...Good morning, everybody. Thank you so much for waiting. I am Marília, RI Director of the company, and we are going to start our webinar on results second quarter 2024. Today's presentation will be CEO José Firmo and CFO Rafael Procaci, followed by Q&A session with all the executive board. So this way, I'd like to ask you to send your question on IR questions. We are not going to open up mics in this session. Please place your name in the question. It makes easier for us to open up the Q&A right after today's presentation. The webcast will be broadcasted on the internet, and later on, it's going to be available on our website, RI.
Before starting up, I'd like to clarify that all the declaration during this video conference on the business perspective goals, are based on beliefs and premises of this board of directors and also information available by the company. Future considerations are not guarantee of performance because they bring risks. This way, I'd like to pass the floor to Firmo. Thank you so much, Marília. Good morning, and thank you so much for your attendance in the results of the company second quarter 2024. I'd like to thank Troy, connected from Wyoming on vacation. This quarter has been challenging, but the positive aspect is our program of resilience with deliveries that are really very relevant. Financially speaking, this quarter bring into interesting marks, the issuance of our first debenture, BRL 1.1 billion, reorganizing our capital structure, improving the cost of the debt, extending its term.
This operation is going to be better detailed by Rafael. Another main point is the payment of BRL 410 million in JCP as a result of cash generation in the first months of this year, representing, with the dividend paid in May, a dividend yield of 7%. Our net revenue is BRL 826 million, 11% higher than the previous quarter, and lifting costs reduced to $12.62 per barrel, 5% under the previous quarter. EBITDA reached BRL 447 million, an increase of 27% quarter-on-quarter and 22% in the accrual year to date. We register better performance in financial terms, stable production, leveraged by revenue growth, and improve the efficiency of the cost during the quarter.
The quarter profit, BRL 136 million, represent an increase of 24% quarter-on-quarter, impacted by, without cash effect on market of our assets and liabilities in dollar, BRL 188 million. Operationally speaking, the quarter was very important and big, finalizing the commissioning, starting up in July, the first rig in PR-14, and this is a landmark very relevant to our zones and service and all the company. PR-14 is a probe with the operational capacity, one of a kind in onshore in Brazil, drilling wells up to 5,000 meters with agility and safety, so we can access new frontiers of non-reservoirs in our concessions. We are going to detail more in a further slide. Another relevant topic for the quarter was the success of sidetrack of the TA-5, it's TA-11 now, start producing the beginning of July.
Initial production that is robust is going to be detailed up ahead. We received the permit to operate in UTG São Roque at the end of the month June, and the plan started in July. Now, we deliver natural gas in the delivery point of Bahiagás, so we can have one more alternative and resilience to flow the production in Bahia. Finally, reestablishing the level of execution of workovers RSO in May, with a relevant advance in the last months, reaching an increase of 87% in the volume of operations.
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... allocation focus on the robustness of the return, considering all the final results available on the work performed in the last month. Our commitment with production growth is based and is aiming to reach reserve report curve without losing the discipline and the planning, and the maximization of the equation, costs versus return. One of the highlights of the quarter was, without any doubt, the success of sidetrack of the well TA-5, originating the well TA-11, starting in June. After intensive work of reservoir team, a new modeling of the field in TA was concluded, and the well program was defined, directing the final objective to a new design of production, jointly of the two parts, Água Grande and Sergi. In the past, TA-5 produced just in Água Grande, with the average of 331 barrels of oil a day.
In 2023, this well presented failures, and different attempts of fishing were done without success. After modeling, we have decided to go for sidetrack, using the same opening of the well for a directional drilling, reaching the formations of Sergi and TA in the same well. When we assessed the profiles of the well, we decided to change the configuration, putting the well in the production just in Sergi, getting the success and reaching the average of 822 BOD in June, and the well is still stable, also in July. The data from this well is very important for a validation and correction of the models that are being developed by the reservoir team, enabling a better understanding of potential production in all the field TA. In addition to that, today we have a well with a robust production, lots of potential.
We still have the alternative of opening up one more zone in the future, if necessary. Another operational landmark of the quarter was the onset of the operations PR-14, opening up a new phase for the company. This probe has the capacity to operate in Brazilian onshore, and is able for projects of wells with a depth up to 5,000 meters, so it can operate in new frontiers with technology for horizontal drilling in the reservoir that are deeper in the basins operated by the company. The project started in March 2023, and after the refurbishment, logistics for Brazil and commissioning with more than one year without accidents, we start the operation of drilling now in July. The project was led and executed by the RSO team of the company, with the support of a long list of suppliers and partners.
Here, I acknowledge and thank one more time for the excellent technique of the team, PetroRecôncavo. The probe started the drilling program in Campo de Tiê, in the end of July, in an injector well, and through the integration of high quality equipment and a selected team with the best RSO, we are confident that we will reach the efficient levels in the operations as a global benchmark that has never been reached in the Brazilian onshore. In this slide, I'd like to highlight our advancement in the operational reliability program, reinforcing the commitment of the view of all the advances in our alternatives and impact mitigation processes in our operation.
As we mentioned before, and communicating to the market, the UTG São Roque is under operation within the parameters and expected conditions of the project, bringing an increase of capacity of processing in Bahia and a new route of flow of part of the gas produced in the state, enabling a delivery directly to Bahiagás and potential clients in the free market that are connected to the grid. UPGN Miranga, we follow with the project PL two in this phase, final phase for the final decision investment, and we expect to get in 2024. In Potiguar, as it's been communicated, we signed a MoU with 3R, and the objective is to coordinate joint efforts to assess and share the infrastructure of natural gas flow in Bahia-Potiguar. So we create a work group, started already the analysis and technical feasibility of this possible partnership.
For the electric reliability, we are advancing, estimating the onset of the operation of an excellent center to monitor our distribution park and consumption up to the end of fourth quarter 2024, and this points the onset of a pluriannual plan of resilience, and the electro transformation as a strategic input for the company. Truck loading of oil in Ipanema finally is ready, and we conclude on the construction and the commissioning of the project truck loading in Rio Grande do Norte. This is a logistic alternative that is fundamental for the company. Now we have the capacity of flowing 100% of Rio Grande do Norte production using highway. Now we have logistic plans and commercial plans, short and mid-term, for the construction of flowing alternatives and export of the production from this new facility in Ipanema.
More about this plan, we are going to communicate as they materialize. I pass the floor to Rafael now, and I am back to conclude this presentation before the Q&A.
Thank you so much, Firmo, and I greet you all. Our net revenue has the record of BRL 826 million, presenting an increase of 11% quarter-over-quarter, impacted by the high of commodity and dollar, and the lower impact of derivative hedge. As you can see, the negative impact of oil in the revenue of second quarter was about half of the impact of the previous quarter, reflecting that we are reaching near the end of the rollout during the pandemic, low prices, around $60 per barrel. We still have a volume of NDF, similar to the second quarter, and after that, they are over.
We only have the newer agreements in zero cost collar, determining a floor and a ceiling. Considering that the oil is in the price range, these instruments do not generate relevant impact for the company's result. Let's talk about cost and expenses. We had one more quarter with cost reduction as the evolution to the right direction, lifting costs, the extraction costs, highlight for the cost reduction with well repairs in the first quarter, after a first quarter that was challenging this aspect, and the first quarter of the initial effect of FX increase 5% in the quarter. Royalties, we captured reduction because of the benefits we get at ANP in the last quarters, of the quota reduction on the incremental production approved with the extensions of concessions.
Midstream costs benefit from small reductions in the penalties and costs with transport and flow, but still they do not reflect any benefit coming from the UTG São Roque that started now in July. We had a quarter, EBITDA that was record for BRL 147 million, led by a combination of growth of revenue and expense and cost reductions. In these slides, we have a graph showing up the EBITDA evolution quarter by quarter since 2023. Comparing second quarter 2022 with the first one, we can see expressive growth of BRL 94 million, 27% of the EBITDA of the company. Mainly because a positive contribution of net revenue, plus BRL 82 million, as explained previously, and cost reduction in total of BRL 12 million compared to the first quarter.
This way, we would like to close the first semester of the year with EBITDA of BRL 81 million, represent an increase of 22% compared to the same period last year. CapEx of the second quarter, 2024, was BRL 165 million, a level so similar to the first quarter. Observing one more time, the highlight of the investments of the company, development of the reserves after the phase of investment, expanding the execution capacity that we experienced in 2023. As the graph shows, in the second quarter, we invested BRL 156 million, developing our reserves and projects of workover, facilities, and drilling of new wells, and more 37 million in other lines of fixed assets, especially remaining payments of our probes and services, especially PR-14 and the acquisition of software.
In addition to that, we kept our commitment in reducing our stocks in 2024, with the additional reduction of BRL 29 million this quarter. In total, BRL 53 million in the accrual of the year. This reduction reflects a revision work in the supply chain, that's part showing results expressively in the first quarter, showing a continuity in this quarter as well. On the right-hand graph, we present an opening of BRL 160 million, applying into the development of reserves. I would like to highlight the evolution on the investments when we return the workover campaign second quarter. The value is BRL 94 million, representing an increase of BRL 34 million versus the invested value on the first quarter of the year, reaching levels close to the executed in the first semester 2023, with fleet of probes in workover, much higher back then.
That of the company, in June, we had the first debenture emission at PetroRecôncavo. The value is BRL 1.1 billion. And through this operation, the company now has available a new way of capturing resources in the capital market to longer terms and interest rate lower, according to the need, and adjust the cash flow better. The success of this reinforced the reliability of the investors, the solidity in the financial health of the company. Just to exemplify, although the company does not have a rating of credit, this first issuance has led longer mid-terms and a redemption of the debt in 9.94%-7.80% a year in dollars, first quarter 2024, to the end of the second semester. And the new debentures swapped to dollars, reach the average cost of 7.05% a year in dollars.
I'd like to highlight that the company has as a strategy to put debts in dollars, considering almost all the revenue is in dollars, seeking a risk reduction of mismatch of cash flow. As mentioned by Firmo in the opening session, although the dollar increase, bringing a negative impact in short-term financial result because of the market, long-term, dollar is getting stronger and is positive for the company. We finished the second quarter, leverage 0.63% times that, an EBITDA in the last twelve months, establishing our mid-term, extending our mid-term of our debt to 0.06-3.92 years. Currently, we have a capital structure that is more optimizing the company.
Finally, with the redesign of the capital structure and the cash flow generation, the choice was having the amortization in July 2024 of a debt of $60 million. In this slide, we can see cash flow generation in the last quarter. I'd like to heed your attention to the cash in the last quarter, BRL 556 million, and cash generation after CapEx, BRL 392 million in the quarter, and in the total, BRL 623 million in the accrual of the year. This cash generation enabled the payment of 1.46 BRL per stock to our stockholders. In total, dividend yield of 7%. We mentioned already the debentures as a reduction, finishing up the second quarter 2024, with a cash position and financial application, BRL 1.6 billion.
In this second graph, underneath, we can see the consolidation of a change phase of the campaign to a new level of free cash flow generation. This evolution reflects the advancement of the company in the execution of their strategy, passing from extensive investment in the expansion of the execution capacity, enabling a strong growth of production to a phase of higher free cash flow generation, balancing investments and payment of stockholders, opening up opportunities for capital allocation in the future. Now, I pass the floor back to Firmo.
Thank you so much. Thank you, Rafael. I use this presentation and this opportunity to show the organizational chart with important changes in the RSO and the structure of VP Operations, Troy. An important change that we have, now we have Denis Campos coming in, a professional with 28 years of experience in Schlumberger.
Lots of experience in drilling services and integrated services. Coming up next Monday to be part of PetroRecôncavo team here in Salvador. The company has evolved a lot in RSO, and I believe it represents, without any doubt, one of the biggest competitive differentials of PetroRecôncavo. I acknowledge and thank you so much, Troy and Stênio, for creating this differential and this independence in service provision, protecting PetroRecôncavo from the seasonality of the services oil, oil and gas in Brazil. And I welcome Denis. We truly believe he's going to raise our bar to higher levels of safety, efficiency and execution. And then Stênio takes up a new board of integrity of assets, and the objective is to create something new, a competence that he's proved already here at PetroRecôncavo. And this new board is going to develop a capacity of execution and maintenance, and projects that are more efficient-...
more standardized, with more harmony now in the big asset parts of the company. Reporting directly to Troy, this structure will migrate the resources from integrity of assets and facilities inside this structure, inside of the production, optimizing the use of these resources with potential of material gain, efficiency, and reduction of lifting costs. This way, the four managers of production hub, two in Potiguar and two in Bahia, now have the executive focus on safety and efficiency, reporting directly to Troy, VP of Operations, removing the position of production director, and Guilherme leaves the company. We have the chance to discuss this better, all these changes, in person with the market.
In this quarter, I had the chance of visiting an inspiring project of PetroRecôncavo here in Bahia, Ciranda Viva, that was born from an initiative of two workers, Daniel Costa and André Mello, identifying an opportunity of developing and supporting project to the community near one of our stations in Cassarongongo, in Recôncavo Baiano. This year celebrated 10 years of existence, this project, Ciranda Viva. It's a mature project, today grew in sports, education, and development of those people.
Thank you so much, André and Daniel, you made a difference, and they make the difference. I pass the floor to Felipe, so he can conclude this presentation and give you further details about Ciranda Viva and our report of sustainability. Thank you so much, Firmo. Good morning, everybody.
Reinforcing Firmo's work, in the last 10 years, the Project Ciranda Viva generated a positive impact, offering literacy and sports education for children and young people, supporting the social development in the regions, is also a powerful tool to engage our collaborators. In July, we published our sustainability report at PetroRecôncavo, reassuring our commitment with the ESG agenda. I'd like to highlight two points: This is our third report in a row that is getting more and more consistent in presenting our ESG initiatives with the main stakeholders of the company. We enlarge meaningfully the number of the indicators to GRI standards, introducing standards that are specific for the oil and gas industry, SASB and IPIECA. This improvement raises our transparency levels, aligning us to the best practices of the market.
In 2023, our social contribution had an expressive growth, number of people impacted, increasing from 1,000 to more than 10,000 in the last year. Also expanding the reach of our programs, in total, 21 communities served, showing our commitment with the social development. Considering regional impact, two indicators are relevant. 90% of our employees are in the Northeast region, and 68% of services and materials are acquired from local suppliers. The capillarity of our operations on shore made us take, richness and wealth in the interior of Brazil, where we have our camps and stations. I'd like to pass the floor to Marília.
Thank you, Felipe, Firmo, and Rafael. I will start the Q&A session and reinforce that the question should be written on the chat, please. We are not going to open microphones today.
The first question is Bank of America: Can you explain the dynamic of prices of gas in this quarter? I would like to understand the drop of prices quarter after quarter. I pass this one to João directly, because he's an expert trading gas. Thank you so much.
Good morning. We had some effect, the first one reflecting on both quarters, the increase of the proportion of Bahia gas in our headquarters. We had an agreement that reached its peak in 2024, and the prices are fixed, agreed in the past, so I believe this has brought this effect in two quarters. And we also have a late effect of the benefit of Brent. These agreements, normally, they bring Brent from the previous quarter, so all the benefits associated to Brent increase, they are going to be captured as this is stable.
But in general, we are still supplying according to fixed agreements, to established prices. In case of Bahiagás, connected to a fixed price structure, and the other agreements, long-term agreements, that we have connected to the Brent price. So the expectation is to follow using a reason of prices aligned to what we communicate to the market the last quarters.
Perfect, João. Thank you so much. Next question is UBS, gathering with BTG questions. They are about the topic, I'm going to collect them together. After some quarters with pressed results, we have a more normalized levels, first quarter and also second quarter of free cash flow generation. Can we say that this is the new normal of the company? And in the same topic, this cash generation, solid, balance, low leverage, open up room for a new capital allocation.
Is the head of the companies more for dividends, payment, policy alteration, and if there is a predictability of dividend payments for the next years?
I think, as we showed, two quarters in a row, connected to our resource certification, we do believe that we are in a phase of free cash flow generation, very robust, and is still ongoing with the CapEx reinvestment floating around 40%-50% of the cash flow, the operation generating possibilities of free cash flow, so we can decide the best capital allocation. And I see a potential of all- Very strong distribution. But Firmo, please, we had a recent event, we discussed this topic a lot, and we are thinking about a methodology to define this capital allocation in a frequent way. Rafael, thank you.
We had lots of interactions since I started in the company talking about dividends, because it was anticipated that the company would change from a moment of investment to a moment of free cash flow moment, as we can see now, and we do believe it's going to continue this way for the following quarters. Fundamentally, the idea of a dividends policy, it seemed that it was an important discussion, but a discussion that would impact a higher assessment. What I see for onshore in Brazil, external moment and also strategic moment of PetroRecôncavo. Lots of options, higher opportunities of PetroRecôncavo to be with all the choices at the table all the time in order to use and enjoy bringing impact to the future of the alternatives, and they are none.
So the discussion with the board now is a structure of gates and assessment every quarter about all these alternatives in a very open way. The company has currently tools, capacity, and is developing more and more opportunities to accelerate the development of the reserves. The company can take this decision in a very fast way, once we have the structure of new modelings, new pieces of equipment like PR-14 in our hands. So it's very important for the company to be fast in decision-making of a possible alternative, accelerating, drilling or accelerating some reserves as the information becomes material. Another clear alternative is the company now start operating midstream, a company that has midstream activity, UTG São Roque, and a more impact in midstream through the investments in Miranga or investments in Bacia Potiguar. This is another alternative that is being built.
As time goes by, they are going to make more material, and we have to be able to use these opportunities very fast. Another one is the option of M&A, is a constant option. PetroRecôncavo is going to be called to discuss all the choices of M&A here on the Brazilian offshore, and it's known and accepts the position of the company with the best operational capacity in lowering costs and be efficient, developing resource, reserves onshore and M&A options are very important to have visibility and be ready to do them when they come. In the prices and in the model, PetroRecôncavo, the subsurface and above, assessing the potential of these assets geologically and production, and of course, assessing as well the synergies that we might have with the operation of PetroRecôncavo.
The other choices that are farm-ins and choices that we can have, not an M&A level, but project level on the fields, and a possible payment of dividends. Instead of having a specific discussion about events, dividends, we establish with the board, is an alternative, long-lasting throughout the year. So we list all the choices, we list all these alternatives, and we take the timely decisions based on what PetroRecôncavo has, the visibility currently and the future. This will bring more dynamic level and maximizing PetroRecôncavo in their choices, making a differential, competitive differential here in offshore.
That's perfect, Firmo and Rafael. Next question is Safra: "What is the operation in São Paulo? Is it according to expected?" João?
We started in July. It's a process of commissioning something new to us. Aligning the gas, we had the chance to have natural gas. The plant is operating within the parameters expected, a better plan, working the traction, so we retain all the liquids and specify the gas to be delivered. It's a spec- gas specification philosophy, as we explained the market. So we can use the liquids in the oil flow. It's working very well. All the flow produced by the four concessions in Bahia. That was expected. They are operating in UTG São Roque, and delivering directly to Bahiagás, enabling also an increase of the available capacity to increase production, increasing the expectations in Miranga that delivers to Petrobras. In the next month, we are going to be following according to the expectations of increased flow specific to that field, the performance.
But the execution of capital, this project was well. The performance is exactly as we expected in the project structure that we designed for that plant. Perfect, João. Next question, Safra: When are you going to receive the drilling probes back? Is there a program for them? We have a pre-defined program for the second semester, and we discussed today the needs and the efficiencies in these probes. They are gradually to operate outside PetroRecôncavo. We took this decision, and I believe it was a correct decision. We had the chance of participating in these projects and understand these projects better, and also a process of maturation that is very important to our soul. Today, we have something that it seemed to be hard in the beginning of the year, but we have three drilling probes under operation, two with partners.
This window of drilling second semester is going to be concluded, focusing on PR-14. Since the beginning, commissioning and drilling of PR-14 was the focus, but now absorbs more other wells, absorbing other probes as well. The final program is going to be defined jointly with the partners to do what is correct. An agenda of drilling, meeting 100% our needs and maximizing the use of the piece of equipment, making it available to the partners. So we are going to have a change in the second semester, with more internal drillings, demanding the return of some of these probes to our own drilling activity. How can we think about storage elements next quarter? Are there consumables? Yes, there are consumable items in our stock. We described and communicated the objective of reducing our stock BRL 70 million this year, achieve with the reduction of BRL 50 million.
As we accelerate the program, work over and drilling, the consumption of this stock is together. So we have a plan to keep on. Rafael mentions correctly, we are in the right direction. We see results already. The integration of supply chain since the purchase up to storage and logistics, in a more strategic way, assuring that we plan well, fulfilling in the planning window, maximizing the use of the stock. This stock, of course, by the end, by the mid of the year, we see this development, and we have to keep on going this process in the second semester. I don't know, maybe something saying that the planning is broader. It starts with a planning that is more detailed and controlled of the execution of work over programs, drilling, offset, led by this Coutinho team.
And then there is this planning, execution to the supply chain team. In purchase and material consumables, this is a broader planning; it's not only limited to the supply chain. Next question is BTGs: Can you talk about the expectations of production trend for the second semester? The curve is the best proxy for the year. The acceleration and drillings of workover, it seems yes, but I'd like to hear from you if there is chance of upside exit rate for the year. The question on production has the answer of production. The curve of reserve published is still the proxy that we follow. We know that this beginning of the year has the domino effect, everything that we discussed before. So we had a first semester that was very challenging, but what we saw in the acceleration of the execution, what we could do.
But now, the drilling process in the second semester, we have the expectation of a return, bringing us closer as possible to this curve that was published in the reserve report. There are upsides and downsides, as any other drilling program, and that's why we prevent from putting a fixed known to us, and that this was a year very challenging in the first semester. So yes, it's the best proxy. We are searching and reaching this curve from today up to the end of the year. We have upsides in our program, but of course, this is a project of a AIP considering risks of drilling and risks of workover. What we saw, what we did, especially in the last quarter, we started creating a platform that is necessary, so we can have this level of reliability in the second semester.
We established the foundations, and now the company can reach and seek a production increase that is expressive for the second semester. Next question is XP's. Can you update the infrastructure of UTG and 3R? What are the conditions that are important for PetroRecôncavo? Excellent question. Maybe João answer. Let me first talk about the first part, and I, I pass the floor to João. This, sharing of infrastructure is not new in Brazilian onshore, especially in Potiguar. That's something that must be done this way. Everybody says, it makes sense that the two companies find a long-term methodology to maximize the efficiency using that infrastructure. Most of the gas flowing, that infrastructure is ours, but we need to keep on investing in the production growth in Potiguar to have a level of protection and resilience level to flow gas, so we can rely on it.
This is one of the first discussions we had, because of the crisis on the fourth quarter last year. The conditions of outline, we need to find out a technical and economic equation to align the investments, to develop more gas in the Northeast, in Potiguar, aligning the level of protection that we need to flow the production. This alignment of two ends are the outlining conditions. The mathematical number is very simple. Build UTGN has a cost and a benefit. Sharing that infrastructure has a cost and a benefit. Finding a commercial way that this number is, harmonic and signed is our objective. I was asked many times, "Why can't we do it without looking back, to the past?" But looking ahead, we see the outline conditions now, currently, so we can reach the decision.
I believe that we are not going to get to the end of the year without a decision. PetroRecôncavo must take a decision. Having a contingency work to flow Potiguar gas. You have defined very well the premises we have been working, with the reality of, ensuring resilience of structures, that our production flows. That's the premise. We have a potential vision in the midstream, but the philosophy is to ensure continuity, stability, and Potiguar's production has a potential of gas and is going to increase. Considering the structure of partnership, we signed the MoU, MoU before the recent changes. We rely on this process. We have a big alignment with the new management people that are leading this process, as we understand the outlining conditions and establishing the comparison and build up our own infrastructure.
Migrating to use the current structure in association and thinking about a different solution is something that we want to build. As we have 3R Petroleum as our partner, we have this possibility. Perfect, João. Next question in Rio Grande do Norte, Goldman Sachs, about shut closing in Rio Grande do Norte. What is the percentage of production in Rio Grande do Norte can be moved in this mean, and what is the destination of the trucks leaving that point? The percentage is easy. The construction is 100%, so we do not close one more field because of the flowing possibilities of oil. This is the design of engineering of facilities, so we can move 100% of the production. The definition of terrestrial condition is our next step. We were not waiting, but we have been developing jointly.
We also had a workshop, very interesting in Rio de Janeiro, observing all the alternatives. The second answer is, there is no definition today on a single place that we have decided that's going to leave 100% of the production. The best alternative today to PetroRecôncavo is what we have. We do not have just one exit of oil. We established this. This is the most relevant to me. Now, commercially speaking, it's hard to have a logistic solution using trucks to be more competitive than a solution using oil pipeline, a balance between the two of them, so we can have the logistic ready to receive 100%, if necessary. But it's not the primary alternative. It seems to be the best alternative, having the oil pass, the oil pipeline as the primary and the highway as the secondary option.
João has been developing this with the team in the following months, to close the terrestrial logistic to be beneficial to PetroRecôncavo. But the fundamental change, a critical change that we achieved, the technical capacity of doing that. This was not possible in the past, but 100% of production today could be transported using trucks... Next question is Bradesco. What about the operation of PR-14? Adding other questions that are relevant, what can we expect from production increase for the second semester? And gathering another question, Santander, about workover, work in July, if they were executed, and how they are going to be executed, the impact on the production for the following months, if it's something more to stabilize and fight decline or increase the production. So, so, so let me get back. PR-14.
PR-14, we started the drilling process, finished the commissioning, and it's performing well. The objective, they have an injector well, and the objective is debug, a probe that has just passed a refurbishment and international logistics. All the probe in this situation, the first well, must be more focused in reaching the technical objectives of drilling, ensuring that the safety operational is well revised. It's not a well that you get maximum efficiency, but today we have a performance in the first days that is robust. Nothing new, unless the small details on the end of commissioning. We are so pleased to the performance of PR-14, the first well. Of course, the first and the second wells are very important to establish this performance. And remember, this probe has a full team, a new team, operating for the first time.
We use the exceptional capacity of PetroRecôncavo, using other probes to select a mix of people with experience with this equipment here in Brazil and abroad as well. Together with the PetroRecôncavo team that understand the philosophy of work and safety and all. It's a challenge and a great opportunity as well. Very important for PetroRecôncavo to reach what is not simply having a probe. Having a probe, having a piece of equipment is an important part, but definitely it's not this that makes the difference. Being able to operate this probe with level of efficiency that it operates, for example, in the American onshore, this will transform our capacity of developing reserves on onshore that was not developed because this efficiency was not available.
The same way as PetroRecôncavo could be unbeatable in their cost of reserve development in the past, PR-14 is an important component for the future. This is the answer about PR-14. Workover and drilling. Workover alone does its best. Its maximum in some fields, brings additional production, additional potential. In other fields, it's fundamental for maintenance of production, especially in the fight against decline. So it is a mix of incremental production and fight to decline. But we all know that in a mature field, the way of growing production, materially speaking, is a combination of workover and drilling. So the project of secondary recovery, the projects of water flooding, depend on these two aspects, and this brings robustness to the future of PetroRecôncavo.
We expect today we have the right pieces of equipment, the right people, the right processes, and the workover program back to their potential, so we can reach maximum during this year, the reserve curve on the reserve report. That's what we can expect. Okay, next question. Any piece of comment, Troy, from your side? Would you want to make any comment, you can. Would you like to comment?
No.
Go ahead.
Firmo, I think you said it very well. You know, the focus that we have to have is to improve the efficiencies in the workover. The new opportunities that we are putting in place for the second half of the year have some positive impacts on. As you said, the objective is to bring the reserve report curve as close to reality as possible by the end of the year. You said it super well. Thank you.
We can have one more question. This next question, Goldman Sachs: What is the level of leverage that the company is going to use to base the dividends payment? The company has an internal policy of keeping the leverage under 1.5. We are so far away from that. The mindset, there is no mathematical formula. What we are thinking is keeping the leverage of the company near this level, 0.5, 0.75, I would say. Except from M&A and big projects, midstream, this would be the planning. I do not see a big structure, a big change to leverage the company for the next quarters. And this will enable the cash flow generated is available for the opportunities or payment of dividends. I would say something on top of that.
I see the leverage of PetroRecôncavo as an advantage to keep in order to be very efficient in a possible need of cash flow or leverage for an M&A or farming that is very important and relevant, that the company is going to do in the future. Perfect, Firmo. To conclude, if you could detail more the electric reliability project? Fundamentally, what we did in the last months was observing the electricity electron in a different way, not only as an input, but an strategic input. What does it mean? It needs its own structure, a group of people observing it in a special way, not only with short and mid-term solutions, but also long-term solutions, and it needs data and information. We have lots of understanding of electron at PetroRecôncavo, but it was not harmonized in a single structure.
The first thing that we did, and the focus of the first months, was the creation of an excellent center. That is basically what we see in a distributor. PetroRecôncavo has more than 500 kilometers of distribution line, substations, infrastructure of distribution. They operate themselves, so we already have, in the company, activities of distribution, and we create an excellent center to integrate it all, as the distributors do, in association with distributors, to understand the best way of doing it and generate information, data, and also event logger, a capacity of knowing about each and every electric event that we have in the company, the cause and the consequences. So we can have a robust program and address, not only purchase of electricity and possible changes long-term in the electricity generation, also integration with partners to generate and distribute.
We are going to transform electron into electricity in a strategic topic, and the company has a long-term point of view. This year is excellent central data event logger, so we keep on evolving. But on short-term, we are doing things. We have 21 projects already registered to improve tactical improvement, to get the company ready for the rain period next year. So we have some sites with generators in order to bring more electric resilience in some fields and wells and some clusters. We are doing it, but I thought this was not enough. That's why we created a broader project that is ongoing. Short-term, the list of projects seeking the acceleration of resilience for next year, something more impactful and strategic for long-term. That's the model that we are operating.
We expect to have the Center of Excellence next month and start generating data and information in the level of transparency for the company, so we can have a more ambitious program on how to treat electricity. That is a critical input and relevant cost-wise and operational resilience-wise. Firmo, there is one more question I will ask you, so we can conclude. Morgan Stanley, the first question is about lifting cost. Can you tell us the perspective for next quarters to understand if it's doable, that range $11-$12 per barrel, that was discussed months ago? The objective of lifting cost is the correct direction. There is nothing I can tell you that we have to do. PetroRecôncavo is efficient, has always been.
There is no low-hanging fruit that I would say next month or three months from now, we are going to have a radical change in lifting costs. But there is a need of searching efficiency and reestablishing some efficiencies that PetroRecôncavo had in the past, and we can still have. It's the decline of lifting cost, reaching for efficiency. I have made an impact that we believe is going to be good for the company, considering the harmonization and standardization, that is the creation of this structure for the integrity of assets and facility projects. This brings impact that is positive of improvement on efficiency. In addition to that, other types of actions that we have been doing to increase visibility of costs, understanding, and creating platforms of improvement and optimizing cost.
I do not have a number or a figure we are going to bringing down the lifting cost. The best efficient way for the lifting cost is increased production. Second semester, we see capacity to increase production, keeping the fixed cost as fixed as possible. We are having better improvement in lifting costs the next days, but the big factor is efficiency and production increase. These two topics, these two foundations, we can keep the lifting cost in the direct correction. I believe we conclude our webcast on the results of second quarter. All the following questions, my team here, and if necessary, some of our executive directors return to you. I thank you so much. We are going to access this recorded webcast on our RI site. Thank you so much. Have you all a good day. Bye-bye.