Prio S.A.
Quarterly Information in US dollar
March 31, 2024
Legal Notice
This report uses the Company's functional currency, the US dollar, as the presentation currency, and was prepared to allow comparison with other companies in the oil sector. For the purpose of comparability, we have converted (i) all assets and liabilities on the Balance Sheet as of December 31, 2022 at the closing exchange rate on December 31, 2022; (ii) all accounts in the income statement, other comprehensive income and cash flows using the average exchange rate prevailing during the applicable period.
Balance sheet | 3 | |
Balance sheet | 4 | |
Statements of income | 5 | |
Statements of comprehensive income | 6 | |
Statements of changes in shareholders' equity | 7 | |
Statements of cash flows | 8 | |
1. | Operations | 9 |
2. | Accounting policies material to the quarterly information | 11 |
3. | Cash and cash equivalents | 13 |
4. | Accounts receivable | 14 |
5. | Recoverable taxes | 14 |
6. | Investments | 15 |
7. | Property, plant and equipment (Consolidated) | 17 |
8. | Intangible assets (Consolidated) | 18 |
9. | Suppliers | 21 |
10. | Labor obligations | 21 |
11. | Taxes and social contributions payable | 22 |
12. | Loans and financing | 22 |
13. | Local debentures (includes conversion swaps) | 24 |
14. | Lease operations | 26 |
15. | Current and deferred income tax and social contribution | 27 |
16. | Provision for abandonment (ARO) | 28 |
17. | Impairment | 29 |
18. | Shareholders' equity | 29 |
19. | Related party transactions (Parent company) | 31 |
20. | Net revenue | 32 |
21. | Costs of products sold | 33 |
22. | Other revenues and expenses | 33 |
23. | Financial income (loss) | 34 |
24. | Income tax and social contribution | 35 |
25. | Segment reporting (Consolidated) | 35 |
26. | Objectives and policies for financial risk management | 36 |
27. | Insurance | 41 |
28. | Contingencies | 41 |
29. | Subsequent events | 43 |
Balance sheet
March 31, 2024 and December 31, 2023 (In thousands of dollars-US$)
Parent Company | Consolidated | ||||
Note | 03/31/2024 | 12/31/2023 | 03/31/2024 | 12/31/2023 | |
Assets | |||||
Current assets | |||||
Cash and cash equivalents | 3 | 3,060 | 3,769 | 806,633 | 482,392 |
Accounts receivable | 4 | - | - | 286,563 | 360,129 |
Oil inventories | 21 | - | - | 70,196 | 52,533 |
Inventory of consumables | - | - | 87,323 | 82,069 | |
Financial instruments | 26 | - | - | - | 74 |
Recoverable taxes | 5 | 402 | 404 | 73,124 | 71,811 |
Advances to suppliers | 7 | 7 | 23,747 | 20,703 | |
Advances to partners | - | - | - | 19,248 | |
Prepaid expenses | 17 | 15 | 3,541 | 4,571 | |
Other receivables | - | - | 7,987 | 159 | |
3,486 | 4,195 | 1,359,114 | 1,093,689 | ||
Non-current assets | |||||
Advances to suppliers | - | - | 46 | 46 | |
Mark-to-market of debenture swaps | 13 | - | - | - | 18,643 |
Deposits and pledges | 28 | - | - | 5,992 | 6,191 |
Recoverable taxes | 5 | - | - | 480 | 873 |
Deferred taxes | 15 | 2,524 | 2,105 | 45,414 | 106,703 |
Related parties | 19 | 14,130 | 1,932 | - | - |
Right-of-use (Lease CPC 06.R2/IFRS 16) | 14 | - | - | 410,947 | 422,275 |
Investments | 6 | 3,197,033 | 2,975,110 | - | - |
Property, plant and equipment | 7 | 40 | 46 | 2,133,904 | 1,946,816 |
Intangible assets | 8 | - | - | 2,185,966 | 2,254,534 |
3,213,727 | 2,979,193 | 4,801,392 | 4,754,107 | ||
Total assets | 3,217,213 | 2,983,388 | 6,160,506 | 5,847,796 |
See the accompanying notes to the quarterly information.
3
Balance sheet
As of March 31, 2024 and December 31, 2023 (In thousands of dollars-US$)
Parent Company | Consolidated | ||||
Note | 03/31/2024 | 12/31/2023 | 03/31/2024 | 12/31/2023 | |
Liabilities and shareholders' equity | |||||
Current liabilities | |||||
Suppliers | 9 | 104 | 133 | 127,453 | 172,429 |
Labor obligations | 10 | 2,793 | 3,116 | 35,951 | 55,128 |
Taxes and social contributions | 11 | 131 | 140 | 82,173 | 122,489 |
Loans and financing | 12 | - | - | 266,343 | 250,477 |
Local debentures (includes conversion swaps) | 13 | - | - | 1,503 | 8,144 |
Financial instruments | 26 | - | - | 1,164 | - |
Advance from partners | - | - | 905 | - | |
Contractual charges (Leases - IFRS 16) | 14 | - | - | 46,612 | 46,372 |
Accounts payable - earn out Albacora Leste | 8 | - | - | 165,372 | 59,584 |
Other accounts payable | - | - | - | 848 | |
3,028 | 3,389 | 727,476 | 715,471 | ||
Non-current liabilities | |||||
Loans and financing | 12 | - | - | 747,167 | 896,630 |
Local debentures (includes conversion swaps) | 13 | - | - | 768,953 | 371,852 |
Provision for abandonment (ARO) | 16 | - | - | 238,534 | 231,638 |
Provision for contingencies | 28 | 80 | 83 | 198,977 | 195,423 |
Related parties | 19 | 132,418 | 113,237 | - | - |
Contractual charges (Leases - IFRS 16) | 14 | - | - | 390,060 | 400,045 |
Accounts payable - earn out Albacora Leste | 8 | - | - | - | 162,502 |
Other liabilities | 39 | 36 | 7,691 | 7,592 | |
132,537 | 113,356 | 2,351,382 | 2,265,682 | ||
Shareholders' equity | |||||
Realized share capital | 18 | 1,425,545 | 959,899 | 1,425,545 | 959,899 |
Capital reserves | (56,025) | (41,856) | (56,025) | (41,856) | |
Profit reserves | 1,356,442 | 1,810,361 | 1,356,442 | 1,810,361 | |
Accumulated translation adjustment | 121,254 | 121,570 | 121,254 | 121,570 | |
Equity valuation adjustments | 13 | 16,717 | 16,669 | 16,717 | 16,669 |
Income (loss) for the period | 217,715 | - | 217,715 | - | |
3,081,648 | 2,866,643 | 3,081,648 | 2,866,643 | ||
Total liabilities and shareholders' equity | 3,217,213 | 2,983,388 | 6,160,506 | 5,847,796 |
See the accompanying notes to the quarterly information.
4
Statements of income
Three-month period ended March 31, 2024 and 2023
(In thousands of dollars-US$, except earnings/losses per share)
Parent Company | Consolidated | ||||
Note | 03/31/2024 | 03/31/2023 | 03/31/2024 | 03/31/2023 | |
Net revenue | 20 | - | - | 642,154 | 524,599 |
Costs of products/services | 21 | - | - | (268,255) | (188,262) |
Gross revenue | - | - | 373,899 | 336,337 | |
Operating revenues (expenses) | |||||
Geology and geophysics expenses | - | - | (89) | - | |
Personnel expenses | (4,538) | (188) | (8,231) | (5,837) | |
General and administrative expenses | (7) | (44) | (3,446) | (3,956) | |
Expenses with Outsourced Services | (304) | (164) | (4,352) | (1,341) | |
Taxes and rates | (173) | (96) | (2,904) | (899) | |
Depreciation and amortization expenses | (7) | (16) | (4,950) | (4,142) | |
Equity in net income of subsidiaries | 6 | 222,191 | 223,878 | - | - |
Other operating revenues (expenses), net | 22 | (14) | (1,045) | 4,431 | (27,246) |
Operating income (loss) before financial income (loss) | 217,148 | 222,325 | 354,358 | 292,916 | |
Financial revenues | 23 | 42 | 84 | 10,264 | 5,065 |
Financial expenses | 23 | (1,544) | (335) | (59,005) | (44,087) |
Net exchange-rate changes | 23 | 1,592 | 61 | 8,191 | (13,108) |
Income before income tax and social contribution | 217,238 | 222,135 | 313,808 | 240,786 | |
Current income tax and social contribution | 24 | - | (351) | (36,250) | (25,022) |
Deferred income tax and social contribution | 24 | 477 | - | (59,843) | 6,020 |
Income for the period | 217,715 | 221,784 | 217,715 | 221,784 | |
Basic and diluted earnings per share | |||||
Basic | 0.260 | 0.262 | 0.260 | 0.262 | |
Diluted | 0.259 | 0.260 | 0.259 | 0.260 |
See the accompanying notes to the quarterly information.
5
Statements of comprehensive income Three-month period ended March 31, 2024 and 2023 (In thousands of dollars-US$)
Consolidated | ||
03/31/2024 | 03/31/2023 | |
Income (loss) for the period | 217,715 | 221,784 |
Mark-to-market of local debenture swaps | 48 | 7,836 |
(-) Deferred taxes on mark-to-market of swaps | (16) | (2,664) |
Translation adjustment on investment abroad, net of taxes | (316) | (5,234) |
Other comprehensive income for the period, net of taxes | (284) | (62) |
Total other comprehensive income for the period, net of taxes | 217,431 | 221,722 |
See the accompanying notes to the quarterly information.
6
Statements of changes in shareholders' equity
Three-month period ended March 31, 2024 and 2023 (In thousands of dollars-US$)
Capital reserve | Accumulated | Equity | ||||||
Capital | Treasury | Profit | translation | valuation | Retained | |||
Capital | reserve | shares | reserve | adjustment | adjustment | earnings | Consolidated | |
Balances at January 1, 2024 | 959,899 | 70,502 | (112,358) | 1,810,361 | 121,570 | 16,669 | - | 2,866,643 |
Paid-up capital | 465,646 | - | - | (453,919) | - | - | - | 11,727 |
Stock options granted | - | 2,163 | - | - | - | - | - | 2,163 |
Translation adjustment on investment abroad | - | - | - | - | (316) | - | - | (316) |
Gain (loss) with financial instruments | - | - | - | - | - | 48 | - | 48 |
Treasury shares | - | - | (16,332) | - | - | - | - | (16,332) |
Net income for the period | - | - | - | - | - | - | 217,715 | 217,715 |
Balances at March 31, 2024 | 1,425,545 | 72,665 | (128,690) | 1,356,442 | 121,254 | 16,717 | 217,715 | 3,081,648 |
See the accompanying notes to the quarterly information.
7
Statements of cash flows
Three-month period ended March 31, 2024 and 2023 (In thousands of dollars-US$)
Parent Company | Consolidated | |||
03/31/2024 | 03/31/2023 | 03/31/2024 | 03/31/2023 | |
Cash flows from operating activities | ||||
Income (loss) for the year (before taxes) | 217,238 | 222,135 | 313,808 | 240,786 |
Depreciation and amortization | 7 | 16 | 122,891 | 60,515 |
Financial revenue | (2,413) | (831) | (120,509) | (70,214) |
Financial expenses | 2,218 | 1,157 | 160,388 | 102,429 |
Share-based compensation | 2,163 | 3,654 | 2,163 | 3,654 |
Equity in net income of subsidiaries | (222,191) | (223,878) | - | - |
Provision for contingencies/losses/R&D | 217,238 | 222,135 | 4,567 | 10,201 |
Amendment of the provision for abandonment/IFRS 16 Contracts | - | - | 69 | 6,272 |
Negative goodwill on acquisition of Albacora Leste | - | - | - | (3,230) |
(2,978) | 2,253 | 483,377 | 350,413 | |
(Increase) decrease in assets | ||||
Accounts receivable | - | - | 73,600 | (384,834) |
Recoverable taxes | (164) | 34 | (7,098) | 22,005 |
Prepaid expenses | (2) | 90 | 1,032 | 1,380 |
Advances to suppliers | - | - | (3,044) | (6,658) |
Oil inventories | - | - | (12,867) | 43,436 |
Inventory of consumables | - | - | (5,254) | (2,741) |
Related parties | (12,198) | (8,682) | - | - |
Advance to partners in oil and gas operations | - | - | 20,190 | 3,540 |
Deposits and pledges | - | 1 | 239 | (269) |
Other receivables | (6) | 1 | (7,471) | (212) |
Increase (decrease) in liabilities | ||||
Suppliers | (715) | 213 | (35,565) | (428) |
Labor obligations | (247) | (1,412) | (17,991) | 8,437 |
Taxes and social contributions | (192) | 11 | (73,952) | (19,467) |
Related parties | 20,395 | 11,565 | - | - |
Other liabilities | 2 | 110 | (604) | 3,115 |
Net cash (invested in) from operating activities | 3,895 | 4,184 | 414,592 | 17,717 |
Cash flows from investment activities | ||||
(Investment in) redemption of abandonment fund | - | - | (537) | (331) |
Non-current assets held for sale | - | - | (1,271) | - |
(Purchase) sale of property, plant and equipment | - | - | (237,852) | (140,658) |
(Acquisition) of oil and gas assets | - | - | (59,940) | (1,839,470) |
Net cash (invested in) from investment activities | - | - | (299,600) | (1,980,459) |
Cash flows from financing activities | ||||
Borrowings | - | - | - | 278,000 |
Repayment of principal on loans | - | - | (136,000) | - |
Interest paid on loans | - | - | (13,604) | (6,027) |
Contractual charges - Leases IFRS 16 - Principal | - | - | (3,192) | (994) |
Contractual charges (Leases - IFRS 16) - Interest | - | - | (9,078) | (5,817) |
Funding of debentures | - | - | 388,035 | - |
Interest paid on debentures | - | - | (13,962) | (19,574) |
Derivative transactions | - | - | 1,238 | (19,098) |
(Decrease) Paid-up capital | 11,728 | 6,519 | 11,728 | 6,519 |
Own Company's shares (held in treasury) | (16,332) | (9,490) | (16,332) | (9,490) |
Net cash (invested in) from financing activities | (4,604) | (2,971) | 208,833 | 223,519 |
Translation adjustment | - | - | 416 | 615 |
Net increase (decrease) in cash and cash equivalents | (709) | 1,213 | 324,241 | (1,738,608) |
Cash and cash equivalents at the beginning of the period | 3,769 | 3,287 | 482,392 | 1,842,375 |
Cash and cash equivalents at the end of the period | 3,060 | 4,500 | 806,633 | 103,767 |
Net increase (decrease) in cash and cash equivalents | (709) | 1,213 | 324,241 | (1,738,608) |
See the accompanying notes to the quarterly information.
8
Notes to the quarterly information
March 31, 2024
(In thousands of dollars-US$, unless otherwise indicated)
1. Operations
Prio S.A. ("Prio" or "Company"), was established on July 17, 2009. Headquartered in the city of Rio de Janeiro, its main purpose is to hold interests in other companies as partner, shareholder or unitholder, in Brazil and abroad, with a focus on exploration, development and production of oil and natural gas.
For the purpose of this report, Petro Rio S.A and its subsidiaries are denominated, individually or jointly, as the "Company" or "Group", respectively.
Its relevant activities are carried out by means of subsidiaries Petro Rio Jaguar Petróleo SA. ("Jaguar"), Prio Bravo Ltda ("Bravo") and Prio Forte S.A. ("Forte"), and they are focused on the production of oil and natural gas, operating in Campos Basin on March 31, 2024:
Country | Basin | Block | Field | Concessionaire | % | Status | Phase |
Brazil | Campos | BM-C-8 | Polvo | Bravo | 100% | Operator | Production |
Brazil | Campos | C-M-466 | Tubarão Martelo | Bravo | 100% | Operator | Production |
Brazil | Campos | Frade | Frade | Jaguar | 100% | Operator | Production |
Brazil | Campos | Albacora Leste | Albacora Leste | Jaguar | 90% | Operator | Production |
Brazil | Campos | BM-C-30 | Wahoo | Jaguar | 64% | Operator | Exploration |
Brazil | Campos | BM-C-32 | Itaipu | Jaguar | 100% | Operator | Exploration |
Brazil | Foz do Amazonas | FZA-M-254 | Coral | 100% | Operator | Exploration | |
Brazil | Foz do Amazonas | FZA-M-539 | Pirapema | Coral | 100% | Operator | Exploration |
Below we describe the activities in the main Fields where the Company operates:
Polvo Field
The Company is the operator and holds 100% of the Polvo Field concession contract, acquired from BP Energy do Brasil Ltda. ("BP") - 60% in 2014 and from Maersk Energia Ltda. ("Maersk") - 40% in 2015. On March 29, 2023, the Field concession was transferred from the subsidiary Petro Rio O&G Exploração e Produção de Petróleo Ltda. ("PrioOG") to the subsidiary Bravo, starting a process of restructuring/streamlining the group's corporate structure, with no impact on the quarterly information.
The Polvo Field is in the southern portion of the Campos Basin (offshore) some 100 km east of the city of Cabo Frio in the state of Rio de Janeiro. The license covers an area of approximately 134 km2 with several prospects for future exploration. Average daily output during the first quarter of 2024 was of roughly 6.1 thousand barrels (6.0 thousand barrels for the first quarter of 2023).
Tubarão Martelo ("TBMT") and Prio Forte S.A. ("Forte")
As of August 3, 2020, PrioOG completed the acquisition of 80% of the Tubarão Martelo Field operations and took over the Field's operation.
The Tubarão Martelo Field is located in the south of the Campos Basin, approximately 86 kilometers off the coast of the State of Rio de Janeiro. The license covers an area of approximately 32 km², with an average water depth of 110m. The Field produced approximately 9.8 thousand bbl of oil per day in the first quarter of 2024 (6.5 thousand bbl of oil per day in the first quarter of 2023).
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Notes to the quarterly information
March 31, 2024
(In thousands of dollars-US$, unless otherwise indicated)
On January 8, 2023, the subsidiary Petro Rio OPCO Exploração Petrolífera Ltda. ("OPCO") completed the acquisition of shares and control of Dommo. As of this date, all Dommo's shares were transferred to OPCO, in exchange for PNA shares that were redeemed on the same day for PRIO3 shares; and PNB, in turn redeemed in cash on January 13, 2023, as detailed in Note 8. Dommo Energia S.A. had its corporate name changed to Prio Forte S.A. ("Forte").
FPSO Bravo and connection between the Polvo and Tubarão Martelo fields
As of February 3, 2020, the Company entered into a contract for the acquisition of the FPSO Bravo vessel (Floating, Production, Storage and Offloading - FPSO), built in 2012 with a processing capacity of 100 thousand bbl of oil per day and storage capacity of 1.3 million bbl.
Currently, the FPSO operates in the Tubarão Martelo and Polvo Fields, through a tieback with the Polvo A Fixed Platform, concluded on July 14, 2021.
Frade Field
On March 25, 2019 and October 01, 2019, after complying with the precedent conditions and obtaining the necessary approvals, Jaguar completed the acquisition of 51.74% and 18.26%, respectively, of interest in the concession of Frade Field, in the operational assets of the Field, and assumed the operation of the Field.
Furthermore, on November 28, 2019, Jaguar signed a purchase and sale agreement with Petrobras for the acquisition of the remaining 30% interest in the Field, increasing interest in Frade Field to 100%. The completion of this transaction took place on February 5, 2021.
The Frade Field is in the northern region of the Campos Basin, about 120 kilometers from the coast of the State of Rio de Janeiro. The license covers an area of approximately 154 km², with an average water depth of 1,155 m. In the 1Q24, the Field produced approximately 45.2 thousand bbl of oil per day in the first quarter of 2024 (32.9 thousand bbl of oil per day in the first quarter of 2023).
Albacora Leste field
On April 28, 2022, Jaguar signed a Purchase and Sale Agreement with Petróleo Brasileiro S.A. ("Petrobras") for the acquisition of a 90% interest and operation of Albacora Leste Field, with Repsol Sinopec Brasil as the partner holding the remaining 10%.
On January 26, 2023, upon ANP's approval, the acquisition of operation and a 90% interest in Albacora Leste Field ("Field" or "Albacora Leste") with Petrobras was concluded. As of this date, PRIO becomes the operator of the asset, pursuant to Note 8.
Albacora Leste is located at a water depth of 1,200 meters, in the north of the Campos Basin, 23 km from the Frade Field. Discovered in 1986, the field had its first oil in 1998 through its 10 producing wells and 6 injection wells currently in operation. The field produced in the first quarter of 2024, approximately 25.6 thousand bbl of oil per day (24.3 thousand bbl of oil per day in the first quarter of 2023).
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PRIO SA published this content on 13 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 May 2024 13:02:13 UTC.