Thank you, Zach. Good afternoon. Welcome to the call to discuss our Q4 2025 earnings. I will start by going over the highlights on Slide number 3. I will talk a little about our operations as a whole and then I will pass it on to Milton and Francimar, and I will come back at the end, as always, to talk about our next steps, and then we will take our questions. Well, the year 2025 was great, a great year for the company. I like to look at 2025 as a year in which we achieved all the strategic goals we had set at the beginning of the year. Perhaps the path was not exactly a straight line between January and December. We did achieve all the goals we had set for ourselves. We managed to complete environmental licensing for Wahoo.
We obtained both the drilling license and the installation license. We started developing the field. We managed to make the acquisition. We signed the acquisition of the 60% stake of Peregrino field, and then we had the closing of the 40% working interest in December. Actually, 40% in November, which was earlier than we had imagined. It was ahead of schedule. Efficiency of Albacora, which punished us so much during 2024, we are finally beginning to see a light at the end of the tunnel. We operated the Q3 very well. The Q4 perhaps a little worse, but for a specific reason related to the compressor, an issue which we are resolving. The Q1 of this year is already much better in terms of operation. I think that we're getting where we need to be with Albacora's operating efficiency.
We did the workovers at TBMT, which also hurt us so much throughout 2024. Not only because of lost production, but also because of the gas not produced at the field. With that, worsening our carbon footprint because we had to burn diesel instead of gas and all that. We also managed to improve that. All of this contributed to the company's financial results. We achieved a record production of 106,000 barrels daily on average for the year. We sold 37.8 million barrels. This was also a record mark for the company. To support this entire business, we had two important issuances last year. Both the 2030 bonds with the tender offer for the 2026 bonds, as well as the debentures that we issued in the first half of the year.
In short, we had an adjusted EBITDA of $1.4 billion in some month. You see, the financial result is only a reflection of these strategic goals that we have managed to achieve. That is what is bringing this moment, this great positive moment for the company at the beginning of the year now. January and February, they were two very good months. We produced 154,000 barrels in January and 148,000 in February. We had a little issue in February. In March, the company is also doing very well. 2025 set the foundation for a very strong year of 2026. We are at final stages at Wahoo. I will talk a little more about that in the next steps session.
Milton, or better yet, Francimar will be showing our reserves report that was also very positive. We managed to generate reserves practically equivalent to what we produced. That was also positive. We practically have that. In short, I think the company had a lot of merits in the full year 2025. I will go over some numbers, then I'll give the floor to Francimar and come back later. The first figure I think is important to mention is our lifting cost. We ended the Q4 with a lifting cost of $12.50. I believe this was the lowest lifting cost of the year. In fact, it was the best quarter of the year in terms of the lifting cost. If we look at 2024, the lifting cost started to rise a little due to declining production.
In 2025, we had an impact on the lifting cost because of Peregrino field, which came to us with a very high lifting cost, contributing $18 per barrel to the lifting cost, $18.50 for the lifting cost, impacting the weighted average. That hurt us a lot. When we took over the operation in January, we immediately began reducing the lifting cost. We already reached $12.5 in the Q4 . In the Q1 , we'll be somewhere between, I should say 10 and 12 or between 11 and 12 dollars. With Wahoo now, we are going to be reducing the lifting cost to a single digit, no doubt about it. We are starting to return to the levels we saw in 2023, gradually improving now until the middle of the year.
In the Q4 , this is the last point I would like to mention, we still suffered the impact of the Peregrino shutdown. The bulk of the shutdown was in the Q3 with a lifting cost of $17. This lifting cost of $12.50 still reflects the impact of the Peregrino shutdown because the company was spending but did not produce. Obviously, this contributes negatively to the lifting cost. The second chart on the right is production. We can see that it was a record for the company, but there's no big news here because, in fact, it was on top of the closing of the 40% stake of Peregrino. We only had 40% of Peregrino, the non-operated part, which we had acquired from Equinor in 2024. Well, we only had 40% stake.
In November, we added another 40% and the operatorship. For most of November and the entire month of December, we operated with 80% working interest of Peregrino field. That explains this increase in production, which is obviously very concentrated on Peregrino, but the other assets also contributed well. Frade already has a much more controlled decline. Albacora, ABL has much more controlled efficiency and so on. Our cash position in this chart below, Slide 4. Well, here in this chart at the bottom left, we see our cash position. We had $1.7 billion in cash, and we ended the year with $618 million. This shows the payment we made.
The big delta in this cash position was the payment we made for Peregrino, for the acquisition of the 40% working interest of Peregrino, which, if I'm not mistaken, cost $1.53 billion or something very close to that. Our leverage also increased. The gross debt increased to $4.3 billion. Actually, our net debt increased to $4.3, and net debt to EBITDA ratio stood at 2.3x. All completely expected as part of this payment for the 40% stake of Peregrino paid to Equinor. That's it. That's the summary of 2025. I think we achieved all the goals we had set for ourselves. Again, perhaps it was not a straight line, but we managed to achieve all our goals by the end of the year.
That was the foundation for this year, 2026, which candidly speaking, has been very good so far. January and February were two good months for us, and I'm sure it will get much better moving forward. We'll discuss the next steps a little bit with the implementation of Wahoo and so on. I'm going to hand over to Francisco Omar, take a break, and then I'll come back to talk about sustainability, next steps, and we'll open up for questions. Francisco Omar.
Thank you, Roberto. Hello, everyone. I'll continue on Slide 5, speaking about asset performance. Without commenting on the macroeconomic aspects, which are not really under our control or the offtakes which are solely a result of production, I'll focus on production and the lifting cost. Asset production, each asset behaved differently.
We saw Frade still facing a decline, comparing the overall results for the quarter and the full year. For the year, we had a fairly reasonable oil volume, still a result of the natural decline of the field and a little bit related to efficiency, which I will detail later. Albacora Leste, ABL, was relatively calmer throughout the year and performed better. We will see this in full detail. Polvo is a slightly different story. We managed to achieve an increase in production and very good stability for the asset. In Peregrino, which is the game changer, that's where we took over the operation. All of this put together ends up impacting the lifting cost result. We see throughout the year a very substantial evolution, culminating in the Q4 with a figure of $12.50. Roberto has talked about that.
Here it is very clear that there is a trend that finally, after a lot of struggle, we have managed to reverse this upward trend. We are working very hard to move forward with this project so that we can return to a lifting cost at the level we would like to have. From an economic point of view, it is the company's most important indicator, giving us resilience and resistance to withstand just about anything. Moving on to Slide 6, let's focus on Frade field now. Frade field had a very complicated year. We had a lot of setbacks. In the Q1 we had a scheduled shutdown that didn't go as planned. It ended up taking longer than expected, and when it came back online, it was even worse because we had a failure in the compression system.
We ended up spending a lot of time overcoming this failure. It came back, and we ended the year with extremely high efficiency, 99.3%, in line with the best figures in the field's history. The field's decline still performed poorly. We had a decline of more than 20% during the year. Now, in the last quarter of the year, we saw it settling down, so it has already changed level. It has been performing well with a much more controlled decline, which marks a change in the asset's phase. The secondary recovery is beginning to take effect, which makes us optimistic that the field is in a much more controlled situation, and the Frade FPSO is ready to receive Wahoo. Moving on to the next Slide, number 7, let's talk a little about the Polvo TBMT cluster.
It was a very busy year at this cluster. Throughout the year, we fought hard to recover operating efficiency. We performed three workovers to replace pumps. Please remember that we spent a long time without receiving a license or approval from IBAMA to perform maintenance on the wells and replace these electric submersible pumps. This was done during the year. The production part, the topside production system operated well. At the end of the year, we also put an extra well in production at the very end in December. All of this together allowed for an increase in production and stability in operating efficiency throughout the year at a very good level, which we have rarely seen in the history of the field. The last few months have also been performing very well. In February, we added another well to the field.
This was located in the Eocene region. It is a region that we will study in much greater depth in the future. Perhaps it will bear more fruits for us later on. Moving on to Slide number 8 at ABL, we also had a very intense year. The first half of the year was marked by efforts to replace or improve the power generation system, which was causing the most problems in terms of interruptions and blackouts. This was resolved. We built both the necessary turbines and the redundancies. From the Q2 onwards, we saw a much better level of efficiency, which is now consolidated. We are now working only on improvements to this. The generation system has redundancy, is stable, and we are continuing to improve. What hurt us a lot throughout the year was the compression system.
We had sequential failures throughout the year. We, of the 3 compressors, we were left with 2, and at times only 1. We recovered from this in the last quarter of the year after losing that compressor for a long period. We are well-balanced now with 2, but we have no redundancy. The complete compressor system will take a little more time to be ready, we believe by May. We are working to receive parts that are still arriving for maintenance. After that, we will be in a really robust situation seeking greater stability and efficiency in the asset. Apart from that, the field has been performing well. In recent months, it has been performing at an efficiency of over 90%, around 90%. It is progressing well. Progressing well in terms of declines, in terms of performance of the wells.
Now this year, we will work to be prepared, so that next year we can begin redeveloping this asset. Moving on to the next Slide, number 9, I'll give you an overview of Peregrino field. Peregrino was also marked by a year of changes. We basically moved from the co-pilot or passenger seat to the effective management of the field. Most of you followed very closely the struggle that took place during the so-called interdiction phase, which lasted through the Q3 and a little bit of October, the Q4 , when the field was shut in. It was very tense, but we came out of that phase and brought forward the transition of the asset, effectively taking over the operatorship in mid-November. After that, we have carried out workovers at the field. We completed the drilling of a well that was in progress.
We are strongly implementing all field optimization actions. We are capturing improvements day by day with the field, seeing what was done well and what we can improve based on our experience. This is in full swing. It will be a year of struggles and progress in this regard, but we are very optimistic. The field is performing well. The field has tremendous potential. I am sure there will be plenty of raw material for us to work with and generate a lot of results for everyone. Moving on to Wahoo field, a quick update on this asset. Finally, by 2025, we had unlocked all the restrictions we had on the asset. We received the license in March. In April, we started drilling. We ended the year delivering two wells and drilling the third. We have already completed the third well.
We are working on the fourth, and we should deliver the fourth well next month. In terms of subsea construction, it was also a very, very intense year. We received the license in September. By October, we were already installing the equipment. That installation has now been completed. Everything is in place. Everything is on the seabed. What we're doing now is the commissioning part, so testing everything, doing all the checks and controls, the part of chemicals, safety. Everything is ready for us to start production of the field. This should take a few more days. What remains to be done in addition to commissioning is connecting the third producing well, which is already done. It is a little further away from the central hub. The team is planning and carrying out the installation of all the connections.
We still need to drill the last phase of the well in the reservoir and handle well completion, which should take another month at least. Moving forward, we will start production in the next few days or very soon, as soon as we complete the commissioning. We will start production on one well. We have a whole set of A and B regulations on fiscal measurements. We have to test the one well, verify that measurement is correct, and then start the second well. There are also regulations on how to do this, and then we stabilize production from both wells. We are trying to bring things forward as much as possible, but have the field fully operational, that will happen only in May. That's when we will have the field 100% in production.
We're working hard, and that is what we expect to happen. Moving on to the next Slide, let's talk about the reserves certification. We to give you a general update, we went from a reserve of 764 million, almost 765 million last year. With years of production, we consumed this reserve, and reserves were down to 717 million. Each field was reassessed, both upward and downward, to see what improved and what got worse. In general, what changed was at ABL, we basically removed one well that was planned, but which was in a region that the team, in their first assessment of the reservoir and subsurface in general, did not feel very confident about. They ended up, together with the certifier, removing it to another section, so it was reclassified as 1C.
As the 4D seismic progresses and wells are drilled, this will certainly change, but that is for the future. We're explaining what is happening at the moment. Both Frade and Uaru, the change was an increase of 2 million barrels resulting from an in-field well, which we are looking to drill this year in 2026, and some other reclassifications. A delta of 2 million. At Polvo and TBMT, there was a positive delta of 6 million, which was basically a reflection of another well in the Eocene reservoir, which we put into production now in February. The well drilled in December had been brought online and was also already factored in. We are continuing to study this Eocene reservoir to see if we can get more out of it, if we can get anything more out of it. This is also for the future, we'll see.
Peregrino was the major contributor to this revision. It added 38 million barrels. It is basically related to the economics of the business. We considered our initial operating cost figures, extending the field's lifespan a little, which added a reasonable volume of reserves in a new area where a discovery had already been made. We have studied it a little more, and we're very confident. We put three more wells into production in this area, which were not included in the previous plan, adding almost 30 million from this new area, bringing the total of 38 to just over 38 million. Altogether, this added up to 757 million, giving us a total reserve replacement of 40 million barrels in total. That's a 5.6% increase. It's a very good result. It's a struggle if you produce oil, I can tell you.
It's a constant struggle to rebuild these reserves. As we produce more, this work becomes even more important. Well, apart from that number, we have the remaining 20% of Peregrino, so that added almost 54 million barrels, which would bring us to 811 million barrels, which many of you already had more or less in mind. This number, 811, is what's in-house. It is our 1P number. Other than this 1P number, what we have here as a basket of opportunities is 1C reserves, which is a contingent resource. Much of it is contingent on economic issues, so there are some projects that we need to unlock, such as cost of well, cost of connections, and we're very confident about many of these.
Basically, of these 108 million that are in the dotted rectangle, I think half of that is Peregrino. In Peregrino, much of it is economic. We are advancing in the studies, and I would say that by next year, we will have a more robust analysis. We can move this forward as it is integrated into our program. Another relevant part of this is Frade, where some things are also geological. We need to understand the region a little better, and part of that is economic as well. Just to point out that this is in our study plan. We have this challenge to move forward to advance. This is largely the result of the team's work to unlock these projects. Apart from this 1C part, there are other challenges related to 2P, but that's another story for another time.
With that, I conclude my part and pass on the floor to Milton. Congrats.
Thank you, Francilmar. Now we're moving on to Slide number 12, where we will discuss Prio's financial performance in the Q4 of 2025. This quarter, Roberto and Francilmar have already highlighted several important events. I think it's also important to note that we sold 10.6 million barrels in the Q4 . A large percentage of these sales were linked to Peregrino with 4.8 million barrels, referring to the Peregrino field, which resumed production after the shutdown on October seventeenth. This has a significant impact in our Q4 . The Brent benchmark was around $63.22 for the Q4 , with an implied discount of $7.73. The discount is slightly higher because it concentrates sales from Peregrino, which has a higher discount compared to the other fields.
In addition, the lifting cost of around 12.5, it's already lower when compared to the previous quarter when we had an even greater impact from the Peregrino shutdown. Meaning that we are managing to work well on this cost and reduce the company's consolidated cost. I mean, this leads us to an EBITDA of around $324 million with a margin of 55%. If we exclude non-recurring effects and go to adjusted EBITDA, we reach $341 million with a margin of 58%. Another relevant figure refers to depreciation and amortization. Basically, it's depreciation because in the Q4 , we have a relevant impact from Peregrino due to significant sales. I mean, since we made this acquisition, we have realized a large intangible asset value that we have carried out since the historical beginning of the field.
Therefore, there was a significant depreciation related to Peregrino's meaningful share in the quarter. Just to give you an idea, the depreciation per barrel of Peregrino is around $45 per barrel. More sales in Peregrino means higher expenses. These are non-cash numbers and also deductible for tax purposes, which ends up being an expense that helps us be a little bit more efficient when it comes to taxes. Other than that, the financial results of $89 million, of which around $76 million or $77 million are interest expenses, which are the main expenses and most relevant in our results. This is explained by the increase in the company's gross debt to cover the acquisition of Peregrino.
We also have the impact of deferred tax in the amount of $106 million, only deferred this quarter, which is negative, which is basically due to the exchange rate appreciation. The exchange variation is mostly concentrated in this line. As a result, we had an accounting loss of $185 million. For the year, revenue was $2.48 billion. Adjusted EBITDA stood at $1.384 billion. Bearing in mind that it is below 2024, but in 2024 we had an average Brent price of $80. The average Brent for 2025 was $68. Therefore, this helps us understand a little of the variation in profitability and the reduction of EBITDA itself compared year-on-year. Now moving on to the next Slide number 13.
Here we talk about Prio's debt position that you can see on the right-hand chart. We see this bar chart, which is basically the amortization schedule for the coming years, also separated by instruments, meaning bonds, debentures, and working capital. What is it worth mentioning here? In the Q4 , we issue a new international bond. In fact, we had a maturity on our inaugural bond of $600 million in June, and then we launched an offering for $700 million and made a tender of 70%, around 70%–71% of our regional bond of $431 million. Therefore, this was used in this new issuance of $700 million. We extended it for another 5 years, starting last October.
With that, we have a remaining balance of $169 million, plus a small working capital debt for commitments that mature in 2026. I would like to remind you that this bond was a senior unsecured issue. Our inaugural bond was senior secured, and now basically, all the company's maturities for 2027 onwards, we have working capital lines and debentures, meaning that we're very comfortable with the company's cash generation for these maturities. Obviously, if there is any opportunity that is interesting from a cost perspective, we can certainly consider extending here or there with our relationship banks. I would say that for our cash generation, for our business plan, we are very comfortable, and we see a significant reduction in leverage for the coming quarters and years.
Now, with regard to duration, we saw a slight increase due to the entry of this bond, which has a duration of just over four years with a cost that was also very competitive and does not change much the weighted average cost of the company's debt, which remains at 6.36% at the end of the year. Now, moving on to the next Slide here, we have the variation in Prio's net debt, which is basically a good proxy for the variation in cash flow. We started with a net debt of, you know, $2.8 billion. EBITDA reached $340 million. The most relevant event in the quarter, obviously, is the closing of Peregrino involving a significant payment of over $1.5 billion. We also have working capital variation and CapEx.
We are in the final stretch of the investments in Wahoo. We also had some expenses with workover. We also had still in the integrity campaign of Albacora last year, drilling in Polvo, which adds up to $252 million. Also, there was a small amount of share buybacks and the financial result, which is basically interest rates and some expenses with hedging. With that, we arrived at a net debt of $4.3 billion at the end of the year. Well, moving to Slide number 15, now we talk about leverage. We have seen an increase in leverage over the last few quarters. This is largely explained by the acquisition of Peregrino. In fact, the Q4 saw an even greater increase than the Q1 with the completion of the Wahoo CapEx.
Therefore, I believe that leverage should still remain at a similar level. However, throughout 2026, we've been making efforts to reduce costs at Peregrino in addition to the entry of Wahoo. Therefore, we actually expect the company to deleverage. We hope to see a significant, you know, operating cash flow, and with that, we will bring the leverage level to lower standards over the next few quarters. This is just the natural path we see going forward. With that, we will continue the presentation. I will now turn the floor over to Roberto, who will talk to us about the environment, society, and the next steps for the company. Thank you. Well, thank you, Milton. I'll talk a little bit about the environment and society. In fact, this is very much a continuation of everything we've been doing in 2025.
We created last year Instituto Prio, which focuses on initiatives related to biodiversity, environmental education, and marine economy, et cetera. We launched a very interesting corporate volunteer program. We opened up the opportunity for Prio employees to get involved in all of these social projects. This has been, you know, very good with great response. We are very proud of this project. We focus a lot on safety this year. We had a better year when compared to 2024 in regards to safety. Even though we had more work, more man-hours worked, and so on, we continue to focus on internal audits on subjects of SGSO, SGSS, SGIP, and all of that throughout the Q4 of 2025. We also did a lot of work on safety, SGSO, and so on.
When we did the transfer of the Peregrino operation, the transfer was carried out very well. I think it may have been one of the best transitions we had in the company's history. Peregrino is operating perfectly well with no hiccups, and this is largely due to the meticulous work we did, especially on safety related issues. Health and wellbeing, we remain very committed to all the programs we always offered here at Prio, such as, you know, tracking and medical visits. This quarter, we offer cardiological examinations and tests, preventive care, checkups, et cetera. In terms of sponsorships, we included several initiatives within our I Love PRIO platform, meaning cultural and sporting events such as Carandaí, XTERRA, Imbussos, and so on. Here it's more about maintenance and the environment and society with a strong focus on safety.
I think this was a very, very good year for the company. Now moving on to Slide 17, I think it makes sense for us to talk about next steps. The first and last I always repeat, it is a focus on safety and prospecting for new M&A opportunities. Our company was created, you know, based and built on M&As. I think these issues here are important but are recurring. Here, we are really focusing, in the coming quarters, on the items in the middle. That doesn't mean that we won't focus on safety and security, obviously, but the extras to our focus are those in the middle, and I'll talk more about each one of them. The first is first oil from Wahoo. As Francisco Francilmar Fernandes said, we are in the final commissioning phase.
We should start up the field in the next coming days. Our expectation is that after the startup, we will have some time to stabilize. You have to bear in mind that the field is 30 kilometers from the FPSO, so the oil will take a while to reach the FPSO, and this involves some adjustment process. There are regulatory requirements for the new field. We have to measure well by well. The measurement has to be done independently. There is a lot to be done. Our expectation that we will start producing, you know, next week. There will be an adjustment period, and my expectation is to come back to investors right after the first oil in approximately 10-15 days, something around there, with a formal statement on how production is moving along. Frankly, our expectations are very good.
Everything we've done in the field have been in line with what we expected, meaning that the quality of the reservoir is better. Everything else is in line. The quality of the oil is also better. We remain confident and with, you know, good vibes to start production in the coming days. I think it will be a major achievement for the company. The second point I will also spend some time on refers to the shareholder remuneration policy. As I have already said, this year, I mean, and also 2026 and perhaps a bit of 2027 as well, we will focus on our organic growth. We will be looking inwards, gaining efficiency and managing to be a very real company, meaning that we want a company with low costs, high cash generation, and so on.
Since we are looking inwards a lot, a large part of our work is to allocate this cash generation, meaning to make the right allocation, an efficient allocation, a profitable allocation to generate cash. I mean, we are looking for those high returns in dollars of more than 10%, 20%. What we are trying to do with this cash generation this year and next year as well, and I think this is something that will be extended further, is that we are repurchasing the company shares. We already canceled 3% in December of the shares we had in treasury. We returned to the buyback program in January and February. We already bought back something there, if I'm not mistaken, about something close to $30 million, but we will continue to buy back.
We spent some time here without buying back because of the blackout period, the earnings statement, and now we can resume buying again. Frankly, we believe that this is one of the best investments we can make, a high return investment and so on, buying our own shares. This will suit us for now. With future cash generation, we understand that this will not be enough. Just buying our shares back will not be enough. Therefore, what we are discussing now together with the board, I mean, we're, you know, getting into a consensus within the board. In fact, we're just writing it to formalize it. We are talking about a shareholder remuneration policy. Therefore, this policy will include both, you know, buybacks and also dividends within certain parameters.
We are going to establish our parameters, meaning where we want to be in terms of net debt to EBITDA ratio. I said that we want to reach 1 time net debt to EBITDA. This can be reviewed by the board. It can also be reviewed according to the price of oil. However, considering long-term oil price, which we are still using $60 per barrel or $70 per barrel, our idea is to reach a net debt to EBITDA ratio of 1 time, and then the cash surplus will be distributed either through share buybacks or dividends. Of course, this will be done when we do not have an M&A pipeline, which makes sense for us to retain cash in order to carry out the M&A. That is exactly what we did back in 2024 when we bought Peregrino from Equinor.
We were repurchasing, then we stopped the buyback program precisely because of that transaction. This obviously is something very important that we and now we take that into account in this policy. We will take into account M&A, also the company's debt position, but the idea is to establish and formalize before the middle of the year this compensation policy. Another important issue for us now, we are still waiting for the environmental licenses so that we can start working from the middle of the year onwards, is Frade drilling. We are just concluding Wahoo. We still have one well to finish. We will start drilling, you know, two wells now in the next few days.
The third well, I would say, will come up between the last week of March and the first week of April, and the fourth well will start in the last week of April. This will then complete all producing wells at Wahoo. Then we have the water injection wells at Wahoo, which should, you know, come soon after. Once all of these water injection wells are finished at Wahoo, we intend, and now I'm already referring to the Q3 of this year, we will start drilling Frade. We are at the final stages with IBAMA, the environmental agency. We are at the very final stages, and very soon we should be receiving the permit to resume drilling at Frade.
Still this year, the idea is for us to drill one or, if possible, two wells in Frade to add more production to that field. Another important subject, you know, is Albacora Leste. There we still have two issues left for us to conclude everything at Albacora Leste. The most important one is the compressor. Today, we have two compressors out of three in Albacora, and we would like to have three compressors up and running because with that we will have a good level of redundancy that should improve the efficiency of the asset, making it very high. Therefore, we are at the moment working on this third Albacora compressor, and it should be up and running by the end of April since we are receiving all the materials now at the end of the month. Between April and May, the compressor will be working in Albacora.
Then we have what we call the turnaround, which is the scheduled shutdown of Albacora. There will be two days of scheduled shutdowns throughout the year. We are still scheduling the exact date, but the idea is to do a major integrity job in Albacora. It will be the final step, you know, in this asset that has received so much investment in recent years. We will focus heavily on Peregrino and the remaining 20%, so we hope to be, you know, to be at for the end of the year. We were at first thinking about July, but I think this will linger a little bit further, something closer to October or November. Anyway, there will be a closing, there will be a reasonable disbursement. I think something in the region of about $600 million.
It certainly that depends a lot on the oil price because there are some price adjustments, but it should be something close to $6 million. Then the last point will be new M&A. This is part of our DNA. Okay? To conclude, I will open for questions. I would like to thank you all.
Good afternoon. Welcome to the Q&A session of our Q4 2025 results. We will now begin the question and answer session. The first question from Rodrigo Almeida with BTG.
Thank you, Zé. Good afternoon. I think I have two questions. Firstly, I would like to speak about Wahoo. Perhaps have an update from you. We mentioned that some wells have slightly different characteristics among themselves. Perhaps having more details, I'd like to know whether we should imagine that these two wells that will start operating soon, whether they are different from the rest or whether you can state and affirm that the wells have a slightly better productivity than the others. If you could elaborate on that, it would be helpful. Also about drilling the two injectors. This might change depending on the productivity of the wells. Or is this a given?
That is my first question. My second question is about oil trading, and I'd like to get an update from you regarding discounts, especially for Peregrino, because it's heavy oil, and it was fluctuating a lot in the beginning of the year. If you could give us an update on how higher freight is impacting you. Thank you.
Yeah. Different characteristics in terms of the quality of the reservoir extension, et cetera. All together, we expect that it will be kind of more or less the same. There are variations. We cannot say that it's gonna be 10,000 per well. Some will produce more and some less, and according to the productivity of each well, we'll make adjustments to get the best return. In a nutshell, I think it will be kind of more or less the same. As regards the injectors. Once we put the wells into production, there's a possibility that we might need to have a little more time to see whether we'll put the wells immediately online. Perhaps six months later, we'll have the injectors on or whether we should wait more time. We are following this up close, and it will depend on the performance of the reservoirs.
Another point to mention is that we're going to have well 1 and 2 into production. Wells 3 and 4 will come online subsequently. If we look at the size of the net pay, 1 and 4 have less, and 2 and 3 are the ones with the highest net pay. We're going to have 1 and 2 online. We can expect about 20,000 barrels daily and the remaining 20,000 subsequently. This is what Francisco Francilmar Fernandes said. If we make a decision to invest water injection, we would bring the drilling of Frade forward, but we cannot affirm anything now. We'll leave this as is according to our schedule of having the water injection wells. We want to be conservative. Yeah, there is a potential upside for the year. It might be substantial.
A potential upside to invert the injectors with the fragile wells. I mean, it's not worth writing this in stone, but it would be an upside to the current scenario considering the injectors. You asked about discounts. Today, we are running the company, and in the Q4 , the discount was $7.70 per barrel. In Q1, we always sell in an anticipated fashion, so Q1 is actually not suffering so much of the impact of the war. We have an impact of Iran on what we call the flat price, Brent price, but the discounts, well, they were previously defined in December. What we are going to see in terms of discounts for Q1, this will depend on the destocking of Venezuela and what happens after January 3rd. We had Venezuela. The Venezuela history, well, before Maduro, for a long time Venezuela could not sell oil.
There was a very heavy embargo. They were not able to sell oil. They increased their inventories a lot, and when Maduro fell, Venezuela started destocking, and that hurt Peregrino. The discount we are going to see in Q1 will take that into account, so that should increase $1.50, so it should be around $9 per barrel in the Q1 . It will be very positive for us because the Brent will be much higher, and we are going to have a discount delta of $1.50 or up. For the Q2 , we start seeing kind of the opposite mechanism. We had some long positions of the VLCC and vessels with good prices. Now the prices with the war have increased even more. We were able to improve a lot our trading, and this is work that Gustavo and Bruno keep doing during most of their workday.
In Q2, we should see discounts dropping to $7, going back to this more normalized number. Please remember they will have more Peregrino, so those $6 per barrel will be structurally closer to $7 because of Peregrino. In Q2, we should start going back to that level. Would you like to add anything? Well, the only thing to add is that, as Roberto mentioned, when we have the war and the Strait of Hormuz, well, this helped destocking Venezuelan oil, so we started suffering from this destocking. When there was the delivery restriction because of the Strait of Hormuz, this dried Venezuelan and Russian oil. Trump gave waivers for some countries to go back to buying Russian oil, so that dried up Venezuelan and Russian oil. That will help us, the recovery we expect for Q2.
Excellent. Thank you very much.
Next question from Gabriel Barra. Barra, go ahead.
Thank you for taking my question. Perhaps one of the main problems that the company had that you have talked about, so I'd like to hear. According to the plan that you have for the coming quarters, I'd like to know about the environmental license, how critical it is, and could you give us a timeline in terms of what we should pay attention to? How will this impact the plan? This would be very useful for us. My second question, and I think that Roberto spoke about shareholders' remuneration. I think this is a very important point in your thesis. What drew my attention is that you have almost 7% of shares in treasury. You didn't cancel those shares. My question is why. Why not cancel them all? Why keep this buffer in treasury?
Is this a strategy for capital allocation of the company, or do you intend to cancel these shares eventually also given the scenario of looking more in-house than outside considering the M&A market in Brazil? A follow-up question on the previous question, considering the war, you have hedged a substantial part of your production, and with the spike in oil price, I'd like you to speak more about the effects of the war. Could you hedge anything in the short term? I know that there's a long curve, but was there any interesting opportunity to hedge prices for the coming months? These are my questions. Thank you.
Okay, let's start from the end, Gabriel. In terms of hedging, no. In January, we hedged, or the only hedge we had was to buy put options.
Our strategy to not sell futures, not having collar deals, was shown to be the right one and again recently. There's so much volatility that if we had sold in future prices, volatility would be huge and we would be giving up a good part of the upside. When we do hedge is to buy put options. We bought put options in January, February, that became dust because we bought them at 68 up to 69 or 70. None was exercised in January and February. In March, we don't have any hedge. In April, no hedge. To give you an idea, today, in order to hedge for April, we are talking about a premium of $10, more than $10 a barrel in put. It's totally crazy business to do. Today the Brent spot is $90.
Next month it's no longer 90, it will be 88, 87. Based on that, you have a 10%. You have a 10% discount, which is your premium. You're hedging actually at 77. We didn't do anything. I think this is the normal would be to pay $2 per barrel for the next month, and we're talking here about $10. If you look at OVX, which is the volatility index of oil, we normally hedge when it's at 30. It's now at more than 100. It's 116, 110. We didn't do anything, and I think it is difficult that we'll be able to do anything at this point. If oil remains structurally at a higher price, volatility will start dropping and we might go to market to do it. As for your second question, it was?
Oh, the 7% shares in Treasury, and then you asked about license. Well, the 7% shares in Treasury, eventually we will cancel them. We are buying back the shares and we'll cancel them. Should we cancel everything now or will we cancel them as we buy them back? I mean, our plan for this year is to allocate via share buyback or dividends, and I'm talking about a oil price of $60. Now, with this spike that we are having in price, we're going to generate more cash, so we are probably going to be able to distribute more. At $60, we're talking about $400 million a year, and that would come through share buyback and perhaps dividends. With the increasing oil price, this might increase even more.
Our intent is by year-end to get to 1.6 net debt over EBITDA ratio. The surplus cash, we can lower the ratio to 1.4, bring that schedule forward, or we can distribute. At the end of the day, it's discussing the angel's share. We're not gonna use these shares for nothing. If we use the shares, I mean, it's terrible in terms of tax. Nothing we do will justify using these shares because we have a huge capital gain based on these shares. If we use them, it will be tax inefficient, so the only way out for them will be to cancel them, and this is what we will do. It's just a matter of time. Eventually, it will happen. Candidly speaking, I wouldn't worry about that. Your last question was the environmental license. Today, we would need the environmental license of Frade.
Our relationship with IBAMA has improved a lot in the last 12 months. We have a new team. We started reorganizing the team last year, so now we have a totally new team working with IBAMA. Leandro, who was the responsible person, did a great job. Now he's doing something else. We brought in a former ANP guy, and he's somebody who knows a lot about the industry. His name is Thiago. He's continuing the beautiful work that was done before, and he's doing his homework and all the homework we should have done 2, 3 years ago. We have a good relationship with IBAMA, a very fluid one. As far as we know, IBAMA is very close to giving the Frade license. They have inspected our rig to issue the license. Normally, this is the last stages. That's when they come for these inspections.
We hope to get this in the short term, very short term. Before we deliver Wahoo, we are probably going to have the drilling license for Frade. Once we have the drilling license for Frade, plus the approvals and the works we can do in ABL, the rig is busy almost until mid next year. In the first half of next year, we'll be needing the Albacora license, the area license. We are also working on that with IBAMA, and that's the outlook. I don't envision any major problems. I think that IBAMA now is back to their normal standards of working. Of course, things do take time, analysis take long. That's how it is. I don't see this as a big threat.
You will remember that in October 2023 I was the first to say that I felt that IBAMA was going to be a hard business. Just like I said in October 2023 that I thought it was, we were going to have trouble, I think that we've traveled a long distance now, and the relationship is much better now. I don't see IBAMA as a setback. We cannot say that the license is going to happen tomorrow, going to be obtained in 2 years, in 2 days. It doesn't happen that way, but we are very positive about it. To Gabriel.
Question from Tasso Vasconcellos with UBS.
Thank you. I have two questions on my side. One perhaps is a follow-up on the previous questions. My first question, Roberto. What is your negotiation like with your customers?
I know that your price dynamic applying to the average brand has historically been this way, but now with the global dynamics that we are seeing, perhaps there is a greater disruption risk. Any changes in this relationship in your discussion with customers? Perhaps do you see some customers trying to sign more midterm contracts or with perhaps a different dynamic? In terms of leverage, could you make a decision if eventually the oil price remains at this level in the coming months, perhaps until the year end? Do you intend to accelerate share buyback or perhaps bring forward a dividend payment to Q2 or Q3? These are my two questions.
In terms of trading, we have a very well-defined strategy which is selling spot. Bruno and Gustavo are the ones who lead that, but our strategy is defined.
There was one who wanted to have a longer term contract with us, but, you know, it's not the kind of thing that we entertain. Our business is to sell spot, and this is it. The negotiation dynamic is the same. We negotiated with the refineries. What is happening today is that the refineries have a long spread, so refining margin is very high. Since refining margin became very high, the refinery is more voracious. They are more willing to buy in this price delta of shipping. The bulk of it goes to the refinery. When we have an increase in shipping prices of VLCCs increasing price, that's a bill shared by the producer and the refinery.
Today, the scales are pending more to refinery because they are the ones. Well, of course, they become slow to buy oil because they want to maintain their margin as much as possible, but their margin is really high. There's a negotiation involved, and Bruno and Gustavo are the ones who handle that in our day-to-day, and they handle this really well. As regards the remuneration plan for the shareholders. We want to get to the end of the year with 1.6 ratio. If we have an additional revenue, if we have much faster deleveraging, we can accelerate the share buyback program. Something we don't do with a share buyback is to artificially inflate the share price. When it's going up, we don't go to the market to buy back.
We normally buy shares back when the price is lighter or giving up a little. Actually when they are dropping. There's a limit to what we can buy back. We don't want to artificially increase the price of the shares. Perhaps we'll not be able to buy back 100% of what we aim to. In the beginning of the year, we said, "Perhaps we'll buy back BRL 400 million in shares of Prio." We might not manage, and in this case, we will think about dividends, and this is exactly the dividend payout policy that we are discussing with the board of directors. We should be finalizing it by the end of the year.
Super clear. Thank you very much.
Thank you.
Next question with Bruno Montanari with Morgan Stanley. Thank you for taking my questions.
I have two questions. One, in terms of trading, but more specific. You ended the year with a very high inventory. How has the inventory evolved over Q1? Were you able to have a more opportunistic sale when the oil price was higher? Do you have a strategy to hold back your inventory? I just would like to know what you're thinking in terms of destocking. The second question about Wahoo. Everything is in line, but with the reservoir with a slightly better quality, could you explore what this means? What is a better reservoir informing us in terms of the curves or possible upside, thinking about the mid to long-term?
Well, Bruno, thank you for the question. Well, Bruno, our goal here regarding our inventory is one to have logistics optimization.
I am producing, and when I think that my logistics is optimal in terms of offload size and composition of the loads so that we can have perhaps a VLCC, we put it together and we sell it. We are indifferent to calendar day or month of the year. We have to optimize, and this is what happened over Q4. The whole oil on December 31st was sold this year at this year's price rather than last year's price. As for optimization and specific offloads, what we did is what Roberto said in his comments. When the war began, we were long in some vessels. We had contracted the vessel, but the load was not allocated. So for some loads, we were able to optimize.
We could benefit from a lower price of shipping in an environment of higher price of shipping. We had deals with the refinery that were interesting because the environment was high shipping prices. This is priced, but I didn't have that cost. We were able to do this for some of the offloads. After the war with Iran began, the inventory of the end of the year over the month of January was totally sold and delivered to our customers. There was a question about Wahoo. As for the reservoir, we found similar net pays to what we imagined. Net pay is what we have in the reservoir. The quality, the oil flows a little better. This oil could produce more than expected because the oil flows better. What really feeds the reservoir is the amount of oil that exists there.
What feeds the well, what feeds all that, is the amount of oil. It's the amount of oil in the reservoir does not change because our net pay is very similar. It's there, then we have the net pay, which is what we've the oil that we find, which is very similar. Our volume doesn't really change, and because the volume doesn't really change, how much we're going to produce is not going to change. We have a well, we have a reservoir that could have a higher productivity. This is not something that I can tell you, "Oh, it's going to be producing more," because it really depends on how the reservoir behaves as a whole. Almost like having a car that drives at 150 miles an hour, but the speed limit is 100.
You have a car that gives you a better safety margin, it gives you more comfort and all. To us, the well having a productivity index that is higher, it's kind of the same thing. We have a well that can produce more, but today, our review of the reservoir is that we're going to be producing 40,000 barrels, and that is it. Can we have any surprises? Yes, we can, if we have not identified the certain area or something. But we cannot really say what's going to happen now. Today, what we have to take into account is that our production is 40,000 barrels daily, and this is it for now.
It is clear. Thank you very much.
Thank you, Bruno.
Next question, from Regis Cardoso with XP. Go ahead, Regis. Good afternoon to the whole team.
I'm not gonna be mentioning you individually. Regarding dividends, I would like to have some quick clarification. I think that in the past, we had this debate that is a threshold. It's a limit between buyback migrating to dividend. It will depend on the amount available. I understood in the previous answer that perhaps this threshold is $400 million that you can possibly get through buybacks and one point six net debt over EBITDA ratio. I just want to clarify. It is exactly that. The threshold is not the $400 million. We wanted to buy $50 million in the Q1 . We were able to buy 30. That's the truth. It's about the strategy. When we buy back, we limit the percentage. The daily volume, we never buy when the share price is increasing. We never artificially increase the share price.
Sometimes these things will prevent us to do what we want. We would have liked to buy $50 million. We bought back less than $30 million because we just didn't manage. If we wanted to buy the shares at any cost, then most likely our shares would be costing 65 or higher. Fine. We didn't want to do that. We think it's healthier to let our shares perform on their own. We buy them back following some rules. I wouldn't say that the limit is 400. We would like to buy back $400 million. Perhaps we won't manage, and dividends will come in to offset that. Okay, dividends would be the difference. Perhaps another theme on Wahoo. We spoke about the ramp-up process. You mentioned the restrictions at the start of the life of the field.
You have the measurements by ANP. Could you elaborate on this process? What are the obligations you have? It would be nice so we can calibrate our expectations for the next two quarters. Okay. What we have in terms of restriction, in terms of regulatory items with ANP, what we agreed with ANP, because it's a new field, a new well, everything is new, is that we are not going to measure for calibration purposes, for physical measurements that we have to do at the beginning of the field life. We will not be measuring two wells at the same time. We'll put the first well to produce. When it starts producing, it stabilizes. Then we'll have the second well put to production.
When we measure the second well, we'll not do the second with the difference of the first, measuring everything and deducting what the first one produced. We will not do that. We will stop temporarily the first well. We'll measure just the second well, and after we measure the second well, it'll take about 24 hours. We measure the second well, then the first well will be back online and both of them will be producing. With the third well, we'll put it to production. When we get oil, we will stop the first two wells. We'll measure the third, and the same goes for the fourth well. These are kind of 24-hour shutdowns. These will happen, and that's how we need to do it. It's not that we are going to have a huge production loss. No, it's not about that.
I know that several of you keep monitoring the ANP report day by day, and then it shows there was less production, there was a problem. No, no. No problem. It's just a measurement tactic. It will not change the economics. It will not change anything. It's just a regulatory requirement. It is what we agreed with ANP, and this is what we're going to be doing. By the way, this is normal for any new field. ANP requires that physical measurement be done in a regulated way, and there is also accommodation in the process plant. Normally, this initial part takes a little while. It's very normal. In a matter of two months, we'll tame this wild horse.
Once we start producing, you asked about the ramp-up, it will take about 10 days because we want to have a slow ramp-up because Wahoo has a GOR, gas-oil ratio, that is very high. So we'll need to process that gas and export the gas. So there will be some challenges, but minor ones. It's nothing out of the ordinary. It's part of the work that we do. That's it.
Perfect. Perhaps a follow-up, any impact on Frade production? I understood in the first part of the answer that not due to individual measurement of the wells, but related to the second part, the topside of the plant. Could you comment on that?
Yeah, you got it right. The answer would be no, as long as we do this right.
We don't want to mess the process and have interruptions of production at Frade. The ramp-up will be slow because we'll be thinking about Frade. If we bring too much gas to the system at once without being prepared, if we have a quick delta of gas, we can mess the whole plant, and that will hurt the operation of Frade. We're going to do a slow ramp-up in order to keep the whole plant under control. Thank you. We just have one last question that we received in the chat that we perhaps should address, which is asking about an update of the appropriation of synergies and reduction of costs at Peregrino. Today, we are operating Peregrino at $370 million a year. That's the run rate of Peregrino today.
This takes into account all logistics, synergies that we said we were going to have, SG&A gains and the fact that we were working with a floatel. The floatel ended in January and went away. Today we are exactly on schedule. The next step in terms of cost reduction has to do with the gas line, what we call gas import. Since 2023, that line has been activated. There was an accident with a vessel at the time of Equinor operatorship, and we are bringing that line back. Our expectation was July of this year, June 1, 2026, to have gas back in the field and have a reduction of another $120 million per annum. Our OpEx would go to $250. The good news is that we are ahead of time with the gas import line.
The ship that will handle this is Valente, and she has laid the two lines of Wahoo. They are getting prepared, so she will probably leaving next week to go to the field. They will lay the line, and there is a good chance that we will be delivering this before May. Let's keep it to May or June. Now, there's a chance that we might bring this forward a little bit, but it will depend on the work that we will be doing with the Valente. It's doing really well. We had an update in our management meeting yesterday, and all is unfolding well.
Well, thank you for the questions. I am closing the Q&A session of the call discussing Q4 2025 earnings. I'll turn the floor to Roberto for his final statements.
I would like to thank you, all of you, for your attention, for joining us. We are all very excited with the company. I think that we are living a unique moment. It's not about oil price, let's put this aside, but I think that we are living a unique moment in terms of our achievements, our goals. In Q1, we'll have Wahoo in full swing. Thank you very much.