Petro Rio SA

BOVESPA:PRIO3

Earnings Call Transcript 2018-Q2

[Operator]

Good day, ladies and gentlemen. Welcome to the conference call to discuss Second Quarter 2018 Results for PetroRio. Thank you for standing by. [Operator Instructions]

This event is also being broadcast simultaneously over the Internet via webcast and may be accessed through PetroRio's Investor Relations website at www.petroriosa.com.br/ir by clicking on the banner 2Q '18 earnings release.

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 the assumptions of PetroRio's management and on information currently available to the company.

Forward-looking statements are not a guarantee of success. They involve risks, uncertainties and assumptions as they are related to future events and depend on circumstances that may or may not occur in the future. 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.

I would now like to turn the conference over to Mr. Nelson Tanure, CEO; and later to Mr. Roberto Monteiro, COO, and to Mr. Milton Rangel, Head of Finance. Please go ahead, Mr. Tanure.

[Nelson Tanure, executive]

Good day, everyone, and thank you for joining us in this webcast to discuss the results of the second quarter '18. Before we begin, I see that there's a great number of people who work at PetroRio on this call.

I just like to say that, that makes me very happy. Folks, it's great to see so many of you listening to the results of our company. To our investors joining us today, a quick comment. All of us at PetroRio are also investors. There's a great alignment of incentives, which is good for us working here for the company itself and for you who invest in PetroRio. So this is just a quick comment that makes me very happy.

I'll make some brief comments about the results of the second quarter because afterwards, Roberto, our Chief Operations Officer, will give you details on our drilling campaign and on the performance of our assets. Then Milton Rangel, our Head of Finance, will make some comments on the financial performance of the company.

Regarding the second quarter, it's suffice to say that this was the best quarter in the history of PetroRio. We posted a record revenue for a quarter, the highest adjusted EBITDA ever and the highest operating results. So all very positive.

The drilling campaign is going very well. We have increased production at the field exactly when the Brent crude oil price have increased and when the dollar appreciated, vis-à-vis, the Brazilian real that helped a lot for the performance of the field. In addition, Manati Field continues to perform very well.

The [indiscernible] constant study, solid performance and PetroRio as an independent company focused on cost has been making its contributions to the consortium where Petrobras is the operator. So the quarter was very positive, but I would like to make some quick comments about this quarter, some reflection.

The first consideration is that even with a very positive quarter in line with some consecutive positive quarters, one after the other, and we expect to maintain the sequence and trend, what really matters to us is long lasting value creation. We want the company to grow very sustainably with a short, medium and particularly long-term horizon that is very solid. I just wanted to share with you our vision to build a very solid company, a strong company. This is as important as or more important than delivering good quarterly results.

Next, I would like to congratulate our operational team that has been doing excellent work. We have dedicated a lot of efforts to those campaigns, both the reservoir engineering team, they were devoted to studying the seismic data; and the whole drilling engineering team. Roberto is going to give you more on that, but all of those have made us very, very proud.

Well, another quick comment about the company's performance and mainly the performance of Polvo. Firstly, an oil and gas company that is independent and focused on mature fields can have its action more or less divided into 2 stages. The first part is when you acquire a mature field, then you focus on increasing production and having a very efficient cost structure, always privileging the product's health, safety and the environment. Having a safe operation is of utmost importance.

Anyway, this first stage is especially to increase production and have a very efficient cost structure with a lot of safety. The second stage is the one that we have just completed, actually, we are halfway through it, but the fact that we have charted it and completed some wells, gives us, in a way, the credentials of being a very efficient operator of mature fields. Essentially, in Brazil, we are now seen as a company that acquires mature fields, increases productivity and improves the cost structure. And in this drilling campaign, we intended to drill 3 wells. We have drilled 2 and had some economic discovery with undersignificant volume of oil in these 2 wells. And now we're drilling the third well. We have communicated these results to the market on a timely basis. But this part of drilling new wells concludes the cycle of a complete independent operator.

In my last comments about the drilling campaign that I would like to highlight is that our strategy, our mode of action to inform the market is essentially to communicate the startup of operation and then when we get the result of the field -- of the drilling, we communicate the result.

Oil and gas activities involve a lot of risks and uncertainties. So -- because we want to be in alignment and with consistency, we prefer to communicate results. This is how we like to communicate with the market. The opposite would be to disclose expectations and then perhaps have to justify and come up with excuses to explain why these expectations did not materialize.

I just want to make it clear, our mode of action to communicate with the market. We have been working in this way and will continue to do so, to communicate results.

And to conclude, I have spoken about how health, safety and the environment are vital and a priority for our company. What is most essential is to have a safe operation, respecting life, people's health and the environment. However, I want to share with you one last point that makes me very happy, that actually makes all of us at the company very happy, which is every year, we launch an internship program when we try to hire over 10 students. That's always the number that we hire every year.

Some years ago, in the beginning of the life of the company back in 2015, when we opened these 10 positions, the demand saw a little below our expectation. Not many people got interested as we would have liked. As the company started to perform better and show more consistency, we saw the number of interested students increasing more and more. So I just wanted to share something very, very nice with you that we really like.

Last year, for 10 slots, we had more than 3,000 students interested in doing their internship at PetroRio. This year, the number was even better. We had 12,500 students interested in our internship program, 12,500 applicants for 10 slots. That makes our process very competitive and ensures that we are able to attract many very talented people, skilled people who will bring more ideas to the company, more dedication. And this is the engine of our company, to have very well-prepared, trained people working under a management structure that tries to always find what creates value, to maximize this lever and know what destroys value to minimize it. And with good people, we can have a better judgment process to know what is really best for the company. So this is all very good, and we are all very happy.

Well, with that, I now turn the floor to Roberto, our COO, who will speak about the drilling campaigns, about Polvo performance and Manati Field. Thank you.

[Roberto Monteiro, executive]

Thank you, Nelson. Indeed, PetroRio had a very positive second quarter with many highlights to be mentioned. I will start the presentation on Slide 2, speaking about Manati, where PetroRio has a 10% working interest. We are not the operator. Thus, production was positively impacted by the fact that Southeastern Thermal Electric Power Plant, TPP worked at full power during the second quarter and also because of a depreciated exchange rate. Southeastern TPP is at full power, limits the amount of gas dispatched from the southeast to the northeast, and the depreciated exchange rates makes the Manati gas more competitive in the Brazilian market. With all that, the volume corresponding to our stake was 41 million cubic meters in the second quarter, approximately 8% up compared to what was produced in the first quarter.

Another good news about Manati is that in terms of cost, PetroRio is quite happy with our participation in the consortium. PetroRio has been always working closely with the operator, making several suggestions for cost optimization. Most of the time, these suggestions have been implemented, and we have been having better and better results.

Still regarding cost, referring to our stake of the field. In the first quarter of 2018, the monthly average was BRL 1.7 million, 40% lower than the average of the first quarter '17. Thus so far, Manati seems to be moving towards a good result in 2018.

I will now turn our attention to Polvo on Slide 3, please.

As you all know, Polvo is our main asset. We are the operator at Polvo. We have 100% stake in this asset. In the second quarter, Polvo was full of positive achievements as well. Most of them referring to the drilling campaign. But before I talk about the drilling campaign, I would like to highlight some operational marks that, in our opinion, were quite significant. In terms of volume produced, if we look at the second quarter compared to the first quarter '18, we see an increase of approximately 30%. But in my opinion, what illustrates this volume increase better it, obviously, relates it to the drilling campaign is when we compare the average produced in April of 7,200 barrels a day with our current production of around 10,700 barrels. In other words, a 50% increase.

Regarding operating efficiency, the second quarter did very well too. We again hit the mark of 98.8% operating efficiency. This is the up time of the field. In other words, the time during which the field was operational during the quarter, 98.8% of the time. Even amidst a drilling campaign, when a good part of the team is concentrated on other activities other than production itself, these levels are comparable to the record marks we had in 2017. Please go to Slide 4.

Here, we show you our austerity and discipline with the operating cost of the field, which continue underway. With increased production, we were able to reduce our lifting costs from around $40 per barrel to about $27 per barrel. So cost continue under control.

Operating efficiency is back at record levels and production is increasing respectively with our drilling campaign. Well, now I will speak about the drilling campaign itself.

And this is on Slide 5, actually, Slides 5 and 6. Before I speak about this drilling campaign, I would like to convey a message regarding our strategy to create value in mature fields and in our view, actually. The first stage of value creation is marked by a strong cost reduction, an increase in operating efficiency, an increased production in existing wells. This [ well stage ] which was the case of the [indiscernible] campaign in 2016, when we improved production by 20%. Now obviously, costs and operating efficiency are items that are on our agenda every single day. Obviously, in terms of cost, cutting and reducing costs are always more dramatic in the beginning, but it's something that is part of our culture. We focus every day to have efficient cost and high upgrading efficiency.

Well, the second stage of value creation involve drilling wells near the field, normally in reservoirs similar to those producing reservoirs. And it is exactly about this that we will speak now, the drilling campaign that we are conducting in 2018. For that, I will go back to 2015 and tell you the history of this campaign.

Firstly, we did a seismic reprocessing of Polvo Field. With the seismic reprocessing, we identified some opportunities to increase production. The simplest ones were drafted and that [indiscernible] Campaign in 2016. Further opportunities that did not require new wells, and we found opportunities that required new wells, and these became prospects. We then got these prospects along the year 2017, I guess. We did a selection of these prospects and presented them to a group of geologists and reservoir engineers with a vast experience in carbonate and sandstone reservoirs in the Campos Basin. We called this APL review. It is quite common in oil producing companies.

In large, oil producing companies here, since we do not have enough people, we have approximately 100 people. So we don't have such multidisciplinary groups. So we called independent people to analyze our prospects. We did a presentation to these people and they -- these technicians also approved the prospects. So we created a portfolio of prospects. Of those portfolios, we selected 3 prospects to submit to our Board of Directors for approval. These 3 prospects were: One, in a carbonate reservoir; and two, in sandstone reservoirs. The board approved drilling and investment of about $50 million to $60 million for these wells. $50 million to $60 million as long as these wells have oil. So they would be drilled and then completed.

The first of them was POL-H. It was drilled and completed in 50 days. A carbonate reservoir with an initial flow rate of 2,600 barrels a day and oil of about 20.5 degrees API in a reservoir with good porosity, a carbonate reservoir of good porosity.

The second well was POL-Z, which was drilled and completed in 60 days. This was a sandstone reservoir with an initial flow rate of 2,000 barrels a day and oil of 90 degrees API. A slightly heavier oil in a reservoir with an average of more than 20% porosity. Well, currently, we are drilling POL-M, which aims to reach another sandstone reservoir. And you can find the drilling campaign schedule on Slide 6. The whole drilling campaign, as we mentioned, should cost between $50 million to $60 million. We hope it will cost closer to $50 million than $60 million. Overall, we are very confident and happy with the results obtained so far with these 2 wells that are already producing oil. It is always important to remember that drilling wells is an activity that involves a huge diversity of paths that needs to happen in synchrony with several different suppliers and teams working 24/7. So it is indeed a difficult challenge that we have handled quite well with excellent results. The series that we had, that we created when we reprocessed the seismic data were all confirmed. Regarding the carbonate reservoirs and sandstone reservoirs as well, which gives us more visibility of being able to launch new drilling campaigns in the coming years.

To end, we would to thank the whole PetroRio team for their dedication and discipline, for their teamwork, their methodology, always applying meritocracy all the time along this process. I hand the floor now to Milton, who will continue with the presentation. Thank you.

[Milton Rangel, executive]

Thank you, Roberto. Very well, please go to Slide 7, where I would like to go over the financial highlights of the second quarter.

As a consequence of everything positive mentioned by Nelson and Roberto, PetroRio reached its highest revenue ever reported in its history of BRL 239 million, and this is an important milestone for us, a very important milestone. We know that both oil price and exchange rate worked as tailwind for us to reach these results. And when we add all the ability to deliver in our financial discipline, which is a strong trademark of our identity, all of that allows PetroRio to post also the highest operating results ever recorded in a quarter, of almost BRL 120 million, equivalent to more than 130% increase compared to the same quarter of the previous year. We also recognized EBITDA of around BRL 85 million and net income of over BRL 70 million in the quarter, both with 2-digit percentage increases, quite significant in the year-over-year comparison.

Definitely, we see here one of the best results ever posted by PetroRio in its history, consolidating our ability to deliver good results. One point that I would like to underscore and which is very relevant is that the first role of this campaign, as explained by Roberto, POL-H, started production in the end of May. And the second well, POL-Z, started producing only in the end of July. So my point here is that this quarterly result does not really reflect most of what is already being produced with this project. With that, we expect that all of this positive impact will be mainly captured in the next quarters of the company.

Moving on to Slide 8, please. Here, we see a chart that tracks the Brent crude oil price recovery in the last 12 months, indicating an average of $75 per barrel in the second quarter. In the bottom table that shows Polvo offtakes, we had one offtake happening in the first quarter and 2 offtakes in the second quarter, totaling 1,255,000 barrels in the quarter. And there's something very interesting to note here. All of the success of Polvo's delivery will allow us to increase the frequency of offtakes looking forward, and this is very positive for Polvo and PetroRio. Because with that, we can increase the liquidity of the company, have more frequent offtakes and consequently reduce the need for working capital as well. So there are some important financial benefits resulting from this success.

Moving on to the next slide, Slide 9, please. We have here basically a summary of our income statement. Well, I will not dwell on the details of every line item and rather, I will focus on what I think is most important about this statement. We had a significant EBITDA increase, both in the quarter and in the first 6 months. And what is really interesting is that net of nonrecurring items, we observed that the adjusted EBITDA margin practically tripled in the first 6 months and more than doubled in the quarter. Increasing the cost to 40% up from 15%. This is direct operational results for the company. It is a clear cash generation. This helps position PetroRio as a differentiated company with excellence in the recovery of mature fields with a focus on generating value to its shareholders through a highly efficient management of its assets.

Continuing on to Slide 10, where we see the breakdown of our cash flow in the second quarter for the company. We can see that from the operating standpoint, adding revenues, costs and loyalties, the company generated more than BRL 80 million in the quarter. Also, we had a positive result in terms of our financial results and funding. Corresponding to some credit facilities for working capital. And there was also an outlay of BRL 47 million in the CapEx line, which basically relates to the revitalization plan of Polvo.

An important point to highlight is that what we see here impacting our cash is a lot more related to the consumption of cash in the Polvo campaign and reflects practically nothing in terms of cash generation resulting from this campaign. This will be captured for sure in the coming quarters. But still, the company was able to enter the quarter with a very robust position, BRL 760 million, including our oil inventories.

Well, now to end our presentation, please go to Slide 11. I'd like to speak briefly about the outlook for the company. We saw an improvement in our contribution margins with the stabilization of oil prices. Basically, as mentioned before, Brent crude oil price recovered in recent months. In addition, we managed to bring about a significant reduction in operating costs per barrel. So we began the year with a lifting cost of around $40 per barrel and now closing the quarter in June, lifting cost dropped close to $27 per barrel, which is very relevant, shows important resilience of the asset and this big difference is captured as cash generation for the company.

In addition, as mentioned a couple of times before, we had a 50% increase in production with the 2 new wells. The 50% increase in and of itself is transformational for Polvo Field and proves PetroRio's excellence in the recovery of mature fields. And in addition, there's also the third well in which we are working hard and we hope for a positive result.

As for deals and negotiations to acquire other mature fields, which is another big priority for the company. We have a rather robust pipeline of opportunity. We try to find new angles to do business, and we are very optimistic regarding a positive outcome in the near future. We know that, unfortunately these negotiations tend to last a little too long. There are many stakeholders involved, these are long deals that involve a lot of money. So -- but we are very focused to bring good news in the foreseeable future for the company.

Still on the M&A front, another aspect that is also very important to enable these acquisitions has to do with access to this credit market. PetroRio with all these positive results and with this solid and robust balance sheet that we've been posting, we believe that the company is at a mature moment now to increase its leverage.

In order to increase the company's filing power to materialize these possible acquisitions that we are working on. Also in this quarter, we had some pretty good news. Because of a reevaluation by S&P, there was an increase in the rating of Brasoil of 3 notches. We had an upgrade from BRA+ to BRAA+ in the national scale. So those doing [indiscernible] excellent positioning of full credit thesis for the company. And finally, we also had another good piece of news. PetroRio -- our PetroRio shares joined the small-caps index. And also, we had the start of the options series of PetroRio being traded at B3. The joining of small-cap index is good because in addition to the whole operational success that we are seeing at Polvo, we start enjoying now recognition on the commercial and investor relations side. And this is very positive for us because, indeed, we have been working hard to tell our story correctly, to show our trajectory, and how we're building the company. We have been very well accepted by the market. More and more, we see greater interest on the part of different classes of investors, from individuals to institutional investors that have billions in assets under management.

And this, to us, is a really great satisfaction. We can, more and more, deliver an increasing daily trading volume of our shares, reaching much higher levels than what we had 1 or 2 years ago, putting the company at a whole new level in terms of trading and liquidity.

Last but not least, I would like to thank all of you for joining us in this conference call. I would also like to thank all of PetroRio's employees. Each and every one of you contributed a lot for us to deliver this very good and positive result, which reinforces our goal to transform the fundamentals of the company, to strengthen the history of PetroRio and to prepare the company for its future, which is undoubtedly, very promising. Thank you very much.

[Operator]

[Operator Instructions] We have a question phoned via webcast by Mr. [ Marcello Cortina ].

[Unknown Analyst]

Regarding the second well drilled at Polvo, I would like to know if the flow rate was expected and what is the lifting cost considering the current oil prices, if you are successful in drilling the third well?

[Nelson Tanure, executive]

Regarding the flow rate of the second well, yes, it was -- it met our expectations. It is important to highlight that our reservoir engineering team always works with a range of production values, and this number is within that range. And this is why in the presentation, I said that our theories were confirmed with these 2 wells. So yes, the flow rate was expected. Regarding the production cost, it is a little hard to give you a guidance for the third well. At the moment, we are working on drilling the third well and then it will really depend on the flow rate and so on and so forth. What we can affirm at this point, is that our production and cost already considering the second producing well, should be at around $27 per barrel, as we mentioned. And then the third well, if it starts producing oil, this amount should drop, but it's kind of hard to give you exactly what the numbers would be because it really depends on the flow rate and the production range of the third well.

[Operator]

The next question was sent by [ Claudia Miller ].

What discounting dollars for -- in Brent for the Polvo oil?

[Nelson Tanure, executive]

This is Nelson speaking. To answer regarding discounts for Polvo 2016. The company is negotiating our oil through Luxembourg. And since they started trading our oil, the discounts have been improving a lot year after year. Lately, with the latest offtakes, the discount was close to $3.

[Operator]

[Operator Instructions] The next question comes from Daniel Alberini, CTM.

[Daniel Alberini, analyst]

Could you please give us more detail on the drilling campaign? Given the success of the drilling campaign and on the size of Polvo, can we expect any campaign for 2019? What is the potential size of Polvo Fields in terms of exploration capacity?

[Roberto Monteiro, executive]

This is Roberto speaking. Well this campaign was very, very interesting because it proved some ideas that we had regarding the productivity of the field and regarding some sandstones close to the field. So since 2015, when we started reprocessing the seismic data, we identified a number of prospects and we started filtering them down, analyzing lists and so on and so forth and came to a short list. We analyzed not just the lowest risk, but prospects that could prove our thesis. So we had a short list of 3 prospects. But having said that, we still have a number of prospects that have not been drilled. As we are successful with these 3 wells, these other prospects will become viable and very, very interesting. So my answer to you is, yes, we do have a great expectation of running another exploration campaign, at least one more in 2019. And perhaps, others in the future. Another interesting thing is that in our platform, we have licensed 6 slots to drill. So we could put into production today without having to ask any enviromental licensing, without having to invest any additional CapEx than the CapEX for the wells. We can have another 6. So the company has the capacity, has prospects in our pipeline. There is space in our platform. So I guess that 2019 most likely we'll have another campaign.

[Operator]

Our next question comes from [indiscernible] with [indiscernible] America.

[Unknown Analyst]

Nelson, Roberto, Milton. The first, please, I'd like to hear from you. How did you do the hedge for the uptake of oil for the second half? What volume estimate did you consider for that hedge?

[Milton Rangel, executive]

This is Milton, thank you for the question. Well, as for the hedge, we are a growing company, so we have to be all the time managing our risks and analyzing possible upsides and downsides regarding our cash generation. So the hedge for Polvo for this quarter was made when we observed that the oil price had increased a lot. It was close to $80 a barrel. We thought that, that level was a good entry point, so we decided to hedge approximately 1 million barrels, which is a good number that we will be selling in the second half of the year. So the hedge was done with the idea of protecting a good part of our production in the second half of the year. And to quickly explain our strategy, we have a color that basically ensures a minimum price of $75 and a maximum price of $90, 9-0. So the price of the barrel between $75 and $90, we will get a revenue of the value in that range. Anything below that range, we can have a minimum price of $75 per barrel. For us, for example, at this moment, this is a very successful strategy because the crude oil is trading at around $72, $73 per barrel. So just quickly a correction, we have 2 million barrels, not 1 million, 2 million.

[Unknown Analyst]

And I had one question. You said a minimum of $75 and maximum of $90. Regarding this minimum price of $75 per barrel, should we add the $3 discount that Nelson mentioned earlier? Or this price interval already takes into account the discount of PetroRio oil compared to the Brent?

[Nelson Tanure, executive]

No, it does not include the discount. This is just considering the Brent reference price. On top of that, we would have to consider the discount. So in a more conservative scenario, as far as understood, you'd be ensuring a price of $72 per barrel of PetroRio's oil, is that correct?

[Roberto Monteiro, executive]

Yes, this is an estimate. Just to be very accurate, when we hedge, we have different windows for offtakes, practically 1 a month. So we have this range of $75 to $90 for 3 of these offtake windows. And by the end of the year, I think the ranges between $70 and $90. So depending on the offtake, we have a different range, but with the minimum being between $75 and $70.

[Unknown Analyst]

Okay. For 2 million barrels for the second half?

[Nelson Tanure, executive]

Yes, 2 million barrels for the second half of '18.

[Unknown Analyst]

And I have a second question that has to do with lifting cost. On Page 6 of the presentation, you included a downward monthly curve, April, May, June, reaching in June $27.85. The June data corresponded to an upwards production slightly under 9,200 barrels. Roberto mentioned earlier that you would be running with the second producing well at around 10,700 barrels. So I ask, you mentioned about $27 . Don't you think that it is a little higher considering $27 lifting cost will be too high for the second half?

[Roberto Monteiro, executive]

I think that the $27 would be like a cap or a floor. It will be an idea, a guider. On the other hand, we have some few operational contracts that have an escalation considering oil price. So let's say the $27 is a good number for us to work with considering the second well, given the Brent crude oil price between $75 and $80 per barrel. And this is considering the production of the second well. Now obviously, we always are very keen to bring this number down, something below $27. But I guess, that's where to do our math for now, this is a good number.

[Operator]

Our next question was sent by Mr. Lunar [indiscernible]

[Unknown Analyst]

Would you speak of how you see the capital structure of the company for the future, and how the M&A strategy fits that equation? Having cash? The next M&A will be done with what ratio of equity?

[Nelson Tanure, executive]

Thank you for the question. This is Nelson. In the first place, the company is very active in the M&A front. But in Brazil and abroad, we dedicate a lot of effort to the M&A front to identify efforts that could be acquired or they are already for sale. In terms of the cost structure, the company has 2 cash generating assets, and we have very low leverage in a cash balance, which is quite solid. So when we look at these acquisitions, we always seek to get some leverage higher than the asset can hold. And we always consider partnerships with peer companies and investment funds as long as everyone is on the same page regarding efficient management with 100% focus on safety and cash generation. So to recap and to be very objective, the idea is to have some leverage, to acquire assets, we're talking about debt, partnerships with other companies and funds to share the equity with us. But depending on the situation, we'll also consider increasing our capital structure.

[Operator]

Next question is [indiscernible]

[Unknown Analyst]

My question has been answered.

[Operator]

[Operator Instructions] There's a question sent by Mr. [ Calvin ].

To add value to shareholders in the future, does the company intend to reinforce its cash or do you intend to have a dividend payout to shareholders?

[Nelson Tanure, executive]

Calvin, this is Nelson speaking. We are a company focused on growth and use our cash to acquire new assets. We don't really think about dividend payout. We have a long-term vision. We believe there are many opportunities both in Brazil and abroad. And also, as I mentioned, with our current asset, Polvo, there's a lot of potential. So we want to use our cash to drive growth for the company.

[Operator]

This concludes today's question-and-answer session. PetroRio's conference call for today is closed. Thank you very much for your participation and have a good day.