Good afternoon, everyone, and welcome to 3R Petroleum third quarter 2023 earnings conference call. To start today's conference, we'll be showing a video of 3R Petroleum's main assets. The presentation and comments about the results of the company will be presented by the top management of the company. We inform that the simultaneous translation tool is available on the platform. To access it, simply click the interpretation button at the bottom of the screen and choose your preferred language. This conference call is being recorded and will be available on the company's investor relations website, ri.3rpetroleum.com.br, as well as the presentation that we will show here. Please be advised that all participants will be in listen-only mode during the company's presentation, and then we will begin the question-and-answer session when further instructions will be provided.
Before proceeding, we take this opportunity to stress that forward-looking statements are based on the beliefs and assumptions of 3R's management and on current information available to the company. Forward-looking statements may involve risks and uncertainties because they relate to future events and, therefore, depend on circumstances that may or may not occur. Investors, analysts, and journalists should understand that events related to the macroeconomic environment, the industry, and other factors may cause results to differ materially from those expressed in these forward-looking statements. We will now begin the presentation with the company's CEO, Mr. Matheus Dias. Please, Mr. Dias, you may begin.
Hello, everyone. Good afternoon. Welcome to 3R Petroleum conference call to discuss third quarter 2023 earnings results. In the beginning, a video was shown in which you were able to see various images of part of the operating structure of the assets in our portfolio.
On our end, I feel obliged to emphasize the pride and joy, given our relatively recent history, that these images represent for all the employees of 3R, who have tirelessly dedicated themselves to the evolution and maturity of the company. Even more so, considering the milestone of this quarter with the effective consolidation of our assets. As I've mentioned a few times before, this is a very important phase when we concentrate on the execution and constant improvement of the company. Very well. Given this brief introduction, let's start the presentation, which, as usual, will be led by myself, Mauricio Diniz, our Chief Operations Officer, and Rodrigo Pizarro, our CFO and IRO. Starting now on page three with an overview of the period.
Considering what I mentioned before in this quarter, with the portfolio of assets that the company has, our main highlights are a record production of 42,700 barrels of oil equivalent a day, with a share of oil already reaching almost 80%, as well as a record revenue of BRL 2.4 billion, a significant increase over previous quarters. This evolution is a reflection of the materialization of the Potiguar Cluster, and in it, another relevant source of revenue, which is the mid downstream business unit, due to the perceived operating improvement and consequently gradual growth in our oil and gas production, as well as due to the improvement in the pricing conditions of our commercial contracts.
I would also like to highlight the significant EBITDA of Q3 of 829 million barrels, which represents an increase of more than four times compared to the previous quarter. Still on the metrics, which will be covered in greater detail by Pizarro, I would just like to highlight the lifting cost for the period of $18.6 per barrel, which represents another important indicator in the company's quest for efficiency. Once again, I would like to emphasize the structure of the integrated production chain at the Potiguar Basin with pipelines, industrial units, and the private terminal, which provide the company with many opportunities for optimization, as well as commercial, operating, and logistical flexibility. Lastly, on this page, there are two last important and relevant elements to mention.
The company's issuance of an infrastructure debenture in the amount of BRL 1 billion, which has a clear benefit for the profile and amortization schedule of the company's consolidated debt. The publication of our first sustainability report using global standards as well as standards of the oil and gas sector. This is a very important step for 3R on our sustainability journey, increasing the transparency of our projects and initiatives. Well, at this point, I will ask Diniz to present the main highlights of our operation during this period.
Thank you, Matheus. Let's move on to the operational side, dividing it into four large blocks. Firstly, the Potiguar Complex, where we posted production of 25,200 barrels daily in the third quarter, and October's production was in line with this third quarter.
In this area, it is important to highlight the production at Macau, with a very significant evolution, where we went from 4,300 barrels a day to 7,000 barrels a day now in October. In other words, a growing and constant production, and this, that was our first asset. In this area, we have all of the rigs operating as we had predicted, with great activity in both drilling and workovers in the area. On the next slide, we see the production of the Bahia Complex, the Recôncavo Complex, as we are calling it. There has been a constant increase in production over the course of each quarter, both in Rio Ventura and Recôncavo, with October's production being much more significant than the production in the third quarter of 2023.
In the area, we have six rigs in operation on workover activities, and in this last quarter, we will start the drilling campaign, depending on some licenses that are to be obtained from now until the end of the year. On the next slide, we see the production of Papa-Terra Cluster. We closed Papa-Terra in December of 2022, and since then, we have undergone various maintenance activities in the unit, in the power generation unit, in maintenance of the offloading system, in maintenance of power generation, and this maintenance has meant that the unit's efficiency has improved over the course of each quarter. In October, we already saw the fruits of these initial maintenance activities. In October, we already achieved a number higher than that of the third quarter of 2023.
On the next slide, we'll go into a little more detail about the interventions that have been carried out at Papa-Terra. These activities will be divided into the first phase, which we are doing now in 2023. This year, we are working on the unit's main systems. These main systems today include power generation system, the unit's boilers, the tanks, and some of the main pumps. We are carrying out maintenance on all these systems in order to make the unit's operations more efficient and safer. An important point to highlight is in relation to the wells. That is to say, we are going to start changing the pump in those wells where the ESP, the electrical submersible pump of the wells, had a problem, so we are going to change those pumps.
In these three workovers, first of all, we are going to work on Papa-Terra 22, 17, and 12. An important point is that next year, we are going to start drilling new wells at Papa-Terra, pending the environmental license to be obtained. Another very interesting point at Papa-Terra is that next year, we are also carrying out a major workover at the field, as well as continuing with the maintenance of these main systems. We are going to intervene with the so-called Floatel, a unit that we are going to locate next to 3R-3 , and in a campaign to last for three to four months, we are going to carry out a major revamp of the unit, bringing greater efficiency. This is reflected in the lower right-hand graph, where we can see a systematic evolution in the field's efficiency.
Our operating efficiency is currently between 60% and 80%, and after this workover, it should be around 80%-90% operating efficiency in the second half of next year. Lastly, now talking about the Peroá Cluster, we've seen an increase in production over the quarters, and this Q3, we had a reduction in demand, which the commercial team has been working to get back to that previous level. The field has the capacity to produce 650,000 cubic meters of gas per day. Complementing the production part, in this last graph, we see three years total production in Q3, which reached 42,700 barrels daily of oil and gas, 80% being oil and 20% gas. In October, production is already a little higher, according to this week's production report, so it's a little higher than in the third quarter.
As for oil production, too, we can see in the graph below, separated by the four areas we mentioned earlier, production of 33,800 in Q3, rising to 35,800 barrels a day now in October, 70% of which is coming from the Potiguar Complex. I'm now going to hand over to Matheus to complement the mid downstream operational part. Matheus, please.
Thank you, Diniz. Let us continue to page 11, where I discuss two important groups of our initial activities in the third quarter at the mid and downstream unit in the state of Rio Grande do Norte.
This period was marked by an intense agenda of maintenance in the essential units, with a highlight to the downtime of the refinery, the main deliverable of this program being the increase in effective production capacity, bringing it to a level very close to its nominal capacity, as well as adjustments in the industrial plant that make it possible to process products such as naphtha for blending with imported gasoline and specification of marine diesel oil.
...Next, we are also carrying out a maintenance shutdown of the natural gas processing unit with the same purpose, that is to increase processing capacity. And lastly, and of great importance for the formation of batches of cargo and operating and commercial flexibility, we have the maintenance of the tanks in the oil storage area in order to meet the mandatory requirements, and then also increase our storage capacity. It's important to note that this maintenance is carried out concurrently on the tanks that are currently out of the operation, and in most cases, done in a continuous basis. In terms of the business itself, the company has been working together with partners on commercial strategies and opportunities that could bring greater predictability to results in the medium term.
Once again, I would like to emphasize that the integration of the commercial and logistics units with the oil and gas production facilities provide great deal of operating and commercial flexibility, both in the best and worst market moments. On the next page, we have an important commercial highlight, which shows an evolution in unit pricing levels. As we can see, when we look at both charts, both for oil and for the processed gas molecule, both cases reflect adjustments to existing contracts and also new contracts for a large part of our assets. There are some operating restrictions in some assets, which we are working on right now, as already mentioned, and we do believe that after these adjustments, we will have even better contracts and greater access to markets.
It is just worth noting that this quarter, in Papa-Terra, in particular, where we formed a batch for loading during a period of more or less 15 days to be loaded onto the shuttle tanker, the effect of Brent brought benefits in the consolidated unit price in relation to the price defined in the contract. I now hand over the floor to Rodrigo Pizarro, who will bring you the financial highlights for the period.
Thank you. Good afternoon, everyone. Thank you, Matheus. We will now talk about the company's financial highlights for the third quarter of 2023. On slide 14, we present net revenues with a significant increase compared to previous periods. In the upstream segment, meaning oil and gas sales, we reached BRL 1.5 billion. In the mid and downstream segment, the amount was slightly higher, also close to BRL 1.5 billion.
If we take into account eliminations through sales or intragroup transfers, the consolidated revenue was BRL 2.36 billion, almost three times higher than in the previous period, reaching a total net revenue of almost BRL 3.8 billion barrels in the first nine months of the year. On the next slide, we highlight the distribution by basin and by product, especially the proportion of the Potiguar Complex, with 58% of net revenues in the period, and the weight from oil revenues in the upstream segment, reaching 90% of revenues, even though it represents 80% of production, as mentioned by Diniz and Matheus. As we often mention, oil tends to bring in more revenue and margins than gas. On slide 16, we present the evolution of EBITDA, which was certainly the most important highlight of the period.
Finally, after all the acquisitions, we were able to present figures compatible with average production of over 40,000 barrels, reaching around $170 million in the quarter, with an 11 percentage point increase in the company's consolidated EBITDA margin. Moving to the next slide, here we present the company's lifting cost. Although we saw a significant reduction in the third quarter with the entry of the Potiguar Cluster, it is worth noting that we will have some expenses that will be incorporated in the coming quarters, especially in the Potiguar Cluster.
Even so, the company's goal is to maintain an efficient lifting cost of around $20 per barrel, which should be maintained until the third quarter of 2024, when the dilution of fixed costs due to increased production becomes even more relevant, and most of these non-recurring costs relating to maintenance activities that were not carried out by the former operator will then have been completed. It is worth remembering that our lifting cost includes all logistical expenses up to the delivery of the final product to the consumer. On slide 18, we highlight the evolution of CapEx with the mobilization of rigs, intensification of drilling campaigns, recovery of facilities, and preparation for offshore workovers. CapEx in the third quarter reached $85 million, totaling $116 million in the first nine months of the year.
The highlight goes to the photos of the new wells at the Macau Cluster and the automatic drilling rig, also in operation at the Macau Cluster, which has performed excellently, drilling a new well on average every six days. More efficient than our internal planning and certainly a benchmark among internal operating companies. On the next slide, we highlight some aspects of the company's capital structure. We ended the period with $207 million in cash and a net financial debt of $1 billion, or just under $1.4 billion, if we consider all firm obligations and earnouts relating to asset purchases. Another highlight is the company's leverage. We ended the third quarter with 2.1 times net debt- to- EBITDA, and if we analyze the quarter's EBITDA.
In other words, a very balanced and comfortable level for the startup of the consolidated portfolio with the Potiguar Cluster already in operation. On slide 20, we show our hedge position at the end of the period, with approximately 8,000 contracts signed, of which around a third are NDFs at an average value of $80 per barrel, and two-thirds are collar type contracts with a floor of $55. Finally, on the last slide, as usual, we highlight what is a priority for the company in the coming months. We are committed to establishing commercial partnerships, both to better monetize our facilities as well as to better market our products. To this end, we have done our utmost to accelerate the midstream asset integrity recovery campaign in order to increase our flexibility to allocate oil for sale or refining.
In a few weeks, we will complete the scheduled maintenance of the Clara Camarão Refinery, restoring its refining capacity to 40,000 barrels. In Papa-Terra, we are totally focused on workovers and recovering the integrity of the assets. We already have the first rig mobilized, carrying out the first pump replacement activities, as mentioned by Diniz, and we already have IBAMA's approval for the second rig, which will be assembled at TLWP by mid-December. Our third major focus is on the intense onshore drilling campaign, seeking to speed up the licensing process of new wells. We are very satisfied with our team and with the performance of the rigs that are in operation.
Finally, on the financial side, we continue to monitor the market, seeking for opportunities to optimize our capital structure, with a view to both increasing duration and reducing costs, as well as increasing liquidity without impacting the company's net debt. Thank you very much for joining us, and we will now initiate the Q&A session.
Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please click on the Q&A icon on the bottom part of the screen and type your question. In order to ask questions live, click on that same icon and state your name and company, or click on the Raise Hand button. Please wait as we collect the questions. Our first question is from Monique Greco with Itaú BBA. Ms. Greco, you may begin.
Hello, everyone. Good afternoon, and thank you for taking our questions. For starters, I'd like to congratulate you on the results. It's great to see the improvement on the operational data, so congrats on the good work. I have two questions: starting with the last slide mentioned by Pizarro, the potential to monetize mid downstream assets and generation and creation of new revenue streams.
You mentioned $47 million in this quarter from this monetization avenue. Could you share with us how much you expect from this revenue stream? How far can you get? What are the measures you were considering? Any bottleneck in addition to the integrity of the tanking of the oil, oil storage, and if you have any partnership in your radar for mid downstream assets? That's number one. Second question, we're getting to the end of the year. In the beginning of the year, we have an important event, the reserves certification. If you could give us some color regarding what we could expect, both in terms of addition of new reserves or changing the profile of the production curve or changing the CapEx profile. If you could give us some color regarding the new reserve certificate, it would be very much appreciated. Thank you very much.
Hello, Monique. Good afternoon. Thank you for the nice words. We are very excited with the earnings of this quarter, and thank you for the questions. I'll answer the first question, and the second question will be answered by Pizarro. As regards the potential of mid downstream services, indeed, we have been looking into this. Of course, in this quarter, very much due to the downtime of the refinery, it was a compulsory downtime from the standpoint of regulatory requirements. There was an increment in service provision because oil was not refined to commercialize oil products. In that regard, it was replaced by service provision by the whole structure, not just by the industrial unit, but also by the terminal. Our goal is to have a balance between the two.
... And now getting a little bit into the second part of your question, of course, we are considering partnerships. We are looking into what would be the best format. We are very happy to have more visibility in a shorter period of time than we imagined, in terms of the partnerships, to understanding our mix of oil products, where we can protect better, to create a predictability of results and EBITDA that would be better. So in this way, we're moving forward well with the partnerships, and our goal is indeed to maximize in-house security and the sale of oil products. Now, the service potential will work at those moments when we might stop refining, for maintenance reasons, as we mentioned. This is an asset that has a lot of flexibility.
So if a market moment makes sense for us, in a market moment, if it makes sense for us to hold back refining for a while, we'll offset that with service provision. So that's the strategy. There is another point that moves hand in hand with the sale of oil products, which is service provision, specifically at the terminal. At the terminal, we are considering potential allies with distributors in the imports of oil products, and this moves hand in hand with the sale of oil products, and it works as an upside, not just for the sale of oil products, but bringing oil and mix. And this is our goal in our strategy. And of course, we'll pursue the best monetization for the oil products, also protecting those that have a price in relation to the brand, which is lower. For that, partnerships are being very relevant for 3R.
Now, I will turn the floor to Pizarro to answer your second question. Thank you, Monique.
The microphone is off. We apologize, but Pizarro's microphone is off. We apologize, but the microphone seemed to be off.
Well, we've been focusing a lot in developing reserve certification by basin, as we mentioned, and as we did in 2023. And most likely, the probable result will come between February and March of 2024. So this will certainly be taken into account already in the first earnings, in the first quarter of 2024, already based on the new reserves certification.
Regarding the potential, I think it is always important to underscore that our portfolio, exactly because of the size and the volume of assets that we have in onshore and offshore, our portfolio has the possibility to increment the reserves quite a lot, particularly when we assess the recovery factor already extracted from these reservoirs. And the potential for extraction, because they have about 500 million barrels of 2P reserves, and these 500 million take us to a recovery fraction, which is still very small and controlled, which means that we have a lot of potential still to increase this without necessarily having to acquire new assets, which is a big differential for 3R. Now, objectively speaking, about next year's reserves certification, it is not our intent to relevantly increase our CapEx. This will not translate into a relevant increase in reserves.
Everything will evolve in a controlled while balanced fashion for our capital structure to match the growth of reserves and CapEx evolution along the years of 2024 and 2025.
Thank you very much. That's great. Thank you, Matheus and Pizarro.
Our next question comes from Bruno Montanari with Morgan Stanley. Your microphone is enabled.
Thank you for taking my questions. I have two questions, one about the capital structure and one about mid downstream. In the capital structure, historically, the company was very active in both fronts, equity and debt, and some people were a little scared with a post-accounting event when you pay for Potiguar, and you don't have the operating results of the last 12 months. So the snapshot is not nice, but the future perspective is much better.
So I'd like to understand from you, in a scenario where the oil price remains reasonably healthy in the range of maybe $60-$80 per barrel, do you feel comfortable that 12 months from now, the company will not have to access new funding sources, either debt or equity? So I'd like to understand how you're looking at potential funding alternatives in the next 12 months. In the mid downstream, I'd like to learn more about service and refining, particularly in Q4, when you don't have refining. Service provision, can it offset the operating result that you showed in Q3? I'd like to have some color on what to expect from the mid downstream unit, because it's something new, and it's kind of hard for us to model this, until we learn more about this new dynamic. Thank you.
Starting with the capital structure, it is not our intention to have any capital inflow via equity. In other words, it is not in our horizon, exactly in this range that you mentioned, $60-$80 a barrel. We can even stress a little bit and even below these numbers, but it's not in our horizon to have a follow-on deal for the company work point injection. What we are working on, though, is in optimizing the debt of the company. As you well said, looking back, leverage could seem to be high, but in Q3, I think it becomes very clear that the leverage of the company is very much under control. If we annualize this quarter, we are talking about an order of magnitude of two times net debt over EBITDA, in the most conservative way of calculating this.
In other words, putting all earn-out obligations with Petrobras, including those, not necessarily in an extraordinary scenario. Worst case scenario, we would be paying all these earn-outs to Petrobras. But being conservative, we are at a very healthy level for the start of this operation, consolidated with Potiguar Cluster. What we intend to do, what we have actually been doing already, is looking for ways to optimize the debt. In terms of cost, trying to lengthen the debt and reduce the cost of the debt. We normally think about dollars. We always try to equalize this, match this to our revenue, which is 100% dollarized. At the same time, as we pay, as we make payments to Petrobras in 2024, 2025, we will eventually have debts and correlated volumes.
Could be a little higher, could be a little all lower, in a way as, in a way as to not change the net debt of the company. In 2024, we should pay to Petrobras between $100 million and $120 million. It would only be natural for the company to bring in a financial volume in debt that would be comparable to that. It doesn't change the net debt, and it doesn't change the gross debt either. And this is the strategy so that we can have a positive liquidity, financial volume and cash, which are positive and comparable with our need for CapEx, even in a scenario where the Brent price, for whatever reason, drops to levels of 60, 65, or even lower than the current curve.
To your second question regarding mid to downstream, in Q4, as Matheus mentioned, we will always be pursuing a balance between what brings us the best return for the company. It's either service provision, and we'll focus on selling crude oil to a trading company or to a Brazilian refinery, as is the case of what we've been doing in the last weeks and months. And at the same time, look at the right balance and the mix of products that we could get with refining activities and how commercial partnerships, as mentioned by Matheus, that we've been developing, can add value to mid and downstream. What will probably happen over the fourth quarter is that we'll resume refining.
The first refining unit has been completed successfully and eventfully, and in a shorter period of time than expected in terms of ramp up of production and capacity of processing. The second one is at an accelerated pace. In the next two weeks, we'll complete the scheduled maintenance for refining, and in mid-December, we'll be able to resume refining. What we'll decide, whether in mid-December or in the beginning of next year, is exactly the evolution of these commercial partnerships, and our expectation, they should move forward quickly enough so that we'll resume refining by year-end. My expectation is that not necessarily with the service provision, but translating into returns of mid downstream with the sale of oil products, we will achieve margins similar or even better than the margins seen right now.
Of course, we always take into account the market conditions, local market conditions, sale of gasoline and diesel in Brazil, they can interfere, but can momentarily hamper that margin. But please remember, our assumption is that we can provide services or sell oil derivatives, and by balancing this, we can add $3, $4, sometimes even $5, $6 per barrel to our production at Potiguar Basin with the mid downstream assets. Thank you for the questions, Bruno.
Our next question is from Mr. Pedro Soares with BTG Pactual. Pedro, your microphone is on.
Good afternoon, everyone. Good afternoon, Pizarro and the rest of the team. I have two questions, and the first is related to CapEx, and the second one refers to lifting costs in the upstream. Regarding CapEx, very briefly, and still recalling the previous call, you talked about $280 million. I would like to know whether this number can be reinstated, even if you think in terms of the acceleration going towards the fourth quarter, and whether that $400 million for next year still makes sense to you? And finally, still on that same note about CapEx, I would like to refer to the composition of CapEx. We look at the evolution versus the second quarter, we notice that selling investments, inventories and infrastructure increase as a percentage of the total, and I believe that this could be a source of CapEx release.
so that you could have other investments further down the road. Could you tell us a little bit about, you know, investments in inventory and infrastructure? Now, about lifting cost, I think during your initial remarks, you referred to a certain conservative position. We should approach about $20 per lifting cost throughout next year. What would be the possible upsides, or what would contribute to supporting that position? Or whether that has to do with instabilities at Papa-Terra, or you see, like, mobilizations and relocations as being one factor in relation to gas generation at Potiguar Cluster. Thank you.
Great, Pedro, these are excellent questions. As for CapEx, CapEx for 2023, the order of magnitude is very similar to what we mentioned before.
It could be slightly lower than that, because as we mentioned in our last quarter, we've been trying to find ways to optimize what was in the plan. For instance, in the steam generator, we found other alternatives that are significantly better and cheaper than what we had initially planned. Therefore, the CapEx for both 2023-2024 could be slightly lower than the numbers we gave you before, I mean, meaning $280 million and $400 million for 2024. And the efforts on the part of our team, [Hashidi], who is here today, Matheus, Diniz, [Tatiana], I mean, we are all constantly looking for ways to reduce CapEx without necessarily doing all of the other activities.
Finding ways to maybe transform some facilities in leasing, finding ways to reduce the cost of the steam generator, replacing them by others that have already been installed, we could bring with a lower cost throughout 2024 and 2025. And all of these measures are aimed at reducing that $400 million without, you know, reducing the pace of the activity. So we see a very healthy pace, and so that would be around $35 million-$400 million in terms of CapEx. Now, as for inventory, we are getting ready for the drilling activities and the replacement of offshore pumps, and therefore our CapEx inventory will be used. So throughout 2023, this will still remain the case, and in the beginning of 2024, part of this equipment and additional equipment will be utilized both onshore and offshore.
Then finally, in terms of lifting cost, this current reduction in the third quarter, it's a very important achievement of the company, because this comes from what happened in Macau. In Macau, our lifting cost is below $10 per barrel and with a growing volume. Therefore, this is quite relevant for the company. At the same time, the company made a very assertive decision when we did not renew our contract with Termoaçu. That contract was harmful to the company's lifting costs, and certainly the EBITDA per barrel that we got without that steam injection is better. I mean, it's more positive than bringing, you know, steam generation to Termoaçu with a higher lifting cost. And it's precisely because of that, that we instate that as soon as the steam generators start operating, we will have an increment in our lifting costs.
As you mentioned yourself, if one or two wells in Papa-Terra throughout the first and second quarter of 2024 stop by any given reason, we will shut down production, and that lifting cost could probably reach $20, $21 or even $22, which would be a number that we would like to see in the next two or three quarters. Our view is that in the second half, production increment will be quite relevant and enough to reduce our fixed costs. At the same time, I mean, the best thing of all is that we've been, you know, pursuing a campaign for recovery and integrity recovery. Part of it is based on CapEx, and the other part is based on OpEx and non-recurring.
These are activities that were not done by Petrobras in 2020, 2021 or 2022, and we need to do in 2023 and 2024 to increment our processing capacity. And we say that this is non-recurring, not recurrent, and maybe in the third quarter of next year, this will become more apparent with the reduction of the absolute OpEx amount. So basically, this is what we anticipate for the coming quarters. Thank you.
Thank you. Our next question is from Luiz Carvalho with UBS. Your microphone is on.
Hello, good afternoon. Thank you for taking my questions, and congratulations on your operating improvement. I have two questions. My first question is just to get an idea of the quality. Your Bahia assets have been the ones that performed the best so far.... That's where the company was most successful in terms of increasing production.
I would just like to understand whether this is related to your strategy, the strategy of gradually mapping out the potential and also the difficulties of the assets. And also, if this is related to your divestment strategy, well, first related to, you know, better prices. And I would like to know whether you could give us better details about what is working well in Bahia versus Rio Grande do Norte. The second question is that we recently participated in a field trip to Potiguar, and I remember, Matheus, we were talking at that moment, and you said that you weren't able to map everything yet, given the size of the area, and also given the difficulty to access the assets because of all of the impositions by Petrobras.
There is a question I often get from the market that relates to the volatility in your results, that we saw that is decreasing, operationally speaking, but the trend is towards the second half of the year. Would you say that you would reach a more stable level when it comes to maintenance? I would just like to get an update to check whether this is still the case or what would be a more current scenario. Thank you.
Hi, Louise. Good afternoon, and thank you for your questions. Well, regarding your first point about Bahia, this reflects, in a way, the maturity and the time of the assets that are already in operation after the closing.
They've been in operation longer, and we see that in Macau, where we also see a significant evolution since the beginning of the year, and assets in Bahia, especially Rio Ventura, in the same format. To that end, what do we realize here? Great part of that initial effort of moving forward very strongly in terms of the integrity of the assets and the preparation of the infrastructure to take care of the surplus production that should be taken care of through workovers and reactivations, as well as drillings. It's the answer from a base that was already in place that allowed us to do to have these increments. In Bahia, the case is very similar to that of Macau. What we had of, you know, production that was in place but not used, and the drilling of wells, activities and workovers. Now we're getting more positive responses.
That was the initial objective, and this is also what we've been telling you quarter on quarter. At the beginning, we started on a slower pace, given all of the infrastructure limitations, and now, in fact, we are able to capture more significant increases. Our objective remains the same. This infrastructure phase is not over. We are already looking at production increments for 2025. We do not want to have any surprise, given the intervention campaigns for 2025, but in fact, this is a response, and we always refer to lead time of oil industry, suppliers, et cetera, because it takes some time. The closing of the assets, I mean, the transition until we took over the operation, happened some time ago, and so now we start reaping more positive benefits.
Just to highlight, in fact, the company is looking at the portfolio attentively. We are making a very detailed study of the portfolio. We are very pleased with our asset portfolio. Well, certainly, we will always study it deeply, and this has to be an interactive analysis. In every asset, we have to look at fields of, you know, smaller size and fields that respond for the Pareto curve of the operation. But again, the company is very much focused on the execution phase, and we are happy with our own portfolio. Again, constantly studying the portfolio in a very interactive way. Now, regarding your second question on volatility of the results, and in fact, we mentioned higher stability in the second half of 2024.
This is aligned with the first answer, because we have this time not only of maturing things, but it's important that we treat all the systems or the physical things during the operation, the onshore, the surface part, that responds for the treatment of oil and gas, not only involving transportation, but also transportation. Therefore, I mean, we work with pipelines, equipment and systems, and in 2024, in the second half of that year, we will see the response from several campaigns, not only in terms of integrity and facilities, but we're just getting the house ready for-
... increased production. We often talk about Papa-Terra because of the lead times of the asset and the Floatel campaign that is being planned for next year. And then we will concentrate our efforts to expedite that integrity campaign. In fact, in that case, we are talking about integrity, you know, redundancy of the system, increase in tanking, and this work will be concluded in mid-August, initiated in April. Therefore, in the second half of the year, we will be able to shorten that standard deviation regarding the production of every quarter, considering, I mean, the results, EBITDA, et cetera. This quarter, or on a monthly basis, we noticed that we were able to reduce that standard deviation. And again, this is just a result of extensive work. We have a series of infrastructure and integrity projects to get ready for increments like three to 4.5 years ahead.
This is just the response coming from several projects that were happening at the same.
Our next question comes from Ms. Milene Carvalho with JP Morgan. Ms. Carvalho, you may begin.
Hello. Thank you. I actually think that most of my questions have been answered, but I have some follow-up. I think the first point I'd like to understand better with you is production. I think we came from, in October, when we started the maintenance downtime for Clara Camarão and the UPGN, and we could expect some kind of flow restriction. In a very positive way, this did not happen. Given that this process is not over yet in November, should we expect any kind of impact coming from this maintenance, or is this all well addressed and we can see the consistency that you delivered in October also carrying on in the coming months?
Another point has to do with Papa-Terra. As Diniz mentioned, maintenance and Papa-Terra recovery phases were divided into two, but we had more critical moments when we had to stop production. This also had an important effect on your results. In that regard, what is the most critical schedule for Papa-Terra in the coming months?
Milene, thank you very much for the questions. Let me start with the stoppages, the scheduled maintenance downtime, both for the refinery and for the natural gas processing units, NGPUs. As we have been saying, I believe the biggest differential of the company is integration.
Our oil tank capability, and to have everything in our portfolio, which gives us a lot of flexibility, even in the recently taken over assets from Petrobras, with some deficiencies, yes, but still, we can plan and structure a maintenance plan so as to mitigate and sometimes even eliminate the impact on 3R production. This happens, for example, with refining. We scheduled these maintenance stoppages simultaneously in moments when we had the ability to store oil and to have sufficiently positive off loads in terms of sale price, with, with no impact whatsoever on 3R's production. At the same time, when we speak about natural gas processing units, it is important to remember that part of the relevant production by 3R is non-associated. It is gas produced at fields that can have a reduced flow without impacting oil production.
This is not necessarily the same in other onshore oil and gas companies, where when you reduce gas production, you impact oil production. But fortunately, we have that flexibility. Part of the gas that we produce is used for steam generation. The impact for 3R when we have a maintenance stoppage of the UPGN is relatively symbolic. I will not say that the impact is zero, but we lose very little production of oil and gas, of barrel, of oil equivalent, while we provide maintenance and we service the natural gas processing units. In a nutshell, this is the big differential of 3R. When we have the terminal, when we have oil tanking, and then we have a utilization of gas through the generation of steam. As regards Papa-Terra, I'll start the answer, and then I'll turn the floor to Diniz.
This has to do with what we normally say. When we took over the operation of Papa-Terra, we had one priority: in those assets that could have a relevant impact on production, and at the same time, we focused on the operating safety of the units. Fortunately, even without the Floatel, we were able to manage really well the people on board so that we could have maintenance, integrity, recovery, replacement of some parts and materials, so as to have greater stability, greater predictability of production looking forward. Now, of course, there are some systems, as Matheus mentioned, where the lead time for delivery of this equipment and these materials is longer, and so they will be done. They will stretch until the first quarter of next year, and maybe in the second half with the Floatel campaign. We continue with that campaign.
Power generation is something that we acted very intensely on, particularly in Q1 and Q2 of this year. In Q3 as well, we still had a relevant effort in that direction. And finally, now, in November, we already have one power generator, which is practically new. All parts, pieces, and materials of the generator are new, which really mitigates the main reason for previous stoppages, which was power generation. Diniz, would you like to add anything?
Yes, I just want to add that today we have more safety and more confidence in the unit. We started with one pump, one generator, one boiler, and now we have the backups. So the stoppages that we had, that would take 15-20 days when one piece of equipment was down, well, those are very much reduced over time.
The Floatel should start working in mid-April and should take between 90 and 120 days. In this period, as I mentioned in the previous quarter, we should have a production stop for 15-20 days, more towards July of next year. This is our plan. We're still finalizing the plan of purchases. We're starting to purchase the equipment to be trained, and we are going to be working hard in terms of the painting, changing some equipment, in the unit, so that we can increase the efficiency of the unit. That will be closer to 50%. By the end of next year, we want to have 80%-90% operating efficiency at the unit. Efficiency means how much we can produce compared to the potential of the wells that are operational at the unit.
That's it. All right. Thank you very much.
Well, thank you, Milene, for the questions. Our next question comes from Mr. Bruno Amorim with Goldman Sachs. Mr. Amorim, your microphone is enabled. Go ahead.
Thank you for taking my questions. I have two questions. The first is very objective and straightforward. I just want to understand, looking forward, what we can expect in terms of oil price. You're running at 93% of Brent, which is already some progress. I'd like to understand if there is any process to improve this or if this is the new normal. Second question is, as much as possible, could you give us some outlook for 2024 for the main metrics in terms of production? We're talking about a year of 50,000, 55,000, 60,000 barrels daily. The lifting cost perhaps will increase a bit in the short term and will drop again.
What would be a reasonable lifting cost for next year? If you could mention on the dynamic of other costs per barrel. And lastly, CapEx. If I understood you right, you mentioned $350 million-$400 million of CapEx for next year. Would this be without the CapEx of previous acquisitions? What would be the CapEx, including everything for next year? And in a nutshell, is it a year that will start generating cash, or is it a year for breakeven, in 2025, starting to generate cash? So what are you thinking for 2024?
Hello, Bruno. Good afternoon, and thank you for the questions. I will start with the first two, and then I will turn the floor to Pizarro to speak about CapEx. As regards oil price, we had an interesting evolution curve.
Of course, if we got the whole history. When we completed a number of transactions and deals, we carried some initial obligations, some commercial, because of the SPA obligations, and these were not obligations in terms of commercial optimization and unit price of both oil and the gas molecule, which were interesting. Over time, as these obligations were being dealt with, we had done an in-depth market study, and we have looked for a number of partners and more access to the market. And with that, we were able to capture quite significant values from the standpoint of unit prices, not just of crude oil streams, but also for the price of the treated gas molecule. It's worth pointing out that in some cases, such as in Bahia, we have a discount of $1.5. It's a very good quality oil.
In Rio Grande do Norte stage, we have an integrated structure, and between the business units, we normally use market price. So what we observe today is that we sell oil of the refinery directly to Acelen. It's an indicative price of the oil, and this is a very interesting price. We will most likely have improvements. This is what we pursue from the standpoint of oil and crude oil, mainly in some assets, especially in Papa-Terra, where because of a tank oil capability limitation, which evolved a lot already in Q1 2024, we'll already have access to the international market with some lots. Of course, we've been having commercial discussions and conversations with a number of companies that are waiting for us to be able to increase a lot, to have an offload that will have a logistics cost...
That will be interesting for us to improve monetization and the unit price. So we'll certainly have an evolution of the current price. So much so that we have an oil that has a very similar characteristic to oil that we mentioned before in Colombia. It's kind of heavy oil, and heavy oil has been having positive responses in the market. So most likely, we should be able to capture some benefit by expanding our tanking capability. We've been speaking with a number of companies, trading companies and refineries abroad. They know the oil. We've sent samples to a number of companies in the world, so most likely, we should have a more interesting price for the oil from Papa-Terra. For gas, it's a very similar situation. For some contracts, we carry some obligations from the SPA, and then we access the market as time went by.
We have some interesting monetization contracts for the processed molecule. We've been pursuing, from the standpoint of gas, other contracts, so that when there is oscillation in demand, not have a production effect. So we have good market conditions. If we feel safe, we'll also work a little bit with spot operations to capture some market peak conditions, but we are very safe about these prices. So in a nutshell, this is the aspect regarding pricing, and we'll continue to incessantly look for better conditions. And from the standpoint of oil products in the downstream, the mid downstream unit, it is what I mentioned in the first question. It's a lot of market. We do have some strategies or partnerships that can bring us an extra safety in terms of the difference of barrel price that we can monetize with oil products.
What was the second question, really? The second question was regarding CapEx. Well, basically, Bruno, what we have is the $350 million-$400 million of CapEx. That's the plan, as I answered to Pedro from BTG. And for 100% of 3R Of fshore, we have about $115 million. If we have just our stake, it's about $105 million, $105 million expected for 2024. When we look at debt interest rates, taxes, CapEx plan, we realize that our free cash flow to equity should be close to zero, between $0 and $50 million. This, if we do not have another loan, another debt, to replace payment to Petrobras.
So to add to my first answer, we continue to assess opportunities for a new debt, which eventually will not change our net debt and our gross debt along 2024. Because at the same time that we pay Petrobras, we replace that payment by another debt, and then with the new debt, the balance will be positive. In other words, in 2024, we'll already have a cash generation after investments and debt that will be positive without changing our net debt profile. On the contrary, our intent is by expanding EBITDA, which will probably happen along 2024, we'll continue with this downward trend of leverage. And today, we have a lot of comfort, and we'll have a lot more comfort in 2024. And let me go back to the outlook for next year in terms of production lifting costs and other costs.
What do you think would be the best guess? And Bruno, I apologize because I skipped that part of your question. Well, regarding production, our idea, our goal, is to get to a level in December, and I'll make this comparison based on December 2023, with a peak of 2024, a range between 44,000 and 45,000 barrels of oil equivalent in December. Our expectation before was a little higher. As I mentioned, we had not a problem, but a delay in some licenses. It's something that is not under our control, nothing to do with our ability to do workovers and drilling. Particularly in Q2, we continued exactly as planned, particularly regarding the workovers. We have carried out more than 400 interventions.
The drillings we had, particularly in the Rio Grande do Norte, have been responding even above the expectations of productivity for every new well, which is a very positive message for the company. But objectively, what can we expect for 2024? What we imagine is an increment. December to December, an increment of 25%-30% in production of barrels of oil equivalent. And this increment should be consolidated year on year. Not just from 2024 to 2025, but from 2025 to 2026, we'll pursue an increment in 25%-30%. So our expectation, what we plan, what we expect-
... from December 2024 and 45,000, and then something between 57,000 and 60,000 barrels in December 2024. As for the lifting cost, it's kind of what Pizarro mentioned, particularly in the first half of the year, we carry out a number of infrastructure activities. So we should be at around $20-$21 per barrel, and as of Q3 2024, we should expect an improvement in the lifting cost, not just because of a production increment, an incremental production, which corresponds basically to our big stake. It's a fixed cost, so that incremental will have a positive response. But also because of the whole infrastructure effort with this campaign in the first half. Thank you very much, Bruno.
Thank you.
Thank you. Our next question comes from Leonardo Marcondes, Bank of America. Your microphone is available. Good afternoon.
Thank you for taking my questions. My first question is about the potential cash generation of the company. It's just a follow-up of what Pizarro just said. I would just like to get a better understanding about it, especially looking towards the second half of next year or even 2025, when Papa-Terra is already performing better with a better, you know, operating efficiency. In your view, what would be the oil price that would be adequate for you to deliver a cash flow to equity equal to zero in the second half of 2024 and beginning of 2025? I mean, there are several macro variables, but thinking about constant interest rates with very few changes, it will be interesting if you could give me some color. My second question is about your hedging strategy and your MTM in your financial result.
If you could give me some color there, too, about these topics, I would appreciate it. Thank you.
Hi, Leonardo. Thank you. About free cash flow, as I was saying, as part of the company's strategy, and in the next few months, we will bring in a new debt, you know, at volumes equivalent to those of Petrobras. So the difference is the free cash flow to equity, the last line should be positive. At least, you know, equivalent to the size of the debt, approximately $100 million-$150 million. Therefore, we believe that throughout 2024, if we do not bring any new debt, we will be very close to $0-$50 million, as I said.
But with the new debt, that number goes up to $100 million, between $100 million and $150 million, bringing more liquidity throughout the year without changing the net debt of the company, as we've been constantly mentioning. So this is what we anticipate. And what level of pricing we are working with for next year? We usually include a 10%-15% reduction in relation to the forward curve without hiccups or one-off declines. Therefore, we are working around $68-$70 per barrel next year for all of these assumptions that I mentioned. Another aspect that we like to reinforce, that as the company has 80% of its portfolio onshore, we have a lot of flexibility to accelerate or decelerate CapEx when compared to a company that only has offshore assets.
As Matheus was saying, the time to deliver equipment and to get all the rigs, they have to be scheduled with a year and a half in advance. In the case of the company, if the oil price goes from $80-$50, we have a capacity to reduce that CapEx to half, and very quickly. This is the major differential of the company, and this gives us a lot of flexibility. About hedging, you know, mark to market, it should be clear to all of our investors that when the dollar appreciates, as it happened, from 4.80 to approximately five, we have a mark of our debt and obligations with a negative effect, because usually... I mean, our debt is denominated in dollars, and this impacts the financial result in the line of financial expenses.
So if there is a drop of $0.18 or $0.20 cents from the end of the third quarter to the beginning of the first quarter, there is an impact of about BRL 230 million in terms of financial expenses. And by the same token, the hedge is also impacted when oil price goes from $78 to $86 throughout the third quarter. If we were to do mark to market today, there will be almost no impact. We will be very close to to zero. Our NDFs are around $80, at the beginning, at $85, and our collars, when we look at our collar range or the distance between call and put, it ranges before, you know, $85 and $95 at the beginning. Therefore, we are within that range, but this volatility has to be monitored on a quarterly basis...
because at the end of the quarter, you take a snapshot, and this is an accounting issue. There is something that it's important to highlight, that even if the forward curve is within the range that we set for our collar, when that forward curve gets closer to call, it's close to the ceiling of our curve, this mark-to-market becomes negative. But if indeed, the future curve is realized like the forward curve, there is no cash disbursement, because we fall within that window. Therefore, I would say that the company is applying a very healthy hedge discipline. Our hedge volumes are around 12,000 hedged barrels for the next 24 months at much higher levels when compared to other, other listed companies in Brazil. Therefore, we are very pleased with our current hedge position.
One third of those 20,000 barrels in NDF, about $80 per barrel on average, starting with $86 and ending slightly below $80, and with collar, the window of 8,000 barrels in the range between $85 and $95. We are totally aligned with the hedging policy of the company. However, volatilities that have a more accounting effect than practical effect, they will occur usually when the oil prices go up, or also when the U.S. dollar appreciates against the real. And this is also translated into better operating results, better EBITDA, better revenue, that brings us a better impact rather than that, you know, one-off effect of mark-to-market, right?
Yes, that's very clear. Thank you. I just have a follow-up of my first question.
If we think in terms of the follow-on you had at the beginning of the year, and correct me if I'm wrong, I think that was much more due to a fear of lower oil prices and also in line with the service of the debt. If we were to look at it today, and I think you even said something to that end in your answer, at what level of oil prices do you think that this will impact your growth CapEx?
Perfect. That's a great question, and I even take this opportunity to say that we issued an Infrastructure Debentures. We already have an additional BRL 1 billion in, compared to what was published in our release, because we concluded successfully that Infrastructure Debenture, if we translate that into a dollar cost, it's below 9%. It's about 8.5% in dollar terms.
So this was a very positive issuance for the company, and certainly, this will replace the other debenture that we have in the company. Meaning that we will extend the payment, we will eliminate short-term debt service, and with that, we have a debt service coverage ratio, I mean, that is very comfortable. First of all, net debt- to- EBITDA is not a risk, even though some messages from the past have been served as an alert to the company, but that has never been a problem. I mean, with a drop trend of oil, this has never been a concern for the company, but now, in fact, it's not. It is absolutely no concern, our net debt-to-EBITDA. The debt service, as we were saying, with this debt replacement and infrastructure debenture, we solved the problem, so that's no longer a problem.
Certainly, we are constantly monitoring the forward curve and how we can look at this performance so that our CapEx is in line with what we want to do. Certainly, if the oil price, you know, falls substantially, we could even reduce that by 50%, but this would not hurt our production curve in terms of decline or drop. If we do just half of the CapEx that we have in mind, you know, of about $200 million, that means that we have a stable production. As Matheus said, we want to increase production, we, we want to use all of that $250 million with the intent of increasing by 25%-30% our production by the end of next year. Okay?
Perfect. Thank you. Thank you very much for your answers.
As a reminder, for questions, just click on the Q&A icon in the bottom of the platform. For questions using the microphone, use the same icon and type in your name and company. Our next question is from Gabriel Barra from Citi. Your microphone is on. You may proceed.
Thank you for taking my questions, and congrats on your results. Now, we can clearly see the results of all the work you've been doing. I mean, many questions have already been answered. I just have some quick follow-ups. You talked a lot about downstream, but there are two aspects that I would like to, to get more details about. Maybe, I mean, two models that you could envision in terms of the refinery operation. I also have a provocation because I want to understand-...
What you have in mind, and I'm referring to maintaining the operation or maybe do an offtake to have a commercial partner rather than just having an operation partner at the refinery. Would that make any sense? And maybe you could also look at some business in Brazil, like a bunker, which is not very commonly explored in the Brazilian market. How do you think that that could fit into the scheme of the company?
Yeah, we can hear you. Can we just answer that first follow-on?
Okay, let me just finish, and then you can answer all of them. My second point is about UPGN. What about the gas operation, whether it would make sense to bring a partner on board or to maintain the operation in-house? Would it make sense to do that together with someone else? And my last point is about steam.
You already gave some numbers regarding production and lifting costs, and I think, I mean, that's one thing, but I just want to understand how does that affect production in a timeline, even though you have a very small short-term impact, but maybe there will be a different impact once you have the new machines, or maybe it will go back to previous levels. This can help us to model your future production. Thank you.
Thank you for your questions, Barra. Speaking specifically about downstream and the partnerships that we refer to, in fact, we've been looking at some possible commercial partnerships, and they are not just limited to a simple product offtake. As you mentioned, the bunker, we can divide it in two macro groups. One would be the group of the lights. We are connected by pipelines.
Therefore, you end up having a commercial relationship with several distributing companies because they're connected by the pipeline, you know, gasoline, you know, and MDO. MDO is not something so heavy; it's maritime diesel oil. This, this has a very interesting price in the market, both in the domestic and also international market. And the bunker, which is the largest volume at the refinery. In fact, not only we've been talking about it, but we are consolidating partnerships. What we want is to have more predictability of EBITDA. And when we thought about this partnership, this partnership is more encompassing. Surely, we realized in the initial months of operation, that operation and maintenance, the O&M of the terminal and the refinery, is not a big deal; it's not any rocket science. We can operate it quite well.
We managed to evolve the nominal capacity of the plants, of both refining columns. We operated, you know, well with the tankage of the terminal. Therefore, what we are looking for is for a more strategic partnership that can maximize volume, be it through the terminal or be it through the mix of product strategy and a good strategy of sales. That's what we've been pursuing. This partnership, again, is not limited to a simple offtake or a sale of MDO of the bunker, but we are looking for a strategic partnership, something that allow us to have a more concentrated operation and then, you know, have a split between those who are more knowledgeable about trading, et cetera.
So these are the partnerships that we have in mind, and this partnership will certainly bring better results, not only in terms of EBITDA, but it will give us a higher degree of comfort to add, to increase EBITDA at this business unit once we consider an integrated productive chain. Now, about UPGN, again, reinforcing the message, I would say that we are very pleased with what we have in our portfolio. By far, you know, in order for us to render services at UPGN, things work quite well. This is an activity of service rendering. We do that for third parties, and at the end of the day, we do it for us as well.
But certainly, if we look at a transaction, I mean, that could be opportunistic or something very advantageous for the company, we will certainly look at it, and then we will follow that with an analysis. We are rendering services today, and we are very pleased with our current portfolio. I mean, your third question about steam, and then we'll turn the floor over to Pizarro and Diniz, because this is a very broad subject, and there is a lot of concern in the market. So I think it's interesting if my two colleagues also express themselves about this topic. Well, steam, Pizarro already talked a little bit about this transition of the Termoaçu contract. In fact, it was something very advantageous for the company. In terms of lifting costs, the contract would bring more than $15 per barrel.
What we lose in terms of production, in view of the absence of that contract until December of the first quarter, is something that does not exceed 15% of production, especially at Alto do Rodrigues and Estreito, and not of the entire portfolio of Rio Grande do Norte. At the end of the day, if we think of the portfolio as a whole, it's something that would be less than 4% or 5%. Therefore, it's not relevant to the portfolio. What is our strategy? We continue with the process that involves the allocation of the existing generators, and Pizarro will also talk about sourcing in the market, not only for the production of new generators, but we also found 3 generators in the market that had been produced but had never been used.
One of them we already acquired, and the other two we are about to acquire this month. So in addition to the relocation of the existing generators to more strategic places that are more demanding of steam injection, we want to bring additional generators, at least in all this portfolio that I mentioned. In addition to the relocation, we will bring, you know, more generators, in addition to all the three that we are acquiring. And then they will be enough to increase production in 2024 and 2025. The project will be carried out in 2024, and the new project in 2025 will involve that increment for 2025 and 2026. But until the first half of 2024, we want to be able to have all of the production in place by the end of December. The project will continue.
I'm just mentioning the conclusion of this first phase that accounts for the production increment until 2025, but the reallocation of the generators already is already in place. Therefore, we are reducing the potential loss between 10%-15%, specifically in Alto and Estreito. The new generators, one of them is supposed to arrive between December and January. It will be already installed at the base. Everything is already being put in place, the pipeline and the electric installations, because it's important that we gradually reduce that loss potential. I don't know whether this Diniz or Pizarro would like to add anything else.
No, Matheus, I think the answer was quite complete.
Thank you, Barra, for your questions, and if there are no further comments from you, Barra, we will now proceed with the closing. That's it. Thank you. Thank you, Barra.
Thank you all for joining us today. The management's message, not only in our release, but now in person with you, is that we are very pleased with the performance of the company. I take this opportunity to thank our team, our team in the office in Rio, Bahia, Rio Grande do Norte, the teams on board, you know, offshore, everybody working together. As you know, we've been working diligently. In practical terms, I think even the video helped to demonstrate our efforts. Every time we go out in the field, we see an evolution, we see the engagement and the integration of the team. Finally, we can say that not only we consolidated our portfolio, but we also concluded it. There is no longer one manager.
We already have the entire team in place, and we are very pleased with the performance of all teams. It has been a gradual evolution, but after all, we can use all the lessons learned throughout our four years of activities after the first funding for the acquisition of the Macau Cluster. Three years since we were listed, but four years since the first funding. But today, we are certain that our speed to revitalize and to rethink the mature fields is much faster. We are much better prepared. What we've done in Potiguar in 160 days, it's really astonishing. Our refining unit that has been totally recovered. It went from 15 to 19 barrels in capacity, and the second one is going, you know, in the same direction. The process should be concluded in the next few weeks.
Everything we did at Papa-Terra, in terms of integrity, recovery, risk reduction, it's also really impressive. More than half of our portfolio has been in operation for only 11 months. Papa-Terra, the closing occurred in December. Potiguar, the closing was in June, meaning, you know, very little time, but we are really eager to expedite things. We hope, you know, with the integration of our teams, to deliver better results, increasingly better results. As any commodity company, we depend on Brent prices and oil prices, but on our side, what we intend to do is to deliver greater efficiencies and reduce the lifting cost in all of the areas possible, constantly integrating our teams and operations. On behalf of the management and our team and investors, I would like to thank you all, and thank you for joining us during this earnings release call.
This conference call is now concluded. We thank you very much for joining us today, and I wish you an excellent afternoon.