August 03, 2020
Petro Rio S.A. (“Company” or “PetroRio”) (B3: PRIO3) announces its 2Q20 earnings.
Highlights for the Quarter
Message from Management
“In one of the most challenging and unprecedented quarters in the oil and gas industry’s history, PetroRio has had the opportunity to establish itself as one of the most resilient companies in its sector. Our business model was once again tested, with almost two months of Brent prices below US$ 30 per barrel, between March and May of 2020.
During this period, our team has responded with agility, and by focusing on health and safety, as well as on (i) operational costs and liquidity management, and (ii) capturing synergies with the incorporation of Frade and Tubarão Martelo. The combination of these efforts has resulted in a Company-wide lifting cost reduction to US$ 13.7 per barrel in 2Q20; 43% lower than the annual comparative and 21% lower than the previous quarter. We reiterate that the continuous review and reduction of our lifting cost is the most important strategy to protect us against oil price volatility, and this will continue to be the pillar that supports the Company’s current and future projects.
Furthermore, in early 2020, the Company hedged 70% of its estimated offtakes for the first half of 2020. As a result, the gross effective sales price in the second quarter, including the hedges, was US$ 53.1 per barrel.
These lifting cost reduction initiatives, in addition to the income from the hedge operations, helped maintain PetroRio’s liquidity in the face of the impact of Covid-19 in oil prices, and to report a reduction in net leverage (Net Debt/EBITDA) in the second quarter of 2020.
During the quarter, we also signed an agreement to extend the payment schedule of Chevron’s Vendor Finance, currently the largest line item of the Company’s debt. The new amortization schedule will keep us well capitalized through 2020 and 2021.
Finally, despite these significant achievements and the outstanding operational performance, the quarter’s net income was affected by non-cash effects, mainly related to foreign exchange variations on liabilities. As in previous periods, theses impacts are offset by the fact that our revenues and cash balance are also mostly dollar denominated.
We emerge from these recent events stronger than ever, eager to face the next few months, while remaining mindful of health, safety, efficiency and new business opportunities. We also wish for health and serenity for our employees, suppliers and business partners.”
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