Prio Sa · BMFBOVESPA:PRIO3
Prio Sa — PetroRio — Investor Presentation (March 2018)
27 slides from Prio Sa's investor presentation, March 2018
Slide 1: Corporate Presentation March 2018
CORPORATE PRESENTATION MARCH 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 PetroRio is the largest independent oil producer in Brazil Financial Highlights • Well positioned to attract capital (leverage potential; listed in BM&FBovespa) 2016 2017 • Experienced technical team - qualification as an A-Operator granted by ANP Average Production 8.145 bbl/day 7
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: 2017 Highlights
2017 HIGHLIGHTS Record Net Revenues of R$ 534 MM, 34% higher than 2016 Operational Efficiency in Polvo of 97.4% in 2017, the highest in the Field’s history Brasoil acquisition concluded in March 2017, with increase in production of 3mil boe/d EBITDA of R$ 132MM and Net Income of R$ 51MM for the year
Slide 7: Polvo Field
POLVO FIELD OPETRORIO
Slide 8: Barrels per day, days without accidents
7,800 BARRELS PER DAY 2,000 DAYS WITHOUT ACCIDENTS 97.4% OPERATIONAL EFFICIENCY
Slide 9: 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 (2017) Reserves POLVO OIL (million bbl) Proved (1P) 13.0 Proved + Probable (2P) 15.4 Proved + Probable + Possible (3P) 21.2 Source: D&M certifica
Slide 10: Polvo Production
POLVO PRODUCTION Average Daily Production and Operational Efficiency 96.9% 98.4% 99.1% 10.000 93.0% 95.2% 100% 10,000 8.000 8,000 80% 6.000 6,000 60% 4.000 4,000 8,167 8,213 8,040 7,654 7,365 40% 2.000 2,000 20% 0 0% 4T16 4Q16 1T17 1Q17 2T17 2Q17 3T17 3Q17 4T17 4Q17 Average Daily Production (bbl/d)
Slide 11: Polvo Field: Lifting Cost vs. Brent
POLVO FIELD: LIFTING COST VS. BRENT Brent x Lifting Cost* (USD/bbl) 108.7 Resilient performance and actively 110 99.4 responding to market environment 90 70 53.6 54.7 45.1 50 57.3 43.2 30 35.6 33.5 30.9 10 2013 2014 2015 2016 2017 Average Brent Price Lifting Cost *100% of the field (without deprecia
Slide 12: Enhanced Oil Recovery
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 times Results ✓ New, high-q
Slide 13: Business Model
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 from Petro
Slide 14: Manati Natural Gas Field
MANATI NATURAL GAS FIELD OPETRORIO
Slide 15: Stable cash flow and project EBITDA margin
✓ Stable 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 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.) 800 8
Slide 17: Exploration Assets
EXPLORATION ASSETS FZA-M-539 • Natural Gas Discovery • Two wells drilled • Estimated gas-in-place: 20 billion m³ (Manati @ 100% = 33 billion m³) • Water Depth: 130m FZA-M-254 • Oil asset • 3D seismic activity underway
Slide 18: Oil & Gas Industry
OIL & GAS INDUSTRY Impacted by oversupply, geopolitics, and advances in technology, the O&G industry is in constant motion
Slide 19: 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. Recovery can be seen since 2Q16 with reduced volatility Brent prices 2000 – 2017 (USD/bbl) Brent prices 4Q15 – 4Q17 (USD/bbl) 160 $70 140
Slide 20: Oil Production in Brazil
OIL PRODUCTION IN BRAZIL ANP National Oil Operators Ranking – December 2017 OPERATOR PRODUCTION (bbl/d) 94% Petrobras 2,457,975 Statoil Brasil O&G 63,237 Shell Brasil 56,703 Chevron Frade 17,249 6% PetroRio O&G 6,899 Dommo Energia 5,582 0.17% 0.18% 0.28% Maha Energy 1,274 SHB 1,327 0.67% Petrosynerg
Slide 21: Ready for Growth
READY FOR GROWTH Defined growth strategy, strong liquidity, a team prepared and motivated to achieve its goals
Slide 22: Unique Opportunities in O&G Market
UNIQUE OPPORTUNITIES IN O&G MARKET Political and economic environment bring opportunities O&G companies in financial distress due to oil price drop Brazil’s political and economic crisis Shell-BG USD30 billion global divestment plan Petrobras’ divestment program Petrochemicals US$ 21 B Biofuels US$
Slide 23: 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 24: 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 25: 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 2129
Slide 26: Annex I: Pro Forma Income Statement
ANNEX I: PRO FORMA INCOME STATEMENT R$ thousand In thousands of BRL unless otherwise stated Proforma Income Statement 2016 2017 ∆ Sales Volume - Oil (thousand bbl) 2,980 2,842 -4.6% PROFORMA INCOME Sales Volume STATEMENT - Gas (thousand m³/2017)* 2016 - 133,223 2017 - Revenues 397,871 533,922 34%
Slide 27: Annex II: Balance Sheet
ANNEX II: BALANCE SHEET In thousands of BRL