PetroRecôncavo continues to deliver positive results in its operations, creating an attractive growth potential with the clusters it already has. In Safra’s opinion, the company should keep up the good pace – or even create more value with the acquisition of new areas.
“In our view, PetroRecôncavo should be able to continue delivering good results in operations and in the revitalization of mature onshore fields, leveraging its positive track record and its internal services unit,” said analyst Conrado Vegner, in a report released on Monday . “We see an attractive valuation potential considering the clusters it already has, while more can come with the potential to acquire new areas.”
PetroRecôncavo released preliminary and unaudited production data for the month of June. The company had a 2.9% increase in total production compared to May, recording a daily average of 12,400 barrels of oil equivalent.
Production in the Potiguar District increased 5% month-on-month, totaling 8.8 thousand barrels of oil equivalent/day.
According to PetroRecôncavo, the production results of the 30 fields operated by the company in the Potiguar District since December 2019, when they were acquired from Petrobras, recorded growth of 59% in average daily production compared to the last daily production data reported by the former operator. The results of gas production had an increase of 92% in the average daily production in the last 12 months.
For Safra, PetroRecôncavo’s operational data proves the company’s ability to increase production in the mature fields it operates. The bank has recently started covering the name, highlighting the company’s ability to report very favorable results over the past 20 years while building an effective team of professionals and corporate culture.
Safra began covering PetroRecôncavo with an outperform recommendation (expected performance above the market average) and a target price of R$ 26.50 for the share.
The institution sees competitive advantages in the company. Using its own team and equipment, PetroRecôncavo was able to develop in-house service capabilities that can, in addition to speeding up operations, help reduce costs.
“Using in-house teams and the equipment itself, the company recorded an average well drilling speed of 150 meters per day in 2020, 74% faster than the average of 86 meters/day for other mature onshore field operators,” said Vegner. “In terms of fracturing costs, the company estimates an average of US$32,800 per operation since it began operations in the first quarter of 2019 versus US$75,400 offered by third-party contractors, a 57% reduction” .
Safra reinforced the outperform recommendation (expected performance above the market average) and the target price of R$26.50 for the share.