Good day, ladies and gentlemen. Welcome to the conference call to discuss first quarter 2019 results of PetroRio. Thank you for standing by. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session for analysts and investors, when further instructions to participate will be provided. Should you need assistance during the conference call, please dial 40 for the operator. This event is also being broadcast simultaneously over the internet and may be accessed through PetroRio's investor relations website at ri.petrorio.com.br by clicking on the banner 1Q19 Earnings Release. Before proceeding, let me mention that forward-looking statements that may be made during this conference call relative to the company's business perspective, operating and financial goals, projections, are based on the beliefs and assumptions of PetroRio's management and on information currently available to the company. Forward-looking statements are not a guarantee of success.
They involve risks, uncertainties, and assumptions. They are related to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors can also affect the future results of PetroRio and could cause results to differ materially from those expressed in such forward-looking statements. I would now like to turn the conference over to Mr. Nelson Queiroz Tanure, CEO, Mr. Roberto Monteiro, COO, Mr. Milton Rangel, Head of Finance, After to Mr. Guilherme Maia, CFO, New Business Officer, and Investor Relations Officer. Let us begin with Mr. Tanure. Please go ahead, sir. Good afternoon, everyone. Thank you for joining us today to discuss PetroRio's first quarter results.
I see that there are many people who work at the company participating in this conference call, I want to greet all of you. As I always say, you are the driving force of this company because of your dedication, hard work, and devotion, this company each year could reach new goals, and you did very good outlook. Thank you very much. For those of you who are not employees, I want to repeat something that is very important. 80% of all PetroRio employees are also shareholders, which is a very important element explaining our success. To speak about the first quarter of the company, we had a very safe quarter in terms of operating efficiency and very high safety indicators. Safety is a priority for all of us at the company.
Polvo Field has been operating at a very high safety level, which is vital for us. Our HSE, health, safety, and environment, continues to reach very high industry standards, and this is a matter of pride for us. Manati Field, operated by Petrobras, has been operating at a very satisfactory safety level as well. With regards Frade Field, we became the operator only on March 25th, We prepared a lot, so that when PetroRio took over as operator of the field, this transition would be as fluid and safe as possible. In this period, from March 25th until the end of the quarter and until now, we've had a period with a lot of safety and a lot of predictability, which makes us very happy, We intend to keep the bar high, which is a priority for the company.
To start with the highlights of the first quarter, the main one was the completion of the acquisition of Chevron's working interest of Frade Field. Chevron was the operator of Frade. When we closed the deal, PetroRio became the operator. That happened on March 25th. We now have an increased working interest, and I hope we will soon close the deal with Impact that will bring us to a 30% share of the field. This is a transformational field for PetroRio. In addition to more than doubling the production of the company, we believe we have a great potential to generate value, both from the standpoint of optimizing costs and sharing resources with Polvo Field, and also as regards a better management of the reservoir to increase production.
I believe that most likely in 2020, we will have a drilling campaign at Frade Field to increase production from the asset even further. We are very happy, and we are very excited with this deal. Just one more comment regarding Frade's results. When we analyze our numbers, it is visible that the whole debt related to this deal is reflected. Well, only five to six days of results are posted. I would like to give you some peace of mind that this debt is totally manageable. It will be repaid in two years, actually less than two years. The company remains extremely well-capitalized with a very healthy and solid capital structure. Moving on to Polvo. Polvo Field continues to generate many results for us as a company. It is a surprising asset regarding its longevity.
This is not just a surprise, it stems from the dedication of our technical and operational teams, led by Roberto. Roberto will give you more detail on Polvo. The only highlight about Polvo that I would like to mention is that in addition to continuing to operate at a very high level of safety, we are preparing ourselves for a drilling campaign in the second half of the year. All the part of preparing the rig for another campaign, getting quotes from suppliers, and preparing to start to effectively drill at Polvo, all of that is at an advanced stage. Roberto can give you more on the preparation for the Polvo campaign. Our third producing asset is Manati. It is a field that has been producing for quite a while now in a very satisfactory way. If anything, it has been a positive surprise.
Manati is an excellent field. We had a scheduled downtime, and this maintenance was expected, and it was scheduled to happen, and it is something that the field needs to make sure that it will remain very safe. Manati is doing quite well. I would like to conclude my remarks with a final take-home message for all of you, which is, all of us who work at PetroRio, in addition to being passionate about the company, we think about the future of the company, its sustainability. We want to create value in the short, mid, and long term. We care a lot about operating discipline as well as about financial discipline.
With this, I would like to stress and show that we are optimistic that the company will continue to be a player in the M&A market in Brazil, both participating in formal divestment programs, the most famous one being Petrobras, and looking at other assets that might not be on the table yet, as well as analyzing assets in the Gulf of Mexico. For the company to continue to grow in such a sustainable fashion, making smart acquisitions that create value for PetroRio the company has a number of interesting alternatives. We have been approached by banks, funds offering credit facilities, other exploration and production companies that are already in Brazil and others thinking about coming to Brazil, who are approaching us for JVs, associations, and to buy assets jointly, which is very interesting.
There is another alternative that we announced and spoke about, which is the possibility of funding through a Norwegian bond, which is also a very interesting alternative. I can tell you, we are considering all of these options in order to choose the best for the company. With this, I thank you for your time and turn the floor to Roberto. Thank you very much. Thank you very much, Nelson. I will start on page four, speaking about our operating performance. Firstly, I would like to speak about Frade. It has been producing around 19,000 barrels, and this was also the volume when the field joined Prio's structure five days before the quarter ending. At Polvo Field, we produced 9,600 barrels a day, approximately, very much in keeping with our expectations.
At Manati Field, we are producing more or less 420,000 cubic meters a day, which is also very much our expectation. In the case of Manati, we had a scheduled maintenance stoppage in January. In the case of Polvo, we are not going to have any scheduled stoppages along 2019, and the same goes for Frade with no scheduled downtime. Additionally, something important to be highlighted is the increase of our reserves. We increased from more or less 12 million barrels, 12.9 million barrels, to 57 million barrels. Most of this increment obviously came from the acquisition of Frade Field. We now hold a 70% working interest. The rest of that increment came from the drilling campaign at Polvo Field, which happened during 2018. Regarding costs, firstly, we have the lifting costs of Polvo. We have the first quarter with a cost of around $30 per barrel.
So we remain highly competitive regarding our costs. Speaking about Frade, we have already signed a number of contracts. We had what we call an innovation of contract. Some of the contracts we renegotiated in full. Currently, we are operating Frade in the logistics base of Açu. Actually, Frade and Polvo in a consolidated operation. Our helicopter operation has been consolidated with flights leaving from Macaé. We have added approximately 20 people to our staff, here I'm speaking about onshore, about our office operation, not to mention, of course, all of the people who work at Frade Field itself, at the FPSO.
With that, with all of these cost reductions and more to come regarding vessels, regarding our integrated emergency plan, what we call PEI, and so on and so forth, our expectation is to, by year-end or operating next year, with an approximate cost of $20 to $22 a barrel in a consolidated fashion for the company, meaning the production of Polvo plus Frade should be having a cost of $20 to $22 a barrel. Obviously, there will be a cost allocation and so on and so forth, but in a consolidated fashion, this is an important number that we should keep in mind. Moving to slide five, please. In terms of operating efficiency, here we see that Polvo Field continues to operate at a high level. We ended the quarter with almost 99% of operating efficiency. Polvo Field has been having a good performance.
We did have some quick shutdowns, short stoppages, particularly in the month of February, but nothing that impacted our daily production too much. Regarding Frade, we had a quarter with an operating efficiency of 94.6%. In prior quarters, we had 99%, 98% operating efficiency. An operating efficiency that is very close to what we've been having at Polvo. Frade still has a little room for improvement, but it is nothing new happening at the field. This FPSO historically has always had a very high operating efficiency, and we are going to bring it back to the Polvo level very soon. What is important on this slide that I would like to draw your attention to is that Polvo here already operates 30,000 barrels of oil a day when we have the operations of Polvo plus 100% of Frade operations.
That's precisely makes very interesting what we're considering all field operators in Brazil. Coming on now to slide six and talking about the drilling campaign. This is an investment that we will make in Polvo Field. It is a continuation of what we did last year in 2018. Compared with the previous campaign, what we did basically was seismic reprocessing with a great focus on carbonate. We did the whole procedure of peer review. We hired people from outside the company to do an independent assessment of the prospects that we had found. With that, plus our own expectation, we ranked these prospects. Mind you, this is not only a size-based ranking, but rather a risk return ranking or risk size ranking, I should say. This is the methodology that we used. We also provided maintenance to the drilling rig to prepare for this new campaign.
Considering it all, it seems that the drilling campaign in 2019 will start in July. We estimate about two months for each well. Of course, it can vary a little. It can be a little more or a little less, because as much as we have seismic data and all, only when we are actually drilling a well can we really get to know what there is underground. That can vary a little. We were estimating a total cost of this investment between $40 million and $60 million. We have these wells to drill. We already have three to four prospects aligned out of 18 that we listed after the seismic reprocessing. We will do this year's campaign, we will reassess, and most likely, we will start thinking about future campaigns.
This is what I had about our operation, I will now give the floor to Milton, who will speak about the financials. Thank you very much. Thank you, Roberto. Good day, everyone. Let us continue with the presentation, let's move to our financials. Please go to slide seven for the highlights of the period. We reached a net revenue of almost BRL 140 million, up 19% from first quarter 2018. It is important to highlight that this net revenue does not include any impact from Frade because the closing happened at the very end of the quarter. That is M&A. Comparing with what the EBITDA would be before the IFRS 16 adjustment, we would have posted an EBITDA of BRL 35.6 million, 133% higher year-on-year.
The EBITDA that we are reporting, as you will see in the next slide, is higher than that because of the impact of IFRS 16. This EBITDA, just as I mentioned for our revenue, had no contribution from Frade. In this quarter's results, you can see we have a negative bottom line. I will comment on this negative bottom line in more detail later, it is basically due to some non-recurring facts. With that, we had a cash generation of BRL 46.4 million, very much in keeping with the EBITDA before IFRS 16 adjustment. As mentioned by Roberto, we have the drilling campaign at Polvo Field in the acquisition of 18.26% stake of Frade without the need for new funding or taking on new debt to fund this obligation. This is important from the standpoint of the company's liquidity. Moving to slide eight.
We can see the numbers I mentioned before in more detail. Company's EBITDA of BRL 55.2 million. Basically, the EBITDA increased with the IFRS 16 effect that led to a reduction of leasing expenses, on the other hand, started to have higher depreciation and amortization and an impact on the financial result. Just because of this IFRS 16 change, we estimate an impact of approximately BRL 15 million negative in this quarter just because of an accounting change. Also, we can see that the big offender of our results in this quarter was the financial result. What happened here? There are some explanations. The first is that we did a hedging operation. Because of the closing of Frade, you will remember that in the beginning of the quarter, oil prices were very volatile.
The price ended the year at a very low level, below BRL 55, it started rebounding again. When it reached BRL 61, we took to conduct a hedging operation in order to hedge the floor price of the oil at BRL 60 and use the call option. As to keep this operation cheap, we bought a put and we sold a call at BRL 65. We bought a put option at BRL 60 and sold a call option at BRL 65. What happened was that the oil price increased to around BRL 65, BRL 67 along the quarter. We were closing the hedging operation, that brought us a negative financial impact. Our rationale was to be conservative given the volatility of oil prices. If oil prices dropped a lot, price adjustment at Frade would be high. We would be penalized by reducing oil prices.
We chose to have an insurance, so to speak, to back the closing of the operation. And this, of course, had a negative repercussion on our financial result. However, we see this as a conservative approach to our business, and we see this as an extremely one-time off event because of that deal that has been closed, more specifically. In addition, we had some financial expenses with no cash effect of an exchange variation nature. There was some exchange variation as part of the cash that was used for the payment to Chevron for the acquisition and closing of Frade. We had an FX variation by recognizing leasing as a liability according to the change brought along by IFRS 16. You see we had a series of events.
The events of a non-recurring nature, all of them happening during this quarter, which we can basically link to the change of an accounting standard and because of the acquisition of a very relevant asset, as well as all the insurance measure we adopted to neutralize possible pricing effects and to have a soft closing and uneventful closing for the company. This makes it clear that despite having a negative result, the company is interested in making good investments for the future of the company. Of course, we cannot see this future yet translated in our results, but we are convinced of the excellent acquisition of Frade. And there's no problem here. I mean, of course, no one wants to report a negative result, we will not be necessarily managing the company by quarter. This acquisition was important at this time.
It did bring some non-recurring negative effects, but what matters is that in terms of fundamentals, growth, and value creation, this was an excellent acquisition, and we are very convinced of the successful future of the company. Moving to slide nine, please. In talking about our financial results, and in still talking about our financial results, we have a comparison, a pro forma income statement showing what our results would be had we integrated Frade since the beginning of the quarter. It is interesting to note that the company's results had an EBITDA margin of 40%. Frade would have the potential to contribute with almost 60% of the EBITDA margin, an EBITDA of BRL 125 million. And in this pro forma table, we would have reached a margin higher than 50% in an EBITDA of BRL 180 million in the quarter.
It would have contributed quite positively to our results in the effect that in the coming quarters, the positive impact of Frade's acquisition will be more and more observed and felt. I would like to remind you that this pro forma result reflects Frade field as it is today. Of course, we have complete plans to more and more improve cost management for the asset and to improve the asset as a whole. We hope to report increasingly better and stronger results through this important acquisition. On slide 10, please. The company reported new loans, which is a very good thing in terms of balancing the capital structure of the company. It is important to note that we tried to be very assertive in this funding and to avoid paying more for third-party capital.
The acquisition of Frade was done partly by cash, partly by financing by the seller, what we call vendor finance, at a cost of LIBOR plus 3% per annum with a term of 2 years and a total amount estimated at $224 million. Recently, we also signed an export prepayment agreement with the Chinese bank ICBC and PetroChina in the commercial part. This loan also has a cost of LIBOR plus 2% per annum, a term of four years and amounts to $60 million. We also previously reported contracting a credit facility of up to BRL 90 million from FINEP, where we have dispersed the first tranche of this facility of BRL 36 million at a cost of TJLP long-term interest rate, plus 1.5% a year, a term of 10 years, and a two-and-a-half year grace period to amortize the debt principal.
We also have what we call a true sale. That's the name of this product. It helps us have some working capital comfort at a cost of LIBOR plus 1.6% per annum, basically in connection with advanced payment of receivables amounting to BRL 35.6 million at quarter end. Basically, we can see an average cost of debt, which is quite interesting, both in dollars and Brazilian real. We try as much as possible to be as competitive as we can to reduce the company's cost of capital and to maximize return. On slide 11, we give you more color on our amortization program. We see that in the next 24 months, in years one and two, this debt will be reduced abruptly, which is basically by the repayment of the vendor finance that we have with Chevron.
It is important to remember that this is a debt that will be repaid by the asset itself now that we have a 52% working interest of Frade. The asset itself is expected to repay this debt. Additionally, we are negotiating, as Roberto said, and we expect to soon complete the acquisition of the remaining 18% of Frade. This remaining stake has no debt attached to it. It is totally unencumbered. With this, the company's debt schedule after year two is quite reduced. The company still has a lot of room for future funding. We have a lot of momentum, and this is really good for the growth and strengthening of our business plan, also considering future acquisitions in terms of currency.
We have a great predominance of dollar-denominated loans, which is also in keeping with the company that generates a lot of cash in dollars that has the essence of its sales in dollars. Well, these are my comments regarding the financials of the company. I would like to thank you all for joining us on this webcast. I now turn the floor to Diana Meyer to speak about the future of the company and about mergers and acquisitions. Thank you. Thank you, Milton. Good afternoon to all of our partners. This quarter, as has been broadly mentioned by my colleagues, the main highlight is the acquisition of Frade field, which belonged to Chevron. In a moment where the whole industry was focused on Petrobras divestment program, Frade was not such an obvious asset. With the announcement that we did, we caught a lot of people by surprise.
Actually, we have been pursuing this asset for 4 years. With a lot of resilience and persistence, we were able to structure the deal in such a way that the seller financed a substantial part of the price in installments to be paid every 6 months along 2 years. Thus, the deal was affordable to us, and we did not have to resort to loans. Not featured in the banks was fundamental to the success of our strategy, as we maintained the confidentiality of the deal, which avoided information leaks that could have attracted other companies to compete with Prio for the field. Still talking about Frade, we need to create a solution to structure the corporate ownership, which allowed us to take over the operation very quickly. We started operating at the field in March, just 2 months after we signed the purchasing agreement.
Regarding the Japanese working interest of 18% of Frade, in my opinion, I think that we are going to be able to close the deal in the coming months. We just need to sort out some details regarding internal approvals by the sellers. So I think that in a couple of months, this will be resolved. Prio has proven that we can do a lot with little. This is our motto. With our modest cash for an oil company, scarce access to credit in a period where oil prices reached historical lows, year after year, we were able to execute our strategy to grow through the acquisition of producing assets, and we also completed 2 drilling campaigns at Polvo, one in 2016, one in 2018. PetroRio in 2013 was a company with no producing assets, a company with zero revenue.
Today, after 5 years, we are a company with a projected revenue of more than BRL 2 billion in 2019. We are also a company with a diversified portfolio with a total of 6 assets. We have 3 producing assets. They are 100% stake of Polvo, 70% of Frade, and 10% of Manati that produces gas. We also have one asset under development, 100% stake of Piratema, a gas field that we are very optimistic about, and we believe it's going to be very promising in the future. It has a proven reserve. We also have 2 exploratory blocks, one in Foz do Amazonas, where we have 100% working interest, a neighboring block to Tepual. This block came with the Brasoil deal. And we recently acquired another block, a Ceará offshore block, where we hold a 50% stake, and we are a partner of Ecopetrol.
This field was recently acquired within our deal of Frade. It used to belong to Chevron. Our business ambition is somehow translated by the appreciation of our share price. In 2016, when our shares were forgotten in the stock exchange, our share price was below BRL 0.72. Now, after a lot of blood, tears, and sweat, our share price reached BRL 21 in the beginning of the year, an enviable appreciation of 3,000%. Undoubtedly, PetroRio is a consolidated success case, not only in the oil industry but also in the capital market. Now with the production of around 30,000 barrels a day, we became one of the biggest independent players in Latin America. However, we don't intend to stop here. We have a lot of energy, and we have ambitious plans for the future because we have in our pipeline deals at different stages of negotiation.
These are producing assets, most of them offshore in Brazil and abroad. Some of these assets are more obvious, others are not that obvious. Our keen eye for spotting the business shows that we are one step ahead of our competitors in the race to buy new assets. It is always good not to forget financial discipline, responsible leverage, and creation of value for our shareholders in all of the acquisitions that we make. I believe that after the completion of the projects that we are studying, we will achieve our dreamed goal of exceeding 100,000 barrels of daily production. Of course, we will need new loans to realize this bold plan of acquisition, but for good projects, there will always be capital.
We are living a window of opportunity in the oil and gas industry in Brazil. I believe that PetroRio, with its track record, unleveraged balance sheet, and a robust and perennial cash generation, is undoubtedly best positioned in Brazil to capture the several consolidation opportunities that will arise in the coming years. We are very proud of the work that we have done, and we are very optimistic about the future. Thank you very much to all our shareholders for their confidence and trust. Now I open the floor to questions. Ladies and gentlemen, we will now begin the question and answer session for analysts and investors. If you have a question, please press star one. If at any time you would like to remove yourself from the questioning queue, please press star two. Our first question comes from Rodrigo Medina with Santander.
Hello, thank you for the presentation. I have three questions. First, related to Polvo Field. You did a good work regarding lifting costs that had a 30% reduction year-over-year. I just would like to know, do you have any specific goal to reduce lifting costs even further after the drilling campaign you're going to have in 2019? Can you get perhaps down to $18 per barrel that you envision for Frade? Could you elaborate on that, please? My second question has to do with capital allocation. Actually, and cash generation as well.
I did a quick math here. I imagine that you should be generating about BRL 500 million cash flow when you integrate Frade. Given that we have an amortization of debt in the next two years, I believe that in the third year, we are going to have no way to generate cash to have a dividend payout or to continue with your M&A plan. I'd like to understand a little bit more about your plans. I'd like to have some clarity on that, please. My third question is related to leverage. In a quick calculation, net debt over EBITDA is about 4x considering the last 12 months as a reference. You mentioned that you have an expectation of 1.5 net debt over EBITDA. That would mean an EBITDA of about BRL 700 million a year.
I'd like to understand from you, when do you expect to reach this goal of 1.5 times, and could you give us more color on that? Thank you. Rodrigo, thank you for the questions. This is Roberto speaking. I will start speaking about costs at Polvo, and then Milton will speak about capital allocation. That was your second question. Then regarding our debt profile. Regarding costs. The company will have Polvo Field at BRL 30 a barrel and Frade Field at more or less BRL 24 a barrel. These are more or less the costs.
Our expectation is that particularly with operating synergy, and here I mean the same base, helicopters leaving from the same site under the same contract, supporting vessels, rationalizing supporting vessels, and it means a magic reduction of G&A and so on and so forth, duly allocated to the operation, I mean. Our expectation is that we are going to get a consolidated cost already in December of BRL 20 a barrel or close to that. Considering BRL 20 a barrel, we would have to take into account cost allocation. Considering BRL 20 a barrel, we would have Frade running most likely close to 18 and Polvo running close to BRL 21 a barrel. BRL 20, BRL 21 a barrel. The Polvo operation is smaller than Frade's. That's why with a simple math, you can get to these numbers. This is it.
Our main focus now in terms of cost reduction, that comes from now with rationalizing the operation initially in 2015 and along with that, a strong wave of renegotiating contracts. We believe that this front will always happen. There's always room to cut costs a little bit and so on and so forth. We believe that the main wave of cost reduction will come from operating synergies and consolidation of operations. This is the name of the game until the end of this year. I would say that in December, we should be operating at that level of cost, and then we will be able to see 2020 with the company remaining at that level of cost. I will turn the floor to Milton, and he will speak about capital allocation and about our indebtedness. Hello, Rodrigo. Thank you for the question. This is Milton.
Regarding funding, that was the spark of your question. Actually, we consider different funding options for the company. One of them, as we also mentioned during the call, is the Norwegian bond. We understand that CP is a very interesting option. We are really considering that option. Other than that, there are some other alternatives in the market, including new M&As. Do not depend necessarily on that bond because we want to be able to access the debt market with export prepayment, as we did with Polvo. Not to mention the possibility of funding these acquisitions with financing from the seller himself, as was the case with the deal involving Frade and Chevron. The fact is that with the acquisition of Frade Field, as we showed in the pro forma income statement, and we expect to show in the coming results, cash generation of the company changes.
It becomes very strong, very significant. This will change our debt service in future quarters. Regarding the second part of your question regarding almost four times net debt over EBITDA ratio. Actually, this is a non-fair comparison because you are considering the current indebtedness considering Frade acquisition, but the EBITDA in the last 12 months does not consider any contribution coming from Frade. When we do a more fair comparison, considering debt coming from Frade and revenue coming from Frade, you will see that the ratio behaves a lot better. And there is an expectation that next year that ratio will be dramatically reduced. Next question from webcast. The question is, are you negotiating with Petrobras to acquire Petrobras' 30% at Frade? What are the investments expected for Frade? Can Petrobras deny investment? Has Petrobras given a green light for investment at Frade field?
Well, thank you very much for the question. I will speak about Frade. As we have said in the past, in several past occasions, PetroRio obviously is interested in having full ownership of Frade, but it obviously includes Petrobras' working interest. Our operational agreement, what we call JOA, Joint Operating Agreement, considering Subupi, the subsidiary of PetroRio and Petrobras. This JOA includes the right of first refusal for PetroRio in case Petrobras intends to sell their stake. Finally, I do not think, I am referring here, but I do not think Frade is a core asset for Petrobras, we are talking about something that makes sense from every angle you look at it, from the angle of PetroRio, from the angle of Petrobras. Of course, that depends on some internal stages of approval at Petrobras internally. We cannot control that. Particularly, we cannot control the timeline.
At the moment, there is nothing to say or to announce regarding Petrobras' 30% stake of the field. We continue to say in the front that, yes, we are interested. Regarding the investment program, I think this is not a question of Petrobras not approving or approving. When an investment has a strong net present value for the field, it is almost impossible to deny it. In my opinion, I think that it is a matter of we, as operators, redesign the program to redevelop Frade. It was basically done by Chevron in the past. We have to rekindle that, or we have to rework with that, adapt it to our shape, our strategies, and our assumptions, and submit this to the consortium. I do not see Petrobras holding this back. It is just up to us to finalize the redevelopment plan and to submit the plan to the consortium.
Something that we expect we can do sometime in the first half of next year, perhaps by year-end. I think this is all I have to say about Frade. Thank you very much for the question. Next question comes from Thiago Noel with Atina Capital. Hello. Thank you for the call. I have one question regarding Frade as well. We saw that the Polvo campaign, the first phase, was little focused on drilling new wells. It was more focused on management initiatives. For Frade, more specifically, what draws my attention is that for some wells, there is a possibility that we can inject more gas. What are you planning in terms of initiatives, in terms of management, and what do you see in terms of results of these initiatives? If you could give us some color regarding the timing of those initiatives. Thank you. Thank you, Thiago.
This is Roberto Monteiro again. I will be speaking a little about this. You see, this is Frade Field. Our strategy for Frade is divided into four main phases. The first and the second one are phases that are happening in parallel. One is rationalizing costs, cost reduction, synergies, consolidation of the operation around one logistics base, helicopters leaving from the same site, everything we've talked about. That will bring about a strong cost reduction for the Field. Let us talk about revenue and production. Today, Frade Field is producing approximately 19,000 barrels a day. We have maintained a flat production flow, prevented declining. How are we doing that? Today, Frade Field has some wells that can still produce a little bit more than what they were producing in the past without having major reservoir issues. It's just a matter of managing the reservoirs well.
This is for the short term. Still in the short term, Frade Field has two wells which are closed. One of them for hydrate and the other one, we don't really know whether it's hydrate or fines. There's a big discussion about it since Chevron's time. There are two wells that are halted, closed, and our intention is to bring these wells back to life. One of them, at least for sure, the hydrate one, we want to bring this well back to production. It's an intermittent well. It produces every other month. That's the strategy of the well. The well has been closed for quite a while now. That's for the short term. None of that requires investment. For the midterm, we would make some one-time investment, occasional investment, that do not require a rig. What kind of investments are these?
We're thinking about stimulating the wells that we saw, what we had in one of the Polvo wells, and we think it's perfectly applicable to Frade is stimulating with a certain chemical, an acid, so as to clean the reservoir, to dissolve some fines in the reservoir. With that, we are able to increase the productivity index of the well. We believe there's an opportunity for that in some Frade wells. We would also do some polymer treatment to ensure the formation of water channels in the Field. These would be for the midterm. Something we don't really know what is going to happen in the midterm or in the long term is the possibility to reinject water in the Field. Chevron itself used to take this into account in their redevelopment plan. We believe it makes a lot of sense.
ANP, the Brazilian oil agency, has analyzed the problem. We have analyzed the data possibility in considering some parameters and in some conditions. I would say that there are no problems there. That depends on the equipment that we need to have to reinject water because these fields haven't had water injection for a long time. This could be for the long term. For the long term, we're talking about end of 2020. After that, we would start a drilling campaign. Those were investments that would require a drilling rig. Still on the long term, we still have other capacity for the rigs. We have seen very competitive quotes from companies that own drilling rigs.
We're just getting started talking to some of these companies to check with them the possibility of starting to think about this drilling campaign in a more iterative fashion. That's what we envision for Frade. There are a number of work fronts there, several stages. The first two related to cost and reservoir management. This is underway. Midterm is the thing that does not require drilling rigs. This should start in the first half of next year, and long term, I would say, would be second half of 2020 onwards. Thank you very much, Roberto. Our next question comes from Webcast. Except for the pump failing in March, Polvo Field production decline seems to be more than expected. Why do you think? Hello, and thank you for the question. No, Polvo production is very much in line with our expectations.
It is important that excluding that pump failing in March, this is Polvo production, very much in line also with our budget, with our production forecast for the year as well. What is important to say and to remember is that Polvo increased production last year from 6,000 barrels, more or less, to more than 10,000 barrels. This is because of the new wells. When you add new wells, these new wells specifically, any new well that starts producing, these wells will have a decline rate, which is a little higher than the decline rate for the rest of the field, which is more mature. Sometimes people might have the wrong impression when you don't look at the detailed data well by well, you can have the impression that the field is declining faster. It's not true. We just increased production in new wells.
These new wells have a more modest decline in the beginning, that is totally normal. Third, our whole investment thesis remains exactly unchanged, exactly the same. From now onwards, the decline of these wells will be closer to the general decline for the field. We will start drilling again. If our wells are successful, we should add more wells, more production, and we're going to see this effect again by year-end, beginning of next year. Next question, also from Webcast. Why is the company selling the shares they normally keep at treasury? Hello, Bruno. Thank you for the question. This is Milton speaking. Why are we selling our shares? This move is basically to give even more comfort for the company in terms of liquidity and to maintain a minimum cash.
We think it's very prudent to maintain a minimum cash for our operations and to have a good working capital management. We see a very positive effect, which is increased liquidity for our securities. In the recent past, we saw our shares entering the small-cap industry. Now with the new rebalances of IBX, there's an expectation that we're going to have an upgrade. I think that this is what moves us to sell some of our shares. Our next question comes from Webcast. Any expected maintenance stoppages for the next months? Hello, Nicholas. Thank you for the question. No. No scheduled maintenance at Polvo nor at Frade in 2019. Yes, we will be stopping Polvo and Frade in 2020, and these will be scheduled downtime. It's too soon to say, but they will probably last 7-10 days, 7-12 days, something along those lines.
For Manati, we've had a maintenance shutdown. It stopped for almost 10 days in January, I think 8 days. Eight. Actually, 20 days. 20 days in January. That is behind us. From now until year-end, no more scheduled stoppages. Next question. From Thiago Noel with Atina Capital. Sorry, Milton. I have one more question. You mentioned you are prospecting some assets in the Gulf of Mexico. You know that that's what you did at Polvo and the potential at Frade. Capital allocation in Brazil is higher. Can you speak to this model? More specifically in the North Sea and in the Gulf of Mexico. Since you think it is a more competitive and developed model, do you think it is possible to replicate your strategy with the same level of return that you have been obtaining in Brazil, also in the Gulf of Mexico?
Perhaps this endeavor would be less transformational? Thank you. Hello again, Thiago. In the past, we analyzed a lot of the North Sea and the Gulf of Mexico. The Gulf of Mexico in particular, which is what we spoke more about, we got even very close to closing some deals in the Gulf of Mexico. The Gulf of Mexico has some interesting characteristics. The market overall is moving shallow waters, is moving to deep waters in the Gulf of Mexico, and a lot of onshore. Regarding returns, what we saw that was very attractive at that time, what we even bid for the Gulf of Mexico, was the entry price. This starting price was very interesting. The possibility of raising very cheap capital very quickly.
From the standpoint of synergies, et cetera, our instinct in the past was to start as non-operators in the Gulf of Mexico. That was our first reaction because the entry price made a lot of sense. In general terms, what I can tell you is that particularly in the Gulf of Mexico, I'm talking more about the Gulf of Mexico because that's what we know more about, what we studied more. The Gulf of Mexico has many synergies realized. You have a field producing in a platform that is producing in another field. There's an integrated logistics and so on and so forth. I think the synergy gains will not be that great, also because it would be in another country. Sometimes we see enterprises that are very interesting. Thank you very much. This concludes today's question and answer session.
I would like to invite Mr. Roberto Monteiro to proceed with the closing statement. Go ahead, sir. In the first place, I would like to thank very much all of you who joined us today. Thank you for your questions. Thank you for your dedication to PetroRio and to our company. I want to say that I've been with PetroRio since 2015, I've seen a lot of things happening here. We went through a lot. We went through several different moments of the company. I should say that this moment we are living now in 2019, half of 2019 perhaps, would be one of the most dramatic transformational moments for the company. We increased our production a lot. We have a field that has a relationship of barrels produced versus reserves, which is gigantic.
It's a total outlier. It brings huge possibilities or upsides for the company when we look at Frade field. When we consider normal recovery factors for Frade, we see that there is a huge amount of potential gains. I just want to say that the whole management of the company, all of our staff are very excited about this new stage of being able to deliver good results, seeking synergies, and so on and so forth. Thank you very much. That's concluding the PetroRio's conference call for today. Thank you very much for your participation, and have a good day.