3R Petroleum Óleo e Gás S A : Earnings Release 2Q21

Earnings Release

2Q21

2nd Quarter 2021 Results

Highlights of 2Q21 and Post Reporting Date Events

• Consistent quarterly increase in Macau oil production: 3R wound up the second quarter of the year with average daily production of 4,793 barrels per day, an increase of 29.2% and 5.3% when compared with 2Q20 and 1Q21, respectively;
• Acquisition of 62.5% stake in the Papa-Terra field in July 2021:
• • US$ 105.6 MM (85% conditioned to the asset's operational efficiency and Brent threshold);
  • Low entry multiple per reserve;
  • Cash generation already belongs to 3R since July 1, 2021;
  • Abandonment Cost Sharing: ~60% of the total amount estimated for the asset decommissioning, related to 62.5% stake, will be covered by the seller.
• Company portfolio comprised of seven complexes of assets either already signed with Petrobras: average production of roughly 36,843 boe/d in 1H21, with 24,682 boe/d related to 3R's working interest;
• Closing of Rio Ventura Cluster: 3R took over operation of the Rio Ventura Cluster on July 15, 2021, the second asset to be operated by the Company.

Quarterly Evolution of financial results confirm the resilience of 3R's investment thesis

• Net revenues reached R$ 152.8 million in 2Q21, an increase of 15.1% in relation to 1Q21;
• Net revenues from Macau Cluster reached R$ 143.8 million in 2Q21, a rise of 16.6% vs 1Q21;
• Consolidated Adjusted EBITDA amounted R$ 89.3 million in 2Q21, up 12.5% when compared with 1Q21, with Adjusted EBITDA margin of 58.4%;
• Adjusted EBITDA from Macau Cluster totaled R$ 96.6 million, an increase of 19.5% when compared with 1Q21, and Adjusted EBITDA margin of 67.1%.
• US$ 2.0 million of Capex for revitalization projects: workover activities and gradual automation of wells and systems to reduce the downtime of the Company's productive systems.
• Macau Lifting Cost wound up 2Q21 at US$ 6.25/boe: even with the impact of the tariff flags for energy (red flag in May and June), the lifting cost for the Cluster held its position as the benchmark among Brazil's independent oil and gas players.

ESG: 3R arrives in the Recôncavo Basin and advances on projects for clean generation of electric power

• Operation focused on preventive, health and safety activities: strict prevention measures against the Covid-19pandemic and absence of any accidents leading to leaves of absence by employees;
• Start-upof operation at Rio Ventura:
• • Pickup in economic activities in townships impacted by the decline in production and lack of investments in recent years;
  • Generation of jobs, income and tax proceeds: training manpower and granting priority to local suppliers.
• Further development of Gas to Wire Project:
• • Generation of electric power from gas derived from operation of the Macau Cluster: reduction in emissions, consumption and costs of electric power from the grid;
  • Engaged subcontracting: project finalized and licensing process in progress;
  • Forecast delivery: first half of 2022.
• Highest level of corporate governance, diligence and strengthening of Company operational policies and procedures.

Message From the Management

3R finished the 2Q21 posting outstanding operational and financial evolution, coupled with the gradual pick-up in economic and industrial activity both in Brazil and in the world at large. At the same time as markets slowly started expanding once again, the global benchmark oil barrel price known as Brent rose by over 12% in 2Q21, reaching thresholds not seen since 2018. Indeed, it has hovered near US$ 70 per barrel since mid-April.

3R's operations in the Macau Cluster posted yet another set of strong results in terms of oil production, recording a rise of about 30% when compared with a year ago (2Q20). Both the cluster's operational efficiency and appreciation of the Brent price in the quarter supported the evolution of 3R's financial capacity: net revenues hit R$ 152.8 million and the Adjusted EBITDA added up to

R$ 89.3 million in 2Q21, very healthy rises of 15.1% and 12.5%, respectively, when compared with the previous quarter.

The Company's results evolved together with the enhancement of the management controls over corporate risks and the measures adopted to mitigate the environmental impact of 3R's operations, bolster the operational safety of our collaborators and prevent the dissemination of the coronavirus pandemic in our installations. The tireless dedication of 3R's employees was once again essential for the consistent evolution of our results in this past quarter.

Ever since it took over operation of the Macau Complex, the Company has been reinforcing its work teams by attracting professionals of the highest level, both in the operation per se and in the business support areas. Our teams are led by professionals with vast experience in the Brazilian O&G industry and tremendous recognition, professionals with solid backgrounds in development of major onshore and offshore production projects, besides thorough know-how regarding assets in the transition and acquisition process.

With over 12 months of operating the Macau Cluster under its belt, 3R is now very well prepared to take over the operations of the other assets in the transition process from Petrobras. Thus, it can replicate the revitalization strategies and solid performance already achieved since the very first months of operations. In 2Q21, the Macau Cluster accounted for over 94% of the Company's revenues, with growth rates of 16.6% in revenues and 15.1% in Adjusted EBITDA, when compared with the previous quarter.

3R continues focused on achieving the goals defined for the rest of 2021, aligning its operating results and strategic decisions to the interests of its shareholders and other stakeholders. Taking advantage of opportunities for production growth and reserves in highly profitable projects and implementation of the plans for development and revitalization of its current portfolio continue to be the pillars of the Company's strategic plan.

Macau: strong results

3R wound up yet another quarter with powerful evolution in terms of its operational efficiency. The healthy results posted reflect a management model backed up by major investments with accelerated payback and application of effective management by a team that specializes in revitalization of mature onshore fields.

After stabilizing production in the first months of operation in the year 2020, in 2021 3R posted the second consecutive quarter with strong oil production growth at the Macau Cluster. In 2Q21, the total production of the Company operated asset reached a daily average of 5,684 barrels of oil equivalents (boe/d), chiefly backed up by the increase in oil production, which posted a daily average of 4,793 barrels in the quarter, a rise of almost thirty per cent (29.2%) when compared with 2Q20.

Papa-Terra Cluster: strategic acquisition with the DNA of 3R

As a post reporting date event to 2Q21, in July of 2021 3R signed an agreement with Petrobras for acquisition of the Papa-Terra Cluster, marking the start-up of the Company's production trajectory in deep waters. Papa-Terra is the second asset of 3R's offshore subsidiary and reinforces its strategy of building up a diversified portfolio mixing onshore and offshore production assets.

This transaction buttresses 3R's DNA in negotiations, providing important upsides for its shareholders at the same time as it mitigates risks, since: (i) it is a strategic acquisition, with low multiple entry per reserve; (ii) a major portion (85%) of the payment is conditioned to the asset's operational performance and a minimum threshold of the benchmark Brent oil price; and (iii) it involves an important agreement with the seller for sharing the abandonment costs of the wells and systems installed in the field. The acquisition substantially increases 3R's production and reinforces its capacity for replacement and increase of reserves in the forthcoming years.

Rio Ventura: the start-up of a new trajectory in the Brazilian onshore production business

Further in July 2021, 3R took over operation of the Rio Ventura Cluster, the second asset operated by the Company and the one that marks its entry into the State of Bahia. The Company's objective is to replicate the successful strategy adopted in the Potiguar Basin, by benefiting from the learning curve of the Macau Cluster operation: (a) efficient operation with low lifting cost; (b) integrated management model between the technical and operational areas of 3R and its main subcontractors; and (c) increased production based on the application of techniques like reactivation of wells, secondary recovery, new drilling operations and access to new producing zones in existing wells.

The start-up of operations in the Recôncavo Basin will serve as a base for future integration of the Rio Ventura and Recôncavo Clusters, slated for conclusion in the 4th Quarter of this year (4Q21). These two Clusters will be operated in an integrated manner with focus on taking advantage of operational and financial synergies through optimization of management of the work teams and chains of suppliers and service-providers linked to the operation.

New opportunities and commitment to long-term operational and financial efficiency

Finally, 3R reinforces its commitment to ongoing enhancement of the operational results of Macau and Rio Ventura. To this end, the Company will continue focusing on applying a management model