PetroRio 4Q21 & 2021 Earnings Release

Highlights for the Year

Message from the Management

“We would like to thank all employees for their dedication this year, with important operational achievements such as the tieback between the Polvo and Tubarão Martelo fields, especially during the COVID-19 pandemic. They overcame various challenges and were responsible for the Company’s success.

2021 was a year marked by many achievements and prepared us for the next growth cycle. Concurrently, we saw the world continue to recover from the COVID-19 pandemic, with extensive vaccination efforts, drastically reducing the disease’s mortality rate, and gradually reopening economies.

PetroRio’s major operational achievement in the year was the tieback conclusion between Polvo and Tubarão Martelo Fields. The project cost US$45 million, and generated savings of US$50 million per year for the cluster, in line with the Company’s culture of financial discipline. Combined with the financial benefits, the investment also brings an environmental contribution, with the reduction of the emissions from the fields due to one less platform operating after the decommissioning of the Polvo FPSO. Accordingly, we managed to reduce the Company’s lifting cost to US$ 11.8/bbl in the fourth quarter of the year, and we expect to continue to deliver gradual improvements in this indicator. The project’s execution, within the expected timeline and under the initial budget, also shows our readiness for new initiatives such as the Frade Drilling Campaign and the development of Wahoo. 

On this front, we hired the NORBE VI rig to drill the Frade wells, whose redevelopment plan will start in the first quarter of 2022 with the drilling of the first production well and other two injection wells in the first phase of the redevelopment. At the end of 2021, we filed with the ANP, the Declaration of Commerciality for Wahoo and presented the Development Plan, beginning the process to develop the asset, so that soon after the drillings in the Frade Field, we can begin to drill four production wells, two injection wells and begin the connection with Frade FPSO at a distance of 30km, bringing a significant production increase to the Company with a marginal increase of costs. The effect of these initiatives will be another relevant reduction in the PetroRio’s lifting cost, combined with another material reduction in CO2 emissions per produced barrel, reinforcing our commitment with all forms of efficiency.

This year, we were involved in the divestment process of the Albacora and Albacora Leste fields, currently owned by Petrobras. In November, we were selected to begin exclusive negotiations of the acquisition for both assets, and we are focused on completing the transaction, as we see a relevant potential for value generation for our shareholders.

2021 was also the year in which we established our access to capital markets, for equity in January, and international fixed income in June. In the stock market, we conducted a follow-on equity offering of approximately US$ 400 million, with a 4x oversubscribed book, reducing leverage and preparing the Company for the debt issuance. In June, we issued bonds of US$ 600 million, reinforcing PetroRio’s cash position, with the prepayment of former short-term debts using the five-year maturity bond, aligning our debt profile with our investment activities. Accordingly, we believe that we are prepared and confident that we will continue to be able to access these sources of capital as necessary.

Another reason to be proud is our focus on the well-being, health and safety of our employees, as well as of the Company’s operations and society as a whole. We had another year without accidents or environmental incidents, breaking records of accident-free days on our platforms and completing 10 years without accidents at the Frade FPSO. Our employees were also able to benefit from the initiatives of physical and mental health, with meditation and yoga classes, shiatsu and psychologists. We also still apply COVID protocols designed to protect people working in our platforms and office.

Finally, in line with our culture of giving back to society, in 2021 we invested R$ 9.3 million in projects to support sports and culture, such as Instituto Reação, Teatro Casa Grande, Porsche Cup and the Gol de Ouro NGO. These projects have already brought important contributions to society: (i) Instituto Reação, supported by PetroRio since 2016, has had a positive impact on the life of more than 2 thousand children and adolescents in nine centers distributed across the country; (ii) Teatro Casa Grande, an important cultural icon of Rio de Janeiro, part of the life of Rio de Janeiro’s citizens for more than 50 years, was reopened in 2021 after its closure due to the pandemic; (iii) Porsche Cup, another important initiative to foster the Brazilian car racing scene; and (iv) the Gol de Ouro NGO, focused on bringing soccer access to children and adolescents in vulnerable conditions. These investments reinforce PetroRio’s commitment with the promotion of sports and culture.

We conclude by wishing good health to everyone, and we would like to thank once again all of our employees, who make a difference, and for the trust in our Company, which allows us to continue to execute the strategy that has brought us here.”

Click here for the Earnings Release.