Prio Sa · BMFBOVESPA:PRIO3
Prio Sa — PetroRio — Investor Presentation (August 2018)
28 slides from Prio Sa's investor presentation, August 2018
Slide 1: Corporate Presentation August 2018
CORPORATE PRESENTATION AUGUST 2018
Slide 2: Disclaimer
DISCLAIMER This presentation contains forward-looking statements. All statements other than statements of historical fact contained in this presentation are forward-looking statements, including, without limitation, statements regarding our drilling and seismic plans, operating costs, acquisition of
Slide 3: Group Overview
GROUP OVERVIEW Our strategy and results
Slide 4: Executive Summary
EXECUTIVE SUMMARY One of the largest independent oil producers in Brazil Financial Highlights • Well positioned to attract capital (leverage potential; listed in BM&FBovespa) 1H17 1H18 • Experienced technical team - qualification as an A-Operator granted by ANP Net Revenues BRL 230 million BRL 356 m
Slide 5: Company Drivers
COMPANY DRIVERS Growth Strategy • Growth through acquisition of producing assets • Development of current assets All About People Cost Reduction • Meritocracy and Accountability Measures • Performance-based • Operational costs optimization compensation ✓ PROFIT ORIENTED • Lean G&A and G&G overhead •
Slide 6: PetroRio Business Model
PETRORIO BUSINESS MODEL 1 COST REDUCTION 2 ENHANCED OIL RECOVERY 3 FOCUS • Increase in operational efficiency • Meticulous reservoir management, • Assets seen as “small” by from 80% to 97.4% greater stability and lower decline Majors receive special rates, extending lifespan of the field attention f
Slide 7: 2Q18 Highlights
2Q18 HIGHLIGHTS Net Revenue of R$ 239 million, highest quarterly Revenue in PetroRio's history Highest Operating Results in the Company's history: R$ 118.4 million, up 132% over 2Q17 EBITDA of R$ 85.8 million for the quarter, up 30% over 2Q17 Net Income of R$ 70.6 million, 50% above 2Q17 Lifting Cos
Slide 8: Polvo Field
POLVO FIELD OPETRORIO
Slide 9: 3 New Wells
9,600 BARRELS PER DAY 98.8% OPERATIONAL EFFICIENCY 3 NEW WELLS DRILLING CAMPAIGN 2018
Slide 10: Polvo Field 100% PetroRio – Overview
POLVO FIELD 100% PETRORIO – OVERVIEW Campos Basin Polvo Field • Close to Cabo Frio City • Area: 134.24 km² • Shallow-water: 92 - 180m Exports destinations Reserves (2017) POLVO OIL (million bbl) Proved (1P) 10.8 Proved + Probable (2P) 12.9 Proved + Probable + Possible (3P) 17.0 Source: D&M certifica
Slide 11: Polvo Production
POLVO PRODUCTION Average Daily Production and Operational Efficiency 98.6% 98.3% 99.4% 10.000 95.6% 93.0% 100% 10,000 8.000 8,000 80% 67.0% 6.000 6,000 60% 8,129 9,176 4,000 4.000 40% 6,927 7,167 6,484 2,000 5,124 2.000 20% 0 0% jan-18 feb-18 mar-18 abr-18 apr-18 mai-18 may -18 jun-18 Average Daily
Slide 12: Polvo Field: Lifting Cost vs. Brent
POLVO FIELD: LIFTING COST VS. BRENT Brent x Lifting Cost* (USD/bbl) Resilient performance and actively responding to market environment 80 75.0 67.2 61.5 60 54.6 51.1 50.8 52.2 47.0 47.0 44.2 35.2 40.3 40 35.7 34.5 31.3 30.6 31.2 32.0 28.2 28.4 20 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Av
Slide 13: Revitalization (2016) Enhanced Oil Recovery
REVITALIZATION – (2016) ENHANCED OIL RECOVERY Estimated oil production curve (million bbl) 2.4 2.8 2.2 2 2.2 1.6 1.6 1.7 1.2 1.3 1.4 1 1.1 2015 2016 2017 2018 2019 2020 2021 Previous operator DeGolyer and MacNaughton 2015 DeGolyer and MacNaughton 2016 Expected production (2016-2021) grew by five tim
Slide 14: Revitalization (2018) Drilling Campaign
REVITALIZATION – (2018) DRILLING CAMPAIGN Production Areas POL – H km Drilling: April/May Distance: 3.6km Carbonate POL – Z Drilling: June/July Distance: 5.3km Sandstone New wells POL – M Key No Production Drilling: August/September Decomissioned Producing Injector Production fields Distance: 5.5km
Slide 15: Manati Natural Gas Field
MANATI NATURAL GAS FIELD OPETRORIO
Slide 16: Stable and predictable cash flow from take-or-pay contract
Stable and predictable cash flow from ‘take-or-pay’ contract with Petrobras Project EBITDA margin: 70%
Slide 17: Manati Field
MANATI FIELD Natural Gas producing field • Located in the Camamu-Almada basin, 65km from Salvador, BAHIA • Proved reserves of 0.9 billion m³ (net to Petrorio’s 10% stake)* • Additional upsides with the development of Camarão Norte Manati - Gas production (m³/d) (Related to PetroRio’s 10% W.I.) Volum
Slide 18: Assets in Foz of Amazonas
ASSETS IN FOZ OF AMAZONAS FZA-M-539 • Natural Gas Discovery • Two wells drilled • Estimates of potential reserves of 18 billion cubic meters of natural gas with the possibility of expansion to 28 billion m³ • Water Depth: 130m FZA-M-254 • Oil asset • Phase of studies for potential assessment and wel
Slide 19: Oil & Gas Industry
OIL & GAS INDUSTRY Impacted by oversupply, geopolitics, and advances in technology, the O&G industry is in constant motion
Slide 20: O&G Industry Worldwide
O&G INDUSTRY WORLDWIDE Oil prices have experienced a strong decline since 2014, impacted by the global economic slowdown and imbalance between supply and demand. The commodity gained strength in 2018 and estimates point to the long-term Brent above $65.00 Brent price (US$/bbl) Jun/17 to Jun/18 $90 A
Slide 21: Oil Production in Brazil
OIL PRODUCTION IN BRAZIL ANP National Oil Operators Ranking – April 2018 OPERATOR PRODUCTION (bbl/d) 94% Petrobras 2,419,056 Statoil Brasil O&G 61,382 Shell Brasil 40,846 Total E&P do Brasil 39,555 6% Chevron Frade 17,370 0.24% 0.13% PetroRio O&G 7,167 0.24% Dommo Energia 6,947 0.24% Maha Energy 1,4
Slide 22: Ready for Growth
READY FOR GROWTH Defined growth strategy, strong liquidity, a team prepared and motivated to achieve its goals
Slide 23: Unique Opportunities in O&G Market
UNIQUE OPPORTUNITIES IN O&G MARKET Political and economic environment bring opportunities O&G companies in financial distress due to oil price drop Brazil’s political and economic crisis Shell-BG USD30 billion global divestment plan Petrobras’ divestment program Petrochemicals US$ 21 B Biofuels US$
Slide 24: PetroRio: Potential for Value Creation
PETRORIO: POTENTIAL FOR VALUE CREATION A strong balance sheet, coupled with the skills and competitive advantages in a distressed business environment lead to M&A opportunities in the Oil and Gas industry in Brazil and abroad PETRORIO Current Business Environment Profit oriented Technical team Econo
Slide 25: Best Latin American E&P Company
BEST LATIN AMERICAN E&P COMPANY PETRORIO AWARDED BY BRITISH MAGAZINE WORLD FINANCE https://www.youtube.com/ https://www.worldfinance.com/markets/p watch?v=3U7-WSI0EJE etrorio-flourishing-in-the-face-of-adversity PETRORIO RECEIVED THE AWARD OF BEST INDEPENDENT OIL AND GAS COMPANY IN THE CATEGORY "BES
Slide 26: PetroRio: Brazil's Largest Independent Oil Producer
PETRORIO: BRAZIL’S LARGEST INDEPENDENT OIL PRODUCER Investor Relations [email protected] www.petroriosa.com.br +55 (21) 3721 2129
Slide 27: Annex I: Pro Forma Income Statement
ANNEX I: PRO FORMA INCOME STATEMENT In thousands of BRL unless otherwise stated R$ thousand Proforma Income Statement 6M18 6M17 D 2Q18 2Q17 D Sales Volume - Oil (thousand bbl) 1,255 1,401 -10.4% 792 898 -11.8% Sales Volume - Gas (thousand m³/d) 79,216 41,763 89.7% 40,735 37,257 9.3% Revenues 356,560
Slide 28: Annex II: Balance Sheet
ANNEX II: BALANCE SHEET In thousands of BRL Assets Liabilities and shareholders' equity Current assets 31-dec-2017 30-jun-2018 Current liabilities 31-dec-2017 30-jun-2018 Cash and cash equivalents 92,445 69,331 Suppliers 70,535 91,620 Securities 511,863 652,191 Labor obligations 9,979 7,996 Restrict