Good afternoon. Welcome to Prio's video conference call. I am José Gustavo, your Business and IR Manager. For those who wanna follow us in English, we have simultaneous interpreting through the globe icon on the bottom on the bottom of the Zoom toolbar. The translated presentation is available on our IR website. The comments on the results will be presented by our management. After the presentation, the officers will be available during the Q&A session. At this time, all participants are in listen-only mode. You can send written questions using the Q&A button, or you can use the Zoom raise hand feature to ask live questions. This event is being recorded and will be available on our IR website.
This presentation contains information based on future estimates and forecasts based on assumptions adopted by the company which can change and should not be considered facts or be used as the basis for financial projections beyond the plans expressed by the company. I now turn the floor to Roberto Monteiro, our CEO.
Good afternoon, everyone. Welcome to Prio's earnings call for the first quarter of 2026. This was an exceptional quarter for the company, obviously from a financial standpoint, but also from an operational standpoint with several record marks achieved. Among them, production records, as well as others, such as operating efficiency and all that, but we'll go into more detail as we go along. Well, I'm going to go over the highlights of the period, as I always do.
I'll share some figures, I'll come back at the end to talk about sustainability and the next steps. The first and most important achievement of the quarter, the biggest highlight, was Wahoo's first oil. We've already brought 3 wells online at Wahoo field. The field is producing 30,000 barrels daily, that average of 10,000 barrels per day per well is in line with our expectations. Actually, a little better. It was a very consistent and excellent delivery by our team. We even managed to get a little ahead of the schedule we had initially set. We also obtained a drilling license for Frade field. We have authorization to drill 14 new wells at Frade. Now after Wahoo, we are resuming the Frade campaign before drilling the Wahoo injection wells.
This has given the company a lot of operational flexibility. We achieved a record level of operating efficiency at Albacora Leste. We reached 95% operating efficiency at ABL. We haven't seen this before. Actually, I know we never had a quarter with this level of efficiency. We closed Q1 with a daily production of 155,000 barrels. We sold 14.8 million barrels. Our lifting cost, I believe, is another major highlight of the quarter. It's back down to single digit. We posted $9.4. We haven't seen this level of lifting cost at the company since 2023. The two major items that make up this lifting cost are, the first one without a doubt is Wahoo, which brings in more barrels, thereby diluting the OPEX. The other is Peregrino field.
The entire Peregrino team, led by Gabriel, Rafael, and of course the FPSO crew, Rana, Carlão, everyone, Mantovani in the field, they all did an excellent job, and we managed to achieve a significant reduction and optimization of costs at the field. Today, Peregrino already operates at roughly the same cost levels as the rest of the company. There's one more item that I will discuss later regarding cost reduction at Peregrino, which is the gas pipeline that we call Gas Import. The project is called GIP, which stands for Gas Import, and it's expected to be completed sometime in May. Our estimate was to finish it in July. We'll likely be able to bring it forward to May, June at the latest. Everything has gone very well at Peregrino. These two things, Wahoo and Peregrino, have brought our lifting cost down to $9.4.
Then on the financial side, we add to that, along with very strong operations, the issue of this global turbulence we've been experiencing in the Middle East involving Iran. This brings us to revenue of $1.2 billion, EBITDA of $850 million, and net income of $450 million. I'll say it again, it was a very strong quarter, operationally speaking, coupled with some turbulence, mainly in March, though not so much in January and February, but significant turbulence starting in March that led the company to these very positive results. Moving on to the next slide. I've already shown the lifting cost of $9.4, with the company returning to 2023 levels.
Now, in the second quarter, the trend would be to improve that lifting cost even more because we'll have the full quarter with production from Wahoo, plus further cost reductions at Peregrino, so the trend would be to improve the lifting cost a little bit more. Production, we've already covered that. The cash position. Although we have posted strong EBITDA, our cash position didn't respond for 2 reasons. First, we accelerated the Wahoo acquisition, so we spent $300 million in CapEx this quarter. A very significant amount, but due to Wahoo. We bought $60 million in company stock, and our working capital when we look at accounts receivable, which normally hovered around $300 million, something along those lines, jumped to $800 million. A large part of the results we achieved is in accounts receivable, which is now being collected in April and May.
Well, we reached a net debt over EBITDA ratio of 2 times, which is also slightly lower than we expected. We are maintaining our guidance to reach a net debt over EBITDA ratio of 1 time by the end of 2027. You know, this will be discussed in the upcoming earnings calls along with the announcement of our dividend policy, and so on and so forth. I'll stop here and hand it over to Francilmar. He'll talk about operations. Milton will talk about financials. I'll come back. Thank you very much. Francilmar, over to you.
Well, hello, everyone. Thank you, Roberto. I'll start with slide number 5 and talk a little about asset performance. This quarter really was a fantastic quarter for the company. Operationally speaking, it was, I'd say, probably the best in our history.
Setting aside the volume, where there has been already this significant increase, largely due to Peregrino's production, we reached nearly 15 million barrels sold in offloads. As for production, we saw improvements for virtually all assets. The only exception being Frade. The Valente cluster saw a slight drop, but that was mostly due to natural decline, which performed very well. We managed to offset it somewhat. The introduction of secondary recovery at the field through water injection improved significantly, so natural decline has now slowed in Q1. The result is very good in terms of increased production. I'll go over the details for each one. In addition to production due to more controlled decline across all assets, operating efficiency, and I'll go into a bit more detail, was fabulous, averaging over 95%.
I don't remember I've ever seen that figure before in this type of asset, and I think it's very difficult to achieve that when compared to industry peers. Best of all, I think, is our operating costs. We managed to capture a lot of synergy. We were able to optimize a great deal and saw an increase in production. We had a good production cost and made progress on project delivery. This was a quarter in which we delivered so many Wahoo projects, which was a major endeavor, and I'll go into a bit more detail on this later. We are mitigating a lot of risks related to the company's execution capabilities. It was a fantastic result given all the challenges we faced along the way. We learned a lot, captured a lot of insights, and we'll gain more muscle.
Things will get even better in the future. We delivered. We are finalizing the delivery of a massive asset. We also had drilling and new oil at Peregrino, also at Polvo. We're preparing for more down the road. All of this together helped us keep lifting costs under control, reaching this very good figure that we didn't even expect to achieve so quickly. The best part about the numbers, not just the numbers we see here on the screen, is how we achieved them. The team's resilience and muscle, their ability to keep going and continue to evolve. I'm very pleased with what we are starting to actually deliver.
There will be obviously a lot of difficulties and obstacles along the way, I truly believe that the team, the company's culture, technical expertise, and the drive to succeed are all right here, we're going to keep evolving. I'll move on to the next slide, number 6, so we can detail each asset. Here in Cluster Valente, the northern section that includes Frade and Wahoo, the highlight was obviously the start of production at Wahoo field. The tieback was completed. We finished connecting three wells starting at the very end of March and continuing through April. We brought three wells online, and they are performing well. We've already started production. Everything is in line with what we expected. The fourth well is complete, drilled, and we already have all the data on quality of the rock, of oil, and everything else.
Everything is in line with what we expected. We are just finishing up the subsea connection now, the hydraulic, electrical, and fluid connections. We had a problem with the vessel that was supposed to do the installation. We are currently reorganizing what we will install, but it's just a matter of time. It's really just an operational delay. What needs to be done technically is already under control. There are no further technical risks, so to speak. We should finish this in the second half of May, I believe closer to the end of the month, but we managed to bring it forward compared to what we were planning in April. We'll keep moving forward to complete this field. There's a lot we've learned, a lot of information from Wahoo that we'll be digesting, and we'll continue with the reservoir assessment and possible new tasks we'll undertake.
There are some opportunities there that we might be able to explore a bit more in the future. Frade performed very well in terms of efficiency and cost, and most importantly, we had serious concerns and prepared extensively for the transition to the new field. We were worried about the impact it would have on the FPSO, but it was handled exceptionally well. The technical team worked in an exemplary manner. We didn't have any single hiccup, not even a single problem. In fact, we achieved an operating efficiency of over 98%, which is already difficult under normal conditions. Imagine doing that while bringing an entirely new field online. Frade really had a very good quarter. Spectacular. Let's keep it up. The challenge now is to maintain the space.
Looking ahead, we are working to pursue some opportunities that had already been mapped out during Frade's redevelopment project when we wrapped things up back in 2023. We'll continue this process now in a more, shall we say, piecemeal fashion. We'll start some exploratory work with the goal of bringing a well online later this year, and we'll keep moving forward on that path for Frade. Moving on to the slide about the Bravo cluster, slide number 7. Well, this was a quarter in which we achieved very good efficiency. For most of the quarter, there were no incidents. We closed out the quarter at 98.3%. At the very end of the quarter, we had a shutdown, a pump failure in well 44, and that set us back a little bit right at the end.
The workover on that well is already underway, and I believe we'll be finishing the pump installation in the next few days. This is result of the flexibility we have. You see, the rig had finished the Wahoo well, moved on to Frade to start the other well, but we diverted it to work on this well that failed to repair the TBMT well. The rig will finish up and return to carry out its mission currently underway at Frade. In the first quarter, we saw wells coming online. At Polvo wells we had drilled in the Eocene reservoir. We began production. Obviously, for Polvo and TBMT, the accumulations and volumes are more modest, so to speak. It all helps the asset maintain a good level of profitability and ensures that the vessel runs smoothly. We're able to use the gas to generate power.
In short, the asset performed well throughout this quarter. Moving on to slide 8, let's talk about ABL, Albacora Leste. ABL also had a very good quarter. It was our record for operating efficiency. The result of all the work and the effort that has been made over the last few quarters, we managed to achieve an efficiency of over 95%. At the moment, we are finishing the installation of the new compressor that we're putting in place. This level of efficiency, mind you, was achieved with both units operating at performance levels far from ideal.
We believe that now by improving the compressor status and maintaining high vigilance over the other critical equipment, we will be able to sustain an efficiency level, perhaps not exactly at 95, which would be outstanding for that type of asset that still has so much work to be done, but above 90% as we are targeting for this year. The challenges remain, and the asset has many fronts to tackle, but it has progressed, and each day we better understand what needs to be done. Production is performing well with a relatively favorable decline rate. We are working on the final stages of the redevelopment project, which we expect to begin next year, and we are now finalizing the detailed design of the wells, geological aspects, and so on and so forth.
It was a good quarter, and we are sharpening our tools to begin a new phase for ABL. Moving on to slide 9, we'll go into detail about Peregrino Field. Well, Q1 was a very significant, very good quarter for Peregrino, during which we were able to realize synergies much faster than we had anticipated. We managed to bring the entire team together there, engage the team in our culture, in our way of doing things, we were able to transfer people back and forth. It all went very smoothly with resource sharing, optimization, people helping each other. This ended up helping a lot, both in terms of operating efficiency, which was also extremely high, above 97%, as well as in terms of operating costs and safety. Amid all that confusion of having to handle this volume of operations, we also performed well workovers.
Do keep in mind that we have a lot of wells out there. There are 3 platforms with many wells equipped with electric submersible pumps to pump the oil. Failures occur fairly frequently. We performed workovers to replace pumps. We completed well drilling. We started drilling other wells. The volume of operations at Peregrino is high, but it's already well integrated into our operations. There were no major setbacks in the operation as a whole, and we completed other major projects, such as a project called HAP, H-A-P, which is an integrity and maintenance improvement project. It was finished at the end of last year on the FPSO, then moved to Peregrino Alpha, was completed, has already been demobilized, which helped reduce costs. In addition, during this quarter, we've made significant progress on the gas pipeline repair project.
This project is practically complete. We are already in the final stages of commissioning and opening the gas supply. This should happen in the coming weeks. We are working hard on this as well because it will greatly help reduce the amount of diesel we burn for power generation. We are focusing heavily on this in the short term. As for Peregrino, operations will remain at a high volume. There are plenty of wells to drill. It's a constant struggle to bring new wells online, reduce water production, manage that water effectively, and, you know, it's the normal story. It's already part of the family, already integrated. The team has integrated very well, so everything is going smoothly, and we hope to have more good news from Peregrino in the future. With that, I'll wrap up. Milton, over to you.
Thank you, Francilmar. Good afternoon, everybody, everyone. Continuing with our presentation in slide number 10, we are now discussing Prio's financial performance. Well, in the first quarter, total revenue stood at $1.213 billion. This figure is based on approximately 14,800,000 barrels sold at an average Brent price of $83.50. When we calculate FOB revenue, which involves applying the FOB equivalent price after deducting our discounts and trading costs, we arrive at $1 billion 118,000 in revenue for the quarter. This equates to an FOB equivalent sales price of $75.34. Therefore, there is an implied discount of $8.15. It's important to note here that in the quarter sales, approximately 6.8 million barrels were priced out of the 14.8 million barrels. 6.8 million were priced between March and April. This already factors in the impact of the war.
These were post-war pricing transactions pulling the average sales price upward and also showing an improvement in the discounts which had been higher in the beginning of the year. However, after the war, with the scarcity or shortage of oil and the closure of the Strait of Hormuz, we saw a significant improvement in discounts, thus resulting in an average discount of $8.15 per barrel for the quarter. As for EBITDA, a total $852 million with a margin of 76%. We also highlight, as already mentioned by Roberto and Francilmar, a lifting cost of $9.40 per barrel, which aligns with our cost of goods sold. Well, higher depreciation and amortization also attributed to the entry of Peregrino, I mean, the additional 40% we had with the closing in November. It's now posted in a full quarter, in the first quarter. Financial income of $128 million.
This is largely explained by $80 million in financial expenses and interest. We also had hedges settled against the price drop. We had set them up for February, but they ended up going to waste. This represents $10 million and also the increase in asset retirement obligation, or ARO, which is an accounting figure, not a cash figure, which is essentially a provision for abandonment due to the inclusion of the additional 40% from Peregrino covering a full quarter. This ARO expenses has increased in the quarter, reaching around $26 million. In addition, we saw a positive impact on deferred income tax, mainly due to the adjustment in the tax base resulting from the appreciation of the BRL, which revaluates fixed and intangible assets. This pushes our income tax into positive territory.
We had a negative outflow of current income tax, but a high deferred tax credit that resulted in a final positive figure of $132 million. As a result, our net income was nearly $460 million this quarter. On slide 11, we discuss Prio's capital structure and funding. The chart on the right explains the amortization schedule for the coming year. In 2026, we basically have the remainder of our inaugural bond that was not included in the tender in October when we issued a new bond maturing in 2030, which is the $700 million bond. This amount will be fully amortized upon maturity in June of 2026, I mean, $169 million. There is also a small bilateral debt of $25 million.
In 2027 and 2028, we see these amounts in lighter blue, which are bilateral debts we've taken on over the past few years to fund the company's acquisitions. I mean, here, I think it's worth mentioning that we've already been approached by most of the banks with we have bilateral debts with I mean, with regards to rollovers. In short, they naturally want us to continue with these debts. In our analysis, especially with this rise in oil prices, it may make sense to prepay some of these debts or simply pay them on their due dates. Of course, that if the bond market, for example, improves. We can also consider issuing bonds to push some of these maturities a little bit further out. We have plenty of flexibility and peace of mind here to adopt the best strategy for Prio.
Apart from that, here we see the maturities of the debentures we've issued over the years. This is a very manageable, very smooth schedule for Prio over the next few years. In terms of duration, it stands at 2.79 in our debt portfolio, pulled down by these bilateral loans maturing in 2027 and 2028, and an average cost of debt in the range of 6.30, or 6.3% denominated in USD. Moving on to slide 12, changing Prio's net debt, which is basically a proxy for cash generation. We started with $4.3 billion in debt and ended the first quarter with $4.372 million. There's a slight increase in net debt despite very strong results, as we can see in the EBITDA of $852 million.
We saw a significant impact on working capital with nearly $500 million in receivables from the variation between the last quarter and this quarter. Here we had a lot of sales in March. This cash has been coming in throughout April and now May. It is therefore natural that working capital turned negative due to this significant volume of receivables. CapEx, $308 million. We still have accounts payable, or specifically the final portion of Wahoo's accounts payable related to well drilling and the completion of subsea installations. We also had drillings at Polvo and maintenance CapEx at Albacora Leste and some small minor works at Frade. Apart from that, we repurchased a total of 5.5 million shares, an expense of nearly $60 million in the quarter.
As for the cash financial income, this is basically $78 million in interest, plus $10 million in put options against falling oil prices that we had executed as a hedge back in February. That ended up going up in smoke, and when added to these financial expenses, the total comes to $88 million. With that, we reached a net debt of $4.372 billion. Regarding leverage on slide 13, we had a debt-to-equity ratio of 2.3 times in the fourth quarter. Initially, even before the war scenario and the rise in oil prices, we had imagined this leverage would stabilize at 2.3 times to begin falling further in the second quarter.
We have already seen a significant drop in the first quarter, mainly driven by the company's results and the rise in oil prices and our low lifting cost. We already reached 2 times, and the trend with this very strong cash generation that we anticipate is for a very sharp deceleration in this leverage over the coming quarters. With that, I hand it over to Roberto. Thank you very much.
Thank you, Milton. Well, I will quickly go over the issue of environment and society. One of the items of interest is our carbon footprint, where we've seen a significant reduction compared to 2025. Here we've reached 24.3 kilograms of CO2 even after the consolidation of Peregrino. I mean, I want to highlight 2 things.
The first is cost optimization at Peregrino, which includes fleet optimization, reduction of flights, and Wahoo, which significantly reduces this carbon footprint because you are producing the same volume. You're producing a lot more oil. On a carbon basis, that hasn't changed at all. The FPSO operations remain exactly the same. We achieve a significant reduction compared to 2025, reaching 24.3 kilograms here. I think this was one of the major highlights of the quarter. We also invested in other sustainability initiatives. We partnered with the Projeto Tamar through the ANP to create a turtle database, and so on. We are still operating on our I Love Prio platform, and there we launched several initiatives, such as PPE upcycling, the Instituto Vini Jr., and so on. In terms of health and wellness, we continue with our hiking and functional training programs.
We have now implemented a monthly routine of preventive cardiac screenings, and so on. The company continues with this focus on the environment and society, and with this responsibility toward the environment, society, and also our internal employees. Moving to the next slide on the next steps. As always, the first and last points always repeat themselves, which is a continuous focus on safety and health, and the exploration of new M&A opportunities. Here in the middle are the shorter term items. What we have to do this quarter. Well, we will have the fourth well in the Wahoo field. It was supposed to have been drilled already, we had a problem with the crane on the vessel that is going to do the pipe laying.
There was a major failure in the crane, the well will end up producing its first oil toward the end of May. I mean, all the equipment is already in-house. The umbilical, which was undergoing a re-termination, is already in-house. It's already in our inventory ready to be, you know, laid. This was a very one-off issue. It's a third-party vessel. Anyway, we had this problem with the vessel, but the repair of that crane should take place sometime this month. Actually, we're going to replace the vessel, and we'll start the pipe laying in the second half of the month, starting May 15th. It's a setback, but anyway, without any major repercussions. I mean, it's not a setback stemming from any major inefficiencies. It was just, you know, a one-off failure, and that's it.
Throughout this quarter, most likely before the end of the quarter, we will approve our policy and submit it to the board. We've had some discussions regarding the shareholder remuneration policy. Basically, it's about making very clear and transparent our position regarding dividends and buybacks, I mean, both for this year and the years to come. We will also resume drilling at Frade. As I mentioned on the previous slide, we received the license to drill 14 wells at Frade, we will start drilling at Frade. The reason we are not drilling right now is because we are performing a workover on a well at TBMT. Once this workover at TBMT is finished, which I estimate will take another week or two, we will head to the Frade field and start drilling there.
Today we have at least 2 wells to drill. These 2 wells will explore and study various targets, and from those targets, we hope to bring at least 1 well into production out of all of the targets that we will identify. We might be even more successful, in which case we will run into a slight issue with the amount of material we have in stock to bring more wells into production. Anyway, that's a great problem to have. We will also be working on the Peregrino gas pipeline, which I called before the Gas Import, GIP. It's practically ready, and we should be able to get it up and running by the end of this month, in May.
There are still a few final details to be worked out with the consortium that owns Rota 2, if I'm not mistaken, so that we can put it into operation. Now it's much more a matter of some fine-tuning and commissioning than anything else. We are also focusing heavily on the efficiency of Albacora Leste. Those compressors we purchased at the end of last year have finally arrived and are being installed. This should help us with Albacora Leste's efficiency, at least in terms of maintaining a high level of efficiency and a high level of redundancy, as we've been striving for a long time. We will also start working on closing the remaining 20% of Peregrino, which I estimate will happen more towards the second half of the year. Anyway, some work regarding this closing is already being done now.
Well, I'll stop here in terms of the next steps. Well, I mean, you've all seen it, but I mean, I wanted to mention the structural change taking place here at the company. Francilmar Fernandes is stepping down from his role as COO. Jean Carlos Calvi is taking over as COO. Francilmar Fernandes has a family matter that requires him to leave Rio de Janeiro and be closer to his family. With that, we've made this transition. Francilmar Fernandes will likely remain involved in some specific projects here at Prio. He's our partner and our friend, and I wanted to express my gratitude to him for these 10 years we've spent together working side by side, literally. He sits right here to my left. Well, it's been 10 years of working hard alongside us in the trenches here, building Prio.
I know this is a transition that will happen without any major issues. Jean has also been with us for a long time, over 10 years. Anyway, I just wanted to express my gratitude to Francimar for all the work he has done. And now I will open for Q&A. Thank you very much.
All right, now let's begin the Q&A session. Our first question comes from Rodrigo Almeida with BTG Pactual. Rodrigo, go ahead.
Thank you. I would like to ask two questions. The first, I'd like you to elaborate on Peregrino. You've had a lot of activities there. I'd like to revisit your schedule and ask about Isolado so we can understand it better. I think that during the investor day, schedule, Isolado was scheduled for kind of this time of the year. I'd like to get an update from you. How should we think about Isolado or the isolated area during the year? Secondly, are you considering a possible tieback between TBMT and Peregrino? How are your internal studies on that? We can understand this project. Second question about Arapuça and ABL.
We've been speaking about this for quite a long time, so I'd like to get a sense of what you're thinking. Perhaps at the turn of the year or first quarter of 2027, what are you expecting? I know you have a lot to do. You have a lot of activities along the road, so I'd just like to understand what's going to happen to get an update on Isolado and Arapuça. Thank you.
Hello, Rodrigo. Well, Isolado is being drilled as we speak. It was part of our campaign. We have 2 platforms drilling at the moment. One of them is Isolado. We expect to have the results along the week, and we want to bring that well online and do a production test to evaluate the behavior of the reservoir, but we are very optimistic about that region.
As regards studies on the tieback, this is in the hands of the engineering group. We don't have anything ready yet. We are detailing everything, and we want to get it ready as soon as possible so that we can get ahead with it. One thing to remember, we are also studying the necessary CapEx for that. With the production from Isolado and with very little time of production, we are going to have a pretty good idea of the size to understand whether things make sense. Everything is moving forward so that we'll make a decision eventually, but we need more time to put wells into production, perhaps drill another well to be sure. There are some steps. Isolado apparently is a good opportunity. We'll evaluate one part and then the other part, but we'll do it by the book.
The other question was about Arapuça. Well, for Arapuça, we're at the final stages to start laying the pipes. I think it's 6 kilometers. 10 kilometers? Lines measuring 10 kilometers long. Our expectation is do all this soon using the same vessel, the Amazon, that did the pipe-laying at Wahoo and also the laying of Gas Import. She has good productivity and good costs, so we are imagining we can work on Arapuça in the coming months, perhaps start before the mid-year. If this moves forward, I think that there's a pretty good chance to sign the contract with Petrobras. It's all agreed with Petrobras. There's a real chance that we'll have Arapuça producing at the turn of the year. Everything will be ready.
We'll wait for authorization from IBAMA and ANP. The whole structure will be ready so that when we get the authorization, we can get started. Of course, we'll need to have the workover. These things are more in-house. We needed the Amazon vessel for the pipe laying, and that's why we have been bringing forward the CapEx. We're investing the CapEx. It was GIP, now it will be this, then Frade. All of these are very good projects. For Arapuça, it's all in our hands. We're just waiting for the final stages. If everything goes smoothly, I think that by year-end we'll have production starting.
Excellent. Thank you very much. Thank you, Rodrigo. Next question from Monique Greco with Itaú. Monique, go ahead.
Hi, everyone. Good afternoon. Thank you for the opportunity to ask questions.
Before anything, Francisco Francilmar, I'd like to congratulate you on your story and the legacy you leave at the company. I wish you and your family all the best. I'd like to congratulate Jean Carlos Calvi on taking this new role. Now moving to the questions. Milton Rangel, in his part, talked about improving trading discounts in Q1 now that we have a tighter global market. Milton Rangel, could you explain the order of magnitude of this improvement? Did this make a difference for the products that you sell? What about the month of April so that we can start getting a good idea of Q2? Roberto Monteiro, you spoke about the dividend policy, given the volatility and gigantic uncertainty we are living now in terms of oil prices, how do you intend to design this policy considering possible deleveraging efforts.
You mentioned one time by the end of 2027. Is this a guidance? Is this It, it is a target for a certain oil scenario, but how flexible is this target considering the different scenarios?
Perfect, Monique. Thank you for the questions. Well, let me answer the question about trading first. The trading in April continues to be positive. We have two very different things at the company. We have Peregrino that doesn't suffer so much influence. Of course, there's influence from the flat price, which is the Brent oil price, but the discount of Peregrino has not reacted so positively. For Peregrino, we sell under a discount that is kind of similar to what we had in the past. Close to $8, $9 or $7 per barrel. That order of magnitude.
There was no great improvement regarding Peregrino because all of the oil which is not produced, the oil that is being blocked in the Strait of Hormuz is a light oil. Bruno was telling me the heaviest oil they have there is our best oil here. What improved more was the lightweight oils. Now, in where we got our best numbers was from Friday. We sold with premium compared to the Brent in April. ABL, we sold very close to Brent price in April, and Polvo and TBMT close to ABL number. When you put it all together, I think that we are going to have a better discount than $8 per barrel. It's kind of hard for us to say what's going to happen in the whole quarter because the month of June is not sold yet.
At this time of a lot of turbulence, we tend to hold back on the oil and sell the oil at shorter intervals. June is not totally sold yet. Undoubtedly it will be a better discount than $8 per barrel. If we do simple average, I think the discount should be close to 5 or $6 per barrel on average. We still have to see what's going to happen in June. There's a lot of water to go under the bridge. Please do not use this as a guidance for Q2 because there is the month of June coming. We might have substantial variations to what I'm saying. The only thing I can tell you for sure is that the discount is going to be better than Q1. $8.15 will improve in Q2.
As regards the dividend policy, Monique, José Gustavo is helping us design and draft the dividend policy. We are looking at a lot of things. We are thinking this through. This is going to be submitted to the board for approval, okay? The predominant idea is to have kind of a table where we are going to have Brent oil prices for the last 12 months and a target leverage corresponding to the last 12-month Brent price. When I say net debt over EBITDA ratio of 1, we are thinking about that with an oil price of $60. If it is at $80 in that table, we should have a lower leverage. I cannot really give you a number. If it is at $60 at 1 time and 80 could be 0.8, 0.7 or 0.6.
I don't know yet, but this will be the way we're going to work. We're going to have a table. Based on that table, we are going to look at the average of the last 12 months of Brent prices, and we're going to have our leverage objective.
Excellent. Thank you very much. Roberto?
Our next question is from Gabriel Barra with Citi. Go ahead, Barra.
Hi, thank you for taking my questions. Well, again, congratulations, Francilmar. You had an amazing trajectory. You know, if you look at where the company started and what it is, where it is today, I mean, there is a lot to be said about that. I also wish the best of luck in this new phase. I think everything is going in the direction of delivering excellent results. I have two points here. I think my first point is about the closing of Peregrino. I think Roberto already said that this will be towards the second half of the year. I mean, there is also a discussion about the stoppage of Peregrino and how this could impact the adjustment of the final amount of the closing.
If you could give us an update, Roberto, about this debate and what we should expect in terms of the final amount. I don't know how much of that you can disclose, but I think if you can give us some light, this will help us a lot in terms of how much we should expect and what kinds of impacts, I mean, are you anticipating. My second question is about Wahu's oil. Greatly expected. I mean, the company-Maintain the soft guidance of 40,000 barrels a day in the three wells, and with the fourth well, there should be an increase. It seems like the incoming wells came in even stronger than what we anticipated. Once we keep that 40,000 as a production standard, maybe we should think about a decline, because what could be a standardized production?
I don't know whether this is a sign of being more conservative, but maybe the company wants to maximize long-term production. If there is no decline, what would be the performance of the curve of Wahoo's production, and what is the company's choice when you look at decline versus productivity at the moment, whether you are safe enough to increase production? Okay. Thank you.
Thank you, Gabriel. Well, let's focus on your first question. I mean, 20% of Peregrino's closing and the indemnification. That 20% of Peregrino, we were anticipating paying closing for the second half, and I think that between the third and fourth quarter, I think it should be something close to September or October. Between September and November, I think, from what we are seeing at the moment, looking at all the aspects present in the transaction.
That indemnification, unfortunately, seems to leading to a second arbitration with Equinor. Unfortunately, at any moment during the arbitration, the parties can negotiate something, but unfortunately, it seems like it's heading towards another arbitration. We are still in the initial steps of choosing the arbitrators. If that becomes a reality, which today, I mean, looking at it, all the facts, despite all of our attempts, seems to be the most likely scenario, I think this will then happen next year only. We will certainly keep the market informed. I mean, there isn't much to say right now. It seems like it's going in a direction of an arbitration because we haven't arrived at a common denominator, so far at least. In regards to Wahoo, it may sound like we are being too conservative, but we are not.
The way to look at Wahoo is the following: The producing wells are better than what we anticipated. I mean, the productivity Yes. Perfect. Thank you. The productivity is better than what we had anticipated at first. It's not very clear to us whether the reservoir, the volume is higher than expected. We, we can only push the accelerator once we know for sure that the reservoir is bigger than what we anticipated at first. Today, there is no indication that the reservoir is a lot larger or even better or anything of that sort. What we know is that the quality of the rock is better, so the well has higher productivity. The productivity rate of the wells are much better than expected. The good technical background says that we should be cautious.
In May, we will do the buildup pressure, meaning that we will shut down the entire field for 24 hours. We will wait until pressure is resuming 24 hours, and then we will reopen the field. We are doing everything by the book because what we want is to get the best out of Wahoo. Of course, that all of the evidence is very good. I mean, the wells are much better. I mean, it's obvious that the well is better, but the work of the reservoir engineering is to maximize recovery factor. I know that there is a discussion about money versus time. Let's do it now because oil prices are high. This is a very tough discussion, so we can't just tamper in the company's, you know, execution at this time.
We'll have to maximize the recovery factor. Therefore, we are doing everything by the book because at the end, we want to have the best recovery factor possible, and that's why we are limited to 30,000 barrels a day, and we will also limit it to 40,000 barrels a day once the fourth well starts up, and we expect to see a decline by the end of this year, I mean, the second half of the year. This applies to any other reservoir. I mean, if we arrive at the conclusion that we could produce a lot more, then we will produce a lot more.
We were not, are not going to hold back of a well, saying, "I do not want it to decline, so I could produce 60, but I'm only producing 40." We're not gonna do that because we would be going against the best practices. I mean, the issue is just knowing exactly what the volume is. If I know the volume, I can then, you know, speed up at any time, but I cannot do that in the middle of a foggy situation. To give more predictability, we estimate that between 4 to 6 months, we will have a better understanding about the reservoir, and then we will make a decision based on the facts whether we will expedite or not. There is also the matter of water injection. We will see whether primary injection is already working.
We are doing everything we have to do because I think today you should use, you know, what we are using in terms of reserve certification. From now until six months from now, we will be able to tell you more.
Okay. That's very clear. Thank you very much. Thank you for your kind words.
Next question from Bruno Montanari with Morgan Stanley. Bruno, go ahead.
Good afternoon. Thank you for taking my question. Again, I'd like to second to my colleagues, Francisco Francilmar. All the best to Jean Calvi. Welcome. I have two questions. The first is a follow-up question on the remuneration policy, with a focus on buybacks. I know you mentioned that you're not buying just to drive up the price. Looking at days like today, when an opportunity arises, does it make sense to try and accelerate a share buyback at levels that look more attractive? I'd like to understand, Roberto, 'cause you mentioned that you accelerated investments recently. What should we expect in terms of CapEx execution for 2026? If you could give us an idea for 2027, it would be helpful for us to understand cash generation. Thank you.
Bruno. All right.
Yes, in days like today, it's a typical day for share buyback. Of course, we place the orders. For 15 days, we didn't buy any shares on account of the blackout. Today we are resuming the program. We'll place orders according to market capability to absorb. What we try to do is not manipulate pricing in any way. We do not want to add any artificiality to the share price. If we see that there's room to buy 1 million, 1.5 million shares, we'll buy them back. It's okay. We bought $60 million in Q1. I think that in Q2 we should be buying at least double that, double the $60 million. You know, it will really depend on what arises in the market. You see, that's how we operate.
You see, the remuneration policy for shareholders is based on the following. We build this. We don't want to inflate share price artificially. Okay, perhaps at the end of the year, there will be an adjustment number. We should have distributed, let's guess, $500, and we distributed only $300. Okay, fine, we'll distribute the delta as dividends, this is what we're thinking. There was a second question. What was it? Regarding CapEx. Right. We've been accelerating CapEx. The CapEx for Frade, even at Arapuça, we're kind of bringing that forward. Gas Import pipeline, we are doing it this year. I guess that this year we'll end up executing a CapEx of around $550 million-$600 million. In the beginning, we were thinking about $500 million at the beginning of the year.
Now with the Frade license, with this inversion of drilling at Frade before the injectors of Wahoo, perhaps the CapEx will be closer to $600 million. Next year things should be back to normal. We should be drilling no more than five wells along the year. Every well will cost $50, $60 million. We're thinking $300 million to drill new wells executed by our rig. There will be no tieback anymore, because that's what kind of pollutes the numbers. Tieback and tieback at Arapuça, ABL, and so on. $300 million, $100 million of CapEx for maintenance, and perhaps another $100, $120 million for Peregrino. Put it all together, close to $500 million of CapEx next year.
All right. Thank you very much.
Thank you. Our next question comes from Tasso Vasconcellos with UBS. Tasso, go ahead.
Good afternoon. Well, I have to reinstate Francisco Francilmar performance in the company in the past 10 years, for all the wonderful deliveries. Jean, I take this opportunity also to wish you the best of luck in this new position. I have 2 questions. Maybe the first will be addressed to Roberto. How do you see the physical market, demand coming from customers? We already talked a lot about pricing, you know, the reductions through discounts. Roberto said that this should be intensified in the second quarter.
How do you see demand in the physical market since the beginning of the war, and how do you see it today, you know, from the beginning until today, so that we have a better understanding of how this has been evolving and what we could think is still yet to come? The second question on that same note has to do with logistic costs, like freight. How are you optimizing or taking advantage of your own logistics? The parts that logistics comes from third parties, where do you see more opportunities? I just want an update.
Thank you very much. Thank you, Tasso. I think Bruno can talk about the physical market, but before that I'll refer to logistics. I'd like assets, one thing that we're looking at is having at least our own VLCC, like a time charter of our own.
This will be one of the initiatives that we are thinking about to optimize logistics. We think that the price of that is coming down a bit, and we are now procuring opportunities to verticalize a bit more. We already have the shuttle vessel, and now we are working with our trader, and he also believes that this is a very good opportunity. I mean, we have room to have at least two, you know, VLCCs given our trading volume. We are thinking maybe having one now and another one further down the road. I think Bruno can talk about the physical market, and if you wanna talk about logistics as well, I mean, China and Peregrino, et cetera.
Well, speaking about logistics, from what Roberto just said, I would like to say that we've been optimizing our logistics operation. In the second quarter, we will send our first Peregrino to China in a VLCC. Part of the optimization is that we are deploying it now. In speaking about the physical market before, now, and later, our strategy to deliver to customer and having contact with that throughout the world is paying off because prior to the war we saw that Venezuela was de-stocking. The Peregrino market was in the Gulf, and it was relocated to other regions of the world. It went to Europe and also Asia. The war came, and since the beginning of the war, as Roberto said, I mean, usually prior to the war, we would sell our production 2 months prior.
With the war, the market is more, I mean, prompt with sales occurring in shorter periods of time. With that, discounts in the physical market followed on the same trend. Oil prices increase, and the differential or the spread in the physical market between light and heavy crude also, you know, the gap now is higher. In moments of high stress, the physical market locks down, I would say. When the war has started, it stopped for a week or 10 days, and the physical market just holds to see what will happen. This week we find ourselves in the same situation, great volatility in the market.
Buyers who wanted to price at the end, but the buyer want to price it, I mean, the day before the drop, so they stop a little bit, but I know that next week the market will start moving the barrels once again. Tasso, the physical market, I mean, there are two Brents. There is Dated Brent in Brent, and then there is the ICE Brent. Dated Brent. This Dated Brent in the physical market is shorter. It's the shortest one, is the oil for immediate delivery. On the onset of the war, I mean, these two types of oil move hand-in-hand. There is a difference of only $2 or $4 per barrel in favor of Dated Brent because since Dated Brent is closer when you are in the contango, it moves this way, so it's usually higher.
It is the first point of the contango, so it pretty much $2 per barrel vis-à-vis the other Brent. Well, with the war, since there was a momentary scarcity of oil, that Dated went close to $20 per barrel. It was, I mean, more valuable than ICE Brent. ICE is the first maturity, so it's about in 1 month's time or 20, in 20 days. This happened at the beginning of the war. Then with time both became very close together, and today the dated market is approximately $4 a barrel in terms of differential towards Brent. When you look at dated, you look Brent, which is noted by Bloomberg, and the other one is about $4 over ICE. What could happen? Now, moving forward, we should see a higher scarcity of oil.
There will be a higher demand for prompt oil. The market could probably be bullish. There will be higher volatility when compared to Brent. This is what we've seen. In May. No, not May, but in April. I mean, March and April, there was a detachment. It resumed, it went back to what it was, but it did not go back to normal numbers. I mean, it's slightly different than ICE Brent.
It's very, very clear. Thank you very much, Roberto and Bruno.
Thank you, Tasso. Our next question is from Leonardo Marcondes with Bank of America. Go ahead.
Good afternoon, and thank you for taking my questions. I have two questions, but I would like to wish Francisco Francilmar and Jean Calvi the best of luck in their new endeavors.
Going back to my questions, my first question is on your project pipeline. When we look at Prio, we see a large project pipeline, thinking about new wells. You have Wahoo. Theoretically, you have 14 new wells in Frade, you know, and Albacora Leste, ABL. Just help me understand what is your view about hiring a new rig. I understand that the cost per well would go up with the lease, how do you see this market at the moment? My second question is about Wahoo, and it will be a follow-up to Barra's question. Given the fact that, in a way, the wells exceeded expectations in regards to productivity, could you give us more color on today's expectation in terms of depletion or the plateau of the field, or you think it's yet too soon to tell?
Well, thank you.
Starting with the second question, it's too soon to tell. Today, our best estimate is a certification of reserves that we just announced. In the certification of reserves, we already see some decline this year in the second half of the year. I would say that today, in the lack of any other information, certification of reserves is what should be used for any analysis. The second question about the rig. This provocation appears on and off, but I would say that there is 80% chance of no, we will not hire a second rig because our rig is doing excellent work. Productivity is fantastic. We will be able to drill with that probably 5 wells a year, and I always drilled 4 wells a year, but the performance of the rig is so good that we might even be able to drill an additional well.
When you have another rig like that, the number of people that has to be involved in the company, I mean, to be in charge of material. Jean calls the rig, I mean, a beast ’cause you need, you need material, you have to have planning, you know, a schedule. Prio is not yet prepared to have a second rig to drill. Not in what concerns, I mean, even though we have the authorization to drill at Frade and Albacora or ABL, we still have to detail all the wells. After that, when you drill, you have to have a team of geologists, a team of reservoir engineers. You need to have a team of construction engineers. This involves a lot of work. I would say today with 80% certainty that we will not have a second rig.
In addition, what guides us is capital allocation. I mean, given all this work, we are constantly struggling to reduce production cost and our CapEx per well and per, you know, pipelay. Whenever I look at the rig, I have to analyze whether the price is right or whether this will jeopardize my profitability, and there is also, you know, the support vessels. We cannot drive blind with a blindfold. We have to look at market increase, availability, window opportunity. If it makes sense, maybe at some point it could happen. Right now, the chances are very small.
That's very clear. Thank you.
Next question is from Vicente Falanga with Bradesco. Go ahead, Vicente.
Francisco Francilmar, congrats on your successful career, and I wish you the best of luck and lots of success with your family. I have a follow-up question.
It follows up Montanari's question. With anticipation of CapEx, what about exit in 2026? It seems that after 200,000 in balance, I mean, whether you are running at 173 and you have a, an additional 8 from Wahoo, 20 Peregrino, and then something else from Fragi and Arapuça. It seems like over 200,000. That very likely. What is your position in this regard?
I mean, you already listed all the numbers. Of course, there is a decline there. We had 173, and this 173 will not be perennial until the end of the year. This 173 will have its own decline. Things are moving quite well.
I mean, I'm not talking about Wahoo. I'm only referring to Frade. At Frade, we were able to improve the secondary recovery with water injection so the decline is much lower. It's much more comfortable now. ABL as well, Albacora Leste, is well-behaved. I mean, Peregrino still requires a lot of drilling, so it's difficult to say that we would be able to do a lot of different things, you know, vis-à-vis what we're doing. We will anticipate a bit. We've anticipate Frade, ABL. We will also probably anticipate Arapuça. There is a chance, but we could anticipate a bit and have more than 200,000. There is a possibility, but I will still look at 200,000 barrels a day. That has been the target, and at the same time maintaining production.
We anticipating a little bit maybe that entire plateau can be pushed a little bit to the side. Honestly, I wouldn't be comfortable in giving you a guidance saying that we will come to 220, 210. I think the guidance is 200,000 barrels a day. This is what we've been talking about. We've been quite successful in many other points, right?
Okay. Thank you, Roberto. Back to the basics.
Thank you, Vicente. Our next and final question comes from Bruno Amorim with Goldman Sachs. Bruno, I think your microphone is muted. I don't know if you're trying to talk, we cannot hear you. Let's wait a little more. Hello? Bruno? With that, we'll end the Q&A session. Thank you very much for the questions. I will turn the floor back to Roberto for his final statements.
Would you like to say the final words, Francilmar?
Well, everyone, I'd like to thank all of you for your attention, for all your support. I thank you all for believing in us. We devote our lives to this project. We dedicate ourselves fully to this. I would like to thank the whole Prio group. This is just a phase I'm going through. Jean has worked with me side by side, so he will continue the work. I will be close to the company. We are building a company not just for today, for this quarter. I think that we are building a company for life. There is a long journey ahead of us with the Prio method that we work so hard to consolidate at the company so that this machine can continue to move forward.
Obstacles will arise, one-off problems will happen, but we will continue. Thank you very much, and I'll see you around.
Thank you, all, and I'll see you in the next earnings conference.