PETRORIO IS READY TO TAKE THE NEXT STEPS OF GROWTH, SAYS THE PRESIDENT

(Valor) The president of PetroRio, Roberto Monteiro, said that the company “is ready” to take its next steps in growth. The oil company ended the second quarter with a cash position of R$4.53 billion, after issuing US$600 million in bonds in the period.

Among PetroRio’s new steps, the company expects to start drilling in 2022 for the project to revitalize the Frade field, in the Campos Basin. The company also plans, over the next few years, to develop the Wahoo discovery, also in the Campos Basin. PetroRio is also looking at new acquisition opportunities.

Monteiro also said that the company is looking at the opportunity to acquire Petrobras’ Albacora and Albacora Leste fields in the Campos Basin, as well as other assets.

The executive mentioned that the Brazilian state-owned company set for Monday (09) the date for receiving the binding offers for Albacora.

According to him, Petrobras’ divestment process is carried out in “many stages” and currently has at least four competitors, according to news published in the press. The expectation is that negotiations should still extend into the second half of the year and that the contract with the winner of the competition takes place at the end of the year or even in 2022.

Monteiro stated that the oil company is internally evaluating the acquisition of the asset, in a consortium, but is depositing “all eggs in the same basket”.

“Our point is not to stop exercising, to put all our hopes on Albacora,” he said during a conference call with analysts.

The executive commented that the company is “looking for other things”. Although there is nothing concrete, he mentioned interest in an eventual acquisition of the Peregrino field, operated by Equinor, and of assets from Shell and Total. “There are things that are bigger than Albacora,” he said.

Monteiro also mentioned that PetroRio is still interested in buying the slice of Indian IBV in Wahoo, in order to hold 100% of the asset. “We remain firm for this deal to materialize,” he said.

PetroRio’s president said that the company “is ready” to take its next steps of growth. The company closed the second quarter with net cash of $210 million.

Monteiro also commented on the expectation of receiving R$ 144 million, for the sale of a 10% stake in Manati, in the Camamu-Almada Basin (BA), to GasBridge. According to him, the transaction is subject to conditions precedent, among which is the success of Gas Bridge in the acquisition of the Manati operation from Petrobras. According to the executive, the expectation is to complete the sale this year.

Leverage

Monteiro said that the company expects to work with a leverage level, measured by the net debt/Ebitda (earnings before interest, taxes, depreciation and amortization) ratio, from once to twice.

According to him, the company has already worked with levels above that, but in a punctual way, in some acquisitions.

“We think about working with a low level, we don’t think about having high leverage. As we live on acquisitions, we have to have an opportunistic balance [ready to take advantage of the opportunities]”, he said.

Finally, Monteiro highlighted that the company’s debt covenant is currently 2.5 times the debt/Ebitda ratio.

Protection

PetroRio is considering extending the hedge contracted by the company until October, for the months of November and December, said the financial director, Milton Salgado Rangel Neto.

In June, the company bought put options (Put) on Brent as a hedge to protect itself from oil price fluctuations. The total volume of the hedge is approximately 4.3 million barrels at an average of $67.5 per barrel.

The volume corresponds to the offtakes (sales) priced in June and July, 100% of those expected to be priced between August and September, and 50% of the offtakes planned for October.

According to Rangel, the oil company monitors the fluctuations in oil prices, before taking the decision.

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