 2025, covering about 17% of total production.

• Flexibility remains central to capital allocation, with readiness for M&A and further shareholder returns.