Prio Sa · BMFBOVESPA:PRIO3
Prio Sa — PetroRio — Investor Presentation (November 2018)
29 slides from Prio Sa's investor presentation, November 2018
Slide 1: Corporate Presentation November 2018
CORPORATE PRESENTATION NOVEMBER 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; Reporting Issuer in Canada) 9M17 9M18 • Experienced technical team - qualification as an A-Operator granted by ANP Net Revenu
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 • Operational efficiency above 98% • Meticulous reservoir management, • Assets seen as “small” by (industry benchmark) greater stability and lower decline Majors receive special rates, extending useful life of the attention fro
Slide 7: 3Q18 Highlights
3Q18 HIGHLIGHTS Net Revenue of R$ 224.6 million, highest quarterly Revenue in PetroRio's history Highest Operating Results in the Company's history: R$ 130.1 million Adjusted EBITDA of R$ 107.1 million for the quarter Net Income of R$ 71.4 million Lifting Cost in Polvo of US$ 26.6/bbl in the quarter
Slide 8: Polvo Field (100% PetroRio)
POLVO FIELD (100% PETRORIO) OPETRORIO
Slide 9: 3 New Wells
10,200 BARRELS PER DAY 98.1% 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 (2018) POLVO OIL (million bbl) Proved (1P) 12.9 Proved + Probable (2P) 20.9 Proved + Probable + Possible (3P) 32.0 Source: D&M certifica
Slide 11: Polvo Production
POLVO PRODUCTION Average Daily Production and Operational Efficiency 96.9% 98.4% 99.1% 98.8% 11,000 11.000 98.1% 100% 84.8% 9,000 9.000 80% 7.000 24% 7,000 60% 33% 5.000 5,000 10,081 8,157 8,040 7,654 7,365 40% 3.000 3,000 6,153 20% 1.000 1,000 -1.000 2Q17 2T17 3Q17 3T17 4Q17 4T17 1Q18 1T18 2Q18 2T1
Slide 12: Polvo Field: Lifting Cost vs. Brent
POLVO FIELD: LIFTING COST VS. BRENT Brent x Lifting Cost* (USD/bbl) 80 74.83 75.84 67.23 61.46 60 54.61 51.06 50.79 52.17 47.03 46.99 44.2 40.3 35.7 34.5 40 32.0 31.3 30.6 31.2 28.2 28.4 26.6 35.21 20 1T16 2T16 3T16 4T16 1T17 2T17 3T17 4T17 1T18 2T18 3T18 Average Brent Price Lifting Cost *100% of th
Slide 13: 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 14: Manati Natural Gas Field (10% PetroRio)
MANATI NATURAL GAS FIELD (10% PETRORIO)
Slide 15: Steady and predictable cash flow
Steady and predictable cash flow from ‘take-or-pay’ contract with Petrobras Project EBITDA margin: ~70%
Slide 16: Manati Field
MANATI FIELD Natural Gas producing field • Located in the Camamu-Almada basin, 65km from Salvador, BAHIA • Proved reserves of 760 million m³ (net to Petrorio’s 10% stake)* • Potential upside reducing accrual for abandonment Volume Manati - Gas production (m³/d) (Related Manati - Produção de Gás to P
Slide 17: Assets in Foz do 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 • Ongoing studies for potential assessment and dril
Slide 18: Frade Field (18.26% PetroRio)
FRADE FIELD (18.26% PETRORIO)
Slide 19: Frade Field
FRADE FIELD Oil Field Located in Campos Basin • Increases Company net production in approximately 25% of boepd, as well as 150% in oil reserves • Distance from Polvo Field allows for short term synergies • Subject to certain conditions precedent as well as internal and external approvals WorkingInte
Slide 20: Oil & Gas Industry
OIL & GAS INDUSTRY Impacted by oversupply, geopolitics, and advances in technology, the O&G industry is in constant motion
Slide 21: 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) Sep/17 to Sep/18 Avera
Slide 22: 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 3.92% 2.22% PetroRio O&G 7,167 4.05% Dommo Energia 6,947 9.80% Maha Energy 1,4
Slide 23: Ready for Growth
READY FOR GROWTH Defined growth strategy, strong liquidity, a team prepared and motivated to achieve its goals
Slide 24: Unique Opportunities in O&G Market
UNIQUE OPPORTUNITIES IN O&G MARKET Political and economic environment bring opportunities Companies reviewing their asset portfolios due to oil Brazil’s political and economic crisis price decline since 2014 Shell-BG USD30 billion global divestment plan Petrobras’ divestment program Petrochemicals B
Slide 25: 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 26: 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 27: PetroRio: Brazil's Largest Independent Oil Producer
PETRORIO: BRAZIL’S LARGEST INDEPENDENT OIL PRODUCER Investor Relations ri@petroriosa.com.br www.petroriosa.com.br +55 (21) 3721 3810
Slide 28: Annex I: Pro Forma Income Statement
ANNEX I: PRO FORMA INCOME STATEMENT In thousands of BRL unless otherwise stated R$ thousand Proforma Income Statement 9M18 9M17 D 3Q18 3Q17 D Revenues 581,187 340,307 70.8% 224,627 110,014 104.2% Cost of products/services (247,046) (199,099) -24.1% (76,608) (62,058) -23.4% Royalties (45,771) (33,054
Slide 29: Annex II: Balance Sheet
ANNEX II: BALANCE SHEET In thousands of BRL Assets Liabilities and shareholders' equity Current assets 31-dec-2017 30-sep-2018 Current liabilities 31-dec-2017 30-sep-2018 Cash and cash equivalents 92,445 28,160 Suppliers 70,535 92,833 Securities 511,863 501,935 Labor obligations 9,979 5,192 Restrict