Brava Energia S.A. (BRAV3) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Welcome to Brava Energia's Earnings Conference to discuss fourth quarter 2024 results. The presentation and comments on the results will be made by the company's Chief Executive Officer, Decio Oddone and other management officers. [Operator Instructions]. This call is being recorded and will be available on the company's Investor Relations website ri.bravaenergia.com as well as the presentation that we will share here. [Operator Instructions]. Before proceeding, we take this opportunity to advise that forward-looking statements are based on the beliefs and assumptions of Brava Energia's management and current information available to the company. Forward-looking statements may involve risks and uncertainties since they relate to future events, and therefore, depend on circumstances that may or may not occur. Investors, analysts and journalists should take into account that events related to the macroeconomic environment, market segments and other factors could cause results to differ materially from those expressed in such forward-looking statements. We will now begin the presentation, giving the floor to Mr. Decio Oddone, Mr. Oddone, please go ahead.

Good afternoon to all. We start this presentation of our earnings with the video conquering Atlanta, we made available now on YouTube, and I invite you all to watch it. If you haven't watched it, please do. Before we begin the presentation of our results, I would like to make some comments. We haven't spoken a lot in recent months, our team has been focusing on operating deliveries by the company, and we've been delivering a lot. But I think that now it's a timely moment to share some ideas with our investors. This is the first quarter in which we report the combined company. We had reported Q3 '24, and that quarter was a partial version because in July of 2024, both companies Enauta and 3R were still operating independently. Although Q4 is the first one, it brings a snapshot of the past. The results we are bringing do not reflect the current moment of the company nor the future of the company because it translates a moment where we had a shutdown in Papa-Terra in the transition from the early production system to full development of Atlanta. And that made the offshore production of the company to be well below what was expected, impacting cash generation and EBITDA for the quarter. In Q4 '24, we progressed in integrating the teams and completed the short-, mid- and long-term integration of the company. In this work, we identified that only 5% of production was concentrated in half of our concessions, which required allocation of human capital and resources, which was unproportional to the results we were obtaining. Thus, in order to concentrate efforts on our main assets, the ones that are more profitable, we decided to sell some smaller fields. The announcement of this portfolio optimization process happened at a moment where we were facing operating difficulties at Atlanta and Papa Terra. So we got some manifestations of interest by banks and potential buyers, interested in more relevant assets of our portfolio, namely our onshore fields. We have an obligation of assessing business alternatives suggested to us. So even knowing that the value of onshore assets, particularly those located in Rio Grande do Norte leveraged by operating and financial synergies coming from the deal between Enauta and 3R, the management of the company. We started a process for these possible offerings to materialize so that we could assess them pragmatically and more in depth as the market was provoking us. As a result of that, we received unbinding offers for the totality of onshore assets of the company, and we decided, given the strategic importance and the benefit brought by the synergies, not to move forward regarding negotiations of our Rio Grande do Norte assets. But to proceed for the Bahia one, but the rationale here is the same. Any deal will only go forward if we get an offering that will give us the right value for the assets and considering the merger of the companies. All of these events influenced the market perception of the company and our share performance. But the quarter was not summarized in just that. It was not just that we had a lot of other things happening in Q4. We started capturing the merger synergies we proceeded with the integrity campaign for Papa-Terra facilities, and we resumed production in the end of December as planned. When production was stopped we put into operation FPSO Atlanta and that was the first deep water oil production project conducted from the start by a Brazilian company. And this was done on time, on budget, which is not very common for such a large complex project. Megaprojects with investments above $500 million, 98% of them go beyond budget and extend beyond the time frame. And that was not the case of Atlanta Field. And at the very end of last year, we completed the acquisition of 23% of BC-10 Parque das Conchas operated by Shell. It is now part of our portfolio. We took the first steps to optimize the portfolio as defined in the strategic planning. We sold 11 low production concessions. We forged the partnership for gas infrastructure in Rio Grande do Norte, we advanced in the integrity campaign of the facilities for mid and downstream, and we revisited a model of selling by product and acquiring and buying oil. We signed more long-term contracts with some distributors. Also important, we changed the strategy and management of our onshore business. We completed most of the investments and improving the integrity of the assets in Rio Grande do Norte in Bahia. And in Ceara, we started focusing on projects that require fewer investments, particularly for tertiary recovery our EOR. And on onshore, we increased efficiency of CapEx, for example, we reduced by almost half the number of rigs that we use. We are just focusing on projects with a profitability above 15% with a robust return for that kind of asset, which are less capital intensive with a shorter maturation. We reduced costs. We continue to reduce onshore cost in February. We achieved a record production onshore, especially in Bahia. Never did we produce so much and we increased the EBITDA per barrel produced. This is a metric that we and the management want to monitor looking forward. We want to monitor this up close in offshore. In addition to resuming production in Papa-Terra and starting production at FPSO Atlanta, we approved the second phase for Atlanta and the new wells for Papa-Terra. We had mentioned that we were going to do this in Q1 '25 and we did in Q4. And these have a return well above 25% per annum, which is our goal for sea investments. We signed new contracts evaluating production of oil at Atlanta, and we started fiscal optimizations and liability management efforts that we need to have in place to capture synergies and gradually reduce the cost of our debt. In February, we received good news. We hit a record production, almost 74,000 barrels of oil equivalent, and we are preparing to produce more than 80 with the new wells opening at Papa-Terra and Atlanta and concluding the work we are doing at the FPSO of both fields. So we expect to have better results and also the return of production at Manati. From August to December 2024 in the period where we operated as an integrated company, variable compensation of the officers was zero. Bonus for short-term results was zero. And the retention program with the shares that have been approved by the shareholders' meeting was rolled over to 2025, subject to performance. We implemented a new culture that recognizes performance and that stimulates meritocracy. These assumptions were adopted. In the design of the compensation package of the officers that we approved recently at the Board. So for 2025, the management compensation will be detailed in the next shareholders' meeting, and it is in line with our culture. We have monthly salaries below market average and a compensation which is highly result dependent, independent on unlocking share value. In my case, it gets to almost 90% of my compensation. Of the total compensation of 40% corresponds to a short-term bonus, which could be zero as was the case in 2024 and 30% of the share program for 2025, with an exercise price above the current values. The remaining 10% refer to the share program of 2024 with also a tech price superior to the current share price. The company has a clear strategy. We are pursuing the strategy. We believe in the merit of a diversified portfolio, one balanced portfolio, we believe in scale a company has to produce more than 80,000 barrels of oil equivalent daily. We believe that an oil company should operate with lower leverage, ideally, 1 to 1.25x EBITDA. So past the ramp-up phase of production, we will operate with low leverage remunerating our shareholders and preserving our growth capacity. Operational results are starting to appear. Production is increasing Atlanta will have one of the most competitive lifting costs in the industry. Our onshore and offshore costs are dropping, synergies are being captured. And as we have crossed the most CapEx-intensive phase and will benefit from production increase now. We're starting now a phase of greater cash generation. Leverage as of now tends to drop quickly as our creditors agreed with the change in the calculation of the indebtedness indicators. So variations will be less volatile and less dependent on the foreign exchange. And as mentioned, we're implementing a culture that values people's contribution. A culture that strengthens meritocracy and encourages the sense of ownership of our employees. Today, officers, the shareholders of the company. I am a shareholder of the company, more than that. Most of my personal assets are in Brava shares, never have I sold a share as of 2025 part of the bonus, all of the employees might be converted into company shares with a matching of the company. The goal for this measure is that all employees will become shareholders of the company. And develop the attitude and behavior of being an owner. With this, we're building a robust, efficient and pragmatic company with employees aligned with the shareholders in the permanent pursuit for better results as we are going to start seeing now. I am convinced that the coming quarters will continue to show that. Thank you very much for the initial part. For these initial comments, and let's start with the presentation, please go back one slide there. In the first full quarter of the company, we can see the evolution of production, 74,000 barrels of oil equivalent daily -- average daily production in February 25 and a robust EBITDA and cost reductions. I think that these are the take-home messages of the company associated with a robust cash position. Papa-Terra resumed production, we started Atlanta, and we started with Parque das Conchas. We closed the Parque das Conchas deal. Next slide, please. This shows a little bit of our portfolio where we see a robust increase in production, as I have mentioned, in February of '25. We have CapEx efficiency directed to higher return assets, synergies being captured, deleveraging, which is starting to accelerate now in a set of assets and projects with low regulatory exposure. In 2024, we had greater regulatory exposure, needing authorizations to conduct our operations. But since we have obtained almost all of the necessary authorizations for our investment program in 2025. Our exposure to regulatory approvals is much limited. At the same time, we have significant improvement in the amount of licenses we obtained in Rio Grande do Norte for our operations, and this is unlocking a lot of activities onshore of the Potiguar Basin. Here, this slide shows the governance structure and our management as announced recently. We are replacing Mastrangelo by Carlos Travassos. This was a scheduled replacement with a transition period. So in the next shareholders meeting on April 24, Mastrangelo will leave and Carlos Travassos will take over his highly seasoned and he will take over as offshore COO. He has been working with us since January. So he's already very much integrated with the whole team and with our partners. Next, here we have the highlights of the operation. We can see that the combined company Enauta plus 3R. Last year, we started with a production of about 70,000 barrels produced daily. We had a gradual reduction given the operating efficiencies offshore until Q4, but we already see production resuming, particularly in January and February. And now in March, we are working on the two FPSOs at Atlanta and Papa-Terra, so that we can connect two more wells. Two more in Atlanta, three more in Papa-Terra so that we can have a ramp-up of production in the coming weeks and months for the company. So these are the main triggers for us to improve our earnings in Q1 '25. Now we have the part of the presentation covering offshore activities. I will ask Mastrangelo to lead this part.

Thank you, Decio. I would like to take this moment since this is my last earnings conference call to say that this was an agreed decision. I had already intended to return to the United States. I've been living there for more than 20 years. And what I can say is that I am very proud of the team that I was working with. And I'm still working, but this team I have a lot to deliver until the end of April. But with the merger between Enauta and 3R, this is not a new Enauta and a new 3R. I can say that this is a first-line team the best that we had at Enauta and the best we had at 3R. We have the very, very best. I am very, very proud of this team. You probably saw the results in very little time in the last -- in the previous earnings conference call. I participated with a number of goals to be delivered by the end of 2024. And of course, the team delivered them all. They delivered everything that we promised. So Carlos Travassos will take over my role on April 24. And he's very experienced. He started to work in the industry just like I did just like Decio did at the wellhead at the shop floor. He knows what happens out there. It's not just an office work. He is somebody with a fast experience. I have more than 40 years in this industry. He has many, many years in this industry as well. He's somebody that I am very proud to be handing over to and I'm sure that he will continue the good work. He has been working with me side by side since the end of January. So this is not going to be a smooth handover. It's going to be a hands-on transition. I've been visiting all offshore assets with him a few days ago. I was in Peroa while with him. We were in Atlanta. I'll be visiting Papa-Terra and we are talking with all of the employees that are at the front line because our deliveries come from our people. And mobilizing everyone is what helps us deliver the results as we expect. I'm also a shareholder of the company. I believe in the company, and that is how we will continue to work together. All right. So let us now focus on the slide. As you can see, in our last earnings conference call, Q3 '24, we said that we were working on structuring offshore -- the growth of the offshore operation and the offshore portfolio was a conscious decision to start preparing particularly Papa-Terra to grow. We cannot think about Papa-Terra of the future, if we didn't focus on Papa-Terra now. So we decided to work to structure our facilities to foster growth. We also said that we were going to resume production at year-end. We did for Atlanta. We transitioned the early production system to full development. And I will go back to Atlanta in a minute, but the results are showing now in January, February, and that is what we expect to see from now onwards in terms of growth. And I'll speak about the other fields one by one in a minute. All right. So let's start with Atlanta. I've said a lot about Atlanta, but this is an oil field that I am always impressed with, with its ability to deliver results. Atlanta requires a production system that relies on pumping. So what do we do? We installed a robust system sized to work throughout the lifespan of the project without those intermediate shutdowns. We have a system that does not require water injection wells because it has a fantastic aquifer that maintains pressure. So compared with the development of a field that requires injection or injectors. They account for half of the drilling so that we can produce oil. Here, we don't have the investments to reinject water. And this is a field that has produced more than 30 million barrels in a system that was an early production system. In this system that was there to give us more information about the field to remove risks of the full development and the results are very pleasing. So much so that our production curves, the response of the field, remain exactly as we had predicted according to our models. So Atlanta Field is performing really well, primarily the reservoir, which is all what matters, but also with the full development system we are seeing a performance of the system as a whole, which is even exceeding our estimates because we had an average for the industry with an initial percentage of preparation. And adjustments to the plant and the field is performing even better than the usual. You probably saw the production curve in January and February. And now in March, we will have new wells coming online in a matter of a couple of weeks. So we've made all of the adjustments needed. So there was probably a slight reduction in production because we took the opportunity to run all of the necessary tests and Atlanta Field is keeping our best. Decio mentioned, we are the first independent company developing and executing on this project because we executed the project below the budget initially approved in 2022 because we were able to capture some synergies to reduce activities mainly during installation. With that, we expect to have a final disbursement for the project in a couple of months that will be lower than what was originally approved in the budget. And that's very rare to happen in such a big project. We now have a partner Westlawn. They came in with a 20% stake, and they are giving us full support so that we can move on with the next stages. I think we have another one. Well, very soon, I will talk about the new wells, and then now we'll return to that subject. But this slide only shows the change in scale. Well, we started with a temporary system. We were in production for 6.5 years. The oil storage capacity was 480,000 barrels and this required frequent uploading, I mean, 30,000 barrels a day would mean every 5 days. So in the case of a plant that is a unit that as I was saying, has to be ready to produce and treat water. And they already come with 150,000 barrels of water a day with treatment capacity. Therefore, we are ready to start growing the production in this field. Our schedule -- I think in our last earnings release call, I said that it should be concluded by the end of this quarter, and we are now concluding at the end of this quarter as promised. And as we speak, people are already getting ready to connect the last line of the wells. And then after that 2 more weeks or maybe a little bit over than that, we started commissioning for the next one. So we are at the final weeks. But now going forward, maybe by the end of this semester, we have two more wells I can say, therefore, that it's part of our schedule. We are on time. And moreover, we don't need any additional equipment because we already have everything. We have the license to make the connection to open the wells I mean, to spread the well, we have connections and lines. The only thing that it's missing. I mean, it's just a regular installation sequence just to conclude the final stage of the well. So today, production is quite stable. It's around 26,000. So if you look at the numbers, we are just waiting for the production of the next two wells. I mean, close to what they were producing before. And further on, until the end of this half year, the production that will come from the two remaining wells. But everything is according to schedule in terms of our production start-up. But after I talk about Papa-Terra, I will talk about the tieback wells, I mean, two new wells. They will be the seventh and eighth wells. So next slide, please. One more. Okay. Now let's talk about Papa-Terra. Papa-Terra has to do with the conversation we had last time. And we had to build the basis for our growth, and this is what we did. We started production. And today, what are we doing in Papa-Terra. Well, we are getting ready for -- getting prepared for the entry of three new wells. There were three wells in the pipeline. We are now upgrading the heating system. And why is that necessary? Because this is heavy oil, so you need more heating capacity to support the need coming from these three additional wells. And likewise, we will have to do the upgrade. In terms of stabilizing energy supply. So in a few more weeks, we will be able to start up three new wells in addition to the production we posted in February. From then on, as I said, we back then, Papa-Terra is a field with 2 million barrels in place, I mean, in the reservoir. To extract the oil from the wells, which we call to increase the recovery factor, you have to start working to optimize water injection and other things. And this is what we are already doing. And that's why I wanted to talk about it right now. We already started a section of four new wells, two in Atlanta and two in Papa-Terra. I am talking about both because this is an integrated campaign. It's part of the synergy. We cannot do -- we couldn't do that integrated campaign if it weren't for this combination of our portfolio in terms of the projects. And with that, we can optimize the contract can be longer for the drilling of the four wells, and we could still have the option of an additional one. And with that, we already have all of the necessary material and equipment, everything is already in place. And I think during last year's call, I would -- I said that this would be in the first half of the year, but we were able to anticipate it. We did the final investment decision, the FID that occurred in February or last month. So what do I mean by that? It means that we already have a project with enough maturity to allow us to say that we can start hiring. I mean not hiring without making sure that the license is in place but -- or that the equipment will be delivered in time. But this was the final analysis of the final investment decision, and this was made last month. And the receivable of the rig that is supposed to be in September of this year, meaning that in a few more months, we will be receiving the contracted rig is Lone Star from Constellation. Two contracts have been already signed. The agreements were signed right after the sanction of the approval by the Board. We already signed all of the contracts, and this is very important. 80% of the total CapEx have been committed just to eliminate the risks from the project, risks of any kind of pricing changes. And what hasn't been signed is because it depends on the final approval or a diesel that we will spend and the age of the project, but this does not compromise the delivery of the project. So the project should be delivered on time. We are referring to the four wells, two wells in Atlanta and two wells in Papa-Terra. We intend to start with Papa-Terra. I mean the time between the end of drilling and the production, the ramp-up of production it's in place because we are taking advantage of existing lines, but this is an integrated campaign. It goes from one to the other alternatively, I mean, the vessel that will lay the pipes is the same. So this is something that allows us to have this advantage or to have the synergy of our -- in terms of our offshore activities. Okay. This is one thing, and then I can go back to that. Well, before I talk about the non-operated wells, we have Peroa. It works like clockwork. Operating cost is fine. And our Papa-Terra costs. Here, we have a lot of upside, lots of things to improve in terms of cost reduction of our lifting cost. Once the Atlanta wells get into production, I mean, if you remove freight, which is a standard in the industry to calculate lifting cost, so this is our lifting cost for Atlanta. We are turning this activity highly profitable. And in the non-operated fields and maybe I can refer to DC-10,we have Manati. Our expectation is to resume production this month. The operating company -- I mean we are on the back seat, but the operating company said that by the end of the month, they will start operations. We already have the license to resume Manati's operation I mean Parque das Conchas BC-10 with Shell, the closing occurred at the end of last year with 23% stake. What I can say is that this has many similarities to our DNA. Considering our expertise, I mean, both fields have heavy oil. They rely on deepwater pumps or pumps at subsea. And yesterday, we concluded another offload with Shell. We did a co-loading together with Parque das Conchas. And what would that be? The shuttle tank -- the shuttle tank that takes the oil, they took half of the space available in the vessel, and then they go to Atlanta and took the other half. Therefore, there was a lot of added value in the portfolio, including that field that is not operated by us. I think there's another slide. Now I'll turn the floor to Alejan to talk about the onshore fields.

Well, the fourth quarter, we already see some of the results stemming from the actions we are putting in place. We see production and cost improvement, CapEx improvement and also improvements in our facilities. This year in February, as mentioned before, we reached record production. Record onshore production in the history of Brava in June and June '23 at Reconcavo we reached the highest level of production in the field. So since 2016, almost 10 years have gone by, and now we were able to reach a record production with successful work than by our team. Now speaking about Reconcavo here, there was a reduction in OpEx, stemming from several actions of cost optimization. We made important changes to our maintenance and production agreement. We also had reductions in the work-over of the wells, engineering, production, reservoir and rigs. Therefore, we are selecting the wells and tasks to be executed to reduce OpEx. Decio also said that we are come to completion in some of our integrity campaigns and the major integrity costs are coming to an end. And therefore, this is reducing our lifting cost. There are still many things to be done in order to continue in our path to reduce costs and still talking about production in that basin this increase in production that we mentioned stemmed from the drilling campaign of 6x in our compression system that feeds our system. And this was also due to improvements in the producing wells in addition to a better reliability of our systems. Now speaking about Potiguar, we were able to increase production by the response that we manage with the extra heavy oil field as a result of the drilling campaign and also improvements in the water injection in that basin. Next slide. We continue to work according to plan -- to the plan that we showed to you last quarter, improving capital utilization. We are optimizing the management process of water. And at the same time, we are moving on with the oil recovery projects to improve oil recovery. Now in relation to improvements in CapEx utilization, we reduced substantially the number of rigs. We went from 24 rigs last year to 13 rigs at the moment. We also made substantial reductions in the timing of our drilling campaigns if you compare to the previous operator in the [ Ceara ] field. That's the photo you see on the left-hand side of the screen. These are wells that go to deep sea. In the previous operator, they will drill in 160 days, and now we are doing it on average 38 days per well and also very shallow wells about 300 -- 400 meters in depth. I mean we used to doing 2.4 days. Now we are drilling only 1.8 days. And as of August, we will introduce a case in drilling system, and this will allow us to reduce that timing to 1.2 days. So all of these operating improvements are very significant to the projects. In the past, we had several inefficiencies in terms of CapEx use, and that stemmed from environmental license. And thanks to a great alignment that we had with the regulatory agencies. Now we went from 7.8 licenses a month. As an average, last year, 7.8 licenses to 17 licenses in the first 2 months of the year. I mean, licenses per month, so in the year 2025. And comparing to the first 2 months of last year, there were only two licenses per month. And now we had 17 licenses a month, and we are working towards reaching 20 licenses a month and this will certainly allow us to increase efficiency and better standby resources. Now steam project. Everything is running according to plan. I mean, the steam equipment already arrived in Brazil, some are already installed and some others will come by the end of the year. And obviously, this will increase steam generation. We are not only working in the quality of steam injected but also the quality of the team that is injected. Steam is sold in parcels. So in 90 of 93, the average was 34%. And currently, that number is up to 63% with the new steam generator that we reached 82%. It means that we still have room to improve this efficiency, but we already did some very important work. And finally, speaking about EOR, the enhanced oil recovery. We are launching our first project of nitrogen injection and the project would be deployed in the Fazenda Belem, which is our oilfield, the pilot product consists of injection of nitrogen and surfactants in the wells in these fields. In the world, this is a very commonly used technology. I mean, when you have heavy oil, you work in four things: heating, which is something that has been done by the previous operator, nitrogen, surfactants and vertical or horizontal drilling of wells. We are working to drill horizontally and vertically as well. But we are using the best polymer technology in the world. It's a proven technology. We will run a pilot project. We would do the derisking of the technology, and then we can probably go into full development. And in the oil fields that are not so heavy fields, we signed this month an MOU with a supplier to deploy polymer injection in the Salina and Canto do Amaro field. So we are working to start injecting polymers at the most in the first half of next year. I mean, the purpose of this technology. I mean, just like nitrogen, after the initial derisking, we do the full development. It's very important that these two projects, nitrogen and polymers will probably have a minimum use of CapEx, which also is very good for efficiency. So in summary, we're comfortable. We are making enhancements in costs, et cetera. We still have a possibility to increase gas and we will focus on improving production and costs. We will continue with the drilling campaign, steam injection, water and EOR project. And we also want to constantly focus on improving CapEx, improving the integrity and improving our overall operation.

Next slide. Thank you, Boeri. Well, let us now start about the commercial results and the agenda looking forward. The charts on this slide show our consistent results amidst a period of growth, price volatility and operational volatility of the company with part of the explanations made with the offshore environment. But I would like to highlight three main points regarding oil. This quarter, we completed the offtake contracts for Atlanta partnership with Shell and Trafigura. The new contracts have a new trading format for Brava. Atlanta prices associated with the end markets, Southeast Asia and for low-sulfur well. So this allows us to share the benefits associated with cargo sharing as Mastrangelo mentioned. Logistics optimization and improvement in the quality of the product delivered to the end market. This can bring us sharing of gains for Bras in addition to mitigating risks and accelerated the cash cycle of the company. We see the ability of storage, the new FPSO is a positive element, adding value to similar cargoes, meeting market needs. As he illustrated our share in Parque das Conchas and products with a final spec that we produce at Potiguar refinery and what other refineries in Brazil export. Second point, still on oil. There is a new trading format for purchasing oil in Potiguar. This was signed in February. This is a different partnership with PetroReconcavo and other producers at the basin. Objectively, this leads a 20% to 30% increase in the discount in the purchase of oil compared to brand. The counterpart is the fluctuation of margins in jet fuel and diesel S500. The partnership also involves co-investment of the producers insured storage improvement of transportation modes to optimize the growth of flow expected for 2026 at the basin. This is a new contract model. It's a 24-month partnership, and we are very happy with the results so far. Third point, we end -- we start Q2 '25 aiming at the restructuring of trading of our shared Parque das Conchas. The end of our partnership with Raizen for the selling of bunker domestically and abroad and the negotiation of a new selling cycle for Papa-Terra oil. Now reflecting the investments made to improve logistics of the platform, which now has its full storage capacity in a new -- and a new offloading system. In natural gas, the company developed an area dedicated to natural gas. We improved our trading strategy with new sales contracts to Bahia gas and Comgas and others in addition to signing a longer contract, a 3-year contract with Comgas. And this is the NTS system of distribution gas contracts signed with PetroReconcavo with differentiated conditions at Potiguar in addition to gas procurement contracts. The focus in our opinion will be that in the midterm, the company will benefit from its gas fields, the integrated processing infrastructure, the geographic position of the portfolio with increased production, a number of access points, improving margin and delivery to our main customers.

Here, one of the main points associated with our thesis and the business combination of 3R and Enauta leading to the creation of Brava Energia. In these 5 months since the creation of the company, several teams delivered many synergies identified in the action plan. We estimate that in terms of present value, by year-end 2024, we attained -- obtained more than 30% of the total estimated synergies with the business combination. We expect to fully deliver these synergies captured along 2025. There will be a growing impact on the operating and financial results of the company. It is worth highlighting here that among the main activities. During that period, we had the ownership restructuring of the holding. We finalized many of the subsidiaries. This is an ongoing process to be finished by mid-2025. Secondly, a broad liability management program with the prepayment of debt, issuance of debt and some commitments that will allow us to reduce the average cost of debt, lengthening the maturity of the debt. We also delivered a deep reorg, reducing headcount, unifying systems of the company in addition to improving some activities that are ongoing. We did a broad review of the whole structure of guarantees and insurance. And operationally, we reduced the redundancies in the offshore logistics, supply of inputs and provisions as well as Decio mentioned the decision to invest in new offshore wells with an integrated campaign for new wells in the Atlanta and Papa-Terra. Now I turn the floor to Pizarro for the financial highlights.

Thank you, Pedro. Good afternoon, everyone. This is the -- we have now the financial highlights for Q4 and the full year 2024. For a comparative basis, we'll present unaudited pro forma results as if the Enauta merger with the company had happened in the beginning of the year. So let's start with the net revenues of the company. We achieved about BRL 10 billion in 2024, almost BRL 2 billion in Q4. In upstream, revenues were BRL 1.3 billion and in midstream, BRL 1.5 billion, BRL 860 million being eliminations of intercompany eliminations. The biggest impact on revenues are related to Papa-Terra project and the Atlanta project, as mentioned by Decio and Mastrangelo. These two fields have resumed production in the beginning of 2025. On the next slide, we have net revenues for upstream, broken down by offshore and offshore shows stability of revenues from onshore fields, even with the reduction of Brent price during the year. In 2024, about 90% of upstream revenues came from oil, 10% from gas. Of the total, 46% came from Potiguar cluster, 10% in Bahia, totaling 56% of onshore fields, 25% in Atlanta, 13% Papa-Terra, 6% in Peroa and other fields. Manati also had a maintenance shutdown performed by Petrobras during most of the year. On the next slide, we have adjusted EBITDA for the company, given the operating restrictions at Papa-Terra, Manati and the replacement of the FPSO at Atlanta. We had a declining trend in EBITDA throughout 2024, which followed production reduction. However, we have resumed production levels, very close to Q1 2024 where we achieved $251 million in just 1 quarter. I'd like to highlight onshore EBITDA, which was quite substantial. We can see here the results. And if we analyze jointly onshore EBITDA midstream allocating 50% of corporate costs we achieved about $34 per barrel for our onshore production. In other words, among the most well positioned in Latin America. In offshore, we could see the real potential of cash generation and EBITDA of our combined offshore portfolio starting in Q1 '25. On the next slide, we present the lifting cost of the company. With and without chartering effects, positive highlights for the onshore lifting cost at levels below $17 per barrel as a result of production increment of onshore fields, reduction of costs, mainly in Bahia. I'd like to remind you that a good part of our logistics costs and onshore offloading pipelines is included in the lifting cost, which is not the case of our peers in Latin America or offshore, with the new wells of Atlanta coming online and resumption of production at other wells at Papa-Terra, lifting cost per barrel tends to be more efficient compared to the 2024 average. On the next slide, we have our CapEx broken down by activity, and this time also breaking down onshore and midstream from offshore. What matters here, which is important to highlight is that a number of investments made in 2024, both in integrity recovery, onshore and offshore, both -- and in the full development of Atlanta will not be repeated, at least not in the same order of magnitude in 2025. On the right, the pie chart, considering the current working interest of Atlanta, total CapEx in 2024 was about $870 million, in offshore a total volume of $540 million. 70% of these $540 million linked to the Atlanta project. The replacement of the FPSO as well as the whole drilling campaign in connection of the new wells. For onshore plus midstream total volume of investments was $333 million, $140 million of those in facilities, including investments in steam generators and integrity recovery. On the next slide, we have the company's capital structure. We ended 2024 with approximately $1 billion in our cash position and about $1.55 billion in financial net debt. If we add all the earnouts of the company, deferred payments linked to the acquisitions, total net debt is $1.9 billion. And of note that we have $402 million in receivables from Yinson, which will be paid during the chartering contract for FPSO Atlanta. Even with an EBITDA that was substantially impacted in Q3 and mainly in Q4, the company's leverage calculated in dollars was close to 2.8x. And I'd like to remind you that this is just looking at the last 12 months. On the next slide, we have cash flow and the position of oil by product. Operational cash flow was impacted by a reduction of production of onshore assets in addition to delinquency of NTE, which is the partner at Papa-Terra and the owners of BRL 526 million. The company remains with a very healthy cash position, as I mentioned, of $1 billion. As regard by products and other -- we have 170,000 NDF derivatives and many other contracts in the Collar format with a floor of $58. And we resumed our hedging strategy, trying to protect the breakeven of the company mainly in the coming months. We currently have 1.7 million NDF contracts at $72, which protects the company from instabilities regarding the current level and these contracts are concentrated in the next 6 months. I now turn the floor back to Decio for his final statements.

I'll try to be brief because this is getting very long. But I would like to stress that we promised to deliver some operational events in Q4 '24, and we did deliver. We are getting prepared to deliver a production increase at Atlanta and at Papa-Terra in the short term. And we will continue our goal to capture as many synergies as we can, we will continue to optimize our portfolio to concentrate and our most productive assets, we will continue this journey onshore in generating cash per barrel, both onshore and offshore. We are in a positive trajectory with Atlanta, and we will continue in this relentless effort to create a culture of meritocracy, recognition and respect for earnings, which will make us deliver better and better results for our shareholders. With this, we are going to close the formal presentation. I'd like to thank you for your patience. This was a very long presentation, but we are here to answer your questions. Thank you.

We will now begin the question-and-answer session. [Operator Instructions]. First question from Mr. Rodrigo de Almeida with Santander.

I think I'll start with three questions. I'd like to speak about liability management. If I'm not mistaken, you have an opportunity to make some extraordinary amortizations. And when we look at our interactions with the fixed income investors, they are very interested. And they have been interested in your business case, so I'd like to know how you're are interacting with this market, whether your plans now for the coming months regarding extraordinary amortizations and possible issuances that can somehow bring benefits for you in terms of the cost of debt. And on that same topic, Decio, do you have any visibility regarding. Any news about the Yinson receivables? Second question is about Papa-Terra. And perhaps here more specifically in direct, in terms of the possibility of gas generation and electricity, we know that there is a high energy consumption need. So any costs related to that, do we intend to operate the FPSO? I don't know exactly the details of your contract, but could there be any OpEx and cost upside at Papa-Terra? Any news about the oil price -- price of oil from Papa-Terra? And the third topic is more detail on onshore. We spoke very little about the steam generation project. When should we have the full effect of the steam injection project? And what are your main focus of drilling at Potiguar? What are the main fields and wells you're focusing on along 2025? And what should be the lifting cost for onshore in the coming quarters? I think that these are my questions.

Thank you, Rodrigo. Well, yes, we have a number of initiatives related to liability management. I will turn the floor to Pizarro so he can detail all of those. Likewise, for Papa-Terra, we want to improve the efficiency at Papa-Terra. We have a number of ideas and a number of things in our pipeline in that direction, and I'll ask Mastrangelo to complement that. And then we will answer onshore. So let's start with Pizarro on liability management.

Thank you, Rodrigo. As regards to liability management, I'd like to remind you we have two big debts that can be prepaid this year. Fortunately, the most expensive 2 of our portfolio of debt. Those $500 million that were obtained for the acquisition of Potiguar cluster, which is not the bond, the other BRL 500 million that exchange debenture. And it can be prepaid as of June of this year. And also of the debentures that we have issued, the most expensive one can also be prepaid this year. And this is exactly because of that, that we are monitoring up close both the domestic market and the international market. Here, we have opportunities in both. We also have a very robust cash position. As I mentioned, in Q4, we not necessarily prepay and issue other instruments as big as. But our goal is to reduce the average cost of debt of the company and partially reduce the size of the company's gross debt with cash generation and also using part of the cash that we currently have in-house. So this is the liability management scenario. And as you said it yourself, we also have quite irrelevant receivable of $400 million from Yinson, and we are studying alternatives regarding that. Our goal is not to have this receivable before hand at a rate that is very far from our average cost of debt. So obviously, here, we are very focused on the financial structuring that will bring us a substantial part of that amount as a cash equivalent for the company. And I think that I can turn the floor to Mastrangelo to speak about Papa-Terra.

Hello, Rodrigo. Thank you for the question. You touched on the points that I had mentioned before, Papa-Terra has many upsides. Usage of gas, minimizing the use of diesel. And you even mentioned operating the FPSO. Well, this negotiation is underway. It is our intention to go for the low-hanging fruits to get immediate gains in our operating efficiency. And I'll take this moment since you kind of raised the gas topic at Atlanta in our license, in our operating license, we already have the possibility of using crude oil, the oil produced as fuel. This might sound too simple but we do sell oil as fuel oil, as Pedro mentioned. So we could immediately use it on the board. So the intention at Atlanta is to prioritize gas and perhaps. If needed, we can use crude oil. So both points that you mentioned, they are being worked on. And I turn the floor to Boeri.

Well, Rodrigo, you asked about onshore. Our production for the year is expected to increase slightly. We're not expecting substantial increase in production. And we have focused, as we said since the beginning, on optimizing our investments and our CapEx. That's why we are reducing the rigs from 23 rigs last year to 13 rigs this year. So our production outlook will post a slight increase. By year-end, and steam injection, which is centered in our heavy oil field, about 8,000 oils or barrels per day. Steam injection will reduce the natural decline of the field. When we got to Potiguar cluster, and we had the lack of steam we could see what is mentioned in this theory. We could experience a strong decline of the fields, 40% to 60% of annual decline. With steam injection, we could increase substantially the decline rate and the lifting cost because gas has a cost, but it brings an increase in production. If we don't inject still, the cooling of the field will lead to such a great loss of production that the fixed costs will have a very important weight in the lifting cost. So the lifting cost has to improve with steam injection. Thank you, Rodrigo.

If I may, ask a follow-up question regarding trading of Papa-Terra oil. I think you mentioned the offloading something that was left. Could you access new market? Anything on that, that would be much appreciated.

We are working on that. Well, first offload from Papa-Terra was exceptional. It was worked independently from the Petrobras contract to run some tests in the exports market and to include oil volumes that were part of the ballast of the platform. That was exceptional offload. And it worked as a test for several topics related to future trading of production from the field, but that was an exceptional offload. We worked in partnership with other local and international players. As I mentioned in the presentation today, we have a trading contract from Papa-Terra to Petrobras. And we are working on a new strategy for renewal aiming to improve the profitability of the contract after investments that were made to improve logistics of the platform. It was very inefficient. The platform could do just small batches, small batches -- will that required some dynamic positioning vessels and these are scarce resources in the market, and that made the profitability of the operation -- that hindered the profitability of the operations. So we expect to work with a new concept starting in Q3 of 2025.

Our next question is from Luiz Carvalho with BTG.

Thank you for your time and for being so transparent. If you allow me, I have three topics. In your initial remarks, you talked about the fact that this adjustment in the compensation program or alignment, certainly Brava is a result of two companies that probably have different cultures. Therefore, I would like you to please tell me a bit more about this compensation model. I mean I know you said -- you said something about it, but if you could give me a little bit more details, that will be very much appreciated. And the second question is, at the moment of the deal between 3R and Enauta, much was said about synergies. And then reading your release in some points, and I think you also mentioned that during this presentation, you talk about synergies. And you also mentioned a few points. But for us, it would be really useful if you could quantify things a bit more. Where do we stand in that path towards reaching like EUR 1 billion in synergies. How much has been captured and how much you intend to capture in '25 and '26. And finally, Decio, if you could tell me a bit more about the portfolio recycling, if you can call it that, you have different assets. And certainly, this generates a lot of opportunities for the company. But I would just like to learn your view about how you look at the company as a whole. You talk about onshore, you're negotiating still a few things, but what could you do about the asset as a whole? Would it make sense to sell it now that Atlanta is about to start, maybe you could do that or do something with your stake. So if you could talk a little bit more about your portfolio, that will be appreciated.

So I'm glad to hear that you're still following us. Okay. Let's talk about the compensation part of the question. We -- the Board has approved and we will have a better disclosure in our general meeting of 2025. We just approved a new compensation model for the company. This new model contemplates for managers, I mean, monthly wages below the market, but compensation would be very much linked to performance, cash generation and the appreciation of the shares. In my case, the variable part of the compensation reaches almost 90%. In the case of the employees, what we are doing, is the fact that the model we have says that employees can take part of their annual bonus. I mean, 50% of the annual bonus and they could acquire shares of the company. And in this case, the company matches that, meaning that stays in the company for 3 years in terms of what they acquired and what the company matched up. And then with that, employees become partners of the company, and that's why they have a vested interest in growing the company. So once they buy part of the bonus in shares and matched by the company, they can certainly become a shareholder. So it's like a pendulum movement coming from both sides. And in some other cases, we also offer stock option programs. In the case of earnouts, we have some executives of the company that also carry shares of the company in their portfolios. This is very important to promote a better alignment, especially in a company that has no controlling officer. And we see that there are a lot of people interested in our success. Now referring to portfolio recycling, I think I already talked about that. We develop an initial planning job. And this led to 130 alignment activities in different areas of the company. I mean, not only you have to do something about cost, OpEx, CapEx and development. You have to have a culture and this culture involves processes, communication, management and everything aligned in the same direction. So this whole set of initiatives that we evaluated contemplates, among others, the optimization of our portfolio. I said 130 actions. We have a large number of concessions. And with low production. I'll give you an example. We just sold 11 concessions with total production of 250 barrels. Typically, we should concentrate our resources in the most productive assets and the assets with higher profitability. I mean we still have a lot more to do. We still have to clean up the portfolio further and let's see how the process will evolve. I mean for the assets -- for the sale of assets in Bahia. So we intend to move forward with this process of improving our portfolio. We also had a partnership with PG&E in Rio Grande do Norte, meaning that with that, we are improving portfolio volume management, and this is the objective for us throughout the year. You also mentioned synergies. We've been capturing synergies. I mean the questions you asked are the same questions our Board members ask us all the time. So we are working hard towards that. We already gave you a small idea of our synergies, but I'll ask Pizarro to add something, especially in regards to synergies related to liability management.

Well, Luiz, I think Pedro referred to about 30% of the target about $1 billion, this has been deployed. It doesn't mean that it's already been materialized in terms of cash or contract reduction. But what it means is that from the potential of what could be implemented, 30% has been address or signed. Let me give you an example. Initially, the $500 million that we raised through the bonds. All of the financial expenses was concentrated at 3R Potiguar. And today, all of this financial expense is concentrated in areas where we profit the most Enauta Energia and in the future, the holding once we incorporate Atlanta, I mean, now referring to a second example. . The merger of Enauta Energia, it's a subsequent obligation of agreements from the past that occur at the moment of the merge and the intention is that Atlanta will become an asset from the holding using about BRL 700 million of tax losses that we have. And if we compare that to the base scenario, which was 3R or separate, we would use this tax loss right after -- only after 3R. Therefore, we have a delta that accelerates the tax loss. I mean these are just two examples, but there is yet a third example which is the foreign exchange debenture issued by BTG, which is currently is located at 3R. So once we did the recycling and the liability management, we will no longer issue that at 3R Potiguar, we will do that either at the holding or at some of the subsidiaries that have offshore assets. And obviously, this brings huge benefits. I will only give you another -- one more example. When we look at our onshore portfolio and our offshore portfolio, I said before that our onshore portfolio is one of the most profitable ones in Latin America. I think it's one of the most, if not the most, if you look at the number of barrels. And as you also said that we have a big magnifying lens there. Just look at there and the Brent discount, the ideal thing is to look at that EBITDA number per barrel. It is precisely in the onshore portfolio that we have [ Sudani ]. So this combination of [ Sudani ] plus EBITDA per barrel, which is very competitive, gives us a free cash flow in the last operating line. And once again, one of the best, if not the best in Latin America. And in areas where our profitability is higher of EBITDA per barrel, I mean, offshore barrels especially in Atlanta, the effect will be most concentrated in terms of our financial expenses. I just tried to quantify some financial aspects that are the most relevant ones in terms of that $1 billion synergy. I mean, we already made some initiatives. Pizarro was saying that, but we will capture that in a time line. If the same thing goes for operating synergies, both CapEx and our campaign that we just hired for the two Papa-Terra and Atlanta wells that they wouldn't be done if the companies were separated and also operating synergies that we have in the fields. You also asked me whether selling an additional stake of Atlanta is in our radar. And the answer to that question is no.

Thank you very much and I'm very pleased to see your explanation about compensation. Thank you, and have a good afternoon.

Our next question comes from Bruno Montanari from Morgan Stanley.

I have a follow-up and two other questions. Going back to the sale of assets in Bahia, could you tell me if the level of interest after the streamlining of the area increase or decrease? And what about engagement? And most importantly, what is your timing expectation for the conclusion of the process. And my second question is about BC-10. If the opportunity arises, would you like to increase the effect or maybe eventually become the operator of the block in the mid- and long range. And my last question is I think 2025 is a transition year in your balance sheet. There will be a very strong deleveraging throughout the year between now and 2026. So thinking about 2026, what would be the main use of cash, the company will become a very strong cash generator. So I just want to understand where shareholders compensation fits in or if there is any covenant that prevents you from paying dividends and until when.

Thank you, Bruno. Sale of assets, okay, we already mentioned that we hope to have some binding propositions in the midst of April. This is all I can tell you. BC-10 is new asset, is not in the market. But if it is, we would just look at it. And the use of cash today, we have in some of our debentures, some limitations for buyback and for dividends. But the purpose here is to work with a healthy leverage level, allowing us to remunerate our shareholders and at the same time, being able to grow. So there are several new opportunities in our portfolio. And our profitability is high. So with -- in due time, we want to look at that closely once we do the recovery in Papa-Terra. Do you have any other comments in terms of debenture limitations? Limitations that we have. I mean the dividend payout and share buyback is allowed for leverages below 1.5 during 2023. And after the year 2023, if the share buyback increases to 1.75, no after '25 -- 2025 that level increases to 1.75. But as Decio was saying, the leverage target of the company is close to 1.25, which is feasible for 2026. So throughout 2025, once we clean the quarters of 2024, then our leverage level is controlled and adequate. And in 2026, it's very feasible to reach that level. I mean without focusing on all the projects already approved, like FID of the two Atlanta and Papa-Terra wells that have very high profitability. So we will bring production without adding costs to the assets Atlanta's FPSO in Papa-Terra. They already have a predetermined fixed cost. So here, we would add, I mean, 20,000 barrels to our stake, and then we would do just marginal CapEx. It's precisely this kind of mentality that we have for offshore, allowing us to increase production gradually without having very -- I mean, a very fast pace of growth, but we will also release dividends in a very intense way in the next 3 years. So the company has this capacity of paying out dividends, maintaining low leverage without leaving away the great projects we have. I gave you the example of offshore, but it's the same thing. We're just selecting the best projects that have good profitability. Decio, as you said, as of 15, but in fact, the projects we are selecting our projects of 30, 35 or 25 in cases where we want to approve a different region, but the target is, I mean, 30 in terms of magnitude, in order of magnitude. So this is an overview of what we intend to do in terms of cash utilization.

Next question from Tasso Vasconcellos with UBS.

Hello, good afternoon, Decio and the other officers. I'd like to go back to the outlook of offshore fields. At Atlanta since the connection of the two wells, production seems to be normalized and flowing quite well. So I'd like to get an update of the expected production for the two wells that should be connected in April and also for Papa-Terra the company is making some adjustments in the wells because of the gas production, and this has been a bit discussed here. These adjustments tend to increase production in the coming months. So I'd like to get an update of when all of these adjustments at Papa-Terra the should be completed and what is the expected level of production at the field after these adjustments because I think that these two fields, together with the resumption of Manati is the main path for the company to get close to perhaps 100,000 barrels of the company's working interest. So I'd like to have an update, please. Second question going to M&A at the Reconcavo Basin. You acquired two assets, Reconcavo and Rio Ventura for close to $350 million. According to the stratification, there was no great change in the volume of reserves. 1 year increased the bit, the other year increased a bit, but comparing the most recent certification with the first one. The variation was less than 10%. But during that time, a lot of investments were made to the assets. So the question is to Pizarro, I'd like to get an update from you regarding what was the total amount invested in those Bahia assets from the beginning and if possible, a breakdown of the investment, what was made in infrastructure and improvement, structural improvement and what was in reserves development. These are my questions.

Thank you. So regarding the offshore fields, the two fields that will start operating at Atlanta. And the three new wells at Papa-Terra are wells that produced before. So we kind of know the well's performance. And our expectations are based on that. I'll ask Mastrangelo to give you more detail on that.

Okay. Like I said, we are finishing the connection of the wells from today to tomorrow. The last line will be ready. So we expect to start production in the coming weeks, perhaps in the first week of April. Level of flow the wells that were the highest producing wells in the early production system wells four and five in the early production system, they got to close to 14,000 and now we are going to see the combined production and the wells producing today are quite stable, as you said. In the case of Papa-Terra, equally in the coming weeks, hopefully, in the beginning of April, we should have these extra three wells coming online. Individually, in the past, they produced all together close to 5,000. And this is just given order of magnitude, okay? And for Manati, like I said, the operator by the end of the month, the operator will be resuming production. And as for M&A is the value we see is how much we paid in the past, the reference number, but we always look forward to. I'll turn the floor to Pizarro to give you more data that you asked about.

Very soon in the coming days, Tasso, we will be releasing our new reserves certification report that will be very updated. And we're going to have many more details. We have invested $40 million, $45 million in the assets in Bahia. When we took over the Reconcavo cluster, we were already operating Rio Ventura. And both assets combined were close to 5,000 to 100 barrels of oil equivalent. And as Boeri mentioned, now we achieved a peak of production operated by Brava in Bahia, reflecting the 2016 production. So we are close to 9,500 barrels being produced in Bahia. A part of that production is gas that we reinject. And we are working together with Pedro's team, Boeri's team and Pedro's team are working together to monetize this additional gas. So it's a big leap in production and primarily in the recovery of integrity of these assets. A good part of this financial volume was invested in integrity recovery. We still have some low hanging fruits in the assets, which are not related to the drilling campaign, which are related to monetization of gas, which is the example I mentioned. So again, we're at a moment of a competitive process. We avoid talking about numbers, valuation potential. So we are just stressing that the Bahia asset. Although it's not that relevant in the combined portfolio of both companies, 3R and Enauta, it does have a significant value with a production level which is rather high.

Let me add it. Pizarro spoke about the reserve certification. Before you ask, we're going to have the reserves certificate by the end of the month, we received a first draft and there was no significant change in the report. Okay?

Next question from Leonardo Marcondes with Bank of America.

I'd like to have three questions. Two questions that are more complex and one is a follow-up question. My first question is about the integrated drilling campaign at Atlanta, Papa-Terra and perhaps Peroa. In the advisory, you talked about $100 million, but we understand that this campaign should require more CapEx than that. So I would like to know if you could give us more color on what you expect the CapEx to be in this integrated campaign? And what you are estimating in terms of production at some of the wells? . My second question is about the oil sales contract with Shell for the Atlanta oil. And if you could tell us more about this contract, if it's similar to the previous one, which was very close to Brent price or any different characteristics in this contract? And a quick follow-up question regarding dividends and leverage. Leverage that you will consider for the payment of dividends in dollars, which is the same as the new covenant, correct? These are my three questions.

All right. Regarding the integrated campaign, we released a material fact that stated that we had contracted some equipment and services amounted to the amount you mentioned. And we said that we were going to have an FID, the final investment decision this half year. And that's what we do when we have certainty regarding the costs and the contracts we're going to sign, 85%, 90% of the costs are insured guaranteed. And this is what leads to the total cost of the campaigns, which are very efficient and productive because we have just tiebacks. We don't have to have any new production unit. Pizarro mentioned that. And I will ask him to detail that more for you.

Well, Leonardo, let me remind you, we have 80% in Atlanta. Currently, 62.5% stake of Papa-Terra, four wells that you mentioned. These are tiebacks. So almost no investment in the plants and the facilities to integrate to connect these wells. Part of the equipment for Papa-Terra had been already acquired. So we have about $400 million, which is the working interest of our company for these four wells. And if we look at productivity, you just have to look at what we have in the reserves certification. But for the working interest of the company, this should be close to 20,000 barrels. If we compare productivity, CapEx size with other projects of offshore companies which are listed. We are among the best projects exactly for the reason I mentioned, that's production that will start and will be brought to us with no extra operating costs. And that's why it was not difficult to have full alignment between the management and the Board of Directors for immediate approval of these projects. And this is the reason why Mastrangelo did everything in his power to accelerate the FID because we had a lot of certainty regarding all of the subcontractors that are relevant so that we could conduct a campaign in a well-planned and successful way. And regarding the Atlanta contract, Pedro, you can add to that.

Well, Leonardo, thank you for the question. The contract signed recently with Shell is very different than the previous contract. Shell has been a partner at Atlanta for many, many years, selling produced volumes since the early production system during about 7 years of the early production system, they are a very relevant player in trading low sulfur oil, particularly in the Southeastern market, in addition to being a relevant player in integrated and seamless logistics for floating of oil in Brazil. It is kind of a hard to precise of the spreads and to compare with what we had before in terms of trading solution because previously, we had a commercial condition that was agreed upon regarding the brand. But as I said in my part of the presentation, we are cutting the price of the product in the end product for the low sulfur MGO in the Southeastern market, with a number of new assets regarding the flexibility of combining offloads, combining products, where we have a co-participation of the gains coming from these operations. So this is a contract that will include a little more volatility in profitability compared to Brent oscillation over time. In our view, it will be better over time compared to what we had before.

Please let me add to that. Leonardo, if we look at the company portfolio, Atlanta compared to the brand because it is low sulfur oil. Perhaps there is greater volatility vis-a-vis to the Brent. It is expected that on average, the discount will be low. Potentially, in some moments, it might even carry a certain premium oil from Potiguar, the second big project producing oil when we think about the final profitability post the midstream. This also represents a very low discount vis-a-vis the brand. The Bahia oil exactly because it is a very light oil and also low sulfur oil, it has a low discount. With the exception of what we have in the portfolio, that does not have extremely low discount would be Papa-Terra abate and our stake in BC-10 plus improvements there. But with the blend of products that the company has, we end up having an average discount vis-a-vis the Brent which is very low. And that is why our lifting costs might not be the best among listed companies, but the blend of the company, considering all components so we can have breakeven EBITDA generation or EBITDA per barrel, which is what we are monitoring up close. All of that ends up being very competitive. I just wanted to underscore that. Of course, this is very much led by Atlanta but also by Potiguar, if we look at the company in an integrated way. And Pedro has a task of lowering this discount that we have for Papa-Terra and Potiguar. And yes, Leonardo, we work with dollars.

Our next question from Bruno Amorim with Goldman Sachs.

I just have a follow-up on Pizarro's comments about the possibility of dividend payout in the coming years. First of all, do you understand that the leverage to be delivered this year, which is higher than last year because this year, your EBITDA is more normalized, whether the target -- if this is a target leverage for this year or this is probably stemming from the cash generation of the company. And my second question I just want to get a big picture about the company's cash generation profile for this year and next this year probably envisioning a production of 80,000 barrels a day. Would it make sense to think about an EBITDA close to USD 1 billion. And this will lead to a cash generation that is relatively low. You wouldn't be -- still be single digital in cash flow yield, and this will be the best proxy of what will be dividend throughout the year. I know that you do not give any guidance. I just want to try -- I'm just trying to validate my rationale.

So Pizarro, over to you because you have to report to CBM or the Brazilian SEC.

Bruno, thank you for your questions. Well, I have to be very careful because we do not give guidance. The company, I mean, as restrictions, there are some instruments because as we said, these instruments limit leverage to 1.5 at the most to allow for dividends, except for the mandatory minimum, which is 25% of the profits. So eventually, in 2025, we do have a potential and 25% of the profits of a company, just like you said, may have an EBITDA at that level. And it comes in a year where the exchange rate was 6.19%. And today, exchange rate is much lower and our debt is denominated in U.S. dollars. So the financial effect if the exchange rate remains at that level. It's positive. Therefore, we see the possibility of paying the minimum mandatory payout. And that's relevant. Having said that, I think the most important thing is to look back. In 2024, in the first quarter, we had USD 251 million of EBITDA in one quarter with production at 72,000 barrels from then on Brent prices were down a bit. However, the expected production is higher. Therefore, your estimate is very much in line, especially if we look at the history of the company in the first quarter of 2024. As mentioned before, we intend to keep CapEx close to $500 million. This will allow for increased production year-on-year throughout the next 3 years. However, cash generation would be -- I mean, in the last line, after CapEx will be positive, positive this year, potentially even more positive in 2026 and even more in 2027. So this is a trajectory that we anticipate and what we've been discussing with the Board. And it is also what allows the company to reach 100,000 barrels and even more starting in 2027, especially with the four new wells in Papa-Terra and Atlanta with the capacity to pay out dividends with low leverage. So it's just a combination of factors.

I just have a very quick follow-up. In regards to growth, so this year, obviously, you have seen the normalization of Papa-Terra's production, Atlanta's ramp up. So in the next coming years, where do you see growth coming from?

I mean, these three -- these four wells, we have two wells in Papa-Terra and two in Atlanta, and they will bear an effect in the last quarter of 2026. So we come in the beginning of 2027 with these four wells in operation. So this more than compensates for any decline in 2025 and in the first quarters of '26, or 2027, which is already in place without exceeding the CapEx level. I mentioned we do have the potential to reach a much more relevant number in terms of barrels in terms of what has been contracted.

I mean, we've been here for almost 2 hours, and we still have questions posted in the chat. And I'm looking at that in most part of the questions are repeat one another. So one question is about expected CapEx for the next few years. And I would say that we went through that acute phase of huge CapEx, especially in Atlanta. So I think we should consider a much I mean, a better behaved CapEx. So I'm not going to repeat the level of CapEx we had when we still were working on the full development system. And the last question is about our current cost of debt, and this would be the last question.

Perfect. Just something regarding the CapEx of our total CapEx, if we did not consider the 20% that we sold Westlawn and Atlanta, we are talking about a level of CapEx in 2024 of $800 million, of which about BRL 400 million is the full development of Atlanta, which will not be repeated in that order of magnitude in 2025. The same thing applies to Papa-Terra integrity, onshore integrity, the reduction in the number of rigs. And that is why we're kind of reducing this intensive CapEx of the company. To start now a moment where both onshore and offshore, CapEx is a lot more related to expansion rather than related to integrity recovery or deployment of a large project like Atlanta. And the last question about the cost of debt. When we look at the cost of our dollarized instruments, the latest debentures that were swapped at a rate of close to 7% and our obligations with Petrobras, in our case, with Qatar at BC-10, we have a cost of debt close to 8.5% in dollars -- equivalent in dollars. And the two most expensive instruments can be prepaid this year and eventually issue new debts. The trend is that the cost of debt is declining. This is what we can tell you so far.

Well, thank you very much. And I would like to thank everyone for joining us. This was a long call, but there was a reason. We had a lot of things happening. And for 4 months, we didn't have the earnings call. The next one will be very short, will be in mid-May. So we are talking about 50 days from now. So hopefully, the next one will be shorter. And we'll be able to do a follow-up of some things that we spoke about here. So thank you very much for joining us today and also your next time. Thank you.

Brava's conference call has come to an end. Thank you very much for participating. Have a good end of day. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]