We had great advances in this quarter, and although the production was still stable, I highlight the production in the Tiê field,
[Foreign language]
Tiê 11, which was our best production. We concluded successfully the two first perforation of PR14 after very good work done by the teams in terms of perforation, and as we said, PR14 has unique capacity, and it is able to make deeper perforation and more complex ones as well, and now it moves to the Biriba field, where it's going to continue this plan of perforation for the company. One of the most relevant topics this year was the approval this year of the investment decision for UPGN Miranga, and we're going to go into the details after this.
Another relevant topic was the advance in the development of the new routes for the flow of oil, and we're also going to go over the details in the next few slides. Finally, we have the Monitoring and Control Center for Electrical Energy, where we have advanced monitoring of the assets of the company. In real time, this is to transform this into something strategic and mitigate the losses in production caused by electrical energy losses and perhaps something more robust and reliable in the future. We finished the quarter with 26.4
[Foreign language]
barrels per day, and we have 26.8 barrels per day. It's a growth of 1% versus September and stable during the same period last year. We accelerated the workover, and we still have about 50 workovers in the original program this year.
Then we hired another two third-party rigs that are going to work in November to intensify our execution over the next few months. In November, we're going to have the three working in our fields, PR04 that worked in the Origem. It is going to the Tiê field, where it's going to drill two wells this year. PR14 has already started its activities in the Biriba field, and then it's going to have a well that
[Foreign language]
will have a depth of 315 meters. PR21 was working at Seacrest. It is being mobilized to Rio Grande do Norte, and it's going to make the drilling of new wells in this next quarter.
Our commitment with production is anchored on trying to reach the best point possible for the production in the reserves this year, but without losing discipline in planning and in the robustness of the allocation of capital. The allocation of capital. This slide shows the advance of the commitments that we took over this year in the event perspectives, and we have some targets for next year.
UTG São Roque started working at the end of July without any restrictions during the whole quarter, guaranteeing reduction in the costs of midstream and also supplying natural gas continuous delivery to Bahiágás. UPGN Miranga, we finished the year with a final decision. The board approved the project that will be discussed later on. In Potiguar, the company is still analyzing with Brava Energia to have more economic outcomes and more resilient as well for gas in Rio Grande do Norte.
Truck loading in Potiguar, with the beginning of the truck loading, it increased logistics flexibility, and there's more capillarity of the flow of oil, and that will also be discussed later on. As said, we inaugurated the monitoring of electrical energy, the center. We have implemented this advanced monitoring system in the company assets, and this will allow us to understand very deeply the most strategic inputs of our production. Starting in this center of excellence, we will be able to design and implement a pluriannual project for electrical energy for the reliability of our production. Now I'm going to give the floor to João Vítor, and he will go into the details of these two very important milestones.
Good morning, everyone. Thank you, Firmo. So we announced to the market at the beginning of this year. We concluded the investment of a new plant for natural gas located in the state of Bahia. And UPGN Miranga, that's what it's going to be called. It's for the consolidation of midstream, as mentioned before, and as from São Roque. And we have this project.
There's a capacity of 1,500 cubic meters per day or expansion. And we're going to start these operations in the plant until the end of 2027 after the construction, commissioning, and authorization for operation according to the regulation. So this brings several benefits to PetroRecôncavo.
So the reduction in the processing costs when you compare with the current tariffs in terms of third-party infrastructure, mitigation of risks associated to the processing capacity that is available in the region, and there's greater autonomy and capacity to address our development perspectives for reserves and increasing operational resilience. So it's a new plant, high availability, and greater efficiency in using the natural gas derivatives, plus the geographical location that has been acquired for the construction of the plant. As you can see in the image, UPGN Miranga will be near UTG Catu, and all of the gas that we produce in Bahia goes there and goes to São Roque and Tiê. There is the interconnection of our gas ducts, including the Tiê camp, and aligning to the delivery point of Pojuca, where PetroRecôncavo already provides most of its gas.
And this will allow us to have access to all of the distributors that are interconnected to this transport. And also, it's in the middle of the Recôncavo. There is petrochemical and industrial activities, among others. In terms of oil, we also had great advances in our operational resilience and identifying protocols for the development of new logistical alternatives for the flow and the commercialization of our production. We have three memorandums of understanding with consolidated companies in the logistics, the port companies, and also with expertise in terms of oil exporting. In the first semester this year, we finished the truck loading project with 100% of our production flowing in the railway, and we wanted something competitive, especially in terms of logistics, to be able to send this production. A memorandum that was signed by the Port of Pecém.
The route is quite adequate with alternatives in the short term, and there's temporary storage, and there's a permanent route for the flow and use using the Pecém port in Ceará. And in the same way, we also signed with the memorandum that reinforces the interest of the parties in looking at the flow through the port in Pernambuco and in the short term through the port in Aratu in Bahia. And this last one is a very adequate port for logistics, and it's for the oil from Bahia. So we're also talking about the short term, and this is through the carts and infrastructure to store it in this referred port. All these solutions are able to follow the variables, the most important variables in terms of the flow of our production, which is the logistics cost to the port and the railway.
So we have a memorandum also reinforcing the development of commercial routes for our oil production. We produce wet oil that has a low amount of sulfur, and we believe it can be sold in domestic and international markets. And we have to find an adequate partner to be able to use these solutions. It's important to reinforce that we have the logistic routes that already exist. And during this year, we also had great advances in these routes, the beginning of the delivery of the Tiê oil from the Miranga
area and also the reserve to Petrobras, and then also the oil to Brava Energia in Rio Grande do Norte. So we're going to continue with these partners. We're going to maintain these routes active so we won't have new bottlenecks for the flow and for the delivery of our production.
Now I'm going to give the floor to Rafael to talk about the financial info.
[Foreign language]
Thank you. Good morning, everyone.
We have a record amount of BRL 850 million this quarter. It's an increase of 3% compared to the previous quarter, although there's 6% of increase in the price. The price went up because of the dollar and also very little impact in the hedge instruments and also using external drilling equipment. In the accumulated amount, our income was our revenues were 16% bigger compared to 2023. As you can see, the negative impact of hedge, the hedge for oil, it has been going down ever since the second semester of 2024, reflecting that we're getting to the end of the rollovers that we did during the pandemic with low costs, $60 per barrel. For the fourth quarter, we only have a remaining residual volume of NDF.
Now we have the newer contracts with a zero cost collar, and this determines a floor and a cap. Considering that oil has remained within these prices, within this range, these instruments have not had a relevant impact in the results of the company.
[Foreign language] In terms of costs, we have had a quarter with mixed results. There was an increase of the lifting cost because of greater expenses with the integrity of assets associated to the resilience operational plan mentioned by Firmo, the repairing of wells because of an increased seasonal use during the period, and also with the transport of oil because of the increased production in Tiê that has not been flowed through the oil duct yet. In terms of royalties, we have captured reductions in the last few quarters because of the benefits that we received with ANP for the reduction of the alíquota.
But in the third quarter, we see the effect of the increased production in Tiê, and the average is superior to the rest of the company's assets. Midstream, there's a positive impact due to the operation of UTG São Roque. There's a reduction of costs with the transport, the flow, and the processing of oil to Bahiagás. And we still had some reductions in the processing tariffs for gas done by third parties. And in this slide, we bring a bridge graph with the evolution of EBITDA every quarter ever since the Q4 of 2023.
And we see throughout the year successive growings of the income and of the revenues. And after the reduction of the costs and expenses, we see an increase in the Q3 , as I just explained a minute ago.
The EBITDA from the third quarter presented a small reduction of BRL eight million, 2%, when compared to the second quarter of 2024, but also being supported at a high level. In this way, we close the nine months of 2024, with an accumulated EBITDA, which is a record amount, BRL 1.2 billion, representing an increase of 20% compared to the same period last year.
The total CAPEX from the third quarter was BRL 201 million, so bigger than in the second quarter. Once again, we can see the focus of the company, of the investments in the development of its reserve.
As seen in the graph on the left, in the third quarter, we invested BRL 184 million in the development of the reserves and the workover projects, facilities, and the perforation of new wells, and another BRL 27 million in other lines of our assets, especially those that have to do with services and rigs, new softwares, and also improvement in the monitoring of the fields. In the pie graph on the right, we had an outlay of BRL 174 million, and I highlight the acceleration of the workovers with investments of about BRL 114 million, and there's an increase of BRL 20 million versus the Q2 of the year. Besides that, we had BRL 39 million spent on the perforations, an increase of BRL 13 million compared to the Q2 because of the beginning of the perforation with PR14 in the Tiê field.
The graph below that shows the evolution of the stock position ever since the end of 2023. So we're still moving forward in terms of reducing the stocks in 2024. There was an additional reduction of BRL 21 million throughout this quarter. So it's a total of BRL 74 million in terms of reduction in the accumulated year to date.
So this is the evolution of the last quarter. So the cash flow, it was very robust, BRL 458 million. The CAPEX was BRL 190 million, and we amortized debts and other commitments in the amount of BRL 395 million. And we ended the quarter with BRL 1.5 billion in cash.
In the view of the year below, we can see the consolidation of the change in phase that the company has and also free cash that has reached the amount of BRL 891 million in the year to date of the first months of 2024. This evolution shows the advancing of the company and the execution of its strategy, so going from a phase of intense investments in the expansion of capacity that provided great increase in production, and now we're in a phase with a greater generation of free cash and also remuneration of the shareholders, opening up several opportunities for allocation of capital,
and in this scenario, we announced together with these results, the payment of BRL 379 million, and that is equivalent to BRL 1.29 per share.
This represents a dividend yield of approximately 7.5% in this distribution and 14.5% in what was accumulated in 2024.
In terms of the capital structure of the company, in October, we did the second amount of debentures, BRL 150 million, and we received the first public rating of the company, AA according to Moody's Local Brazil, showing the financial soundness of the company. And almost all the resources that came from this issue, this was used in the payment of banking debt. So there was a significant reduction in costs, and there was the extension of the amortizations.
Comparing to the previous debt, there was a cost of 8% a year in dollars and the duration of 1.9 years. And this was replaced by the new debentures. And in dollars, they have an average cost of 6.2% a year and a duration of 3.7 years.
And I'd like to highlight that the cost of this new money uptake was even smaller than the 7% a year from the first infrastructure debentures from May of this year.
And then we finished the third one with a net debt and leverage of 0.52 times of the last 12 months. And the second issuing and the prepayment that I talked about, we extended the average of our debt, 1.6 years in 2023 to 4.5 years, and we reduced the average cost of debt the company has from 8.95% a year to 6.74% a year. And as a result, I give the floor back to Firmo. Thank you, Rafael.
[Foreign language]
So before we close, it is worth highlighting the great advances that we have had in this quarter, in my opinion. They defined the expectations of our future for this next quarter, as well as for the base of our strategy for 2025, so the final decision of UPGN Miranga and its importance for our capacity of advancing with the growth projects in Bahia, so the construction of this plant reflects an important step in the consolidation of midstream in PetroRecôncavo, and the project team is to be congratulated because of their technical and economic support that they gave for the approval of the board and the advance in the development of alternatives for the flow of oil in Bahia, as well as Potiguar. After 2023, the risks in the system became very evident.
And after work with a lot of investigation and as a result of the logistics workshop that we did in Rio de Janeiro a few months ago, we were able to sign the MOUs that were very relevant with very good partners in the search for transforming solutions for the flow of oil from PetroRecôncavo, and we have MOUs signed by Luby, Shell, and they will actually allow us to reach other markets, domestic as well as international ones, and we have come to the end of this year with flexibility and resilience in flow, and that's much higher than our starting point, and with a strategic effect for PetroRecôncavo in the future.
Finally, we come back to the perforation campaign after we focus on the commissioning of the most important rig of our fleet and in the review of the modeling of the main fields that we were going to develop. We are re-accelerating the perforation program that complements this growth equation and for the development of the reserves for over the next few years of PetroRecôncavo. I would like to conclude our presentation, and I'm now going to give the floor to Marília for the beginning of the Q&A session.
Thank you, Firmo, Rafael, and João, for your presentations. Now we're going to start our Q&A session.
Please send your questions through the P&R or the Q&A. Microphones will not be opened. The first question comes from Bruno Montanari from Morgan Stanley about the lifting cost.
There were some costs that ended up increasing the lifting cost in the first semester. In the fourth quarter, does it make sense to look at a reduction of this line? It was going down ever since the end of 2023. What kind of trends should we expect for 2025?
Thank you, Bruno. I am just going to talk about the perspective. Although our lifting cost is seen as a reference of the lifting cost in Brazil, we expect to improve. We are trying to get more efficiency all the time. We're trying to have a decline in the lifting cost always.
However, the biggest effect, the main effect of the lifting cost is the growth in production, the preparation of this growth in production, the investments that we are making on flexibility, robustness, integrity, so that we will have this growth in production in a more resilient manner. And that's the main factor that we are looking at in terms of increasing the lifting cost this semester, this quarter, actually. And we know that we will have a decline in the lifting cost when we accelerate the production more, and when we find these efficiency mechanisms too. Any comments, Rafael?
I think you covered it well.
[Foreign language] There is seasonality in terms of these wells in Bahia that affected this quarter. And the main point was operational resilience with the growth in production.
The next question is about the infrastructure in Potiguar.
I received several questions about the same topic, so I'm going to just bring them together just to make it easier. Bruno, Monique, Monique from Itaú, and other analysts, they also sent the same question. The expectation of conversion of MOUs, the existing MOUs, what are the next steps and potentials in terms of negotiations?
And with this infrastructure that is established, what kind of benefits do you have in terms of pricing of oil? Can we actually see? Excellent. Thank you for the questions. I'm going to start, and then I can pass the floor on to you. So the MOUs and the methodology of logistics, which is the drive that we have this year, this is a well-known part. So when we look for logistics solutions, one of the ways of doing it is to bring together these partners.
[Foreign language]
[Foreign language] We did a workshop, and then
[Foreign language] the list of ideas was ready, and we started bringing together partners that we believed to be strategic to find the solutions. These MOUs are the first step. Normally, after these MOUs, we begin to develop in terms of technology and equipment and infrastructure, as well as contracts. The MOUs are the first arrangement to know who the great players are with us in trying to find these alternatives. Then we move forward in terms of contracts and even in terms of installation of pilots so that these ideas
in the long-term contracts and so on. Before João says anything, the basis was the search for resilience and also flexibility in our flow. So this has always been our main objective, to have flow alternatives so that we will not have to close our fields anymore, just like we had to do in the last trimester. So this is the main driver, and this is inside the cost for the company.
I would say that according to the workshop that we did in Rio de Janeiro, we're looking for solutions with the short-term enablers. So from then on, we're able to make some MOUs with the Port of Pecém and the structure of Aratu, according to the logistics and the load. So all of these options, they are feasible as we overcome these in the short term. So in 2025, it's already possible for us to do initial tests in terms of destination of our production.
What Firmo said, just like in the presentation, this was also mentioned. We don't have the delivery routes with our current partners. The challenge here is to guarantee that if there's any need to interrupt the production, the production will still continue to flow, and we won't have additional costs compared to our commercialization margins in the midstream that we have in Bahia and Rio Grande do Norte.
[Foreign language] Okay, next question is about dividends. We've also had some questions about it, so I'm going to try and get all of them together. The company has very attractive dividends in 2024, and there is the intensity, less capital intensive, and it's about 2024. If you have space to pay more dividends this year, and how we should actually think about paying the shareholders in 2025.
[Foreign language]
This issue with dividends in the market, this has been one of the most interesting parts of these last 10 months that I've been in the company. And I would like to start by thanking you for the feedback we received. I have already made up my opinion, a strong opinion, and together with the VPs and in the discussion with the board, I was able to establish the structure that I explained. It's the best strategy for PetroRecôncavo is flexibility. And knowing the opportunities, the organic and inorganic ones of PetroRecôncavo in the acceleration of the development of the reserves or in the possibilities of forms and M&As that we believe in, we believe the Brazilian market is going to offer this in the future.
Our discussion structure has been, after every period, sitting with the board, evaluating the free cash flow generated, evaluate the need for cash in the next quarters, and also have a list of opportunities for the use of this cash, so this is our function as managers of the company, and then define with the board the best alternative, so what we're doing now, and this is the discipline that we're going to continue doing from now on, and there's no predictability
in terms of policy for dividends, but there is an understanding of the strategy, so this is what was done now, so this is our result now, the payment of dividends, and then we're going to talk to the board, and we're going to have these periodic discussions, and then we get to the market. So if there are positive alternatives for the allocation of capital, if we're talking about acceleration of the development of the reserves or external alternatives or greater investment in midstream, whatever the alternative is, we're going to discuss with the board,
and then we're going to announce the dividends. Anything to add?
I think you explained it well. So there was the question, possibly we are discussing the
budget for next year, but there is perforation for next year that we're going to do in PetroRecôncavo. So maybe there's going to be acceleration of CAPEX during this period. On the other hand, we also expect to increase production and revenues. There are other things that have a positive contribution, also the hedge for this year, and this is also something that generates the cash expectation that is higher. And this could start growing the CAPEX.
Next question is also from Monique Greco, and how does the company see the evolution in production over the next few months, and what is the output expected for the year?
So this is our greatest challenge this year. It became very obvious that we had a very drastic interruption
in the execution of workovers in the beginning of the year because of all the problems. And we come from this new level, and we were able to establish the execution a few years, and this has brought benefits. We have seen stabilization that is very positive in the production after establishing the workover. The perforation component, we started with PR14, and now we're going back to the perforation. So these are the components for the growth in production.
And of course, with all of this implemented, and maybe there's even more investment that we're going to do, especially in the workover fleet. So this is aligned with our expectations for growth in production. So we hope to have finished the implementation of all the components that are now going to bring production. So our expectations are still, although we're not going to be able to deliver the average growth in production that we expected this year, we're going to be able to deliver the starting point according to what we had in our report, our reserve report. So the output at the end of the year, we're going to have the production according to what we put in our reserve report. Then we'll be able to plan next year, which is what Rafael was talking about.
We're going to discuss the budget so that we can then place this mission for next year in terms of production and in terms of CapEx. Next question is from Rodrigo in Santander.
I would like to understand the preliminary estimate of what you think the performance of the Tiê wells. So what do you expect? We're talking about 800 barrels a day. And I would like to understand if this estimate is maintained, considering the potential of Biriba, if that is useful. It's for Rodrigo.
[Foreign language] Thank you, Rodrigo.
[Foreign language] So in my years of oil and gas industry, they tell me that you should not talk about future production of a well that is being perforated now. So I'm going to talk about Tiê 11. So that's an outlier. That's a well that presented results that were well above what we had expected.
Today, after a few months of production, we can understand this better. All of this was modeled in the development program of the Tiê Field. We are developing this field, perforating both wells. The wells this week, at this moment, they are being tested, and that's being completed. We started the production. Internally, we have the expectations of our models, but I really prefer to talk to you after the well has been producing for a while, because this is what the best practices and oil and gas have taught me. We have reorganized the perforation program so as to develop the Tiê Field in a differentiated way based on the information that we obtained
[Foreign language] in terms of the well number 11 that we are producing and in the other two perforations. Over the next few months, I think all of us, and you as well, we will have greater visibility about the Tiê field as a whole and the performance as well. I can say that in the construction of the wells, we were quite efficient. The construction of wells in Tiê, in the history of our perforations, it was very complex, and we were able to, through PR14 technology and commissioning, we were able to perforate these wells very efficiently.
So we were able to perforate them from beginning to end according to the program and without needing any kind of side tracking, without any deviation of our perforation program. So we're quite excited with very competent wells in terms of production, but I'm not going to give you a number because I don't think it's correct to do that in our industry. Any comment about Tiê? I agree.
I think all of your comments are exactly.
[Foreign language] Eu acho que todos os seus comentários estão em linha. Os resultados do Tiê 11 foram particularmente, foi ponto fora da curva, como o Firmo disse. Isso melhorou a nossa interpretação. E são os poços que nós recentemente perfuramos, e nós estamos voltando ali com as perfurações. Temos três poços, tem os dois do Tiê, teremos mais em novembro e dezembro, então vamos ter crescimento robusto ali no curto prazo. The next question, it was a few questions that were about the same, but I'm going to follow the question from Jorge.
So what are the lessons learned with the operation of PR14 in terms of efficiency, safety, and costs in the Tiê field and now in Biriba? And how are these lessons being applied to improve the production and minimize costs?
Thank you for the questions, and this is going to give me the opportunity not only of talking about what I consider to be robust success, so one of the most robust successes of PetroRecôncavo this year, and this is the commissioning and the start of production in PR14, so to get a rig and to bring this from outside the country and commission it in the right way and make the first
thing that was really something that I've participated in my whole life doing this kind of work, and we have a project that is quite challenging, very robust, and
[Foreign language] the final proof, you know, the first two, if it's new, if it's an offshore drilling rig or not, and if it's refurbished,
this is always very challenging, and the commissioning team, as well as the operational team, has done a lot of work. Now, remember that efficiency in these first
wells, this is a secondary objective. The primary one is efficacy and safety. These are the two great objectives when you have this kind of complex equipment. Now, through some work that is done, bringing the best people, the best technicians for the composition of this team, PR14, our rig is the queen in terms of perforation at PetroRecôncavo. So we got experienced people in the market and also the best from PetroRecôncavo, and this was very positive. Now, in terms of efficiency, this starts now, and of course, Troy is bringing pressure, of course, and all of the wells that are coming here, they're going to be faster, more efficient, and with a reduced cost. We are able to do wells inside a period of time that is typical in PetroRecôncavo, which is below what the Brazilian market does.
However, we are not using the Brazilian market as a benchmark anymore. We're using the international market as a benchmark, so the rig is not according to the levels that it performs in West Texas and U.S. lands, so that's our challenge: advance in technology and processes, in infrastructure, total infrastructure for perforation, to be able to reach these levels, and that's going to be critical and very relevant in the development of reserves, especially now that we're going to the deeper well, so the challenge continues, and I would say that we're very proud of what we were able to do this year, but we still have work in terms of increasing efficiency to be able to reach the international benchmarks of productivity with a probe of these characteristics.
So it should be as good as we expect it, and making wells without drilling wells without any problems, and with great efficacy in coming to the end of the construction of the well according to the program. Perfeito. Seguindo aqui. Okay, let's keep going. Another question from Pedro BTG. I'd like to hear a little bit about the updates about the negotiations with Brava, about the midstream assets of PetroRecôncavo. Okay, I'm going to pass it on to you, João, but they always ask me about the discussions with Brava. And from the beginning, when Brava was created, I said my expectations were quite positive, and technical, operational engagement, and strategic as well, very good with Brava. And I confirm that. So we've already established a sequence of meetings and discussions,
and this validates my expectations about both companies coming closer together.
The advance, well, today we have more than we have ever had before in terms of understanding Guamaré, where we did technical visits, and we put the technical team to evaluate it, and we have our economic model.
So things are moving forward at a very positive speed. I'm quite satisfied with the engagement that we've had in terms of Brava. If you want to give more details, just to add on to what was said, we have the memorandum of understanding with 3R Petroleum. So that's about this discussion. So definitely, it's a little more time because naturally, in the change of management, the entrance of Décio and the team, they tried to understand the scope of the negotiation, but since this happened, we've had very positive conversations trying to get to an understanding. So we have greater stability this year. That's something I wanted to highlight.
In the midstream, we were able to make it flow, to make our gas flow in a positive manner, and on the other hand, as Firmo said in his presentation, it's the resiliency program, and for our area, we have to move to a solution until the end of the year, so we need to present a solution, whether it's a partnership with Brava, which we always talked about for the market, it should be the most adequate one, as there is the capacity of processing, and you'll get into the notch, and PetroRecôncavo is one of the biggest users currently.
Or if there's our own solution that is necessary since we've already reserved a piece of land, we've announced it to the market, and we have not concluded our studies, but I understand that it's moving forward well, and we're going to have a solution until the end of this year. And just to reinforce this, as you saw in our resilience plan, that's all that's left, right? Okay, understood.
[Foreign language] Perfeito. Seguindo aqui ainda sobre o processamento. So still about the processing of gas. I would like to understand more about the review in the processing tariffs in UTG Catu, as well as Guamaré. So if you can have an idea of the adjustment costs. Ou a gente não pode entrar no detalhe. So we cannot go into the specific details of the tariffs because that's in the contract.
But the third quarter has already brought part of the reflection in the gains that were obtained in Catu, just like in Guamaré. So according to the São Roque plan, so the fourth quarter is already reflecting the new tariffs, and then we have midstream as well, and we were able to make the management of penalties and deficiencies. We did this very well this year, and this corresponds to the midstream result as we demonstrated here. Maybe the main aspect, you'll get into the notch while we continue the discussions that I mentioned. We've had the discussion of the continuity of the contract model that we have. And in Bahia, the most important aspect of UTG Catu is that together with Petrobras, we have a contract that ensures us the processing capacity within the horizon of the building of UPGN Miranga until the end of 2027.
We have been hired in the UTG Catu plant, and it's what corresponds to our production prognosis plus São Roque. Okay, the next question is from Thassio from UBS. What have you seen as M&A opportunities or partnerships in the market? We understand that when you talk about not having a dividend policy to have flexibility, it shows that there could be something in your radar. So we know that there are several other players in less favorable situations. Is there something that can make sense? Eu vou usar minha frase clássica. I'm going to use my classic phrase that I learned in the second week here at PetroRecôncavo. Eu fui saudado com meu pai e recebi uma oportunidade, so PetroRecôncavo has always been and will always be in all of the M&A discussions, especially in Brazil, right?
Because of its financial capacity, its balance sheet, and its performance in terms of cash generation, but also because of its operational capacity that is recognized and that we are refining even further, so we're always going to be in these discussions and definitely the classic reason that I believe in, and there's flexibility in our greatest strategy, and this is related to seeing lots of opportunities for PetroRecôncavo. PetroRecôncavo will continue to look for these opportunities, and this is a very young market, and I have said this several times, and this was created a short time ago, and they are still evolving from their original thesis and different levels, and this is going to be according to need or strategy, and it's an M&A or something, and PetroRecôncavo is the preferred candidate for any of these at the correct price, so we evaluate these M&As.
That's another characteristic that PetroRecôncavo has. That's very clear. The M&A is always going to go from the surface up. So first of all, it's the understanding of the subsurface and the capacity that PetroRecôncavo can do, you know, the best. So rejuvenate it, increase the recovery rate of this field, and then generate value as a consequence. That's where the M&A starts. And then we discuss synergies and things like that. So the answer is yes. The main reason for flexibility for me is the opportunities, M&A opportunities in Brazil and outside Brazil. We're going to have that too. However, it's an M&A that is very clear in terms of objectiveness and what we can generate value in. Any further comments? Did you want to make disclosures? Any disclosures? No, no disclosures.
I would just highlight that how SO has contributed in the creation of knowledge as well as competitive differential aspects. So this year, for example, we searched for opportunities and an initiative, but the fact that we know about it and we have drilled all of the basins in Brazil, this gives us a level of knowledge and safety, you know, because we're prepared. So if it's in the cost structure or if it's in the development of reserves and studying the subsurface, as Firmo said. So any opportunity that presents itself is going to be well evaluated by us, and that's something that we highlight in this differential, competitive differential aspect. So next question, I would like to understand a little bit more about the rigs. When should they start operating? And if we have plans for new rigs, if they're going to be bought or rented?
Okay, thank you for the question. I'm going to take this question. I'm going to talk a little bit more about the execution plan. So we've had a huge challenge. So we did a very low workover in the first few months of this year through the competition and with the service, and we reestablished this workover in the last few months. But our challenge, our total challenge, and that's what we're working on now, it's the planning of the company and basically it's the potential for each of these rigs. So it's all the capacity of the company so that we can grow and generate as much revenues as we can. So it's the maximum amount of oil in this case, and it was the design that made a difference.
So in terms of workover, the planning of workover and also of what we will need to do from now on, and then we start to increase the capacity of the company. Now, the availability of the external rigs that we found according to the standards that PetroRecôncavo has, they start now. So we started this discussion a few months ago, and these rigs should start in November, and we're going to increase our execution. So there isn't really a need to, you know, it just increases the pool of capacity of PetroRecôncavo, and we're going to align this as necessary. Now, the difference between rented rigs and the internal ones is the return, right? So we operate with a return and with a smaller internal cost in PetroRecôncavo.
It's natural that considering the visibility of next year, when we approve the budget and we have a bigger understanding of the need for execution, we're going to have an equation of cost benefit and also looking at workover. Workover is not material for PetroRecôncavo, but I prefer to use third-party rigs and have a better equation of our execution in the short term. These are all short-term contracts. Then evaluate next year as we approve the budget over the next few months and then make the decision if we're going to verticalize these rigs more or not or workover. The CAPEX that is necessary to create SO and have the size of our SO that has already been spent.
So we don't have visibility or a need for a material CAPEX over the next few years, but putting one, two, or three workover probes if necessary, that's going to be valuable according to the execution we have and looking at the difference between renting a probe and verticalizing. So we have verticalization programs that have not been tested as we see the execution. They're going to be tested, and it's clear for PetroRecôncavo that the robustness in execution and the capacity of executing in an efficient and in a resilient manner, month upon month, there is an extraordinary value. So this was the year that demonstrated this where we have to be able to address work service, you know, without having the problems with workover. That became very obvious for us this year. Next question is from Leonardo Marcondes.
In terms of resilience of the operation within the context of the Electro project, how do you expect the assets to behave over the next rainy period? So is this going to be impacted the same way as 2024? So the short answer is no. So we are placing all the action plans in a way for next year to be more resilient. So the idea is to increase resilience. The Center of Excellence for me was extremely important. There is a list with more than a dozen projects, and especially Troy's team have, and we're learning this year to increase resilience, especially in a well-directed way where there can be better results and where we can actually solve individual issues from our operation. But it also brings something bigger than that. It brings a more holistic analysis and evaluation that is more detailed in terms of all these conditions.
And besides, it has already started in the first month of operation. It has already started to be a way of providing great speed to the addressing of problems. So if you have an electrical failure somewhere, power failure somewhere, in minutes, you already know where it is. You can already identify the best way of directing this. So this is the beginning of the process. So the process has two main functions. The first one is understanding generation of knowledge and data about our objective and knowing what each part of the company is doing, how they're behaving. And the second point, and this generates a bigger plan beyond the plans that Troy has. The second one is implementing technology and the capacity for fast recovery. So in terms of the excellence, it's a direct connection with management to increase efficiency. So it's a continuous process.
The answer is, yeah, we want to be better and we want to suffer less of an impact in the beginning of next year compared to this year. Of course, it's going to depend on the climatic change, the size of it. It really depends on how this is going to behave next year, but it also depends on the efficacy of the programs that we're putting into place and we're putting into practice this year. They are not huge projects and huge modifications and investment. No, they are spot projects that have to do with resilience. Sometimes it's one well, sometimes it's a season. The central point in terms of information, data information is very relevant in the use of technology and in the understanding of how this is done.
So we had a benchmark with distribution companies, but we have more than 600 km of distribution lines that are ours. They are our property. And we have a mini distributor inside PetroRecôncavo and it's a process of bringing this to a strategic level so that we'll have greater visibility. Okay. Because of the time, this is the last question from Bruno Amorim from Goldman Sachs. In the understanding of management, what is the status of the preparation of the company for a new growth phase? Is there room for reviewing up, you know, having numbers go up in the next reserves? Should we expect more robust growth in 2026? What is his name? Bruno. Bruno. It's more dangerous and more incorrect than talking about a future. Well, is to talk about a future reserve report. So Troy fights with me if I make any comment.
The reserve process started in October and it's moving in the direction of understanding and also the proof of everything that we did in the last 12 months together, together with a certifier. It's a very robust process, of course. I'm going to give you a few details. Go into this reserve report, everything that we've done this year, and that's about your first question. If we feel that the company is moving in the direction of improvement and growth, the answer is yes. Everything that we did this year was improve our understanding, improve our resilience, and also the modeling that we have. We're doing modeling work, and that's the creation of Value. We were really moving in a positive direction and generating our recovery rate and finding new volumes. Our perforation now has the bias of going to deeper perforation.
We have brought PR14 for that. So the objective is to certify new reserves. So the company is working in the sense of improving and enhancing its growth. And that's related not only to external reserves, non-organic ones, as well as organic ones. Now, I could not give you any indication about what we expect at this moment. We have a lot of work from now until March where we finally close this understanding, and we publish it for you. Any comments? No, I think your perspective is correct. Great. Thank you, everyone. And we're now going to close our meeting, our webinar of the results from the third quarter. Sorry about the questions that were not answered here, but the IR team is going to send the answers later on. Thank you and see you next time. Thank you. Thank you.