Petro Rio SA

BOVESPA:PRIO3

Earnings Call Transcript 2022-Q1

[Jose Costa, executive]

Good day, everyone, and welcome to PetroRio's conference call. I am Jose Gustavo, IR and Treasury Manager of PetroRio, and I'll be hosting this event.

[Audio Gap]

presentation is available on the PetroRio IR website. We also have an interpreter for simultaneous translation. Please choose a sound channel icon on the bottom of your Zoom screen.

Presentation and comments on the results will be presented by Roberto Monteiro, CEO; Milton Rangel, CFO; and Francisco Francilmar, COO. They will present the company's results and will then be available during the Q&A. [Operator Instructions] This event will be recorded and will be available on PetroRio's Investor Relations website.

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

Now we will start the presentation with Roberto Monteiro, our CEO.

[Roberto Monteiro, executive]

Good day, everyone. It's a huge pleasure to be back for another conference call to discuss first quarter 2022 earnings results. I would like to start thanking all of the investors who joined us and the PetroRio employees, who are also our investors and joining us on this call. And I'd like to thank you for another quarter that was very strong, I would say, undoubtedly one of the best quarters in the history of the company.

I will speak a little about the numbers. And then we'll speak about what's behind these numbers, which, in my opinion, is much more important than the numbers themselves. We had a net revenue of $310 million, very strong, almost the same as last quarter but with a much lower volume sold compared to the past quarter. Of course, the Brent, the oil reference price, helped us a lot.

We recorded a net income of $228 million, a record number. We had an EBITDA of $229 million, another record. So in this quarter, our EBITDA was higher than the previous quarter EBITDA, which had been already the highest ever posted by the company.

And this results from 2 factors. First, the sales price, which has been at historical highs partly because of COVID, which is the reason for celebration, and partly because of the war in Ukraine, which is a terrible reason, but that also has an effect on price. So that's one factor.

The second factor is right below the lifting cost. We achieved a lifting cost of $11.2 per barrel, the lowest ever recorded in the history of the company, a reduction of around 6% compared to the lifting cost of the previous quarter. So we continue to advance even in a quarter in which the foreign exchange played against the lifting cost. We were able to reduce the lifting cost by 6% from $11.8 in the previous quarter to $11.2 in this quarter.

This has a direct link to a very high operating efficiency that we had at the company at Frade. And Francilmar will speak more about this. We had a record operating efficiency. By the way, we celebrated 10 years without accidents at Frade. TBMT and Polvo achieved operating stability and very high operating efficiency. So operationally speaking, this quarter was very strong for the company with very good results.

And now getting to the last 2 items that makes us also very proud. And -- they are not very operational at this point, but they are very important for the company. First is the signing of Albacora East in April. This quarter was perhaps the heaviest quarter in terms of negotiations, contracts, et cetera, which had its highest point on April 28 with the signing of Albacora East, a field that practically doubles the size of the company in terms of production, reserves, et cetera. We spoke a lot about this field in the release at the time of the signing.

And we started drilling at Frade. We got the license to drill granted by IBAMA, the Brazilian environmental agency. And we started drilling at Frade Field and the revitalization of Frade that had stopped since the time of Chevron. So we were able to reverse all issues related to environmental license for the field and so on and so forth, and we finally started drilling.

Well, I will move to the next slide. Here, we give you a little more color with charts very much related to what I have explained. The first and most important one is our lifting cost. It's the company's strategy to cope with oil price volatility. Keeping the lifting cost low in a scenario where the oil price is over $100 per barrel is obviously going to yield very high margins. We achieved an EBITDA margin that was also a record mark for the company. And it's all because of that, a lifting cost that is totally under control.

Our production was very strong, 35,000 barrels daily -- over 35,000 barrels of oil equivalent daily in Q1, reflecting our operating stability.

Our cash position increased to $1.150 billion. A little before the signing of Albacora, our cash position was $1.4 billion. That results from cash generation and also from some loans that we took on with local banks with 2 or 3 years' duration. And Milton will speak more about that. Very interesting and competitive costs. And that was the preparation for these acquisitions. That's why when we speak about Albacora, I mean, Albacora East, it is an asset which is fully funded. We don't have to make any additional effort from the financial standpoint to go through with this acquisition, to complete the acquisition in the future with the closing, et cetera.

All of that with a net debt, which is very much under control. In the bottom right-hand corner, we see our net debt over EBITDA ratio. Today, we are a company which is not cash -- actually, we're not even a net cash company because the ratio is at minus 0.5. So the company is very healthy and prepared to continue to grow.

I will turn the floor to Francilmar. Then I'll be back to speak about ESG and the next steps of the company. Francilmar, over to you.

[Francilmar Fernandes, executive]

Hello, everyone. Thank you, Roberto. I will start on Slide #5 with operational highlights and details. Q1 '22, I should say, was an exceptional quarter, the best operating quarter in the history of the company despite improvement in the Brent oil price, which is not under our control. As far as we are concerned -- I mean, production and operating efficiency, these were very good results across the board.

So here, we see that in terms of production, comparatively, all assets performed really well. All fields, including those which are not operated by us, maintained a good performance overall. And that contributed to improve the lifting cost.

And moving on to Slide #6 to discuss these numbers in more detail. As always, we have a chart about the lifting cost and its evolution. We achieved a record low number of $11.2. We continue on our path of continuous improvement. We continue the quest for even better numbers.

This quarter, we completed the commissioning or the installation of the gas energy generation unit on the FPSO Bravo in Tubarão Martelo Field, TBMT. And with that, we were able to reduce our diesel consumption a lot.

We completed the commissioning process of FPSO Polvo and its subsea production system. With that, we had only 2 producing units, which makes the operation a lot more streamlined.

In the lower graph on the left, we see the evolution of the Brent price increasing lately. However, we don't focus on that very much because it's something which is out of our control. Now controlled costs are our focus. And we believe that projection is our best weapon in this world of commodities.

With all that production improvement and improved operating costs, we could achieve good results. And we should continue on this journey to improve even more in the next quarter.

I will now move to Slide #7 to speak a little about the performance of each asset. In the case of Frade, first quarter posted considerable improvement in operating efficiency at the field, its production capacity, actual and planned. So we were able to have an operating efficiency close to 100%, one of the best for the field lately. Despite the natural decline of the reservoirs, we have been maintaining the field at an excellent operating performance and also from the standpoint of costs.

Now moving to Slide 8. We'll give you more detail regarding the revitalization campaign or redevelopment of Frade Field. Since we acquired the field, this was in our schedule. There was a certain impact of the COVID pandemic that delayed the project, but we finally started this operation.

This quarter, we were able to obtain approval from all necessary agencies, ANP, IBAMA, et cetera. We received and mobilized our contracted rig to the field. After some adaptations made in this first quarter and the necessary maintenance, the rig arrived at the field. In the end of April, we started operating it. We finished the first and second phases of the well and we continue. Hopefully, by the beginning of Q3, we will have good results with this well starting production.

The revitalization campaign was split into 2 phases. What we call the first phase of the revitalization of Frade has the first producing well and 2 injection wells. And the second phase with 3 producers and 1 injector. Depending on the performance and if we can capture improvements along the process, it is possible that we will bring forward some activities. But this is being reviewed, and we are reviewing the plants and the operation.

So the rig that you see here in this photo on the right is already a reality. And this rig should be at Frade Field for the next few months until next year when we should -- when it should be mobilized to Wahoo.

Now moving to Slide 9, please, to speak a little about the Tubarão/Polvo cluster, TBMT + Polvo cluster. Indeed, the big improvement in the company's performance this quarter resulted from this asset. In Q1, we completed the delivery of the last well that remained that was under workover at TBMT. And now we have a production capacity, which is complete, full with all wells in production. And now with the gas energy producing unit start-up, we will gain more reliability and we will improve the operating performance of the asset.

We can see here in this graph showing the history of production and operating efficiency. In Q3 of last year, we unified both. This loss of production in recent quarters, which impacted efficiency, was due to TBMT wells which were off-line. But we have been doing some workovers with the Kingmaker rig. And we see the evolution of growth recovering 100% of our production capacity, reaching 97.4% efficiency globally for the cluster, which is very good, considering that this is a mature field. And we'll continue to work to improve this even further. With that, Tubarão and Polvo Field delivered excellent performance in Q1.

The focus of these fields now is to maintain reliability, improve operating efficiency a little more and have stability in the coming quarters. This is the main goal.

Now moving to Slide 10. I'll speak a little about Wahoo. For Wahoo Field, Q1 was also a very important quarter. After the declaration of commerciality in the end of last year, we submitted the development plan to ANP. We finished the detailed engineering project with all of the specs. With that, we went to market and opened a bid to get the best proposals.

We expect that in the coming months, towards the end of the second quarter, we should have firm proposals for the acquisition of goods and services for Wahoo development, both for the tieback project and the whole subsea system and wells.

The only thing that is kind of certain is the rig that is going to be moved there. But the part of equipment for well construction and for subsea systems still needs to be purchased. And we expect to kick off the project in the coming months.

And the next steps for this field are to have approval of the development plan so we can move forward; and to start the process of detailing the project itself, including well construction and the tieback; and proceed with the acquisition of goods, materials and services to start the operation and have first oil flowing in the beginning of 2024 according to plan.

Now moving to Slide 11. I will speak a little about Albacora East field that we have just signed. This field shares characteristics that are very similar to Frade. It is truly one of the giants in the Campos Basin. To give you an idea, Frade has 1.1 billion barrels of oil in place, and Albacora East has 4.4 billion.

In terms of volume, it is 4x the size of Frade Field. In terms of characteristics of the reservoir and oil quality, they're basically the same. Regarding production, there's 1 FPSO and Albacora East has 17 producing wells. At Frade, we have the FPSO and 11 or 12 producers. So in operational terms, they are similar.

In terms of production capacity, Albacora East still has a lot to be generated. That's why we got this reserve -- I mean, the certification of 1P reserves of only 280 million barrels. So there are also some 2P reserves.

And the fact that it is close to Frade Field further strengthens this cluster in the North part of the Campos Basin. So on the part of logistics support, capturing of operational synergies will favor this operation quite a lot, one thing helping the other.

Now we are getting into the transition phase of the asset. We are now exchanging information with Petrobras to figure out what we will do. The fact that we already have our own strong production -- I should remind you that we have the FPSO at Frade, FPSO Bravo at TBMT, Polvo-A platform and the Kingmaker rig, all of that operated by our own people, who have all the necessary know-how. All of that allows us to accelerate the transition process.

Now we are going to work to bring our own culture and work methodology with our own people at P-50, which is the FPSO that is in production at Albacora East today. After this transition, we start the Phase 1 in our work plan for Albacora East, the first 18 months that we established. And this is a process for us to increase reliability, stabilize production, increase the reliability of the production system.

If you look closely, production is very variable. There are different behaviors month after month, and we need to stabilize production. We'll invest a lot in the FPSO in the structural part, pipelines, large machinery to improve operating efficiency, which is currently around 80%, considering potential and actual production so that we can post the numbers that we like to have at PetroRio, in other words, above 90%, 95%. So this is the focus during the Phase 1: to stabilize production, reduce operating costs with our own methodology, our culture and our team that will be working there.

Then we get into Phase 2: aiming to increase production through the redevelopment of the field. We'll split this into a first part for the wells that have been mapped. There's even a development plan submitted to the ANP with the wells already mapped out that we have evaluated and confirmed. So we will connect 3 wells, which have been drilled, 2 of them are already completed. And we need to do the subsea connection. The third well needs completion plus subsea connection. And this is a pre-salt well. After that, we will have 2 new wells in the pre-salt that will need to be drilled, completed and connected.

And then we will move to the post-salt wells, which are infill drilling wells. In other words, they will be drilled in reservoirs that are already in production. There's also an injector to improve the recovery factor. There are the estimated values, which we have calculated. And of course, we are going to work to improve those despite any inflation impact. But we work at the company day after day to find ways to do more with less. This is our great challenge.

Regarding early decommissioning, there is a part that is already defined. These are the more critical wells that need to be abandoned by 2027. There are 5 producers and 1 injector, nothing out of the ordinary. And we're talking about abandonment because this needs to be in the plan. And we have an estimated value of $800 million. And that should happen by 2050. And if depends on us, we'll increase and improve production to extend the life span of the field.

This is our plan for Albacora East, and I'm sure that this field will bring us a lot of joy in the future.

So thank you very much and turn the floor to Milton.

[Milton Rangel, executive]

Thank you, Francilmar. Good afternoon, everyone. We will now talk about our financial performance. But I'd like to make a brief comment before getting to the slides.

The company has communicated to the market and, in agreement with our auditors, made the decision to change its functional currency to U.S. dollars. We understand that this currency is a lot more applicable and compliant to the nature of our results and operations.

And so with that, we will start disclosing in our press releases and earnings presentations our numbers in U.S. dollars. Our quarterly statements are filed with CVM and will continue with numbers in BRL for legal reasons. But we will now post the results of the company in dollars for better understanding by the market and better disclosure.

So now moving to Slide 12 about our financial performance. We show, as we do every quarter, the evolution, excluding the impact of IFRS 16 and including these impacts. We do like to look at the results excluding the impacts of IFRS 16 as well. Particularly in this Q1 of '22, we posted a revenue of about $310 million. Please note that these tables are now all in dollars.

And this refers to a sale of approximately 2.8 million barrels at an average net sales price of $107 or $106. So a very strong quarter from the standpoint of international oil prices, which naturally drive our revenue up.

Comparing this with Q1 '21, we sold only 2 million in Q1 '21 with an average Brent price of around $60. That's why we have the significant difference of 160% in the delta.

Additionally, we maintained our costs under control. G&A also under control, and that led to an EBITDA of around $225 million with a 73% EBITDA margin, a very significant margin. And the way we like to look at adjusted EBITDA, which excludes nonrecurring effects and so on and so forth. And we have $228 million and a margin of 74%, excluding IFRS 16.

In addition, I believe that it is worth highlighting that we had income tax and social contribution that were very positive. This is explained basically by the reduction in the expectation of payment of taxes on the back of the Brazilian currency appreciation against the dollar. And with that, we got a net income in the period of almost $230 million, most likely the highest net income ever posted in our history.

Now we're moving to the next slide, #13, to talk about funding. I'd like to draw your attention to the 2 graphs on the left: the top, about average duration of the debt; the bottom one, about the average cost of debt.

So what happened recently, more specifically in this quarter, we have been reinforcing the company's cash through some working capital loans granted by our relationship banks. And these debts are a little shorter than our bond. They mature within 2 to 3 years. And we were able to quickly raise an interesting volume of debt in this quarter, around $200 million to $230 million.

And with that, the duration drops a little from 4.39 to 3.61. And the cost also drops. These are loan facilities that we have been raising between 4.15% per annum in dollars, 4.7% per annum in dollars. Naturally, the 3-year duration debt is a little more expensive versus the 2-year duration debt.

So we have been reinforcing our cash. This movement continues also in April and May. That's why we currently consider the company extremely liquid, extremely solid and with very easy and fast access to the banking market.

I believe there is an important point to mention. As you all know, as the company has disclosed, we have the signing of Albacora East. And because of this fast access to the banking market, the company is today fully funded to honor this acquisition and to pay all of the obligations referring to this very important deal.

Now moving to Slide #14. I will speak about the performance of the company's net cash. We start with a reference number of $241 million in Q4 '21. We see an adjusted EBITDA that is very strong of around $230 million. And then we have some obligations being paid: the BP payment, referring to the acquisition of Wahoo, $30 million; a working capital reduction. Given an increase in receivables, we had sales concentrated in the end of the quarter. CapEx of $34 million, this includes workovers of Polvo and TBMT, the mobilization of the FPSO of Polvo and the start of the revitalization campaign of Frade Field. In addition, financial result and payment of taxes, cash effectively.

With that, we end up with a net cash of about $348 million, a very solid level. We have been able to increase the net cash position of the company due to the strong cash generation in the quarter.

Now moving to Slide 15. And speaking specifically about leverage, we like to follow this indicator, net debt over adjusted EBITDA ratio. Also, in our main debt today, our bond, we have a covenant that says we should be under 2.5x this ratio.

Today, this indicator is negative because we are a net cash company. In other words, we have more cash than gross debt. And so with this super strong cash generation in this quarter, this only improves. We can observe the $348 million that we saw in the previous slide and the ratio is minus 0.5 net debt over adjusted EBITDA, which shows that the company is deleveraged. It's all under control. A nominal position of net cash that is very strong on the back of this excellent quarter that the company had. And it also shows that the company is prepared to grow, prepared to take on a little more debt if needed in case we continue to make new acquisitions.

And I want to stress the point that we are fully funded for the acquisition of Albacora East. We had a very good and fast access to a loan at a rather interesting cost. So I just want to underscore the position of financial solidity that PetroRio enjoys.

With that, I end my part and turn the floor back to Roberto. Thank you.

[Roberto Monteiro, executive]

Thank you, Milton. Well, let's speak a little about ESG. Among the initiatives we had this quarter, I would like to highlight 3 of them, which I believe are very relevant.

The first one has to do with the environment. In February, we finalized the adjustment in the compressor of FPSO Bravo, which operates in the Polvo/TBMT Field. With that adjustment, we started using the whole gas generated, produced at the field to produce electricity and energy for the FPSO itself. So that reduces diesel burning by the FPSO quite a lot. It markedly reduces our carbon footprint in this cluster. And it obviously improves cost because it is a lot more economical. It's a lot more economical and a lot better for the environment to use gas generated at the field to move the turbines than having to burn diesel oil to move those turbines. So we ended that project, and it's already bearing fruit.

As Francilmar said, this is the flagship of our cost reduction initiative and to improve the lifting cost, which dropped down to $11.2 per barrel. It is also the flagship of our initiative to reduce our carbon footprint in this cluster.

Another very important item in this quarter is the Reação Offshore project. We started to sponsor Todos na Luta Institute and Reação Institute, also involving SENAI, for youth qualification, both technical and nontechnical so that they can work in the offshore sector. We are bringing in Albacora and that is going to demand a relatively high number of new hires. And instead of looking for these people in FPSOs which are already operating in the market, we believe in training new professionals.

So I believe that this is good for society and it is also good for our industry. So we don't have to be hiring people from other companies. So we won't create a vicious cycle. We're trying to create a virtuous cycle by bringing more people to the offshore industry through training. So this is a new program that is going to be launched in the coming weeks. And it makes us very proud to promote social inclusion.

Another important item, and this is more on the cultural side, is that we started -- well, we already sponsored Casa Grande theater. And now we are sponsoring Laura Alvim culture house in Rio de Janeiro. It is a symbol of the city, and we thought that it would be interesting to have them count on PetroRio's support.

Now moving to the next slide, actually, to the next slide, the last one. I would like to speak a little about the next steps. The first one is and will always be our focus on the safety and health of our employees. This has been our focus for many years now.

More on the operational side, we have some quite relevant points for the next quarter, in the end of the second quarter, beginning of Q3, but we will definitely have something to say about this in the next conference call, i.e., the revitalization campaign of Frade. We have started. And in the next conference call, we will most likely have something interesting to say about the start of the revitalization campaign.

We will continue to work on the approval of the Wahoo development plan. We declared commerciality in December and submitted the development plan for approval. And we will work for the approval of the plan. Also, our reserves certification added a lot of 1P reserves due to Wahoo that moved from contingent to reserve.

We will continue to work hard on the conditions precedent for Albacora East, which will be mainly CADE, the Brazilian antitrust agency, and ANP. More ANP than CADE, I should say. Obviously, after that, there is IBAMA for the license to operate. But we believe that the main point here continues to be ANP.

We continue on firm negotiations with Petrobras, aiming to get to a common denominator for Albacora field. And of course, we will continue to focus on inorganic growth through M&A opportunities, not forgetting that our main focus of opportunity has been Albacora East and now Albacora. And we will continue on this path because this is our DNA.

Thank you very much. And well, once again, I started with this, and I will end the call thanking the whole PetroRio team. They have achieved very good, very strong results with a lot of determination and commitment. So of course, that contributes a lot to the performance of the company.

Our performance has been very good, not only from the standpoint of revenues because that's something that is not totally under our control. But I'm thinking about the operational side, i.e., lifting cost, control, operating stability, everything that makes our results change from a good result to an excellent result.

Thank you very much to all, and I would like to open the floor for questions.

[Jose Costa, executive]

[Operator Instructions] We will begin with a question by Christian Audi with Santander.

[Christian Audi, analyst]

Well, first of all, congratulation for these excellent results. And again, congratulations on Albacora East. I know that you worked hard on this project for a long time. And you were able to end it successfully. So congratulations on that as well.

I would love to ask 3 questions. First, it's indeed impressive, the improvement in lifting cost. And now that you got to such a low level of $11.2 per barrel and there is so much to come along the year, what would be the expected lifting cost for the company?

Second question, regarding Albacora East. In this process, the coming months until the end of the year, when you will be exchanging information with Petrobras, et cetera? Can this be a source of novelties? Or can anything new come up? Or are you comfortable with your estimated CapEx and OpEx that you provided in Slide 11, which was, by the way, a very good slide.

And my last question is regarding next steps, Albacora, et cetera. You guys made it clear that you continue negotiating with Petrobras for Albacora. I would like to know, if it's successful, excellent. If not successful, then will you work on Albacora East or Wahoo? Will you step on the brakes regarding your positions or not if Albacora does not continue and look for other new opportunities for acquisition?

[Roberto Monteiro, executive]

Thank you, Christian. I will address your questions. The first is regarding the lifting cost. Today, we are at $11.2. The main villain in Q1 -- although we got that 6% reduction in the lifting cost, the main villain was the foreign exchange. Although we were able to use gas at TBMT, the foreign exchange played a little against us.

In Q2, apparently, the foreign exchange will be a little better for us. I mean unfortunately, it's not the best for the Brazilian population. But the FX will be a little better apparently for our end. And that relieves the lifting cost.

But we will have the decline of the field. So for Q2, I think that we will maintain that lifting cost. That would be the idea. Of course, the gas units started operating February. So we're going to have 3 months against 2. So -- but it will be something similar to that.

With Frade, we're thinking of a base scenario of 6,000 barrels daily starting in July of next year. So production starting in Q3 should start to increase. And I wouldn't be surprised if we saw a lifting cost -- if everything goes well and if the FX remains as it is, I wouldn't be surprised to see lifting cost starting at $10, perhaps $10-point-something, perhaps going under $10 per barrel. I mean, if we are successful with Frade, this is to be expected.

And then, of course, Frade, with well #4, that will be the big business of Frade. And then the lifting cost should drop to $10 or $10-point-something. And until the end of the year and next year, it will start recovering, going up again to around $11 given the natural decline of the field. And then when Wahoo starts to operate, it will be single digit.

[Christian Audi, analyst]

Regarding Albacora -- of course, when Albacora starts, the whole business will change a little bit. But I'm thinking ex Albacora.

[Roberto Monteiro, executive]

Regarding Albacora, Christian, I don't know. I don't think so. I don't think that we're expecting bad news. So that would be a limited possibility. This is not the first field we are acquiring. This is not the first data room that we are looking at. Our M&A team is very specialized. So we looked diligently to all factors. When we have doubts, we were more conservative than aggressive.

It is a very limited possibility we'll get some bad news. Even for the seller, that would be very bad because during the data room, the seller has to disclose all of the information. So that could generate a -- and for Christ's sake, I'm not saying this is going to happen. But theoretically, that could generate a liability for the seller if we found a bad piece of information at this point. So I think it is very unlikely that we would get a bad -- a negative piece of information. PetroRio would have had to mess up. And I don't think that our team is that amateur.

Francilmar started having meetings -- and this is the transition phase. It is a lot more operational when we'll start boarding people, how many people we can board. We have something called shadowing, data transfer, model transfer, seismic data transfer. These are huge data, difficult to transfer. How we're going to transfer them, what kind of system we will use, what kind of system we use and Petrobras uses. So that's a lot more cooperation driven.

[Christian Audi, analyst]

And there is last question regarding Albacora, right, or other assets?

[Roberto Monteiro, executive]

Well, Christian, regarding Albacora, of course, we will continue diligently as we normally are. We are normally very diligent, and we're working hard to get there. If we don't get there, we leave the company as prepared. We can move to other deals in the future. We will continue to look at what's in the market.

I think Albacora is the more latent deal in the market. We've done all of the analysis. We are in the initial contract phase. It's not -- we didn't sign Albacora now. In 2 months, we're going to sign something else. No. But of course, we're going to start looking at other data rooms and participate in other processes, carve out other processes because this is our DNA.

I don't think that any of that would happen in the short term because you can't get into the data room, negotiate, prepare the contract, et cetera. It would naturally be some months with a void. But then obviously, we could have another big deal replacing Albacora. But the idea is to not stop. The idea is to continue.

[Jose Costa, executive]

Next question comes in writing by Pedro Soares with BTG. Pedro asks if we can comment on the reduction of 1P reserves of Polvo/TBMT. And he asks if this is linked to a very conservative oil curve that was used in the reserves certification and if this oil curve is also considered for the certification of Albacora East.

[Roberto Monteiro, executive]

So no, the reduction has nothing to do with the oil curve. We are very conservative in oil curve. The assessment was done at $62. $62 because we maintained the past one. Last year, it was $62. And for comparative purposes, we kept this one at $62. So the reserves are considered at $62 per barrel in the long run.

For Albacora, the reserves is calculated also based on $62 for the long-term Brent. So all of our certifications to be issued this year will all be comparable to one another from the standpoint of reserves.

So what happened that is different, I'll speak something -- I'll give my explanation. Then Francilmar can help me.

So what happened was regarding Polvo, we didn't drill 2 wells in the Eocene and so on. And then we thought it would be better to take that well from 1P to 2P. So that was one move. Two wells that were in our drilling schedule of 1P were moved to 2P for the simple fact that we are not going to be drilling at Polvo now. We will not be drilling at Polvo next year. We'll be focusing on Wahoo and so on and so forth. We don't want to get distracted.

And there is another point. The Polvo Eocene, although the volume of oil is there, the oil is a little heavier than we imagined in the beginning. We knew it was a heavy oil. Well, it is a little heavier than we imagined with an aquifer which is a little stronger than we imagined. With that, the performance of the well is a little poorer than what we expected.

These 2 effects led to a small reduction of the reserves in the field of Polvo. Just like we had a reduction in reserves at Polvo Field in this report moving from 1P to 2P.

In the next report, and we didn't include it in this one because of the environmental license for Frade that had not been issued and we didn't need to redo the report, it would delay things, is the inclusion of Frade water injection, exceptionally for Frade Field. The recovery of oil relative to water injection, the delta that we have of better recovery due to water injection at Frade.

In the case of Frade specifically, it is in 2P. The reason it is in 2P is because in the past, the license was canceled. The public prosecutor's office, ANP, IBAMA, they canceled everything. So water injection was stopped. So the goal here, include that in 2P. Now when we restart injecting water and if we have good results, we should bring it back from 2P to 1P.

If we look at Wahoo certification, water injection is already in 1P. In the case of Frade, it is still in 2P. So we will capture a volume which I estimate between 6 million and 9 million barrels for Frade Field, between 10% and 15% of the volume of reserves. We should bring it to 1P.

Well, you see, we didn't want to do it now. We think that we can wait for the next certification of reserves. And we are going to have a clear idea of the effect of water injection. So this is the kind of effect that happens sometimes. We try to play with 1P, 2P and reflect our view, our vision for the field. We could have pushed things a little to 1P, but we didn't want to do it. We wanted to be more conservative.

And another thing that reduces reserves is production. So start with reserves of the prior year and you have production for the year. And we have the delta production and the new reserves.

[Jose Costa, executive]

Thank you for the question, Pedro. Our next question comes from Bruno Montanari with Morgan Stanley.

[Bruno Montanari, analyst]

I have a couple. When we think about behavior of oil price, I imagine it is a lot higher than the price the company imagined a year ago when you continued with your M&A campaign. So my question is, does this change your view about the firepower of the company and the need to raise funds? So thinking about Albacora.

And with this kind of cash generation and a very strong cash position in this scenario, you don't get Albacora. And there is a gap of 6 to 12 months. Would it make sense to have some kind of distribution to shareholders so that we could have faster return on investment?

And my second question is about inflation. We hear today almost all global companies talking about difficulties in services, equipment costs going up. So what you're doing in Wahoo, and Francilmar mentioned that, do you see an impact of inflation on the oil industry in Brazil?

[Roberto Monteiro, executive]

All right. The first question was about...

[Bruno Montanari, analyst]

Dividends and funding, a little bit of -- the question was about firepower.

[Roberto Monteiro, executive]

Well, Bruno, regarding firepower, of course, a higher price for the oil increases and improves our firepower. Of course, no doubt about it.

Today, well, we are always forecasting the company's funding using a lower oil price in the long run. When we talk about funding for Albacora, we talk about the need for funding in case we sign Albacora in the second deal. We will need about [ 1 700 ] to be divided between debt and equity, as we always say.

But today, we're thinking about [ 1.7 ] for 100% of the field and not for 70%. In the past, we had a partner in the field. But now we're thinking about this funding for 100% of the field because the company proved -- the last quarter of the company was excellent. So we take all that into account. Although we are considering oil price in the long run lower than now, what the company can execute well in this quarter will relieve the company's cash. So the situation is undoubtedly better.

Now if we don't get Albacora now, obviously, we won't be accessing the capital market in any way. But our mindset is to continue to invest in the company, in fields, et cetera. So there would be no room for dividend payout.

We have very good projects for the company with very high returns, organic or future M&A deals. So it wouldn't make any sense to think about dividend distribution. And also because of the bond. The bond is in place, and it limits us in terms of dividend payout.

And it makes sense. When we started the story way back when, we raised capital to deploy and invest in projects with adequate returns. This is what we've been doing, and this continues to be our mandate. So no dividend payout, and I want to be clear and transparent about that.

And there was another question about inflation. We see inflation. Of course, it's perceptible in the $70 million for the well. In the past, the amount was not $70 million. It was lower, $60 million or so. And we already felt an increase.

We had a contingency delta for possible things to happen. And this contingency is already being consumed. I don't think that there will be a lot of variability now because we have the rig and we are contracting the equipment. So we have a pretty good idea of the prices because the equipment we're going to use in Wahoo with the exception of the manifold and the multiphase pump are interchangeable equipment between Wahoo and Frade. So we're buying a lot of things for Frade. We know the prices. I don't expect a lot of surprises looking forward. But undoubtedly, we do see some prices going up. The rig is one of them.

We got our NORBE VI rig at $170,000 a day. And we signed 500 days for the rig plus 5 options of 70 days at $210,000. So it was a good contract. It was the right timing. But we are looking at the market. We don't think that we are going to be impacted looking forward. But we see that there is some movement there.

In the case of Albacora, we had an OpEx of $90 million for Albacora. The FPSO is bigger. It needs a little more maintenance. But in Frade, we are operating under $70 million. So Francilmar is laughing here next to me because we have a little bit of fat, and we do have a little bit of fat. And this is what we presume. Of course, the world is in inflation. I wouldn't say that we have a problem with our guidance, though.

[Bruno Montanari, analyst]

If I may ask one last question. If you can talk about your discussions with Petrobras regarding the other Albacora. Is it -- what's the bottleneck? Is it price? Is it the contract? Is -- what is hindering the signing on the other side of the ring-fence?

[Roberto Monteiro, executive]

We are just discussing value, price. Price does not include only lump sum. So payment between signing, closing, deferred payments, earnouts relative to oil price, earnouts relative to new reservoirs. So it's a sum of all that, all of that together. And that's what makes up the price. And this is what we've been discussing with them.

Regarding the contract, we have very few outstanding items, if we actually have any. 99.9% of the contract is agreed upon. You don't see the one responsible -- the one person we have responsible for M&A. He's sitting right next to us. You can't see him, but he's here. And he's saying it's okay.

So we're just negotiating the value. It's a unidimensional conversation with Petrobras. It's not like we have 10 things being negotiated. It's just the price. And the pre-salt of Albacora is bigger than we imagined. It's bigger than Petrobras imagined. The reservoir is bigger. It has nothing to do with the pre-salt that we see in the Santos Basin. But it is bigger than everyone imagined. So that required us to review our proposal. And that's why we've been working with -- in good faith, both us and Petrobras.

[Jose Costa, executive]

Our next question comes from Gabriel Barra with Citi.

[Gabriel Coelho Barra, analyst]

Congratulations on the results. I'd like to touch on 3 quick points. Looking at Albacora East, the pre-salt region, as you mentioned, you have to go through a unitization process, and correct me if I'm wrong. And if I'm correct, could you give us some color regarding this process? What we can expect regarding Repsol if they're going to participate in the process or not, how much each one will get and how the process will be after unitization and then thinking about the production curve. That's the first point.

Second point, so talking about the certification report for Polvo and TBMT, comparing the 2 certifications, 2021 and '22. It was also this cost inflation and the OpEx increase year-over-year, I think 10% more, if I'm not mistaken. There's also inflation in the sector. So could you comment on that?

And my last point is about Wahoo. Could you give us an update about Wahoo? Can we expect something before the arbitration regarding a final decision for Wahoo regarding IBV? That would be helpful to help us think about the future of the project.

[Roberto Monteiro, executive]

Gabriel, okay. Let's go one by one. The first one was the unitization. Unitization should happen before year-end for sure because we committed to submit to ANP by year-end -- and of course, this can be extended a little. So don't consider this written in stone. But we committed to submit to ANP the Arapuca development plan for first oil to flow in 2024.

This is a commitment that exists. It was assumed by Petrobras. And of course, we took it over when we bought the field. And with that, the parties will try to unitize the project before year-end so that we can figure out the development plan and so on and so forth.

When we look at our reserves, it's net of -- it has the net production of Arapuca for PetroRio. I don't want to speak about percentages because Arapuca can be unitized with Roncador. I don't want to talk about percentages because we're still discussing how much of that will be part of Roncador. So the percentage can change a little. But net for PetroRio, it remains the same. So what matters for us is that we are very sure about what is net for PetroRio. The discussion is to what extent this will be linked with Roncador. And this will define the stake.

Repsol Sinopec does not participate in Arapuca. This is unitization of Albacora and Roncador.

Now your second point regarding reserves certification. What changed was that after the tieback, reserves changed a bit. Dommo in the past had 20% of TBMT. We had 100% of Polvo when the FPSOs were separated. So we had a -- we would do a cash call relative to 80% of the cost of TBMT for Dommo. And Dommo would pay just like any concession.

But with the 2 fields together, it changes. They are entitled to 5% of the oil. They only have 5% of the revenue, and we are responsible for 100% of the cost. We have 95% of the oil produced. We trade the oil and we bear 100% of the costs of both fields. And that explains the difference between one report and the next.

But our expectation is the same regarding OpEx. It remains very similar to what it's been in the past. And if you look at our numbers, we don't feel that inflation delta. I think this is a lot more about the business itself, how it was designed, a lot more than a grade expectation of inflation. OpEx changes a little bit because we can add a well or remove a well.

And the last point was the arbitration of Wahoo. Well, arbitration of Wahoo is a slow process. I don't want to sound pessimistic about this, not at all. I think that we stand a huge chance of keeping that working interest of Wahoo.

This is our -- this is the argument that we built for the arbitration. But it is going to be a slow process. We'll continue to develop the field normally. But I believe that what we have to do here is to focus on the operational. In other words, to develop the field, develop the schedule, work with the price.

An arbitration can be an upside. I think that we can enjoy a great upside in the future if we are successful with the arbitration. But again, I'm not being pessimistic here. For Christ's sake, it's not this, but I don't want to think about the arbitration now. I don't want to think about the potential upside now. I think that we need to give it some time. We are talking about some months, perhaps a year for the arbitration to bring some kind of fruit.

But we've spoken with many experts. And all of them say that what we've done is what needed to be done, that everything is great. But we need to wait. We cannot really count on these [indiscernible] before they actually come.

[Gabriel Coelho Barra, analyst]

Congratulations on the acquisition.

[Roberto Monteiro, executive]

Thank you, Gabriel.

[Jose Costa, executive]

Next question by Regis Cardoso with Credit Suisse.

[Regis Cardoso, analyst]

Hello? Can you hear me?

[Roberto Monteiro, executive]

Yes, we can hear you.

[Regis Cardoso, analyst]

I'd like to touch on a point. I'm not sure you spoke about hedge. I'd like to understand your hedge policy, if you continue with a mindset of protection from a downside or if you're thinking about the sales price for your production. So that's one of the questions.

And the second is about the lifting cost. I think that this quarter, we had a positive surprise. And I would like to understand if there is any expectation regarding the lifting cost, up or down.

And if you'll allow me a more general question to discuss is the execution risk for the several projects that the company is embracing because you see, PetroRio grew very quickly. It doubled in size. And now with Albacora East and potentially with Albacora, you're going to grow even more. You'll be doubling in size at least. So how do you see and mitigate the execution risk? Because precisely, regarding Albacora East, which is as big as the rest of PetroRio, you have an ambitious plan of doubling production compared to the current level.

If this expectation does not materialize, just like the upside can be great regarding the size of the company, the risk is also greater. So I would like to understand how you're thinking about the execution risk and the size of the bets and how they can have a relevant impact on the company.

[Roberto Monteiro, executive]

Thank you, Regis. All right. Let's speak first about our hedge policy. Well, we always thought about hedging the downside. We never thought about the upside. This has always been our mindset. It continues to be so. We always have a hedge policy throughput waiting for the volatility to drop. When it drops, we buy put options.

Our horizon is always 6 months. Now we're practically without hedge because of the volatility. The price of the oil is very high. It doesn't make sense to buy put options with such a high volatility. If it drops, we'll revisit our position.

We do have a discussion in-house with our Board members, looking forward to imagining that we are not successful in Albacora, whether it would make sense to extend our hedge policy until the end of 2023. This is something that is being approached by our Board.

Never any hedge with NDF contracts. We would never resort to NDF contract hedge. It would be something with a put option. Sometimes you can have just like a spread. You can work with a floor and a cap.

So we're still looking into this. We haven't come to a conclusion. But if we are successful with Albacora, it might make sense to create a safer mechanism than just selling. Selling the oil will be subject to margin calls, et cetera. There's this discussion. I cannot really tell more than that at this point.

Regarding the lifting cost, like I said, today we are at $11.2. The villain in the quarter was the exchange rate. Now the dollar is becoming stronger again. This is good for PetroRio. It's bad for Brazil, for the Brazilian population, but it is good for our company. So I think that this is going to relieve things a little.

In Q2, we are expecting a similar lifting cost. FX will help us a little bit. But on the other hand, we'll have a decline of the field. It is also certain that we got gas in February and March in Q1. In the second quarter, we'll have the gas unit operating for 3 months. So I think that it will remain the same.

For Q3, we can start thinking about a lifting cost of around $10, $10-something. When Frade has a successful drilling campaign, it's a simple math. If we have 6,000 barrels or even a little less than 6,000 barrels, we are going to get to a lifting cost of around $10.

In the future, we'll work to maintain the lifting cost. And with Wahoo, we will definitely have a single-digit lifting cost. So this is kind of the trajectory of our lifting cost.

When we look -- now moving to your last question. When we look at the operational risk, execution risk, as you called it, I tend to see this in the following way. Today, when you look at the projects we have in our portfolio, we have Frade now, Wahoo next year, 2023. And I'm talking about drilling here, okay?

FPSO operation, I know it's big and all, but it's something that is fixed. You put the FPSO there, it starts operating. Of course, Francilmar has a heavy day today to control for that. But you have a team to do just that. And you make adjustments to the team.

What brings more complexity is CapEx, drilling, installation, rigs, engineering, et cetera. So that's then -- this year, we have Frade; next year, Wahoo.

Along the next year, we'll also have the start of operation of Albacora. But these are 2 different things. We'll be drilling at Wahoo and operating and "learning" about operating Albacora. So 2 different teams, 2 completely independent teams. And we will be operating Albacora, too.

And then in 2024, Wahoo will be in production. So when Wahoo starts producing, we'll start doing drilling and engineering in Albacora. Albacora is big and all. But with all due respect, Francilmar think it's doing more of the same, right? Do you want to say something?

[Francilmar Fernandes, executive]

I think I can add something to that. In terms of risk of execution of the operation, although the field is very large, it's basically what we've been doing so far because we operate Frade. And Frade is very similar to Albacora East and vice versa. And we already have an operation in Polvo and TBMT. And that's a little more complex.

So in terms of operating and producing, we know -- that's our business. No news there. So we're going to add another cluster. That's not very challenging. Teams that are necessary -- we already have the teams in-house. The teams are trained and prepared to cover the new unit in terms of development, production, installation, subsea. This is almost like an assembly line. This team is on Frade, where we have the drilling rig. The team is there. Then they're going to be moved to Wahoo and then to Albacora. So there are no issues there.

[Roberto Monteiro, executive]

And finally, you mentioned the catastrophic or apocalyptic outcome, "Oh, we did all of the wrong calculations. There's nothing in Albacora." Okay. Undoubtedly, the project will go through a tieback to Frade. This cannot happen today because we are -- because we expect to have more than 70,000 barrels a day, 400,000 from Wahoo plus what is Frade is producing, around 70,000, and Albacora, more than 55,000.

So I mean there's not a lot of idle space in any of the FPSO. Albacora would have a little bit, but we don't want to push it. But if you say game over, there's nothing else here, this is what's going to happen. We'll do the same that we did with Polvo and TBMT. But I think that this is very far from what is going to happen.

[Regis Cardoso, analyst]

Excellent. Thank you, Roberto. Thank you, Francilmar. I didn't see Milton in the beginning.

And if I may, can I ask a follow-up question because I understood that your answer applies to Albacora East, right? I don't know if the other Albacora would change the order of the factors in this logic of we have the teams; and they operate in parallel; initially, operation in Albacora, we are just learning, but we are operating Wahoo; and then the teams will move around. How does Albacora East -- the other Albacora change the schedule?

[Roberto Monteiro, executive]

It doesn't change at all. The schedule of wells for Albacora East is very spread out, actually. We would have one rig working for Albacora East; Frade, dealing with the abandonment of Albacora East. But for Albacora, just Albacora, that creates another layer in terms of engineering and drilling.

For Albacora, we would need another rig, one rig working solely at Albacora, of course, another team from the same engineering group, of course. But we would have another engineering team dedicated exclusively to Albacora.

And there, we can increase complexity a little bit starting in 2024 because that's when we would start drilling at Albacora if we are successful in that acquisition. And then that would increase a little the complexity because we would need to have a second team, second engineering team.

But there's a lot of synergies. It's not like I'm going to create an engineering department -- a second engineering department. But of course, we will need more people to run the Albacora project separate than what is happening already in the company, what we have in the company now with Frade, Wahoo and Albacora East.

[Jose Costa, executive]

Our next question comes from Luiz Carvalho with UBS.

[Luiz Carvalho, analyst]

Roberto, I'd like to go back to discuss reserves. When we look at Polvo, TBMT, you obviously gave some details and some explanation regarding why the number decreased. But when we look at the next 3 to 5 years of the project, perhaps Francilmar, you can help us with that. I'd like to get a sense of the decline rate. We saw a decline rate of a little over 15%. I don't know if that makes sense to you. But that's something that called my attention.

And still on reserves certification. We know that the focus of the company is Wahoo and oil production. The gas reserves for Wahoo were also reduced. Could you give us an update on that?

My second question, you mentioned that you took on some loans for Albacora East and for some opportunities. Could you elaborate more on these opportunities? There's also the Dommo opportunity. I just want to understand the rationale here in terms of returns [indiscernible] regarding reserves.

[Roberto Monteiro, executive]

Okay. We removed 2 wells from Polvo and put that into 2P. So we get a part of the production. We shift the whole curve down. And so your economic cutoff may happen before. Well, let me speak a little about that, might help you.

Remember, we talked about the Eocene in Polvo and TBMT. So we have the reservoir. We have the oil of good quality. The difference is the first well that we drilled in 2020 was very good and continues to be one of the biggest producers at the field. But the second well, that was last year, and that's where you see the greater decline rate. It started producing really well and declined quickly.

And it declined because the position of the well was close to a water failure. And the amount was -- and the amount of water increased a lot. And that impacted the decline rate for that. And that's why we took one step back. We removed those wells from the Eocene in the short term. And we'll have to study this to define the strategy to be able to produce. Excluding or trying to hold back the water, I think that this is what led to this reduction that you mentioned.

But regarding Wahoo, we had 126 million barrels of 1C. We continue to have 126 million barrels of 1P. So perhaps we haven't been clear enough. But you're probably considering 1C of Frade. When we connect Wahoo with Frade, we had another 6 million barrels of 1C reserves. 1C reserves continue to be 1C reserves, right?

The delta that you might be thinking would be these 6 million barrels, but they continue. I'm not sure they're 1C or 1P, but that is the delta. 126 million barrels of Wahoo continue to apply. They moved fully to 1P reserves.

[Luiz Carvalho, analyst]

Before the second question, going back to Francilmar's point. Of course, you abandoned the plan for the Eocene. But looking forward, do you think that the decline will return to the previous rates?

And in the new reserve certification, excluding oil prices, could you have a review of reserves up or you don't expect that?

[Roberto Monteiro, executive]

Yes. Luiz, we just took one step back. We believe that there's a lot of oil in the Eocene. We -- the first well that we put into production continues to be very good. It is the second-best producer in the cluster. So the productivity is high. We just have to get it right and see the order of priority. It will definitely -- this will definitely, in the future, move from 2P to 1P.

Please understand we got productivity of the second well. And we extrapolate it to everyone. So with that, we got 2 wells from 1P, put them in 2P. That's what happened. When we drill a third well, if we are successful -- if we have a third well that is similar to the first well, these reserves will return to 1P.

And there was a last question about Dommo. Well, this is a market rumor. We have heard this a number of times. But this is just a rumor. There's nothing there. We know Dommo, we like TBMT. If Dommo is interested in selling TBMT, it might be interesting.

But we've heard so many things about this, and it's all rumors. I don't think that we should limit ourselves to that kind of circus that people are making about this, investors asking us, "Are you going to buy Dommo? What will be the price?" These are all rumors.

[Jose Costa, executive]

Our next question is from Gustavo from Bradesco BBI -- Gustavo Sadka.

[Gustavo Sadka, analyst]

I have just one question about Albacora East. In Albacora East, in the second phase, how should we see the infill drilling wells? Will they be similar to the Frade expansion? Or will these be smaller wells because it's infill drilling in a productive reservoir?

[Roberto Monteiro, executive]

Well, for Albacora East, we have 3 classes of wells. One, those first 2 wells that have been drilled. They have been drilled. They are completed. They have actually produced in the past. These will be the first 2 wells to be online. And they'll be online with a lower productivity, around 3,000 barrels a day, nothing more than that.

Then there's a second class of wells, which are the Arapuca wells. The Arapuca wells have a higher productivity, productivity similar to Wahoo, to Forno, so on and so forth, close to 10,000 barrels a day. These will be the next 3 wells to be completed in Albacora. One of them is already drilled and now completed, and there are 2 to be drilled.

And then in the future, in the end of Phase 1, if we can call that, there would be 7 wells left to be drilled. Now in these 7 wells, there is a little bit of everything. It's in the post-salt. There will be wells producing 5,000 and others producing 7,000 or 8,000 barrels a day. Same that we are going to see in Frade, some wells producing more; others, less. And the second phase is also in the post-salt. So it will be similar to the first phase.

The difference between one and the other, it's not that the second phase will be less productive. The difference is that the first phase is what we used to their economic assessment because that's where we have more information about. The second phase will be defined now according to the seismic, the 4D seismic data that they're collecting. And the 4D seismic will give rise to the plan for the second phase, but the wells will be similar. They're in the post-salt, 5,000 to 8,000 barrels a day, something in that range. And that will compete with Frade.

When we put together the plan for Albacora, we didn't include all of the wells one after the next, reaching a peak of production. We were more conservative. We spread it out over time because in Albacora, we intend to have 1 rig working there. And these wells will compete with Frade wells. We'll always try to drill the well that will give us the best return.

Sometimes we get it right, sometimes they get it wrong. But we're always trying to get the best return. And the rig will be competing with Frade. We'll drill a little bit in Frade. We'll drill a little bit in Albacora. And that's easy to do because in one field, you can see the other. They're very close. They're neighbors. And we are going to use this as one single portfolio. That's the reality.

[Jose Costa, executive]

Thank you, Gustavo. Our next question comes in writing from Carlos [indiscernible]. And he asks -- well, he has a couple of question. The first, if we can give him more color regarding our price realization compared to the Brent in the quarter.

The second question, whether we consider to issue new shares in Brazil or abroad and if we consider new debt issue in the market.

And finally, he would like to ask about negotiations of Albacora.

[Roberto Monteiro, executive]

Okay. Let's go one by one. The first, realized price higher than average Brent. Well, in the quarter, we realized a little bit more than $4.50 in the oil sold from -- actually, $4.50 in the oil sold from Polvo and TBMT. I'm talking discounts here. So it was Brent minus $4.50 for the oil sold in the FPSO of Bravo, which is Polvo and TBMT, and Brent minus $2.32 for the oil sold from Frade.

Now in the next quarter, we have some sales already realized. And these have substantially better numbers, so far, substantially higher numbers to these $4.50 and $2.30 that I mentioned.

What happened in the last quarter is that we sold using the Brent of March and the Brent of April as a basis. So in February -- half of our offload was in February. And it was priced with the Brent of March minus the discounts. The second part of the offload was delivered in March and priced with the April Brent minus the discounts. Sometimes it's priced with the Brent of the month and sometimes with the Brent of the following month. There's no rule there. Any of the 2 options can be viable.

At the end of last year, this played in our favor. Also now, it played in our favor. And we have to wait and see. This business requires a little bit of luck. And sometimes we get a realized price that looks higher than the Brent for the quarter, but it's not. It just is the fact.

[Jose Costa, executive]

The second question was if we consider new shares issuance in Brazil and other markets and new debt issuance.

[Roberto Monteiro, executive]

Well, no. Today, we're not issuing anything. If we buy Albacora West, okay, Albacora West, that changes things a little bit. Then we will consider this. It might be debt. It might be equity. We'll bring in a project, a new project for the company that will have a great return. And we will need to fund the project. But this needs to be treated separately. What we have today in the company, Wahoo, Albacora East, et cetera, there's no equity, no debt issuance, nothing.

[Jose Costa, executive]

And the last question, given that the negotiation processes were running in parallel and they are now different, what is the Albacora negotiation like now?

[Roberto Monteiro, executive]

Well, we're resuming now the Albacora negotiations. I believe that May is going to be a very important month for us. Like I said, in terms of the contract, we've moved forward a lot with Petrobras. There are no outstanding or pending items.

So what's pending now? The price. It is the most important point, but it is just one point.

[Jose Costa, executive]

So the value to be paid?

[Roberto Monteiro, executive]

I don't think that we'll need too much time to debate that. And that's why I think that the month of May is going to be important for the company, for us to have a potential negotiation of Albacora or some people call it Albacora West. I think the month of May is going to be very important.

[Jose Costa, executive]

Right. I'm going to read one last question from [indiscernible]. He asks in writing, does the company have any signal from Repsol regarding your strategy for Albacora East?

[Roberto Monteiro, executive]

Well, [indiscernible], Repsol -- as far as we know, Repsol does not operate in Brazil. This is a fact. I'm not saying anything new. It seems to me that Repsol's strategy is not to be the operator. Repsol does not have the necessary staff to operate Albacora.

Albacora East -- we're talking about Albacora East. Albacora East is a field that requires a certain expertise of the buyer. It has an FPSO which is operated by Petrobras. It's going to be operated by PetroRio. And that's a great point for us. This is what we want.

We want to have a vertically integrated operation. We like to operate the FPSO. But there are other models of operation where the companies hire somebody else to operate the FPSO for them. This is not our case.

So it is a somewhat more complex operation. And this is what we do. We do it in Polvo and TBMT. So please do not misunderstand. I am not talking about Repsol's strategy. But in my understanding, Repsol does not have any operation in Brazil. And it is a fact that operating Albacora field is a difficulty level 2. It's not something that you buy and you have the contracts. You really need to operate it. You need to have the people and so on and so forth.

So I cannot talk about Repsol. But I think that we are not going to have any trouble regarding their positioning. They have the right of first refusal at the field and so on and so forth. But I think it is unlikely that Repsol will be interested in operating this field.

[Jose Costa, executive]

Thank you, Roberto. Well, we are now closing the Q&A session. Roberto, would you like to make some final remarks?

[Roberto Monteiro, executive]

No, actually, I just want to thank the investors for their support over the years, in this past quarter. And I would like to thank the PetroRio team. They're listening to us. Today, 94% of PetroRio employees who have been with us for more than a year are partners of the company. So this earnings conference call is also for you. You are our shareholders and investors. So thank you for all your support.

[Jose Costa, executive]

This conference call has ended. Thank you very much for your participation. Have a good rest of day.