Good afternoon, everyone, and welcome to PRIO's earnings conference call. My name is José Gustavo, Head of New Business and Investor Relations. For those who wish to follow us in English, we have an interpreter providing simultaneous translation, which you can access via the globe icon at the bottom of your Zoom platform, and a translator presentation is available on our Investor Relations website. The earnings presentation will be led by members of our executive team. Following the presentation, they will be available for a Q&A session. At this time, everyone is connected in listen-only mode. To ask questions, you can submit them in writing via the Q&A feature or use the raise hand button to ask questions live. This event is being recorded and will be available on our Investor Relations website. This presentation contains forward-looking statements and projections based on the company's assumptions, which may change.
Therefore, they should not be considered facts or used as basis for financial projections beyond the company's stated plans. I would like to turn the floor over to Roberto Monteiro, our CEO.
Well, good afternoon, everyone. Welcome to PRIO's conference call to discuss the third quarter 2026 results. I will start by covering the highlights of the period, and then I'll turn the floor over to Jean, who will talk about the company's operations, and then Milton will discuss the financials, and then I'll come back to address environmental and social issues, as well as our next steps. Well, the third quarter was very good quarter. It was the best quarter in our history. I'm not just saying that in relation to the selling price. Obviously, the selling price was what we call a realization price.
It was high, largely due to all the turmoil that has been happening in the world, like wars and so forth. I also say that it was the best quarter in our history in terms of operations. Our operation was very smooth, very stable operation, with extremely high reliability, and this led to several records. Like, we achieved production records and returned to a favorable lifting cost and so on. I will go through this point by point to provide a little bit more color on what I'm saying. In September, we brought the MUP7 well into production at Frade. I mean, we brought forward a small portion of the CapEx plan for the coming years. This is a well we've brought forward from next year, largely due to the high sales prices we are achieving.
Therefore, we felt that it made sense to bring forward a small portion of the CapEx. We also brought forward this well, and we brought forward a well at Peregrino, which we already put in production last quarter. These two, together with the reliability of our assets, mainly explain the production volumes for the quarter, which was around 191.6 thousand barrels per day. That's more than 10,000 bbl per day above our guidance. We've been guiding the market toward 180,000 bbl per day, but today, we reached 191,000. This is even before the 20% from Peregrino. So, with the 20% from Peregrino, the guidance would be 200,000 bbl, and we would be producing on a pro forma basis 210,000 today. That's the delta we achieved. Also, in September, we repaired the gas pipeline in Peregrino.
Remember that when we began operations at the Peregrino field, it consumed a lot of diesel because it did not have access to gas, so it was bad from a cost perspective and also very bad when it comes to environmental perspective. Therefore, these two issues were resolved this past September with the gas pipeline, because we brought the gas back to Peregrino. This quarter was still a transition quarter because July and August were months where gas levels were still low. I mean, the diesel levels were high, and then in September, diesel consumption began to decline, giving way to gas. But it was still a gradual decline. Therefore, our fourth quarter should show slightly better numbers in terms of diesel consumption and also our carbon footprint. Well, now speaking about diesel consumption, that leads us to our lifting costs, which closed at $7.9 per barrel.
Last quarter, it was $8.9, I mean, in the high eights. And of course, this partially reflects this higher and more stable production, but a large portion also comes from Peregrino's, specifically that additional reduction in Peregrino's lifting costs. This quarter, we also acquired two blocks. We were successful in the Permanent Offer auction, securing two blocks, Magnetita and Hematita, which are located near the Frade and Wahoo areas. Therefore, our rationale means that this is not a major investment in exploration, not a change in strategy, nothing like that, but rather an investment in line with our usual strategy, which is to connect accumulations near our field. Thus, there might be accumulations, I mean, they are not large, some are small in these regions, but they can be connected to the Frade and Wahoo areas, and also even Albacora. Therefore, this acquisition made sense for us.
We will begin analyzing these fields next year, starting with seismic data and related aspects, but the results will not be available until much later. So during the quarter, we repurchased 6.1 million shares, and we significantly reduced our leverage. We will see on the next slides, in fact, our cash position, and the fact that our cash position has grown significantly. We achieved total revenue of $1.6 billion, EBITDA of $1.1 billion, and net income of $520 million. Therefore, this was a very good quarter from a financial standpoint, obviously due in large part to the price of oil and to an equally important extent, to our very well-managed and stable operations, right? So now I will move on to the next slide, which shows some of these items in a bit more detail.
So now here on this next slide, we can see four KPIs, four metrics that I consider very important for the company. We already mentioned two of them, in fact, almost all of them, but here we see the trend, I mean, quarter after quarter in how this metric has evolved. We see their lifting cost, which reached $7.9 per barrel. We expected to reach a figure starting with seven. So in the end, we reached $7.9. It is already in the range of the best lifting cost we have ever had. If we look at our best quarters, they were already in the seven range, perhaps a little lower between seven and seven and a half, but we already reached $7.9.
Therefore, I think that the fourth quarter will be roughly in the same range as $7.9, perhaps slightly lower due to the lag in diesel production since the gas pipeline only actually began operating in September. Anyway, it should be close to that. I would say that the entire process of realizing synergies from Peregrino and all the work we had planned when we acquired the Peregrino field is now complete and delivered, so to speak. Of course, there is always more to be done, but the bulk of it has already been accomplished. The major synergies have been achieved, the operating model, the return of the gas pipeline, everything very successful with a high level of safety and reliability. We already talked about production because we reached the company's all-time high.
We noticed that the major boost in production came from Frade and Wahoo from the second quarter to the third quarter. I mean, the blue bar shows the most growth. Peregrino had already shown some growth, and we have been consistently producing over 100,000 bbl per day at Peregrino. At Frade, we delivered another well online, taking another step forward to reach nearly 192,000 bbl per day. The results of everything we have discussed are, of course, reflected in these two bottom slides, our cash position, which closed the quarter at $1.235 billion, $1, 235,000,000 . Today, our position is already slightly stronger than that. In any case, the quarter closed at $1.235 billion with net debt of $3.460 billion and 1x or 1.1x net debt to EBITDA ratio.
Since we experienced a very large fluctuation in the price of oil, the net debt to EBITDA ratio may not be the best indicator, even though it is very good. I think that analyzing net debt or total net debt is perhaps more relevant. Today, our net debt is $3.460,000,000 . We still have one payment related to the Peregrino project of approximately $500 million. Therefore, if we were to make that payment today, our net debt would go to approximately $3.960 billion. With the fourth quarter production and cash generation combined with the share buyback and everything else, we intend to reach roughly $3.8 billion by the end of the fourth quarter. So, if we close Peregrino later this year, or if it closes next year, this number will obviously drop significantly from $3.4 billion. It will drop quite a bit.
Anyway, that is more or less our plan. Debt will continue to decline. There will be this next payment, at least one remaining of $500 million. But the idea is to generate plenty of cash, deleveraging the company, repurchase shares, and maybe in the future, maybe at the end of this year or early next year, we will be able to discuss dividends and so on. Now I will turn the floor over to Jean, who will talk about operations, then Milton, and then I will be back. Thank you very much.
Thank you, Roberto. I will talk a bit about the asset's performance in the quarter. We had a very good quarter at the company. We had production gains when compared to the previous year. We approached almost 200,000 bbl a day. We were able to reinstate the production of wells that were not operational. Our efficiency was high.
Efficiency was higher than 95% at PRIO, so that is an excellent efficiency number for the company, and we are constantly seeking to improve efficiency. This was a quarter of hard work in-house. All of the areas were well-tuned to deliver good results. This was due to a lot of efforts from the teams, and we want to gain production, we want to scale production while keeping our efficiency going and reducing costs. We can prove that we can grow with efficiency. Now, getting into the numbers, Brent is slightly lower than in the second quarter, about $91.29, with production increase, we are 191,000 bbl, mostly boosted by the Valente cluster, where we have Frade and Wahoo wells online, and Peregrino, that has resumed production above 100,000 bbl a day in the quarter. I will give you more details about the assets in the coming slides.
The next slide, we will talk about the Valente cluster. I mean, that is Frade and Wahoo fields. We start in July, resuming the gas lift line at Frade. We had to stop that line for repairs in the previous quarter. We saw Genesis, they are the ones who repaired the line and exchanged the line, and then resumed production in the three wells at Frade. Now we have full production at Wahoo with four wells, plus the wells at Frade. With that, we resumed production closing to 70,000 bbl. In September, we were able to start production at MUP7, so we will gain more production at the Valente cluster, keeping production above 70,000.
In the quarter, we resumed production in the Frade field, and we add another well at Frade, which comes from the campaign of RDA wells that explores Frade fields, trying to understand whether we have more reservoirs that could be online or not. These wells were drilled in May, or at the end of April and early May, and then we were able to discover two zones where we could drill new producing wells. So we drilled MUP7, so this impacted the production in the quarter, and currently, we are drilling MUP3. I mean, I know it is like an alphabet soup. We are now drilling MUP3 that should get into production by the end of November and early December. After this well, at the Valente cluster, we should drill more wells to explore other zones in the Frade field.
Since we were successful with these wells, we will try to get other wells to have a new backlog for 2028. These are the reuse of wells that have been drilled. This first RDA campaign in these exploratory fields are very quick wells that should take us about two to three weeks to drill. This is the summary of the Valente cluster. Therefore, the fields are performing, and after July, we will be able to increase efficiency to be close to 100%. The next asset is the Bravo cluster. Here, we did not have a lot of activity. This cluster, I mean, did not have any campaign for new wells. What we had this quarter that affected efficiency was the shutdown of OGX-44 well. We stopped it, and production was reinitiated now.
Now, we achieve more than 14,000 bbl per day for TBMT and Polvo in the Bravo cluster. We hope that in the next quarter, we will be able to achieve over 95% efficiency for the Bravo cluster. Moving on now to Albacora Leste field. In the quarter, we had almost 89% efficiency ratio. Efficiency was affected basically by the cooling system of the ship. This system cools down all of the equipment, turbines, compressors, and even oil production. This cooling system cools all of the equipment on board. The system needed to be repaired, so production had to be interrupted for a few days for repairs of that cooling system. Repairs were made, and since then, we didn't have any more problems. We noticed that there was some damage, and on a preventive fashion, we decided to shut it down.
We inspect the system, and as a prevention, we do the repair even before things break down. The bulk of the work is the preparation for the flotel arriving in February or March, the first quarter of next year. We already have the agreement, and the teams are working in the vessel to prepare all of the material necessary. When the flotel arrives, we will be able to do everything we need to do to increase our operation consistency. The focus is that after the flotel, we want to have consistent efficiency above 90%. The main focus of the flotel is workover, so we will change pipes, the structure, we do the painting, we have also to replace some old equipment, but we believe that the bulk of the work for the flotel will be the integrity. That's it.
At the same time, we are preparing the vessel to receive oil from Arapuçá. There is work underway today. We are installing the pumps, laying the lines, and working on the control systems in order to receive the oil from Arapuçá. It will start in Frade in December, and it will go to Arapuçá, ABL, for the workover in Arapuçá. The well has been drilled, so this is only related to an operation that will last approximately 30 days. This is the plan for the next coming months. Now, moving on, we will talk about the Peregrino field. This quarter, we get back to a better efficiency level. It's around 97% efficiency. Production has been resumed to over 100,000 bbl. The second quarter was lower, so our production is more stable, is above 100,000, and this is due to new wells we drilled, especially at Isolado.
We drilled A13 at the Isolado reservoir, and A13 has a very good production, stable production, therefore Isolado's reservoir. With the second well, we have A15 and A13, they are good reservoirs. Production remains stable, about 6,000 bbl a day, with no water production to date. The reservoir is slightly better than we expected, but nonetheless, it's a very good reservoir. In addition to that, we resumed our gas pipeline. It had been non-operational for a while, but now we can import gas into the field, and with that, we drastically reduce diesel consumption. We can reduce diesel consumption by nearly 70%, and this is good for the environment because there is a reduction in CO2 emissions. It reduce our costs with diesel. Our turbines can operate better with gas, meaning that our energy generation system is consuming the gas from the gas pipeline.
We lower the lifting cost at the Peregrino field, and this certainly impacts or affects the entire lifting cost of the company, which is below $8 per barrel. We just concluded the gas pipeline in August, so from mid-August to the end of the month, we were reducing the burning of diesel. We were not able to capture all the gains on day one because it took us a month to adjust production, but this gain will be fully captured in October. It took us about a month and a half to reach that 70% reduction. Therefore, we hope that this reduction can be maintained for much longer. What is happening in Peregrino right now is that we are drilling a well at the Charlie platform. The well aims at keeping production above 100,000 bbl.
We should conclude the well earlier, I mean, in the beginning of next year, and we want to keep production around 100,000 bbl. As a reminder, we took over that operation about a year ago, and performance has been excellent on the field. The transition process was well done, the teams are very well prepared, and as soon as we took over the well, we were able to keep that production level. After a year of operation, we are able to collect more information. Therefore, we are working diligently to maintain the efficiency level of Peregrino. Thank you all very much. That was my participation of the call, and I will send—
Good afternoon. Thank you, everyone, for attending. We will talk about PRIO's financial performance in the third quarter. We sold a little over 17 million barrels, 17,155,000 bbl to be precise, at an average Brent price of $94.23, with the equivalent FOB price of $86.78. That leaves us with the implicit discount of $7.45 per barrel in the third quarter. This reconciles with the total revenue of $1, 643,000,000 in the quarter, $1, 488,000,000 in terms of FOB equivalents. Something very relevant this quarter, as happened last quarter, is regarding taxes, the export tax. In this quarter alone, we had a little more than $100 million, $101 million of export tax, obviously significantly affecting our result.
In addition, EBITDA of $1, 137,000,000, adjusted EBITDA, excluding non-recurring events, amounted to $1.7 billion, $2.8 billion over the three quarters, these nine months of 2026. Speaking of these non-recurring effects, in the line of other revenues, we had a relevant amount, in fact, an amount of $72 million related to the insurance of our gas pipeline in Peregrino. We call it the gas import pipeline, GIP, and we have reached a positive outcome with this insurance, and we therefore recognize this result in this quarter. Part of this cash has already been received this quarter, and the rest of it, totaling PRIO's share of $72 million, will be received, were actually already received in the month of October, which underscores the success of this operation.
With that, we recorded net income of $521 million, a total of $1 billion, almost $1.4 billion this quarter. Moving on to slide 11, we talk about the company's overall funding. This amortization schedule chart shows the maturities in the amount of $755 million in 2027, and note that this number has already exceeded $1 billion, $1.2 billion in previous quarters, and we have been working on rolling over some debt, especially bilateral debts. The banks have shown interest in doing this rollover. We have been able to get better spreads than before due to the improvement in the company's credit quality, results, and so on. We are very comfortable for the next few years, given the company's cash generation perspective, its leverage, et cetera.
The average cost of debt this quarter went up slightly from 6.40% to 6.60%, and I mean that a small portion of our debt, about 20-something percent of our portfolio, is in SOFR+, which are some working capital debt. SOFR in the quarter moved 80 basis points, so this affected our average cost somewhat, but most of our debt is in fixed rate, either by debentures or bonds. But this reflects the slightly more difficult global scenario in terms of SOFR, treasuries, and so on. Duration reduced a little, as we did not get into any large, more relevant debt this quarter, so it just follows the portfolio that gets a little shorter over time. Slide number 12, we show the variation in the company's net debt, which is a proxy for cash flow.
We start from a net debt at the end of the second quarter of just over $4 billion, $4,046,000,000 . Our operating result was reflected by our very expressive EBITDA, $1.071,000,000 . We have already received part of that insurance for our gas pipeline in Peregrino, $34 million. As I mentioned, the remainder already came in in the month of October. It is not here in this graph, but we have already received it. The impact of working capital, mainly an increase in receivables and a small increase in inventories. CapEx, $247 million, influenced here by Arapuçá, some wells in Frade, and also Peregrino. We repurchased $71 million of PRIO3. So this also reduces, I mean, it increases the net debt and reduces our cash.
Financial result of $74 million, and with that, we reach the end of this quarter with a net debt of $3.460 billion. Therefore, a significant reduction despite CapEx, despite buyback, a significant reduction in our net debt, mainly due to our operating performance and cash generation. Now, on slide number 13, we talk about PRIO's leverage. We can see a clear deleveraging trend since the end of 2025, when we reached 2.3x the net debt to adjusted EBITDA ratio throughout 2026 due to cash generation, whether by the decrease of lifting costs, increase in sales and production, and increasing Brent, we reached the third quarter of 2026 with 1.1x . It is important to mention that we have a relevant financial commitment, which is for the payment of the 20% of Peregrino.
This leverage may be affected by this event, but still at a very comfortable level for us. For the next few quarters, actually, we still see full cash generation and the ability to continue deleveraging the company. With that, I turn the floor to Roberto to talk about the next steps, environment, and society. Thank you.
Thank you, Milton. I am going to go over some of the environment and society items. Perhaps in this quarter, the most important of all is our carbon footprint. We are already starting to see the reflection of the Peregrino gas pipeline. I had guided in the past to reach 18 kg of CO2 per barrel. We reached 17.7 kg, and this is 54% and 20% below the third quarter of 2025 and the second quarter of 2026, respectively.
I think this shows a little bit of our optimization strategy, cost optimization strategy, and that normally this cost optimization goes hand in hand with a greater responsibility towards the environment. This is perhaps the most interesting figure. I had already guided in the past, as I said several times, 18 kg of CO2 per barrel. We reached this number, and I think there is still more, some additional reduction to deliver in the next quarter because of that, let us say, that transition from diesel to gas, which happened during this third quarter. The fourth quarter will be practically only gas. We will probably have some more accommodation in this indicator. Anyway, we got there. We managed to deliver what we had planned. In addition, we remain steadfast with the strengthening of our culture with events.
We held an event called PRIO Ops, which we do every year. It is an event for the company's leadership, and it is entirely focused on culture of our leaders, from directors to our leaders in the FPSOs, here in our office, and so on. We also held a new edition of Reação Offshore. We had a record number of registrations. If we think that Reação Offshore is an entry program for the company, it is a program that we do together with Instituto Reação, where we train technicians and non-technicians to be able to work in the oil and gas sector. There is always a demand for people.
We always have demands for technical and non-technical people, and we adopted the strategy of rather than looking for people from other places only and getting into that circle where it is difficult to enter this business and one company steals employees from the other, we always choose to provide a gateway to be able to increase the number of people who are capable of working offshore. This is the Reação Offshore program. More than 28,000 people applied this year. In addition, we remain firm in our sponsorships with initiatives in sports, culture, LIVE! Run, Mia, ArtRio, Gastronomic festival, et cetera. Moving on to our next slide regarding the next steps. The first and the last ones are always present, right? Continuous focus on safety, the health of our employees and third parties, and prospecting for new opportunities. This will always be there. That is part of our DNA.
And those in the middle are on our to-do list for the next quarter. Today, we are working on another well in Frade and another well in Peregrino, so we are already preparing for next year. Our goal for next year is to maintain a production that is slightly higher than the 200,000 bbl per day. Note that we are at 190,000. We are going to close now, I think that either by December, the end of the year, or maybe January at the latest, we will bring in the remaining 20% of Peregrino to consolidate it. Remember that the economic effect is already ours, because as it generates cash, the asset reduces the price to be paid. But we are already going to consolidate this 20% of Peregrino by the end of December or at some point in January.
With that, plus those wells that we are drilling, we are already starting Frade, Peregrino, we are drilling a well in each, by the way. We are going to deliver production slightly above 200,000 bbl per day over the next year. This speaks to a total production for the year of more than 70 million barrels, more than 72 million barrels. This is the first focus, I mean, the preparation of the company. The second focus, operational efficiency at Albacora Leste. Considering that Albacora Leste came a long way this year, it has been doing well. Although our reliability has not been at the level of 95% that we want to bring this asset to, today it is already running quite constantly close to 90%, some months at 88%, some months at 91%, 92%. So it is around these levels already.
Those major issues that we had last year have mostly been resolved. I mean, the issue of compression redundancy, generation redundancy, and water injection, and so on. Now we are going to have a scheduled shutdown in Albacora in the first quarter of next year, which was supposed to have happened this year, so this was slightly delayed. But we will have this stoppage next year. The flotel is already scheduled to exclusively address the integrity of the asset. So when I talk about operational efficiency at Albacora Leste, that is it, the preparation, so that next year's stoppage goes smoothly. We estimate that the asset will remain shut down close to 15 days, and we will tackle multiple integrity aspects, and then we will be able to reduce these small failures, these failures that hinder our day-to-day.
It is the valve that gave way or the pipe that has a problem, that kind of thing. So we will solve all of this for Albacora to be ready for our production ramp-up, which will most likely happen at the end of next year, maybe 2028, but I think more towards the end of next year. This gets Albacora ready. The only thing that will happen in Albacora before the end of the year or next year is Arapuçá. We should already start producing at the beginning of next year. Then the last pending point, which I also have talked about, is the closing of the remaining 20% at Peregrino. This transaction obviously has already been signed a long time ago. We recently filed it with ANP, so it is being analyzed at the ANP. I estimate that there will not be any problem. We already operate the asset.
We already given all the guarantees and so on. It should be very straightforward, a very smooth process within the ANP. That is why we expect maybe by the end of December, maybe January, we expect the analysis to go a little faster at the ANP. This is the company. This was the third quarter of 2026. I will stop here and open for questions and answers. Thank you very much.
Good afternoon. Welcome to our Q&A session. We are going to start now with the first question from Monique Greco at Itaú BBA. Monique, please go ahead.
Good afternoon. Congratulations on the results. Thank you for taking my questions. I have two on my side. The first about Wahoo, if you can share a little bit of the level of production at the field now, more recently.
What is the perspective of the beginning of depletion, the injector wells as well, just to give us a positioning? The second about trading. I think this quarter, it was very clear the value of trading and your performance there. I would like to understand, at the beginning of the fourth quarter now, how are you seeing the market and the heavy oil discounts, the impact of shipping, or if you are more exposed to Dated Brent rather than ICE? That also helps us. Thank you.
Good afternoon, Monique. Thank you for your questions. Okay, so let us start with Wahoo. Today, it is producing 39,000 bbl per day, approximately. Actually, not due to depletion. It is a matter of our adjustment at the field. There are two minor things here in Wahoo. The first is that Wahoo produces a lot of gas.
When we brought that Frade well to produce MUP7 , we decided to reduce the production of Wahoo because of the gas, so that we would have more space for oil in the FPSO, and therefore, Wahoo is producing 39,000 bbl per day. We will probably maintain it at this level. The depletion of the field itself is still not here. According to our projections, it should have already started, but remember what we said, that the field could be marginally better. So I would say it is slightly better in this sense, but we are also going on very cautiously. We are going very well, producing 39,000 bbl a day, and it should remain at that level. The second point, the trading. We had a month of September that was extremely positive. July and August were months that, if you look at those months specifically, they had double-digit discounts.
The month of September, it was spectacular. It was a month of a discount of $1 per barrel, something around that, $2 per barrel. It was very low. That was a lot due to that strategy that we talked about of being exposed to Dated. We thought that at some point this would stretch, and it did. The Dated Brent detached at $40 per barrel, 30-some dollars per barrel compared to the ICE Brent, and that made a huge difference for us. I think the strategy of having the trading area with Gustavo and the team and being there at the market full time and understanding all of these movements was very, very important for the quarter. I think we were very pleased the strategy worked. Now, on this last quarter, we are no longer as exposed to Dated Brent.
We reduced proportionally our exposure to Dated Brent. In the third quarter, it was almost the entirety of what we had at Dated. Today, we are half and half, maybe even a little bit less. If you look at Dated Brent, it is what suffered most. Yesterday was a horrible day in the market, but Dated has been struggling for a few days already. If you look at the premium of Dated Brent, it is closer to $1. Yesterday, it got to zero even. We had this change of hand towards ICE Brent, and today we are exposed, I would say, more than half to ICE. Freight is, in the past, in the third quarter, the stretch of the Dated Brent accommodated freight, but now we do not have that stretch anymore, and freight is at an all-time high. It has been worse. It reached levels of $700,000 a day.
Today, it is a lot lower. It is less than half that much. Anyway, it is not an easy scenario. I think that for the fourth quarter, I think our discount will not be at $7.45. I think probably we will have a discount more or closer to the double digits in the fourth quarter than those $7.45 that we presented. I think we achieved spectacular results, mainly due to getting things right in trading. This cost of freight, the logistic cost that translates into freight of VLCCs, Suez, and so on, it is lasting longer. It is giving way, but it is still lasting at very high levels, and we see some tradings with a lot of discounts, especially from our competitors here in Brazil. I think that we should see numbers closer to double digits rather than $7 per barrel.
Excellent. Thank you, Roberto.
Thank you, Monique. Our next question comes from Rodrigo with BTG. Go ahead, Rodrigo. Over to you.
Good afternoon, Roberto and the entire team at PRIO. I would just like to revisit your plan for next year. I think it is clear that you are drilling Frade, Arapuçá, and then I think in 2027, can you tell me whether you intend to do any further drilling at Frade? What are the actions that you envision for next year? Another question about Albacora Leste. Regardless of what you already said, what about the program for Albacora Leste for the second half of next year? The second point is shareholders' remuneration. I think now with the final payment of Peregrino, I think it might be a little tough for you to pay dividends, but how are the discussions moving along? Last quarter, in your final slide, you talked about shareholder remuneration. How are things at the moment?
Okay, let me talk about the plan first, and then I will talk about shareholders' remuneration. I am the bearer of many good news, but let me talk about the plan first. Jean and his team, they put together a plan for next year where we maintain 200,000 bbl a day. We deliver 72 million barrels with Arapuçá alone. I mean, when we think about Albacora, there will only be one well in Arapuçá that will be online in the first quarter. In addition to that well in Arapuçá, we will also drill three other wells in Frade. Out of the three, I mean, the first one is being drilled as we speak. What is left for next year in terms of deep waters are two wells in Frade. Out of the two, we already have the exploratory well of one of them.
What remains, after the well to be drilled in Frade, we will do the RDA. We will have another exploratory well in Frade to seek for another objective, and that will be the last well in Frade until the end of next year. With that, we will be 100% ready. I am putting aside the five wells in shallow waters in Peregrino. We are drilling the first one now, and there will be four more for next year. But speaking about deep waters, where Albacora fits in, we will be able to deliver 72 million barrels throughout the year. We will turn the year with 200,000 in production with only one well in Albacora and all of the other drilled wells in Frade. We did that so that our model becomes very resilient for next year.
Next year, we will no longer depend on any licenses from Albacora, even though we are still waiting for that area license for the first half of the year. We had a meeting yesterday with the licensing team. He met with some people at IBAMA, and apparently, things are moving along well. So within our schedule for the first half of the year next year, we will have the license for Albacora. Even then, Jean decided to put together a plan where we will not depend exclusively from Albacora. If we get the license, we will normally produce more, and then production will be higher. We won't have 72 million, but the number will be slightly above that. So that's the plan, Rodrigo. Now, speaking about shareholders' remuneration. We have $3, 450,000,000 of net debt.
We will pay $500 million for Peregrino's last installment, and this will go $3, 950,000,000 pro forma. So pro forma is $3.950 billion. We will have cash generation in the fourth quarter. It will be X. Let's say it's the same as we had for this quarter. If cash generation is equal or slightly below what we had this quarter, we will probably arrive at a pro forma that is well below $3.8 billion. So even considering the buyback, there will be some room because with pro formas, we will be below $380 million, and we will be below $380 million, as I was saying, because our cash generation will put us below that number. Then obviously, we will have to discuss that with the board. I always told you that we decided not to disclose the numbers, but we are having that debate once a year.
Obviously, this is something to be discussed with the board, and so probably we will make some move in that direction. But it's too soon to tell, so let's see what the oil price will be, what our cash generation will be. But I wouldn't say, "Okay, but we have to pay $500 million for Peregrino." No. We can do all of that at the same time. We will still continue to buy back the shares. We will continue to deleverage the company, and then we will arrive at that $380 million of net debt by the end of the year. So probably, if it's below that, we will also discuss that with our board to see, with the dividend payback, our net debt goes up, so we have to discuss that. Okay? Perfect.
Thank you, Roberto. Thank you.
Thank you, Rodrigo.
Our next question from Tasso Vasconcellos with UBS.
Hi, Tasso. How are you?
Hi, Roberto. Good morning, or good afternoon to the entire team. I have two questions. The first one is about the projects. I mean, it's clear that in the next few years, there will be a campaign in Albacora Leste. You just talked about additional drilling at Frade and exploratory assets that you recently acquired. In general, the company is generating a lot of cash. Do you think it will make sense for the company to analyze the acquisition or maybe the hiring of new rigs to accelerate the project? My second question, and this I think is a recurring debate, how do you specifically see the company two, three, four years from now?
When we look at this cash generation in this quarter, this has been a very strong cash generation in this quarter. But at the same time, this seems to be a recurring cash generation. Production is in the range of 200,000 bbl a day, and you still have the Peregrino cluster. Maybe from now on, the main thing is that payment of $500 million for Peregrino. But how are you seeing the company now? It's more like a dividend player or an expansion, or maybe to expand into new businesses. What do you have in mind for the next five years?
Okay, what was your first question again?
Oh, about the rigs.
Well, never say never, right? I think it's very unlikely, I mean, for us to have an equation that would make sense to hire a rig for a well. I mean, it's the delta of the price of the rig versus how much the well can be accelerated. You have to look at that equation.
Today, our rig costs $100,000 a day. When you calculate that, you will hire, I mean, a rig for $400,000 a day, maybe $300,000 and some. It's hard to make ends meet just by looking at the value of the money over time. I see a very small likelihood that we would hire another rig. We are structuring the company to produce 200,000 bbl a day. I'm not going to say that this will be perennial, because it's impossible. I mean, we work with oil, and there is the depletion factor. But we are working towards having 200,000 bbl a day for the longest amount of days possible. We see that that number is clearly feasible for 2027. We already see 200,000 bbl for at least half of 2028.
Throughout next year, with the drills and when the Albacora campaign starts, my feeling is that we will certainly see that 200,000 bbl till the end of 2028 is very feasible, and then we will focus on Magnetita and Hematita wells. If we are successful with these blocks, maybe we can talk about maintaining that production for a longer period of time. But there is one more thing that has to be successful. I mean, what you said is true. This company generates a lot of cash despite the fact that Brent prices are depressed. But with Brent at $60, $70, things are a bit more difficult. But with this lifting cost of $7.9 or $7.5 per barrel, with this production of 200,000, we will certainly generate cash, period.
Therefore, I believe that naturally, the company will migrate to being. I mean, I don't want to label saying that we will be a dividend-paying company, but I think payment of dividends will just be part of the equation. I think there will be dividends, share buyback. As for expansion, in terms of Brazil, in the scenario we are projecting for the next four years, we are not seeing any major moves in Brazil. Maybe we'll see one company leaving Brazil, but we don't have any chips to bet on that. The only geography outside Brazil we have always looked at, I mean, we've been looking at it for the past four, five years, is in the Gulf of Mexico. Maybe we will see any opportunities if the return profile is adequate in that geography. Okay?
Then you would have, if the opportunity doesn't materialize, we will have more money to pay out dividends, and if not, if we don't see anything that is in line with our company, fine too. But I don't envision any big check. The company will probably look at dividends in a more firm way in terms of its policy of capital allocation.
That's very clear. Thank you, Roberto.
Thank you, Tasso. Our next question, Bruno Montanari at Morgan Stanley. Hello, Bruno. Please go ahead.
Good afternoon. Thanks for taking my questions. I just wanted to close on the drilling schedule. If you put everything together, what's your best estimate for cash disbursement with CapEx for 2027? Going forward, if you can give us a sense of complementary or additional projects or what you see as a minimum investment to try and maintain production at those 200,000 bbl per day for a slightly longer period, considering the assets you already have, of course. Thank you.
So, Bruno, in a macro perspective for us to maintain, I mean, this year, we're advancing CapEx. CapEx is higher because we're already anticipating CapEx from next year due to the price of oil a lot, in a major part.
But in a state of maintenance of production, once we reach the 200,000 bbl, that's why we're producing more than 180,000. But to maintain production in a scenario of more stability, we estimate about 10 wells for the company. If it's a company of 200,000 bbl per day, you're going to lose about 30,000 bbl per year from the beginning to the end. So if you're going to lose about 30,000 bbl in a year from the beginning to the end, you need to get 10 wells producing with an average of 3,000 bbl per well. I'm being conservative. We are being more successful than 3,000 bbl per well, but roughly speaking, you need to consider 10 wells at 3,000 bbl per well. To drill 10 wells in our acreage, we would have to have five wells in shallow waters, five in deep waters.
Every shallow water well costs $20 million, so it does not go into the budget, okay? It is lower, but it is $20 million, so $100 million there. And $50 million per well on deep water, so $250 million. $250 million plus $100 million, it is $350 million. I think we can consider another $200 million on top of others. That would be to replace pumps or schedule stoppages and this type of maintenance of the facilities, and we will get to $550 million, $500 million-$550 million per year to maintain that production of 200,000 bbl.
That is clear. Within the clusters you have today, would there be, so to speak, inventory of those 10 wells per year? For how long?
Today, what we see, Bruno, is until the middle of 2028.
Starting in the middle of 2028. Actually, 2028, there will be drilling done during that year, so there is going to be producing wells and injector wells, but we think we can maintain production with no decline until the middle of 2028. Rig campaigns we would see until the end of 2028, but in the middle of 2028, our well deliveries will be slower than the decline. Probably we are going to start to see a slight decline in the second half of 2028. In 2029, today, the reality is today we do not have any planned or programmed well to 2029. Until 2029, we will consume all of our area. Then we would need to be successful either in getting more things in Albacora, which it is a possibility. Look at Frade. When we bought Frade, we thought there would be five wells.
We probably drilled 15, or not 15, but at least 10.
Do you know how many wells in Frade?
Twelve. Nine in the first campaign. Yeah. When we bought Frade, we thought there would only be five wells to drill. There has been 12. I think Albacora will be the same. We will end up finding more things. But I cannot put that, write that, and set in stone, but that would be for 2029. Those two blocks that we recently acquired, Magnetita and Hematita, if they are successful, then we will have wells.
Excellent. Thank you.
Thank you, Bruno. Our next question, Regis Cardoso at XP. Regis, please go ahead.
Hello. Thank you. Roberto, I think my topics are more follow-ups on dividends, and I am sorry to insist.
It has been a recurring topic in the conversations we have with investors, including foreign investors, and I was with them last week in Europe and in the week before that in the U.S., and that was something. I would like to exhaust this topic a little bit more. Then 3.8 at the end of the year, so you could pay out dividends in the fourth quarter still, presuming you would announce it before the end of the year. Just to see if I get it right in order not to create undue expectations. The first question is the timing of dividends. The second question about production, the reservoir certification curve has a plateau at 1P until 2029. 2P, the production level is even higher, it is 150 kb/d at least until 2030. I would like to reconcile this vision of the curves with what you are saying.
I understand that there's I mean, how much we were building. I think there's a potential there, especially Albacora, that may not be in this account of the drilling for 2029. If I may, a quick third question. When we're talking about PRIOs, FOB, freight, is it only freight or is it more difficult to find buyers?
We see news about offer or supply in the North Sea without bids to buy, so just to understand the market. Okay, so help me with the order of the questions here. We'll start with the first one about dividends. Regis, I think we're going to wait until the end of the year. I don't think there will be, of course, again, never say never, but I think that it's more likely that we'll sit down with the board after we get to the results of the year.
It's going to be at some point after December. We were able to do this, got to that number, and we'll talk about that. I don't think we would do anything before the end of the year. Again, things can change, things can evolve, but I would not consider that as a guidance or a target or anything like that. I think it's a possibility. What's more logical is that we'll conclude the year. After the end of December, we're going to have There's always an idea of what the result's going to be, how the company did, and then we'll sit down and have this discussion. That would be the logical step-by-step. The second question you asked was, trading now, the production with the certification of reservoirs. The 2P curve, being very honest, I don't even look at it.
The 2P curve is nice, but it's a probability curve, and what we look at the company, is a deterministic curve. When you ask me, "How are you going to get to that number?" I can tell you which well we're going to drill. 2P is, well, maybe we'll drill and the well has a bigger productivity. Yeah, true, but I cannot tell you that it will. What we're doing, like, oh, let's consider 10 wells into production with 3,000 per well, but what if it produces 6,000 per well? Well, the production will probably go to 2P. That's why we don't really look at 2P that much. About the plateau and the 1P, I know that. It remains a little bit further away, but we are being slightly more conservative in the initial outflow per well.
We will guide this number of 200,000, trying to deliver this 1P that you mentioned. The last question about the discount or The discount I'd say it's a lot based on freight, the majority of it. Having buyers or not having buyers, it's What happens today is with the war, there's an inefficiency of logistics, a huge inefficiency, because you do transshipment in a lot of different places. There's oil that comes through Suez and goes around Africa to go to Asia. It's a big mess, and that consumes, if you talk to an expert in trading, Gustavo, he says that consumes tons, it consumes the vessel. The logistics is not optimized. It used to be very optimized, and today it is not anymore. That makes this transportation cost to be very high, and that's what's happening.
That's the first point here that leads us to a lower discount. The whole thing about not having buyers or having buyers, it's something that's very temporary. It's kind of like a firefly in the market. There are times where you have a huge supply in Europe because there was a major disruption at Hormuz, and all the ships have to go around the Suez, and then you increase your supply in Europe, and Europe is well supplied. So it's kind of specific one-off situations. In China, if the oil goes higher than $100, China stops to buy, and they have inventory. So if it's $100, I'm not going to buy, I'll consume my inventory. Now it went down, so you're going to see that China may start buying again. So it's very specific situations.
You have to be in the market understanding these moves, and that's why our trading department becomes so relevant to our results. But I wouldn't say that there's a problem with the demand. I think the demand fits are more specific cases. Now what we have in Brazil, some of our competitors, not even competitors, we don't compete with anyone, but there are other sellers here in Brazil who have decided to sell a huge amount to the November program now, so that brings the price down. We had already negotiated our November, but that doesn't help. So these are more specific one-off situations. When you look at the global balance, it's not that there's a surplus of oil in the market, there's actually a deficit, but you have a friction here and there more specifically. Great.
Thank you, Roberto.
Thank you, Regis. Our next question is from Nicolas Barros with JP Morgan. Hi, Nicolas. Over to you.
Good afternoon. My question is about oil export prices. With the plan for next year well underway, what is the length of that 12% tax?
I think at PRIO Tigris or Peregrino East, you got an injunction to escape that tax, and whether you're thinking of doing something along the same lines for PRIO Forte. I mean, the injunction is down. We won in the first instance. I mean, everything has been provisioned from day one, but from the very beginning, we knew that injunction would not stand for longer. So today, we don't have anything in any of the companies, and we are provisioning the export tax. In terms of timing, I mean, it's hard to tell what we should take into account in terms of export tax and timing.
We talked about it in the past that this should have a regulatory bias, but in fact, this is not regulating anything because we cannot refine oil in Brazil. The only way for us to operate is to export the oil. So it's not regulatory, it's just a collection tax, and that's it. If it were to be regulatory, I mean, we would have the basis to dispute the tax, because in our view, this is just a collection tax rather than regulatory tax. I cannot tell you how much longer this will last. There is even a debate now whether this tax is what causing prices to fall right at the pump, but we see high taxes in other segments of the chain. We are being penalized, but at the same time, you see other points in the chain where the margins were much higher.
So it's hard to tell how pertinent that is. I cannot tell you much about the timing of that tax because in our opinion, it shouldn't even exist, but there it is.
Okay, thank you.
Thank you, Nicolas. Our next question comes from Victor Modanese with Bank of America. Victor, over to you.
Good afternoon, Roberto, Jean, Milton, and the PRIO team. I have two questions. The first is whether you could give me some light about the acquisition of Hematita and Magnetita blocks, because in that region, you have the Catuá fields that used to be part of the Petrobras company, but it was relinquished to Petrobras. Do you intend to do anything in those blocks or not? My second question, the participation with Enauta, could that be read as a change in PRIO's growth strategy? Historically, you prioritize fields already in production. Having said that, should we expect the company to be more active in further auctions from now on? Thank you.
Hi, Victor. Good afternoon. Well, this does not reflect any strategic change by the company. Our strategy has always been not to take part in any pure exploration, but rather do what we call near-field development. Americans call it infrastructure-led exploration. This is our strategy. The reason for us to acquire these blocks is because they are adjacent to our blocks. Since they are adjacent to our blocks, we think that there could be accumulations, not large accumulations, small ones rather, but accumulations that would be connected to our FPSOs. So, it would be doing exactly the same thing that we did with Wahoo, the same thing we did with TBMT, the same thing we're doing now with Arapuçá, all the wells that we bring from a longer distance.
Therefore, that's the strategy of the company. Nothing changes. The acquisition of these two blocks are justified by the reasons I just mentioned. When you look at the cash position, both blocks combined cost $20 million, or I mean, $25 million, both fields. This is the cost of the acquisition. We will drill one well in each field, at least one. So, an additional $25 million in every well. So, if we are not successful, let's say that everything goes wrong. We spend $25 million to acquire the field, plus another $25 million in each field. So, $25 million plus $50 million, $75 million. So, this is the amount of money that we chose to put in our risk line, seeking for exploratory opportunities in line with our infrastructure-led exploration strategy. But that doesn't mean that we will be participating in all the bids.
It doesn't mean that we are going to the Amazonas or Pelotas or pre-salt. Nothing like that. Maybe in the blocks we acquire, we may have accumulations similar to the ones that we're already producing that could be connected to our FPSO. It's very important to understand that this is not a strategic change. We just chose to put that money at risk, that $75 million, but within our cash position, considering our financial position, it seemed to be quite adequate.
Okay. Thank you. That's very clear.
Our next question, Pedro Gama at Citi.
Roberto, team, thanks for taking my questions. First, congratulations on the results. I have two follow-up points here about Wahoo. The first, talking a little bit about the question that Monique asked in the beginning of the call. I think it's the first time you're going full blast with Wahoo with the four wells. I'd like to hear about the impressions of the reservoir tests, if it makes sense to see this field operating in the coming months above those 39,000, 40,000 that's kind of stabilized for some time. In the past, we discussed this before, but considering the whole issue of the decline, et cetera, could we see it above that level?
The other point that we also discussed in the past, but the injector wells at Wahoo could still come in in the first half of 2027, but consider there's two wells of Frade that would be left for next year. Would it make sense to delay the injector wells in Wahoo for the second half? Is that a possibility, or the focus is on the first?
I can answer. We have the plan to drill the wells in Wahoo in 2027. We are monitoring the field's performance. We should maintain it at this level of 39,000 that Roberto mentioned earlier. A lot based on the production of the two fields of Frade and Wahoo together, considering the volume of gas produced. So, we're going to do the injector wells. Today, we have the assumption of doing that in the second quarter. Between the second and third quarters, the injector wells at Wahoo. The rig is going to go to Arapuçá, and then we'll look and decide whether we do a well in Frade in the beginning or the two wells at Wahoo. And we only start injecting towards the end of the year, third or fourth quarter. So, we can play with the wells at Frade or Wahoo, depending on the production.
The plan is somewhat flexible. We're prepared to either do the two wells continuously or one after the other, whatever is best for the company.
Excellent. Thank you.
Thank you, Pedro. Our last question, Vinícius Andrade at Safra.
Hello, Vinicius. Vinicius, you may go ahead.
Hello, can you hear me?
Good afternoon, Roberto, team. Thank you for taking my questions, and congratulations on your results. I have a question here. The savings expectations in the OPEX 2027 resulting from the repair of the gas pipeline in Peregrino.
Our OPEX, we are already working on it, but it should be close to $550 million or something around that much. This will translate into those $7.50, $8 per barrel, closer to $7.5 per barrel of lifting cost. This would already take into account all of the pipeline for the year.
Excellent. Thank you.
Thank you.
Thank you, Vinícius. We now close the question- and- answer session of our earnings conference call. I will turn the floor to Roberto for his closing remarks.
Thank you all very much. Thank you to our investors, the press, and society, who have always welcomed us with open arms. We will see you again in the next quarter's conference call. Have a great day.