Enauta Participacoes SA

BOVESPA:ENAT3

Earnings Call Transcript 2021-Q4

[Renata de Andrade, executive]

Good day, everyone. Welcome to Enauta's Fourth Quarter and Full Year 2021 Earnings Video Conference Call. My name is Renata Amarante, and I'm the Investor Relations Manager, and I will be moderating this event.

Before we begin the presentation, I would like to make some important announcements. This event will be broadcast live with simultaneous translation into English, and the presentation will be available at the company's IR website as well as here on the webcast platform. [Operator Instructions]

Before proceeding, let me mention that forward-looking statements that might be made during this conference call relative to Enauta's business perspectives, projections and operating and financial goals are based on the beliefs and assumptions of Enauta's management and on information currently available to the company. Forward-looking statements are not guarantee of performance. They involve risks, uncertainties and assumptions as they relate to future events and therefore, depends on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors can significantly affect the future performance of Enauta, and can cause results to differ materially from those expressed in such forward-looking statements.

Today with us, we have our CEO, Decio Oddone; Carlos Mastrangelo, Chief Operating Officer; and Paula Costa, our CFO and IRO. I would like now to turn the floor to Paula, who will make the presentation. Please, Paula, go ahead.

[Paula da Costa Corte-Real, executive]

Good day, everyone. Thank you for joining us in this video conference call to discuss Enauta's fourth quarter and full year 2021. I'd like to start saying that 2021 was a year of many lessons learned and great achievements for Enauta. We are proud of our progress and are optimistic about our growth prospects.

Let's move to the presentation. Here we have some highlights on Slide #1. 2021. In 2021, the company posted an all-time high net income of BRL 1.4 billion. Basically, 3 factors led to this result: number one, the performance of all of our assets. We have Manati positively affected by the demand for natural gas, and the blend that particularly with the higher Brent oil price and specifically depreciation of the Atlanta oil. The second factor is that we posted additional 50% working interest in Atlanta Field in mid last year. Lastly, in December, we received the third installment of the sale of Carcará in the amount of $144 million.

Another highlight of the year is our solid cash position. Enauta ended the year with BRL 3 billion in cash. Also in 2021, the company made a decision to keep Manati Field in our portfolio. This was a strategic decision, aiming to have portfolio diversification and more stability in our cash generation in addition to balancing greenhouse gas emissions. Also on Manati, we disclosed a new certification of the field showing more than 50% increase in the remaining 2P reserves of the field, which extends the lifespan of the asset.

More specifically on Atlanta, we had 2 important landmarks recently, which I would like to highlight here. The first, in January of this year we signed a contract that allows for the extension of the Early Production System, EPS, that was expected to end in May of 2023. The end of the EPS was extended for another 2 years and may be extended until May of 2025. That gives us the possibility of continuing to operate the field during the transition from the EPS to the Full Development that optimizes the transition process and eliminates a production gap that existed before. So the company will continue to generate cash. We'll continue to operate during the transition between EPS and FD.

The second important point that I would like to mention regarding Atlanta happened now in February. We started to deploy the Full Development System at Atlanta. In and of itself, it is the big project for Atlanta. After all the derisking we had with the Early Production System with all of the information that we collected during this period, we were able to build a sustainable project from the financial, logistics and environmental standpoints. Along this presentation, we will elaborate more on that.

As part of our exploratory portfolio, in February of 2022, we also started drilling the first exploratory well in the Sergipe-Alagoas Basin. This is another growth driver for the company. Lastly, last but not least, we had a quarter with zero leakage in our operations.

Moving to Slide 4, please. Now we will explain in more detail the process of starting to implement the Full Development System. The Early Production System was actually a great source of information for us. We had many important lessons learned, which were valuable for the company so that we could structure and make the final investment decision in the Full Development System with a safety margin.

All of the lessons learned allowed us to have a Full Development System adapted for the field with fewer risks compared to if we had not had the EPS. For example, regarding the wells, we saw excellent productivity of the wells, which proves the effect of the existing aquifer in Atlanta. That eliminates the need to drill additional injection wells. And with that, we reduced CapEx for the Full Development System of Atlanta.

Another great lesson learned we had, had to do with the pumping system. For the Full Development, the company went for a more robust solution that can bring greater production stability and predictability and for a longer period of time. Regarding the value and commerciality of the Atlanta oil, there was a regulatory change at the beginning of 2020, where they set forth a restriction to sulfur content in fuels used for bunker. That significantly drove up the value of Atlanta oil appreciating the Atlanta oil, which brought us an important competitive edge.

With that and other lessons learned, we were able to move forward with the project, which is robust from the operational standpoint and from the financial standpoint, offering adequate profitability for this kind of project. In the beginning of 2022, we took another stride forward regarding Atlanta's Full Development System, which was the acquisition of an opportunity FPSO, an existing FPSO, which is now named FPSO Atlanta. We purchased it for a very attractive and competitive price for the company.

When we have all 6 wells producing and interconnected to this FPSO, the system will have a production capacity, which is around 4x greater than the current level of production at the field. This very same FPSO has an ability to storage capacity for the oil produced, which is 10x greater then Petrojarl, which is the FPSO that we currently have in the Early Production System. That reduces a lot the number of necessary offloads, thus reducing logistics costs.

For the sale of the oil, it reduces what we call demurrage costs and operating risks related to this activity. This project was approved with a CapEx of $1.2 billion, $500 million for the purchase and adaptation of the FPSO and $700 million for drilling wells, installation of production systems and subsea systems.

Another important project to comment about the project is that it is aligned with the company's environmental sustainability pillar. We try to integrate technologies to have greater efficiency in managing greenhouse gases. We pursued initiatives that could bring us a benefit by reducing emissions and with a low implementation cost. The process plant has high energy efficiency. It uses as much as possible all the gas produced thus avoiding emissions. As I mentioned, with the Full Development, we are going to have an important increase in the company's production capacity reaching 50,000 barrels of oil a day by mid-2024.

In addition to this expected leap in production, we also had good news regarding an update on our reserves as we communicated yesterday to the market. Firstly, we had a new certification for Manati Field with an increase of 54% in our remaining 2P reserves at the field, plus 9% of 2P reserves at Atlanta.

In mid of last year, we added 50% working interest in Atlanta Field. This, coupled with the new stratifications made the total 2P Enauta reserves to more than double when we compare end of 2021 with the end of 2020.

Regarding Manati, this difference in certified reserves stems from some parameters adjustments at the station. We identified an opportunity to work with a lower pressure in the onshore compressor station. And with that, we can produce more gas and we can increase the volume of certified reserves.

Now moving to our operating performance on Slide 6, please. This is the second quarter where Enauta posted 100% production of Atlanta. That leads to an increase of about 270% in net revenue when we compare year-over-year, Q4 '21 over Q4 '20.

Manati production also increased. Also posted an increase in the annual comparison reflecting a higher demand for gas in 2021 compared to 2020. With that, our net revenue increased significantly when we compare 2021 over 2020. Basically, due to a strong price increase of the brand and appreciation of the Atlanta oil, as I mentioned before, plus a higher production at Manati driven by higher demand for gas. Manati contributed with around 20% of the company's total revenues.

Now speaking about our operating costs in Q4 on Slide 7. We can see that the lifting cost was almost $35 per barrel. We had mentioned in the previous quarter that the Brent price has a direct impact on our operating cost, particularly the cost of FPSO chartering and diesel cost that we consume in the operation. So if we are to exclude these factors, if we exclude FPSO chartering, our lifting cost would be around $12 per barrel, which represents a reduction of almost 60% when we compare with the same period of last year.

So this shows the focus of the company and optimizing more and more operating costs, particularly logistics costs. The higher Brent price impacts the operating cost of the company, but it also directly impacts the revenue of the company. So it works as a protection mechanism for the company in moments of greater commodity volatility.

Now moving to our financial results on Slide 8. We can see an annual comparison, year-over-year comparison, we posted historical EBITDAX and net income growth. As I mentioned before, this is a result, firstly, of the fact that now we have a 100% working interest of Atlanta, higher Brent price, commercial appreciation of Atlanta oil and the fact that we received the last installment for the sale of Carcará in the amount of $144 million in December.

Net of the sale of Carcará, in the increase and the accounting of the additional 50% of Atlanta Field, the company's EBITDAX would be BRL 1.3 billion, more than 800% more than the EBITDAX of the previous year, and the same goes for net income. Net of nonrecurring events, our net income would be close to BRL 400 million, 3x higher than what was posted in 2020.

So as you can see, I think that we have advanced a lot in our production and our ability to generate cash and revenue, and the company intends to continue to grow. In addition to these results, the financial resilience of the company as we can see with our cash position is another relevant factor in our growth strategy, and this is what we are going to see on the next slide, Slide 9.

We ended the year of 2021 with a cash position of BRL 3 billion. We maintained the necessary liquidity for us to execute our investment plan to continue to grow and to look for other alternatives to grow by diversifying the company's portfolio. I would like to also mention that we ended Q4 '21 with 60% of our resources dollarized. This is a move that the company had started before of increasing our position of dollarized cash. And the goal here is to have the necessary protection to continue to invest because basically a good part of our investments are to be paid in dollars.

Another highlight to mention is the low indebtedness level of the company. We can see here another opportunity to create value for our shareholders as we're able to optimize the company's capital structure in the coming years.

We are now getting to the end of the presentation. Please go to Slide 10. To conclude, I'd like to recap everything we've seen so far, to show how Enauta is evolving by building a balanced portfolio with greater potential to create value in Brazil. Looking forward into the future, I see 5 initiatives, which I would like to underscore and which permeate our whole strategy.

The first. The first has to do with Atlanta's Full Development System. The company was able to create a profitable, robust and resilient project, as I mentioned in the slides specifically on Atlanta's Full Development.

The second initiative I would like to mention has to do with the potential to grow inorganically. Since we reviewed our strategy, the company has been pursuing and will continue to actively pursue business opportunities that will bring us inorganic growth to broaden our portfolio with the right price and adequate return for our shareholders.

There's a third initiative, which is a pursuit to optimize capital structure so that we can continue to execute our current projects and to have company growth through the acquisition of new assets.

The fourth bullet item on the slide is our search for energy efficiency. We pursue that as much as possible. We work to increase productivity with less consumption of natural resources and generating fewer or less waste. All based on our sustainable development policy.

And the fifth point, we're trying to build our future based on gender equity. And I think that on that regard, Enauta stands out. We have 40% of women in the workforce and more than 40% women in the leadership positions. So I feel very proud to be part of a company that is working more and more towards gender equity in our workforce.

Before we begin the Q&A session, I will turn the floor to Decio for his final remarks. And again, I would like to thank all of you for participating. And say that we are always available to speak with you through our Investor Relations department. Thank you very much.

[Decio Oddone, executive]

Good morning, everyone. It's a pleasure to be here with you. Today, we are here to discuss last year's result. Paula already mentioned a lot of things. I don't want to sound redundant, but it's important to highlight that despite results of extraordinary events over 2021, the operating performance of the company and the recurring results were also very good. It shows maturity at Enauta and the results that have been driven by the company for a long time, not to mention the improvement of the Full Development System and the potential of a Full Development System that is resilient and the EPS come from these lessons.

We had the Early Production System, which allowed us to know better Atlanta's reservoir and a better combination of Atlanta's oil flow in Atlanta's reservoir, which was extraordinary with a powerful aquifer, which eliminates to drill -- the need to drill wells. And also permeability, allowing the oil to flow easily without any kind of waste, which is very precious information bringing down some prejudices against Atlanta. So we know this is a winning combination. Porous, permeable reservoir with an oil that flows easily with no need for injection wells.

It allowed us to start with a lot of energy into the Full Development System, but the results achieved over 2021, they stem from a number of initiatives: firstly, a 100% working interest in Atlanta's field; secondly, moving away from all the risks involved in different processes, like the concession agreement. We had arbitration that closed in mid-2021. There is no doubt now about their proprietary aspects and now we can work on the field with no risks of arguing against it. We don't mention a lot about it, but that's a very significant point.

It's another point that was very important. So our previous partner could not invest and the brutal reduction of our logistics cost. It's not so apparent. But like we said before, we have this agreement in which the cost of unit used in the Early Production System or Petrojarl varies according to the oil price, which is good for us when there is a high price of the oil, but that's a short time frame. And like Paula said, it was very positive in moments when we had low oil prices. It was a protection for the company as well.

Another significant factor was an increase in reserves not only Manati but also Atlanta. We shouldn't forget Atlanta's reserves also increased. We had the extension of the Early Production System by 2025. We believe it will happen once the vessel was certified. But this allows us to make this transition into the Full Development System with no shutdown, maintaining our cash generation by 2024, which is so important to the company.

So that's very relevant, but the most important thing is our ability to have the Full Development System in Atlanta for 2024 robust, resilient and sustainable. So we can talk more about it during the Q&A, but that's a watershed, a project of 50,000 barrels of oil per day. By 2024, we have no such a big project like that in our industry in a very short time frame. Usually, FPSO takes much longer to be installed and the 2 years that we have until 2024. We started drilling in Sergipe. Enauta now has the chance to have an upside. We had a discovery and creating this portfolio with value generation possibility through while the upstream chain.

And we also have further improvement in governance. The company's governance is improving a lot. This year, we implemented a number of forum, committee, on audit and we also an SAP. So we'll keep on moving forward in our governance.

And we keep on looking for acquisitions. Manati was some sort of acquisition. We had sold the asset and eventually, it remained in our portfolio. But it's important to further improve our capital structure, use the cash in Atlanta and if we manage to work on asset acquisitions in order to diversify and optimize our capital structure. We're going to have a concrete vision, which is building a company with a balanced portfolio in the production and exploration chain.

We want to have strong cash generation, diversified cash generation with projects on development in the mid and long run. Think of Atlanta, for instance, and also growth projects on a longer term as we have with Enauta's exploration portfolio, which is being tested with Sergipe as well. So it was a very valuable year for us with a lot of satisfaction. I believe our shareholders must be pleased with the results that we deliver. But we'll be working hard to go for more.

So this concludes my early remarks. And now we are here to take questions from the attendees. Thank you.

[Operator]

[Operator Instructions] The first question is from Luiz Carvalho with UBS.

[Luiz Carvalho, analyst]

Decio, I think I have 3 questions. Firstly, I wonder if we could talk more about Atlanta. You mentioned trying to look for a partner. What about the status of this process? And when it comes to operations, how do you see that aquifer below the reservoir? Last year, it was a question mark, and maybe there's a point of attention in the field development process.

Second question about Manati. You did a great job in order to increase by more than 50% the reserves in the field. I'd like to better understand this process involving the compressors, onshore and offshore, and maybe any challenges that you envisage in the process.

And if I may, a third question. You started with your partners to drill in Sergipe-Alagoas, you were about to start drilling. What is your mindset about this asset? Do you think this asset is like the previous Carcará trying to monetize it via divestment in order to actually focus on production assets? And what are you mapping in terms of production assets? What are the opportunities that you see ahead?

[Decio Oddone, executive]

Luiz, when it comes to partnership in Atlanta, we started a process in the past. Well, we have confidentiality right now. That's why I cannot make comments. As for the Atlanta's aquifer, first, it was a problem with water that corroded some vessel equipment we had in Petrojarl, which was not prepared for that, and we knew it. So we had the Early Production System to gather information. At the end, it was excellent news because Atlanta's aquifers so powerful that we no longer need to have injection wells. Dramatically reducing our CapEx and the combination of a powerful aquifer with a magnificent reservoir as Atlanta that is highly porous and highly permeable. This combination allows Atlanta's oil, which is heavy to flow easily. So this was the most important news, and that's why we feel more comfortable now with the Early Production System data.

Another piece of good news brought by the EPS as well was that Atlanta's oil has no solid waste. No particles along the way. And with that, the flow rate was approved by the Early Production System. So I can say this combination of aquifer with reservoir and oil, it was the great news, and we no longer have great concerns about the complexity and the risk of production in Atlanta.

With regards to Manati's Field, I'll turn it over to Mastrangelo to tell you more about compression. Over to you, Mastrangelo.

[Carlos Mastrangelo, executive]

Thank you, Luiz. So just adding to the comment, Atlanta's aquifer was critical for us to better structure the development of the Full Development System.

What about Manati? Gas production, the reserve will depend on the maximum. We -- how low we can go on pressure to take gas from it. So we carried out an analysis of the earth or onshore compression system, and also the need for the minimum pressure on the platform with a reanalysis and a possible techniques to go down in pressure on the platform at lower levels. And at the same time, run the onshore system with a lower pressure, it allows you to take more gas from the reservoir. So this is the new technical design or consideration for Manati's development and it dramatically increased the field reserve.

[Decio Oddone, executive]

Luiz, coming back to Sergipe-Alagoas and assets. Firstly, you have to wait. The well is still being drilled. We have high expectations in the surrounding areas, a number of commercial discoveries by Petrobras. So we are closer to the coast compared to the pre-salt fields along the coast of Rio and São Paulo. So it's very different from Carcará and we are going to assess the results first before we work on the strategy.

As for assets, I believe in the Brazilian market, upstream market. We like a company with a balanced portfolio along the production and exploration chain. The company that focus a lot in a mature field has a positive horizon, a short-term horizon. Investing in fields that were not so invested in the recent past, and you can easily improve production. But it comes to a limit. It comes a time in which production will go down as it happens in all oil and gas production in the planet.

If you're only an exploration or a production, you have no cash. Cash is not enough to work on it, particularly offshore and deepwater. So you need strong cash generation. So at Enauta we have the ambition to have an independent company positioned in these 3 steps of exploration with a solid cash generation.

Today, we have Manati, Atlanta's Early Production System, but that's not enough. We want to use our cash, trying to raise funds to further increase the company's cash generation in the short run. That's why we go for production assets. We keep our eyes open. We still have some available in the Brazilian market, and let's see what we can do in terms of pursuing alternatives.

I don't like to talk or to mention names of assets and processes, but we're actively engaged. No success yet, but on the other hand the price of assets were under inflation effects. And we believe that our transactions that were not confirmed owing to this inflation impact and asset prices. But we are relentlessly trying to strengthen the company's cash generation in a more diverse manner.

The main weak point today are these 3 Atlanta wells, working with pumps that were purchased considering the Early Production System that would take 3 years, and now we have the system for a longer time frame. And we keep on that because it's important to keep on generating cash despite the challenges faced of having to work that an extended system. So we are cognizant of that. And we know that this is better than if it were different or if we stop the Early Production System, just awaiting for the Full Development System by 2024. So we are actively engaged in trying to strengthen and diversify Enauta's cash generation.

We have Atlanta's Full Development System, which is just amazing as a project to be mature in 2 years' time. We don't have a lot of offshore project with such an increase in production. It will not be mature in 2 years' time frame, but we have exploration portfolio in Sergipe. And later on, maybe we have the Equatorial Margin with Petrobras and our blocks in the region might also be value generation points for us.

So this combination, strong cash generation, production, process for mid- and long run and growth via exploration, which is where reserves come from. Every mature oil was discovered once. So that's the portfolio we have in mind. That's what we want to build. And when I mentioned attractive conditions and profitable projects, it's no use searching for volume alone. Volume doesn't deliver enough. It doesn't bring value to shareholders. We want to generate value, not volume.

I recall that before I joined Enauta, I didn't even think I was in Enauta after I left in the -- early in the pandemic, I wrote this paper with Alexandre Manoel, Former Secretary of the Ministry of Finance of Temer administration and the Ministry of Finance in Bolsonaro's administration, and today he's the Chief Economist of AZ Quest in São Paulo.

So we wrote this article summarized in Valor Economico. In this article, we mentioned or we asked, what is the level of oil price in the pandemic or post-pandemic? The study showed that if you think about geopolitical effects, nobody would know what the price would be. We didn't want to be conservative. But if we consider the geopolitical impacts, the average oil price would be around $42 or $45 per barrel since the end of the Second World War up to 2020. And what we recommended was the following: if you're going to make a decision to invest in a company of your in-public administration and want to work on a long-term plan for special interest and government interest stemming from oil, we recommend that we consider oil at this range, $45.

So that was before I joined Enauta. That's what I had in mind. We didn't have this very recent event of the Russian crisis, Russia and Ukraine. And it will bring lack of balance, and it will change the geopolitics and the structure of oil price.

To summarize, when I joined Enauta, I said, we need a Full Development System at Atlanta. But I only take it to the Board of Directors if it's $40 tops because I'm confident that it would be a winning solution regardless of the scenario. If you think about breakeven point, you're talking about flat price during the whole life of the project. It's hard to think of today's scenario in which oil price will be under $40 for decades.

You might even have this in a specific moment as it was early in the pandemic, but not structurally. That's why we're confident that Atlanta is a winning project. Atlanta was within this breakeven range, and I challenge everybody to go for it. Now we need to go for the implementation of Atlanta's project, and we hope we have a discovery in Sergipe and we should diversify cash generation with some acquisition. That's our plan.

[Operator]

Our next question comes from Guilherme Levy with Morgan Stanley.

[Guilherme Levy, analyst]

My first question is about Atlanta. Thinking about the commercialization strategy for the oil of the Full Development System. Perhaps it's too early to speak about that. But are you thinking of having an agreement similar to what you have with Shell for EPS? Or do you want to move forward with your own trading instead of having a more long-term sale agreement and perhaps you could work more in the spot market?

My second question has to do with the hedge policy. I'd like you to give us some sense on what the market is like for this kind of operation. How expensive it is to hedge part of production in the coming months. And if you can share with us the hedge position for 2022 already contracted. These are my questions.

[Decio Oddone, executive]

Thank you. I'll answer the first one. Well, we'll have to look into the oil market. It is changing a lot. We had a bidding process last year in Shell one. Today, we have private refinery also buying oil. Spot strategy will depend on how the market evolves. We are not even excluding the possibility of selling oil domestically, having our own trading or a bidding process with large companies so that they can do the work for us. Today, it seems that we are more prone to redo the commercialization agreement for Atlanta oil.

As for the hedge strategy, I will ask Paula to answer.

[Paula da Costa Corte-Real, executive]

Thank you for the question. Indeed, I think that these hedge operations had a great change, particularly after the pandemic given oil volatility if on one hand, we have a spot market, which is better, we have seen more volatile prices as well, which directly impact on the price of the options. We always work with a put option. We buy put options and with that, we protect ourselves in a scenario of low oil price.

On the other hand, we captured the gain in a scenario of higher oil price. Given the characteristic of productions in our Early Production System, as Decio mentioned, it was built to be temporary. There's some volatility in production. So having future sales of oil using some other type of instrument could perhaps put us in a speculative position, which is not the profile nor the goal of the company. For that reason we always seek to work with oil put options.

After a while, we verified a higher cost of these put options by virtue of oil price volatility. And that made us to perhaps redesign our own strategy to contract these put options. We have contracted perhaps a lower volume than before and particularly out of many options. So taking advantage of the fact that the oil price is higher, the out of many options are less expensive and still protect the company's cash flow in a disruptive scenario that we don't envision today, but it could happen.

For 2022, we have close to 1 million barrels contracted or hedged and that is distributed along the year. So more in the future, they'll lower our position, the -- and in the near future, our position is higher and this is how we are positioning ourselves. To have a reasonable cost for the company, we are trying to position ourselves a little out of the money compared to what we used to do in the pre-pandemic era.

I don't know if I answered your question but this has been our view always with discipline. Trying to protect the company because I guess that the secret of hedge policies is to have discipline. To buy it when you don't think you'll need it and to be prepared for possible volatility periods, and this has been our rationale to date.

[Guilherme Levy, analyst]

If I can ask a third question very quickly. In Sergipe-Alagoas, I understand that trailing will take 2 to 4 months once it start. So I just want to understand, after drilling, do you still need some time to analyze the results? Or the idea is you'll have something to report to the market? Can we expect any news regarding the drilling after 2 to 4 months?

[Decio Oddone, executive]

Well, drilling of the well will depend on what we find. If it's a dry hole, drilling will be ended faster. If it's a successful well, we'll go through an assessment. So all communications will depend on that result. We are not expecting to drill additional wells this year, regardless of the result of the first well. Based on the results of the first well, the consortium technicians will look into the data and we'll design the future strategy. Any future drilling in Sergipe will happen only as of 2023.

[Operator]

[Operator Instructions] Next question is from Leonardo Marcondes with Itaú BBA.

[Leonardo Marcondes, analyst]

I have 2 questions that have to do with asset diversification. Since Decio took over as CEO, the company has been a lot more vocal in looking for opportunity in mature fields, both onshore and offshore. In onshore, there are 2 assets going back to the Petrobras rebidding. I'm not going to ask if you're participating for bidding. But I would like to know from your view, what would be the challenges to operate onshore assets as you have always been a company operating offshore and some time ago, you even wanted to move to the pre-salt? That's my first question.

My second question is, I want to understand the strategy of the company regarding acquisition of new assets. When we look at some of the exploratory assets of the company, we see a note with operatorship, but also with working interest as nonoperators. So in a possible position, would you choose partners? Or is the strategy to be the operator or not of these possible future acquisitions?

[Decio Oddone, executive]

Regarding the operation we believe that we generate value under some conditions. For example, we have a lot of experience offshore. But we can work in partnership with somebody else being the operator. Operatorship is not a necessary condition. Likewise, if there is an opportunity, particularly if we can make an acquisition at the value that we believe is accretive, we'll move ahead. Who has the experience that Enauta has operating in deep waters, 1,500 meters deep? Anybody in the condition would not find it hard to have an operation onshore. I have managed onshore operations all over Latin America. But no problem at all, I have no concerns about that. My concern regarding asset acquisition is not related to the environment, onshore or offshore.

Now regarding the operation, whether we are going to be operator or not. Of course, oil companies always prefer to be the operator. But our goal is not to be the operator to operate onshore or offshore. Our goal is to make money, to generate value to our shareholders. We are looking for opportunities to generate value for our shareholders by acquiring assets at the right price.

And just to end, we don't need to get ahead of ourselves. We don't need to be anxious or frustrated because we are not moving ahead. Opportunities come and go and we assure that opportunities, either direct or indirect in the primary acquisition market with the big players or secondary market. In a consolidation process, these things will happen in the Brazilian market and Enauta will be prepared for that.

[Operator]

This concludes the Q&A session. We'd like to give the floor back to Decio for the final remarks.

[Decio Oddone, executive]

Thank you so much for joining us today. I think I talked a lot. That was a very fruitful year for the company. I thank all shareholders for your trust. Thank you for keep on trusting the company. I'll keep on doing our best so Enauta keeps on delivering better results. Thank you, all, and see you next time.

[Operator]

This concludes Enauta's video conference call. Thank you all for joining us today. Have a great day.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]