Good afternoon, everyone. Welcome to PRIO's third quarter 2024 video conference call. I am José Gustavo, your manager, and I'll be your host in this event. We have an interpreter for simultaneous interpreting. Click on the globe icon. The comments on the results will be presented by our CEO, Roberto Monteiro, our CFO, Milton Rangel, and our COO, Francisco Francilmar. After the presentation, they will be available during the Q&A session. At this time, all participants are in listen-only mode to ask questions, written questions. You can use the Q&A button, or you can use the Zoom raise hand feature to ask live questions. This event is being recorded and will be available on our IR website.
This presentation contains information based on future estimates and forecasts based on assumptions adopted by the company, which can therefore change and should not be considered facts or be used as the basis for financial projections beyond the plans expressed by the company. Roberto, you have the floor.
Good afternoon. Welcome to our call to discuss third quarter earnings results. I'd like to start the call by summarizing the quarter. In the third quarter, we had a very positive highlight. The biggest positive highlight, which was the signing for the acquisition of 40% stake of the Peregrino Field, and we had a negative point, which was our production. This negative point in production was 70,000 barrels daily on average, and this was greatly impacted by some factors, which I think it's important to list well and understand well.
We had two scheduled shutdowns, one of them at Albacora, one of them at Frade. And these were scheduled shutdowns. Normally, they are shutdowns which I believe are very important to maintain the reliability and sustainability of the asset in the long term. And we also had a corrective downtime at Frade Field that lasted five days. This one was a stoppage due to a failure in the offtake line, and we had to shut down Frade Field for five days. So these items, these events, were the main causes of these 70,000 barrels produced daily. Alongside this, there is also the issue of the approval for TBMT-10 and TBMT-4 wells. We received approval for TBMT-8 wells. These are three wells that have been out of operation since the end of the second quarter.
So we spent the whole of the third quarter with these wells not producing. And to this day, we haven't been able to get the IBAMA approval to carry out workovers in two of these wells. TBMT-10 is a well that not only produces a good amount of oil, but also produces gas, which, as we'll see later, helps us a lot in terms of sustainability. Moving on to the next slide, we can see in a little more detail the issue mentioned on the previous slide. I'd like to draw your attention to the 70,000 barrels, the graph on the right. We've already talked about that, but I'd like to draw your attention to the lifting cost, $9.8 a barrel. We didn't necessarily have an increase in OPEX. I think our absolute expenditure remained optimized and remained completely under control.
However, we have moved to a lower production base, so this causes our cost per barrel, our unit cost, to go up. This is normal given our production of 70,000 barrels per day. By the way, today production is already at 79,000. We recently posted 79,000, and our expectation is to close the year, to exit 2024 with production close to 85,000 barrels daily, 85,000, maybe even more than 85,000. As long as we get the approvals for those two wells that we talked about at Tubarão Martelo, TBMT, there's a little bit of improvement at Albacora Leste in these TBMT wells. Let's talk a bit about cash. Today we have a cash position of $2.16 million, net of the payment of $192 million, which was the initial payment for the acquisition of Peregrino Field, so the company is super healthy.
Prepared to make the rest of the Peregrino payment now without the need to go to market, without the need to do anything. Our indebtedness went up a little from 0.4 to 0.5. This was due to this payment of $192,000,000. I'm going to hand over to Francilmar so he can talk a little about the operational side in more detail, and I'll come back to talk about sustainability and the next steps. Francilmar?
Hello, everyone. Thanks, Roberto. I'm going to continue here from slide on slide number five, dealing in more detail with asset performance. This was a very challenging quarter for us. The main points that impacted the operation itself were some scheduled and unscheduled production stoppages and the normal decline of the field, which we weren't able to offset with the expected increase in production due to issues related to environmental licensing.
As you all already know, this ended up resulting in a slightly higher lifting cost, which we can see here in the table. Lifting cost at $9.8, despite all the struggles we've had in production. There was a drop in basically all the assets. Different reasons, which I will detail a little later. So let's move on to slide six. Here we're going to talk specifically about the lifting cost, which is our main area of work. All our efforts are to control this lifting cost. This is what the company sees as the most important part to give the company resilience and sustainability. In this quarter now, due to issues linked mainly to production, a drop in production in many of the assets, we ended up suffering a lot with the lifting cost.
We worked hard on operating costs, on OPEX itself, managing to control it, to compensate here and there, despite having an increase in energy consumption. There was a reduction in gas produced and the consequent increase in diesel used. But we managed to compensate for that. Even so, due to the drop in production, we suffered a one-off increase in the lifting cost. We believe that by resolving these production losses that we had, all of them were one-off events, we were able to reverse them, and it's all getting better. So next quarter, we should see a much better condition. Moving on to the next slide, we're going to talk about Frade specifically. Frade Field in this quarter suffered some stoppages that had a major impact on production. One of them was the stoppage that lasted about five days with a total loss of production.
We had an integrity problem in the offtake line, the line that pumps oil to the shuttle tanker. There were punctures in the line, and we had to make repairs and redo some old repairs in order to ensure the integrity of this line complied with all the regulatory requirements. And this ended up having a major impact on production. We lost production of the asset for those days. We also had a partial shutdown to make a repair, actually not a repair, but an inspection of the container, of the valve, mainly of the instrument control system that is part of the gas treatment. And these are regulatory issues as well. Every X amount of time, we have to clean and inspect everything to see if the thickness is good enough, if everything is 100% compliant with the regulatory requirements. And this was done.
It ended up partially impacting production, which ended up negatively impacting production of the asset in this quarter, leading to an efficiency of 85%. There was also the issue of decline, but this is the natural decline of the field that's expected. The issue is that we were unable to work here to replace, to find new ways of producing and compensating for this decline, which is what we normally do in our operations. That well, that went offline at the beginning of this year, ODP-3 is still at a standstill. And we also need approval to do the workover. Given this whole condition, which is mixed up with other requests, it's in the queue, and we're still evaluating how exactly we're going to solve the problem of this well, and so the story of Frade continues, but on slide eight, let's talk about Polvo and TBMT.
The big impact we had in this area, in this cluster, was really the stoppage of the wells. We had three wells that stopped working between the end of May and June, and now, in the third quarter, we felt a real impact of that. Three wells offline, one of which we managed to obtain the license for in August when IBAMA ended the strike. We did the workover. We started producing with TBMT-8, but we still have TBMT-10 and TBMT-4 that are still offline. The pump burned out, the electric submersible pump that lifts the oil, and we're waiting for the approval, the okay from IBAMA to service these wells. It's exactly the same operation that we carried out in TBMT-8. However, IBAMA needs to evaluate our requests, and we are waiting for their approval, this okay, this green light from IBAMA.
Once this has been resolved, actually, we should have already received this approval by now, but we hope that very soon we will be able to do this, and then we'll allocate the rig according to the order of priority at the moment. These are quick operations. In 30 days, we can get them done and have the well back in operation. Other than that, the operation went smoothly, both on the platform at Polvo Field and at TBMT Field. In the quarter, in this period, we had an increase in diesel consumption because we lost gas for power generation, but we managed to offset by reducing other costs, and we controlled this issue. However, the final result of the lifting cost suffered a lot due to the loss of production itself.
At Albacora Leste, last year field on slide nine now, we also had a slightly greater impact this quarter. Efficiency fell some, but this was due to a scheduled stoppage, a major maintenance that we carried out on the asset. It was scheduled more than a year ago. Since last year, we have been preparing to act on large items, which were a threat, especially in terms of integrity. Large containers, vats, large pipes that were having problems. We solved a huge number of these problems, which ended up having an impact on production. We stopped for exactly 13 days, but it ended up having an impact a little earlier and a little before, before and a little after. When we drop production, it takes some time to bring it back up, and that had a really heavy impact on the field's production during this period in terms of efficiency.
Apart from that, we are doing a lot of work during this period to restore the units, large machines. We are replacing the turbines with new equipment. This week, we are finishing preparing a turbine and installing a whole new turbine. Then there's a second or third that we're installing. We should end November and December with a power generation system that is all repaired, all new, which will bring reliability, the reliability of this generation system to the level we expect and are working towards above 90%. Other battle fronts that we should resolve by the end of the year are the compression system. We're going to install a new compressor that is arriving this month, and it will also improve the compression condition. The injection system is already in a much better situation.
We're working hard this quarter to really turn the page at Albacora Leste last year in terms of the reliability of the treatment plant and then start next year in a better condition. Moving on to slide 10, we're going to give you a quick update on the development of Wahoo Field. Here, unfortunately, we don't have much news. Given the progress we've made in operations, we have practically all the equipment ready. What isn't ready is because we've held off a little just for logistics and cost reasons. When we are ready to install the equipment, we're ready to start drilling. The drilling rig is anchored there, waiting to be released to go to the field. The part for launching the subsea equipment is also ready, waiting there. We're both available to carry out this mobilization.
What's really holding things up, as everyone has heard in one way or another, is environmental licensing. This is also in the final stages. There are two processes. One is the process of drilling. The other is the process of installing the production system. Drilling is more advanced. We expect to get approval very soon. Then we'll start drilling. There are four wells. Each one will take us about two to three months to finish. Three months is our base case. And then we'll start the major installation work, the rigid pipeline, support vessel, the flexible PLSV, and the launching of the equipment, which will take six or eight months of intense work. So that's it. That's the general message. We're ready to work, and we're just waiting for the green light from IBAMA, okay? That concludes my part. Thank you very much. I'll turn to Milton.
Thank you, Francilmar. Good afternoon, everyone. Well, on slide number 11, we will talk about Prio's financial performance in the quarter. We had a significant drop in revenue, as you can see there, 40% in the column X and IFRS 16. So there are two important factors that explain this variation. Firstly, a quantity sold of 6.5 million barrels attributed to a drop in production, as Roberto and Francilmar have already mentioned. In the third quarter of 2023, we had 9.7 million barrels. So when compared to 6.5, that means a significant reduction. Another very important factor is Brent. The average Brent of our contracts in the third quarter of 2024 was around $76.40, while in the third quarter of 2023, it was over $88. So these two factors explain this variation in our total revenue.
Our sales tax, which was a result of a sale to Petrobras in the domestic market, so it was lower. COGS, cost of goods sold, reflects the increase in lifting costs. I mean, in fact, because we are selling a smaller amount, even though our costs are under control, this reflects a slightly higher lifting in this three-month period as well, and with that, our EBITDA stood at $321 million despite the drop in sales and Brent, but still a margin of 68%, an EBITDA margin of 68%, $327 million of adjusted EBITDA with a margin of 69%, and net income for the period of $164 million, a drop of 52% quarter on quarter. Now, moving on to slide number 12. At the start, I think it is important to talk about the central chart, the amortization schedule.
We notice that 2025 is a year in which we have practically no amortization, and in 2026, there is this taller bar that is made up of our international bond that matures in June of 2026, $600 million, and there is this other bar of $800 million that is already the result of these working capital lines. I mean, the bilateral debts that we took out this year to finance the acquisition of Peregrino, so we took out two- and three-year lines, part maturing in 2026, part maturing in 2027. In this photo, where we see the $800 million for 2026, it's also important to mention that a large portion of that is in the second half of 2026, so we have between a year and a year and a half to do the liability management and then extend this profile further, and it is in our best interest.
And more recently, after the announcement of the Peregrino transaction, we received a positive outlook from the three agencies that covered PRIO. So we see our credit rating with good eyes. And there, certainly, we are ready to take advantage of the opportunities both in the local market and in the international market as well to do the capital allocation at the best moment for the company. With regard to duration and the average cost of debt, it is just natural for us to see a reduction in this duration due to this concentration of the bilateral debts, which are shorter. So it pushes the duration from 3.5 to 2.8. And the average cost of debt increased from 6.16 to 6.68 due to the timing of the market.
We took these bilateral debts still at an interesting and competitive rate, but just slightly above what we had already been carrying in terms of average debt or the average cost of our debt. Then now moving on to slide number 13, what happened? You know, quarter on quarter, we were reducing our net debt thanks to the operations cash generation, which was more than enough to pay for our investments and expansion CapEx. This quarter, we had the payment of Peregrino sign-in and of $192 million. And this mainly explained this slight increase in our net debt in a quarter. Apart from that, we followed our normal CapEx schedule. There was a small impact on working capital, $112 million, mostly coming from Wahoo, the acquisition of materials for Albacora Leste, the workover of Tubarão Martelo, the financial result, tax payments.
That's how we arrived at this net debt of $789 million. Now moving on to slide 14, still on capital structure and leverage, we see a slight increase in the company's leverage. I mean, very much explained by the previous slide due to the Peregrino signing. We then increased our net debt marginally and brought this leverage indicator to 0.5 times, still very low. We have a very comfortable liquidity position, more than $2.1 billion US dollars in our cash, which is more than enough to fund the Peregrino closing and maintain a good cash cushion for our operations. From the point of view of capital structure and compliance with covenants, we are extremely comfortable and also ready to honor all of our commitments with a great deal of security. With that, I'll hand over to Roberto to talk about ESG, the environment, and our next steps.
Thank you. Thank you, Milton. In regards to environment, society, and ESG in general, we recently published our second sustainability report for 2023. I'll skip the part on emissions, and I'll get back to it at the end. We conducted several workshops on safety. We have an extensive task force focused on SGSO, which is the Operational Safety Management System, mainly after that corrective action in the Frade offtake line. We continue to focus on our health and well-being programs. We continue to carry out all the activities we used to do for our employees, such as trekking, hiking, running events, etc. We continue to foster social inclusion through sports and culture. Now, speaking about relative emissions, the numbers were slightly worse when compared to last quarter, 27 kilograms of CO2 per barrel of oil equivalent. This accounts for a 35% increase when compared to the previous quarter.
The main driver behind this increase, or the main cause of this increase, is that production was lower considering the same base of assets, very similar to the case of the lifting cost. Some emissions remained constant. However, since we divided by a lower production number, that number per barrel increases. Moreover, there is another aspect, which are the Tubarão Martelo wells, numbers 10 and 4. Tubarão Martelo 10 not only is the one with the highest production in the field, but also the largest producer of gas in the field. When Tubarão Martelo 10 is in production, we can substantially reduce the burning of diesel oil in the FPSO.
This also has a positive impact on the environment, not only the issue of dividing by a larger factor or a larger base and by having producing more, but also the fact that physically we were burning less diesel because Tubarão Martelo 10 is a well that produces a very good amount of gas. So these were the two main pillars of the company's increase in emissions. We are still trying to get these approvals from IBAMA, and we really hope to get these licenses before the end of the year or, I mean, in the short term. Now I will move to the next steps. Within the next steps, two of them are often mentioned, and we mention them every quarter. It's the first and the last, both the focus on health and safety and the fact that we are trying to identify new M&A opportunities.
This is part of our DNA. We will always do that, but the three main points of action for us this next quarter, I mean, in this fourth quarter, which may be a repetition from previous quarters, but the first one is Wahoo's environmental license and the permits for the workover, and all that work involves IBAMA. We hope to start getting these licenses sometime soon. We are already more than a year behind with the licenses. I think more than a year behind with the licenses. We were supposed to get these licenses in December of last year, and today, we're at least a year behind. We are going to focus on Albacora Leste's operating efficiency. Today, we already have a much better situation at the FPSO, much better than what we had in the previous quarter.
Now, in October, in November, we are replacing two turbines on the FPSO. So we will have three very good turbines on the FPSO by the end of November. This is very important to boost efficiency. And in December, we will install another compressor on the FPSO. And out of three, we will have two very good compressors, which are gas compressors. So this combination of three turbines with two compressors and two very good water injection pumps, which have been installed in the past, and they are very good, will mean that our Albacora efficiency will improve substantially. This is our expectation, and that's what we've been working very hard to achieve. And we are very close to be able to turn this Albacora game around. It was more difficult than we thought, but I think we are getting very close to turning the game around.
In addition, we are going to work hard on the Albacora Leste revitalization campaign, and I hope to be able to provide you more details of their revitalization campaign soon. We received the seismic data in the middle of the year, and our geology and reservoir engineering team has been working hard so that we can identify opportunities. Afterwards, you know, after Wahoo, we will carry out the Albacora Leste revitalization campaign, the same thing as we did with Frade, very successful. With that, I conclude my presentation. I would like to thank our employees for their determination and also thank you for your encouragement and support throughout the quarter. Now I will open the floor for questions. Thank you very much.
Boa tarde a todos. Agora a gente começa a sessão.
Hello again. Now we'll start the Q&A session relating to our earnings. First question from Pedro Soares with BTG.
Boa tarde, Zé. Boa tarde.
Good afternoon,
Zé,
and the whole team.
Eu tenho, acho que uma primeira pergunta aí.
I think I have a first question. Connecting to Wahoo's production license. You spoke a lot about that, I know, but perhaps you could remind us. After the publication of the RIMA, there was a period of 45 days.
Esse período já foi concluído, porque eu lembro que era depois.
Has this period passed? Because it needed to be published in the official gazette, federal official gazette. So has PRIO now entered the subsequent period of just waiting for the license to be issued? And the second question about the buyback. After the Peregrino acquisition announcement, you were very vocal saying that you intended to complete the outstanding program.
So I'd like to hear a little bit more about the pace of the buyback. If I'm not mistaken, it's valid until August of next year. But given the leverage under control, the visibility of the results, perhaps we could expect an acceleration of the program. Perhaps you paused it for a while. So if you could give us more color regarding that planning, that would be much welcome. Thank you. Much appreciated.
Hello, Pedro. Good afternoon. Thank you for the questions. As regards to the public consultation, the deadline ended last Friday, and we didn't have any feedback. So now we are in this period where IBAMA is free to carry out their analysis without needing a public hearing, a public consultation, nothing of that sort. So that was positive. It was another positive step achieved. And then Peregrino's in that spot that we've been talking about.
We had a request for additional information by IBAMA about two weeks ago regarding the licensing process for the line. We answered, we replied to IBAMA. Now the ball is in IBAMA's court. They have to do the analysis and get back to us. Next step will probably be the license. Of course, they might ask for more information, but the next step would be a license and then the installation license, which will give us approval to start laying the pipes and so on. As regards to the share buyback, from the announcement of Peregrino till now, we purchased 0.5%. We won't keep this until August of next year. Most likely, we'll get to 10% way before August. We are repurchasing. We kind of stopped it for a while. We paused it for 15 days because of our results.
We couldn't buy the shares back, but now we're going back to the market. And our goal is to get to a leverage close to 0.4, 0.5 by the end of 2025. So with this north well established, the quote-unquote surplus cash will be used for the share buyback, which is what we are doing. So we'll continue exactly as planned.
Thank you. Thank you for the question.
Thank you for the question.
Thank you, Pedro. Next question from Bruno Montanari with Morgan Stanley. Bruno, good afternoon.
Thank you for taking my questions. A follow-up regarding the relationship with IBAMA. From what I understood, the conversations are unfolding well. So I just want to understand your expectations. Do you think that they're going to be asking for more, for a lot, anything pending, both for Wahoo and for the approvals? And I thought your comment, Roberto, was very interesting.
Not having approval, it means they're emitting 30% more CO2, which seems very counterintuitive in terms of what an environmental agency should be aiming for. I mean, that's my personal opinion. So I'd like to hear your comments on that. And my second question, perhaps to Francisco Francilmar, if you can speak a little about the water cut and water flooding, how you're dealing with this increase in the volume of water and if it's possible to take the field to the levels we had seen before. How are you managing the reservoir? Thank you.
Thank you, Bruno. As regards to IBAMA, it is really counterintuitive when you think about the approval for TBMT 10, because this is a well. Then when it is operational, it improves a lot our index of carbon emissions. And the work to be done is not different than what was approved for TBMT 8.
This is exactly the same workover. So that's why it gets a bit anxious or with high expectations that we'll get the approval soon. But the conversations are happening. They're moving ahead. And hopefully, we'll get there and we're going to have this resolved at least by year-end regarding these wells. Now I'm going back to Wahoo. The drilling license, I think, is soon to come. We received another request for information about three weeks ago. We promptly responded. And what we see is that these requests for information are becoming simpler and simpler. So this means that we're getting to the end of the process. I mean, there's not much to say, much to be adjusted. So that was the last request for information we had that was kind of simpler. Things were like just including Wahoo in our environmental monitoring program, which is something obvious to do.
We were going to do it anyway. So these are not major items. So I believe that we are getting to the end of the story regarding the drilling license. The installation license, I believe, will take a little longer. Ideally, if it were to obtain it by year-end, that would be great because we could start laying the pipes already in January of next year. But I mean, we don't have that visibility. I keep trying to push IBAMA, but they don't give us any date. I believe that it's also getting to the end. It's what it looks like considering their requests for information, and I'll let Francisco Francilmar speak a little about the Frade water cut. The increase we are seeing in water production is inherent to the normal production system. That's when we start having water produced.
We manage the reservoir to try to control the pressure differential and control this water production as much as possible. But we're going to see an increase in water production as the lifespan of the well increases. There are reservoirs that have more or less water. That's natural. What we try to do to bring the field back to a peak of production, to a higher production volume, is by inserting new reservoir areas where oil is more separated from water. So new wells will come in the future or will reposition wells or some additional work will be done. But that's for the future. Today, we're focusing on Wahoo. Wahoo will bring 100% of new oil in the future, depending on the aquifer, what it will come to. That's the normal process.
And then we'll address other areas at Frade to have new wells with more oil and less water. And that's how we will work sequentially.
Perfect. Thank you very much.
Thank you, Bruno. Our next question. From Gabriel Barra from Citibank. Barra, you may proceed.
Hello and thank you for taking my questions. I have two questions. My first question is about your Wahoo timeline and then Albacora Leste and also the approvals. And from what we've heard, the approvals should come after the drilling and the tieback licenses for Wahoo. I think my question is, I mean, I know that you're using Hunter Queen for future processes. Is there any possibility for you hiring another rig to do that together with Albacora Leste, or you have to wait for Hunter Queen so that after Albacora Leste, you will do all the workovers that need to be done in Frade and Tubarão Martelo?
I just want to have a better understanding about your production curve, whether you have any plan B in mind. I see that Bruno is here, so I have a question for Bruno. Maybe you can tell us a little bit more about internationalization. You talked about buyback, and maybe you can give us an idea about the company leverage. It's interesting to see where you're heading, but I think you are mostly focusing on growth, that you still have potential investments to do in the next coming years, and we talked a lot about internationalization in the last calls. We have that discussion. We still have 60% of Peregrino, which is the remaining amount, so maybe there should be a sale, so what about your timeline, and what do you have in mind going forward now that you already have 40% of Peregrino?
What will be the timeline in terms of capital allocation together with this issue of buyback?
Gabriel. Bruno is here, but I think I will answer the question on internationalization. Bruno is our M&A officer and new businesses and trading. Internationalization, I mean, the path is very similar. We're clearly looking at assets in Brazil, in the Campos Basin. We managed to get Peregrino. If you get the rest of it, it will be fine. There is a lot more to come. When we talk about internationalization, I mean, the Gulf of Mexico specifically, and the Gulf of Mexico and part of the U.S., I think that's the only thing that would interest us. It's still merely a thesis. We are monitoring the Chevron field production, and it is within our expectations. There is no major surprise. I mean, it's within our expectations.
Therefore, we're still waiting to see how things will unfold. I mean, our Gulf of Mexico thesis has to do with the new area 20K that could be interesting, and so if it is interesting, I think the majors would also migrate to that area in terms of capital allocation, and they will leave a few things that may not make sense to us, but this is still being analyzed. I mean, there is nothing in place in that regard. We continue to look at the Brazilian market, and we are looking at several possibilities here in the country, and so now our main focus is in Peregrino, so that's it. There are no major changes. I mean, the schedule is not moving forward at a higher speed or anything.
The second aspect related to the rig, and I will apologize to Francisco Francilmar because my answer to that question is, I mean, the approval for Tubarão Martelo is in the midst of the Wahoo program. The Wahoo wells will be drilled in batch. We will start drilling two wells. I mean, they are not sequential. They're running in parallel. You drill the phase of one and then the same phase of the other well. And then you go back to the second phase of the first well, and you do the second phase of the second well, and so on and so forth. With that, you have gains in terms of the rig. We can also fit Tubarão Martelo in between these two phases. Like we could have the first phase of Wahoo, of the two first wells. Then we could go back to Tubarão Martelo and Polvo.
We would put wells 10 and 8 to work, and then we will go back. I mean, Tubarão Martelo, once the approval is concluded, we will execute it. What will not be executed after the approval is ODP-3, because ODP-3 is a well that requires additional work. We don't know what happened in the well. Tubarão Martelo, we know that there was a failure with the pump. We have to analyze it. We've done that a million times. But ODP-3, we don't know exactly what happened to the well. That means there are several possibilities, and it could be something that could last 15 days or maybe 45 days. Therefore, we do not want to have that uncertainty in the midst of Wahoo.
Our schedule that contemplates starting Wahoo, and once we get the license for Tubarão Martelo, we will leave Wahoo, and we will go back to Tubarão Martelo. We will go back to Wahoo. We finish Wahoo, and once that is concluded, we will decide whether we go to Albacora or ODP-3, depending on the license. Now, placing a second rig or even more vessels to anticipate Wahoo, it's also another possibility, and we are looking at it. About pricing today, we can say this theoretically. Does it make sense? Yes, it does. It depends on that window of opportunity. I mean, it could be today, tomorrow, next month, but it's something that we will certainly be very alert. It's not that the ultra, the rig, or probably more vessels, because this could expedite the laying of the pipes.
But we have to wait a little bit, because once we have the license, then we can go to market and look at the market position in a more binding way. I mean, we shouldn't look at it now, because if we look at pricing, it's hard for us to conclude anything. I think just to clarify, in our view, I mean, our assets, they are supported by hedging. I mean, they guarantee the base. But when we look at market windows of opportunities in the market in terms of pricing and timing, we could also expedite our timing. This is what we have in mind. This is our context.
Thank you. That's very clear. Thank you very much.
Thank you, Barra. Our next question comes from Leonardo Marcondes from Bank of America. Leo, go ahead.
Good afternoon, and thank you for taking my questions. I have two questions. My first question is a follow-up on Wahoo. Can you please revisit the steps related to the laying of the pipes, the pipeline? Once you get the license, how long does it take for the vessel to arrive in the country? How long does it take for you to lay the pipe? And also, how long does it take to lay the subsea pipes? I would just like to get a better understanding about the steps involved and whether you have any limiting window for that vessel. My second question is about Peregrino. I would like to discuss with you the certification of the field. I think in the next three years, the average production would be 100,000 barrels a day. This is a reasonably high level, like the field will produce that in a month.
Therefore, I just want to understand how do you see the, I mean, the production stability of Peregrino going forward vis-à-vis the certification. Thank you.
Thank you, Leo. In terms of the laying of the pipes, today with the vessels we have, Francisco Francilmar just said that our minimum floor, I mean, with the number of vessels we have, once the first oil starts, it takes about six months. Now, the bulk of the work, once the license is in place, we have to bring more vessels to help out. It's not just the pipe laying vessel, because that's a very quick operation. It may take about 40-45 days. But you have all the peripherals that have to be laid as well. So all of these other peripherals, I mean, that's a big possibility of having more vessels.
We will, I mean, combine the program in an attempt to anticipate things. It takes 45 days for the vessel to arrive in the country, in Brazil. So once we give the notice to support, it takes 45 days for the vessel to arrive. We will not give notice now because we do not have any visibility in terms of obtaining the license. But with a previous license, if we get any kind of commitment on the part of IBAMA, we can see some more possibilities of giving that notice for the vessel to leave the port. I mean, things are a bit shady at the moment because we still have to wait for the license. But I would say that if we do everything without adding any new things to the fleet, it would take about six months.
But once we can increase the fleet, we will be able to anticipate production. The other question was about Peregrino. That 100,000 barrels a day comes from wells that will be drilled. The Equinor working schedule includes the drilling of three to four wells a year in terms of putting them to production. So these three or four wells are the ones that will hold on, I mean, the decline of the field. We can't put more than that because the FPSO does not have enough production capacity. So Equinor's idea is to maintain the field close to its maximum production level during the next few years through new wells that will be drilled. So that's it. They are new wells. They are new wells. There is nothing like nothing rather than that. They're just new wells.
Okay, it's very clear. Thank you. Thank you very much for your answers.
Next question from Rodrigo Almeida with Santander.
Boa tarde, Zé. Boa tarde, Roberto.
Good afternoon,
Zé.
Roberto in the whole PRIO team. I have some follow-up questions, and I'd like to go back to production. Roberto mentioned 85,000 more towards the end of the year. So I'd like to confirm. Were you talking about TBMT, or does that include Albacora Leste, or would we need to count on the workovers as well? And I'm thinking about the bigger picture. Albacora Leste, now with the additional maintenance, we'll see until the end of the year, given the integrity of the asset, which I believe makes a lot of sense. You mentioned that you need that to have the field running well next year. Should this bring a scheduled stoppage for you in the coming months? I think it would be nice to have that kind of mapped out.
Second, I'd like to explore costs. Francisco Francilmar mentioned he talked about the lifting cost and he talked about power generation at FPSO Bravo using diesel, and that has an impact on CO2 emissions, so he had points about cost dilution given the production of production, but I would like you to speak more about the FPSO Bravo so we can understand the situation better. Thank you.
Shall I? Okay. Rodrigo, to give you a better idea, yes, we have this volume that Roberto mentioned, 85,000 barrels by year-end, and this considers the wells of TBMT. At Albacora Leste, we are working so that when the turbines are revised and the compression system is recovered, we'll have three new wells to or three more wells to put into production, so we could produce even more than that, but 85,000 is a good number.
The workfront at Albacora Leste is a big one. We have to improve reliability to guarantee performance of the vessel, and we'll bring production through the maintenance of the wells to put them back online. We have also to replace or put the TBMT wells back in production. That's production. Regarding cost, TBMT costs, yes, we are spending more with diesel. Spent about 50 cubic meters more of diesel per day. So it's about $50,000 more per day. But we offset that with the other assets. You know, make improvements here, you make improvements there, and we are surviving with not a lot of events. I don't know if it's clear. It is clear. About Albacora Leste, the additional turbines to be installed, will this have any effect in terms of having to stop the field for these installations? No, no.
Everything that we are doing happens in parallel. There are no scheduled stoppages. The one we had this year was quite big, with quite a representative scope. We don't have any scheduled stoppage for the near future. We'll probably have one in the beginning of the following year.
Okay, perfect. Thank you very much.
There will be a scheduled stoppage to connect Wahoo. Yeah, it's Friday, yes. There will be a stoppage.
Perfect. Well, thank you very much.
Thank you, Rodrigo, for the question. Next question from Regis Cardoso with XP. Regis, how are you?
Hey, everyone, Roberto, Milton and all of the officers. Perhaps on Wahoo, I just want to understand the timeline. I understand that in the best case scenario, perhaps with the exception of adding assets, it would be the beginning of the second half, and I'd like to understand the possible formats.
Given your description of drilling wells in batch, there's no scenario where you start with one well and then you add the second one and then the third one. Perhaps you would start with two and then drill two more. I don't know whether pipe laying is critical or if drilling is the critical part. So I just would like to understand the possible formats and what is the best case and the base case in terms of the timeline for Wahoo. My second question is about Peregrino. I just want to understand what we should expect in terms of Peregrino's consolidation. So closing is expected for this year, you would say? What is the result? 40,000 barrels to be added or a little less? Any fact we should consider in terms of CapEx concentration or not in the first period? Will it take a while for the first off-takes?
I mean, I just want to try to get a sense of the effect of this asset in the results of the company. Thank you. Regarding Wahoo, we'll drill in batches. The batches means two wells and then two additional wells. I think that from what it looks like, we're going to have Wahoo's first oil from two wells. It really depends on the environmental license. But first oil could come at any time from May to August. Again, I am just giving you a huge range because it depends on the environmental license. We don't have a lot of information. I mean, we don't have a lot of certainty in terms of when the license will be obtained. I think that we should start with two wells, and soon after first oil, we should have another two wells. Because when you drill, that's where we can have more certainty.
Thank you. Regarding Wahoo, we'll drill in batches. The batches means two wells and then two additional wells. I think that from what it looks like, we're going to have Wahoo's first oil from two wells. It really depends on the environmental license. But first oil could come at any time from May to August. Again, I am just giving you a huge range because it depends on the environmental license. We don't have a lot of information. I mean, we don't have a lot of certainty in terms of when the license will be obtained. I think that we should start with two wells, and soon after first oil, we should have another two wells. Because when you drill, that's where we can have more certainty.
We should start drilling in December or January, and then we have two to three wells to drill each well, and if you do the math, you'll see it's a timeline from May to August. I know, I mean, it's a wide time interval. I know, but we haven't got visibility regarding the installation license, and you'll see that we'll start with two wells and then soon after the other two. That's for Wahoo. Regarding Peregrino, we expect closing soon. We are fulfilling all the necessary formalities, and as soon as we have the closing, we'll have consolidation of the deal. Not 40,000 barrels. The field produces 100,000 barrels. When the field produces at maximum capacity, the average is close to 90,000, then 100,000, so I would add 36,000 barrels to our production. We're going to have 36,000 barrels offtakes every two weeks, maybe. Offtakes of 650,000.
Immediately after the closing, we get the revenue. We start having revenue, so we expect a price of $12 per barrel, so we'll start consolidating the moment that we start counting on the oil barrels. There's no great CapEx concentration. Of course, there's a program that we will follow. It's Equinor's program, and we will follow. But that's it.
Okay, perfect. Thank you very much.
Our next question comes from Tasso Vasconcelos from UBS. Go ahead, Tasso.
Oi, Roberto,
Zé, todo o time.
Hello, Roberto,
Zé,
and the entire team. Thank you for this opportunity. I have two questions. They are probably addressed to Roberto. Give me a follow-up on production. I think you already mentioned the expectation of having about 86,000 barrels for this year.
Looking at the end of this year and the end of next year, we are seeing 85,000 until the end of this year, plus 40,000 from Wahoo, and sometime later, 25,000, and more stabilization at Albacora Leste. Could you think that by the end of 2025, PRIO would be a company of about 170,000 barrels a day, and this would be the minimum base case for 2026? And another follow-up on that same question. Once PRIO produces 170,000 barrels a day, it will certainly be a large cash generator, much larger than what you have today. So except for the purchase of Peregrino, looking to next year, don't you think now it's time for you to take a closer look to the Gulf of Mexico? I mean, could you think that Gulf of Mexico could be a possibility for 2026?
Thank you, Tasso. I think the exit for next year for 170 is probably too much. But if we start the year with 85, let's say that we had a decline of 10,000 barrels, that would give us 75. And then 75, we can add 36,000 barrels from Peregrino, that gives us 110. Plus Wahoo is 150. So I think that should be closer to 150 rather than 170, right? I think we should think in terms of 150. But anyway, I mean, the company will certainly be a major cash generator, and we will deleverage very quickly. So the idea is that by the end of next year, our leverage will be 0.5 times. We can deleverage very quickly, and we can get prepared for an M&A.
But I cannot tell you whether it will be the Gulf of Mexico or whether there will be the possibility of acquiring the remaining part of Peregrino or not. And I think in the long run, maybe it would make sense to think about that, but I don't think. I don't know whether that could be feasible or not. Gulf of Mexico, maybe yes. I would think that this could be more towards the end of 2025 and early 2026. I mean, if the business makes sense. The only thing that I do not agree is that number of 170. I think we are slightly below that. 170, we can reach that with Albacora. Once we put in place our revitalization campaign for Albacora, then maybe we can get closer to that. And another follow-up on what you said.
This campaign at first would be Wahoo ramping up sometime next year and Albacora Leste. At first, it will ramp up in 2026. Well, I'm being conservative, maybe not so conservative. I'm thinking for next year, we have Wahoo, and the following year, we would have Albacora Leste. So we have at least 30,000 barrels to be added through Albacora Leste. So that's where all the volume would come from.
Very good. It's clear. Thank you.
Thank you, Tasso. Our next question is from Bruno Amorim from Goldman Sachs. Go ahead, Bruno.
Good afternoon, and thank you for taking my question. I have a follow-up question about production. You mentioned 85,000 barrels a day. I would just like to understand how much of that depends on some approval or license, and what is your vision going forward? And the second question is about buyback. I mean, buyback is clear.
I mean, your vision is very clear. But I would like you to talk a little bit about that trade-off of dividends versus buyback, and what is your view when you look at one versus the other?
Well, to reach that 85, we don't need IBAMA's approval. We need the approval for at least the two wells at Tubarão Martelo. I think we could reach 82,000 with Albacora alone once Albacora improves efficiency. But to reach 85 and a little bit over 85, we need Tubarão Martelo, the two wells at Tubarão Martelo, and we need IBAMA for that. In terms of the buyback, I mean, we would like buyback because we think that the price of our shares is not in keeping with what it should be. That's why the buyback is in our mind. We want to allocate capital.
There are lots of things in place, but we see buyback as a very good opportunity. We could also do that continuously. I mean, dividends, you have to collect the money, and then you distribute it, and buyback is something that we could do in a timeline, and that's it. I mean, maybe further on, we could talk about it again. Of course, nobody here is against anything, but nowadays, that's what we see. I mean, the share buyback has been the main focus.
Thank you, Roberto.
Thank you, Bruno. I guess that with this question, we have answered everyone, so we're going to be closing the Q&A session. I would like to turn the floor back to Roberto for his final statements.
Very well. I'd like to thank everyone for another earnings conference call, and I hope to see you again in three months. Thank you very much. Have a great day.