Good morning, thank you for waiting, and welcome to the Conference of Results first quarter 2022. I am Marcelo, we do not have Marília; she cannot make it because of health problems, but she's online. The presentation will be our COO, José, CFO, and then we open up for Q&A with the Board of Directors. We'd like to invite you to participate writing your questions on Q&A, so I can ask your questions in the end. We would like to inform that this video conference is being recorded; it's going to be available on the RI website. We would like to clarify that the statements during this conference about the perspective of business of the company, estimates, goals, and financial goals are based on premises of the Board of Petro Recôncavo and the current information available. Future considerations will not guarantee performance because there are risks.
The general economic conditions and other operational factors may affect the future results of the company, leading to different results from the one stated for future conditions. I'd like to pass the floor to Firmo for his initial considerations. Thank you so much, good morning, and thank you so much for the attendance. As you could see in yesterday's communication, we have an expressive improvement in the financial results when we compare to the fourth quarter 2023, with recovery of production, revenue, and EBITDA from the normalization of production flow in Rio Grande do Norte.
Our net revenue in total is BRL 745 million, especially because of the strong return of natural gas, our lifting costs presenting a reduction of 7% compared to the previous quarter, $13.33/BOE, with the impact of the high cost of fixing wells that increased because of the combination of total stop of production in Rio Grande do Norte and the increase of electric incidents caused by rains in Rio Grande do Norte and Bahia. EBITDA: BRL 353 million, discounted the accounting of earnout of Maha, EBITDA of the quarter would be BRL 375 million. Cash flow generation: BRL 231 million, an expressive increase when we compare the previous quarters.
This evolution reflects the advance of the company executing its strategy: its experiencing a phase of investment on the expansion of execution and capacity and payment of acquisition to a new phase of higher cash generation, seeking a balance between the investments focusing on development of reserves and the robust payment of the shareholders. In production, we conclude the quarter with the average of 24.4%. The production was 4% higher than the previous quarter because of the normalization of the flow, but even under our expectations and under the level that we reached in the third quarter 2023. Assets point of view: Potiguar grew 10% quarter-over-quarter after a strong period of rains, especially in March, an intensive program of service. The company is back to accelerate the investments on workover and filling the recent drilled wells.
In April, we have a better effect, resuming the production at Potiguar. Bahia dropped 2% quarter-over-quarter because of a combination of interventions in two flows of wells in Tiê and the challenges of rain and electric shortage that is still a challenge for uptime of production. I'd like to highlight the importance of analyzing the climatic resilience of our operations to implement an action plan to increase the electricity reliability, as we discussed in our event in São Paulo. To review, after three months of atypical activity in well repairment, in April already we reestablished the level of activities of drills in workover operations, and we direct the intervention program as necessary to resume the future production growth. Drilling aspect: Throughout the first quarter, the company drilled 11 wells, concluding this phase I of the 2024 campaign, with the result increasing the performance meaningfully in the drilling process.
I'd like to heed your attention to this graph showing the performance of the company drilling the wells in Sabiá da Mata and Sabiá Bico de Osso, the main focus of drilling in the last years. After a project executed with the P05 probe, we reached 157 meters a day. In 2023, the choice was hiring a third-party probe, and the objective is to accelerate our investment program. As you could see, we had a performance lower with this piece of equipment, 78 meters a day, suspending the contract and resuming to the PR-04 probe. And throughIout the first quarter, we put the new probe PR-04 in activity, and after a fast learning curve in the phase I , the performance of the team is above the expectations in 177 meters a day.
The combination of this rig and the automation level and the technology and systems of engine show that we are on the right track to reach new levels on efficiency and low cost on drilling for Petro Recôncavo. As you could see, this is a critical factor for the development of reserves onshore. Now PR-21 is going to Espírito Santo to execute the contract signed with Seacrest for six months, and the new rig PR-14 is in the final phase of commissioning with the estimated beginning of operations the third quarter 2024. Trading aspect: the normalization of flow and the gradual recovery of production, reflecting the reduction of our costs on midstream. In moments of production restrictions last year, the company chose to acquire gas from the market to fulfill the obligations and supply according to the contract and the clients.
In this quarter, the lines of gas purchase and transport had 35% and 26% reduction quarter-over-quarter. The increase on the cost processing and flowing reflects the increase of volumes traded. In addition to cost reduction, I would like to highlight the evolution on the price of performance, that's net revenue of gas divided by the volume of gas sold. From January 2024 on, we enforced new contracts with better conditions and some contracts that we concluded in December 2023. In the beginning of April, we announced the signed contract with GNLink to trade gas in the GNL mode. This process estimated the construction of the first gas liquefaction station in Rio Grande do Norte with a capacity of 100,000 cubic meters a day, with the possibility of expansion representing a new route to flow the production.
And we are going to monitor and track GNL to ensure the implementation of this innovation using natural gas in Rio Grande do Norte. And I pass the floor to Rafael now, and I'm back to close this session afterwards and Q&A session. Thank you so much, Firmo. Everybody, good morning. This slide will show a graph showing the EBITDA of 2023 and the first quarter 2024, and we can see a growth, expressive growth: BRL 106 million, 43%, a positive contribution on the revenue and costs. On the revenue side, we highlight the growth of 4% in production, especially the growth in natural gas and byproducts with the normalization of flow of gas production in Potiguar. Costs and expenses had a reduction, especially expenses with sales. I will deep dive next slide.
In addition to that, the recognition of SPET, Maha Energy Brasil former EBITDA would have reached BRL 175 million. During the acquisition, the estimate was earnout conditioning to different prices of future oil. In 2023, we registered the values that were in the money back then. Now, in the first quarter, with the Brent increase, we estimate the additional value of BRL 22 million because of the expectation that the Brent for 2024 would be averaged $80-$85 per barrel. We are making available in the modeling support file, is available on our website, a table with different combinations for the earnout payment. Talking about costs, here we have a point of view on the cost evolution and expenses on BOE, showing that we reached the lowest level in the last 5 quarters, even in the challenging production scenario.
Compared to the previous quarter, we had a reduction in all the lines. Lifting costs was a benefit when we resumed the operation, and better dilution of fixed costs is impacted by the increase in the well repair costs because of the growth of failure rate. In midstream line, we had a reduction on costs on normalization of flow and reduction in penalties, also reducing 6.5% in transport rate. The reduction of royalties because of the average quota of royalty as a result of the benefits on reduction that we had in 2023, and the extensions of concessions, highlighting especially Miranga field. As GNA, the reduction was expressive related to the sales expenses reduction, normal flow rate, and Potiguar sales to 3R oil, and a result measures that the company took in order to control fixed costs.
CapEx: this quarter expressed one more time the focus on the company's investment in developing the reserves after the investment phase, expanding the capacity of execution that we experienced in 2023. As the left-hand side graph shows, in the first quarter 2024, we invested BRL 163 million to develop the reserve and workover project facilities, new wells, BRL 21 million extra in other lines of fixed assets, especially payment on our rig and services, especially PR-14, and also the acquisition of software. Finally, but also very important, we had for the first time in the last three quarters, five quarters, a reduction in the inventory position, reducing BRL 24 million to pay the costs of the investment program. The evolution of inventory we discussed before, some of the actions that the company took in the last three quarters, and our ambition to optimize the supply chain management.
The right-hand graph shows the evolution of purchase and material in the last 12 months, converging to lower levels in the last months, giving more reliability for more reductions in next quarters. In this slide, we have a brief of the cash variation in the quarter. Free cash generation: BRL 231 million because of strong cash, BRL 392 million, and the Capex that was moderate: BRL 160 million. Spending BRL 52 million in payment of debt, so we closed the quarter with BRL 687 million in cash, leveraging 0.54 times net debt on EBITDA. Finally, I would like to highlight the position of resilience of the company to possible oscillations of commodity prices.
As we discussed last quarter, we define a hedge policy to protect from stress prices, so we put up a position as zero-cost collars, and the price interval is very interesting, and we are lowering meaningfully the volumes in the format NEF, hedged with lower prices. In the first quarter, 441 barrels averaged price $56 per barrel. Next quarter, the volumes will be reduced in half, representing potentially a meaningful reduction in the impact of derivatives in our results. On the right-hand side of the slide, I'd like to direct your attention to the second protection factor: natural gas.
Some of you had the chance to see this analysis of sensitivity that we presented in the event a month ago in São Paulo, showcasing that in different scenarios of Brent, our expected price for dry gas has low oscillation because of the prevalence: 9% of the contracts of gas and fixed prices in $ per million of BTU, and also prices of Brent, but with clause of minimum prices and maximum prices. When we gather the position of the company considering low leverage, low lifting cost in the Brazilian onshore, and about 55% of our production has protected prices, we can assure that the company has a risk profile that is different from the other players in the sector. So I pass the floor now to Firmo. Thank you so much. Thank you, Rafael.
Using this opportunity and this slide just to update the program of operational reliability that we discussed 30 days ago during the event, I bring here some important updates and advances that we had during these 30 days. UTG São Roque had the first test on, and it's ready with the hydrocarbons two weeks ago, and it's ready, waiting just for the final approvals of ANP that's going to happen in the next days. UTG São Roque will start their operations still this month. This is our expectation.
Another important breakthrough is the signature of MOU with Enerflex, building basic engineering and the feasibility study of UPG and Potiguar, so we are going to have an alternative until the end of this year or sign an advance as well purchasing and adjusting UPG and Guamaré, or having the choice also to start up an investment at the construction of our own UPG and in Potiguar. Another interesting breakthrough was the conclusion of licensing at the beginning of construction work of trucking loading facility, so we can have the alternative of flowing using highways, 100% of our production in Rio Grande do Norte. We also had last week in Rio de Janeiro the first workshop.
We invite logistics experts from Brazil, so when we have this highway transport as a choice for loading, we also have alternatives of logistics solutions to start up this year, so we fulfill the cycle when we have the possibility, the alternative of not needing anymore, closing our operations, our production in Rio Grande do Norte. This is an important breakthrough in the operational reliability program. Finally, the final slide, I would like to bring to your attention the effect, capillary effect that onshore has in the surrounding communities. Onshore companies are responsible for this effect and generating socioeconomic development in the interior of the activities here, especially here in the northeast Brazil. Sabiá project, I had the chance to visit, and exactly what they do.
They have a program to support families, not only with water capture systems, so these families can experience critical moments of drought, and also solutions of very little impact, financial impact, but high impact for these families like Aqualuz, potable water, using the sun radiation and the positive aspect of health and development for these families. This kind of program are programs that we have in the company, but we want to develop and extend these programs that really show the capacity of socioeconomic transformation that the onshore operation has here in Brazil and all the companies in the sector. I'd like to thank you so much for your attention and pass the floor now to Vinel for Q&A session. Thank you, Firmo. Let's start up.
We open up the Q&A session, Vinícius, and let's get the questions on chat, and I will address all the questions to the board members to answer them all. The first one is Eric de Mello, Itaú. Two questions about the results. The first is about storage. The company aligned this expectation of Capex consumption. He would like us to comment about the evolution in the next quarters until the end of the year. The second question is about the normalization of workover activities, although we had this inflection point. If you see a normalization in the failure rate and the use of probes in the activities. Thank you so much for the question. I start answering the second one, and then I pass the floor to talk about the storage program. About workover, we saw in April. This was the first evidence in April already.
We established a potential that was higher overall. We had a number of failures of wells lower, solving the focus on the first three months, the backlog with failures. Wells, now in April, we have a level of execution of jobs in all workover within the expected for the year, and the objective now is to accelerate this process to reduce the backlog of the first three months and build this level of growth on production. But in April, the activities of workover are back to normality. The number of workovers in April is already within the expected number for the activities of the year, but we also have a work of acceleration to reduce the backlog on what we had under-executed on the first quarter. Talking about storage, we had this expectation of start contributing in a positive way this year already. This is the first quarter.
This is a reality. We commented in that event, reserve certification a month ago, our internal ambition is to reach a reduction, the full year of 2024, BRL 70 million. And we started on the right track. In the first quarter, we achieved part of the goal already. Next questions are Pedro Soares, BTG. Questions about Capex. The company states in the results, normal operations, improved cash generation. The question is, are you thinking that a scenario disconsidered the price volatility if this could be the worst quarter of the year based on the expectations of improvement? Thank you, Pedro. In the oil industry, we do not talk about the future. It's a commodity industry with lots of variation.
We trust and we believe that the challenges of the first quarter, these are the ones stated, the main one is this challenge of well failure should be based on everything that we know about this industry and the company, the worst quarter in this category of execution for the operator, I am sure of that, and consequently, the expectation is positive, but there are other factors that might affect the price of the commodity in the following quarters. But I draw your attention to the fact that protection, this is one.
We clearly see, unfortunately, we have an example that is said in Brazil about the effect of climate change in the world, and this concern must be strong, and it is very strong here, so we can have a reassessment of our resilience, especially our resilience, electric resilience, in order to protect the company better against rains, not only the rains that we have ongoing, but we have a clear forecast for next year. We have work ahead of us, short term, whatever possible we are going to do, but a robust program on electric protection so we can have better resistance and better resilience for the next quarter, fundamentally for the next rains next year. And I believe that considering the operations, this is the detail that I like to provide you so you can understand our expectations for the next quarters.
The second question is Pedro connecting Tácio's questions, UBS. UTG São Roque, they are asking about the expected time and the main challenges in the process of starting the activities on this plant. João is responsible for that. He's monitoring on a daily basis the execution of that plant. I'm telling you that both the final stages of this plant, the before last is the test with hydrocarbons, a hot test that we had last week, and the plant operated in a satisfactory way. These advances are important. Now it's a matter of regulation. It's hard to estimate, but our expectation is that we are going to solve it in the next days, next weeks. Perfect. Technical aspect, we overcame hydrocarbons tests. It's something that needs a previous permit. That's why we recently tested it, but we overcame all the technical evaluations according to the permit.
We put hydrocarbonate in the plant. This is the most important stage. From this point on, we produce a report of the test. We sent it to this ANP, so we schedule a visit to issue the permit of work. We are waiting for this the next days. We do not have any other roadblock. We have a commercial arrangement for this with Bahiagás and expect is that as soon as we have the permit issued by ANP, we start the plant. Thank you, João. More questions, Tácio. He's asking about UPG and Rio Grande do Norte. What would be necessary to reach the final investment decision about this plant? And he has other questions. A second one is about April production and a report of production that we recently issued.
He's asking about the bottlenecks to be back to the level that the company registered on performance on the third quarter last year and how we can get closer to the goals that we established in the reserve certification. Great questions, Tácio. Before the answer, let's see the first two questions. The first question, I believe, fundamentally we have been talking about two alternatives that are very important for Petro Recôncavo. First is the choice, and the second investment fine decision. We have been working in the maximum speed in order to have the choice of investing on a plant, the right of purchasing the land, starting the permit, the licensing, signing the MOU with Enerflex so we can have the basic engineering. I have a better point of view of Capex and licensing. Everything is already in our hands, and we are doing it.
From this point up to the final decision of investment, we have to put it and relate this to an alternative that it was clear. The best alternative for onshore, for the companies, is to find a solution to manage long-term the contracts with an arrangement with UPG and Marem. This is our intention, but we are going to develop this in power. By the end of the year, we are having these two alternatives in our hands to take a decision, and it's a fundamental prerogative for Petro Recôncavo. By the end of this year, we are going to take a decision, and we are going to work in a long-term vision to flow the gas, our investments, our gas production, the growth of gas production in Rio Grande do Norte demands a long-term solution to flow this gas. And it's based on this construction that we are doing.
Would you like to say something on top of that? No, you have covered it all. Production, we are trying to clarify that we consider bottlenecks. Bottlenecks is a domino effect that we saw total closing of our production in the last quarter. The challenge that this closing has brought in the wells and reservoir, the failure of wells increasing, combination of it with abnormal situation, rain, electric impact in Rio Grande do Norte and Bahia, this whole system that we call protection system, these are the big bottlenecks. It's fundamental to say that in April we have reestablished the structure and the workover activity. This is the big platform to resume growing, and this is a big bottleneck that we have been facing, directing our probes to repair the wells.
My expectation now is that we are going to repair wells in the traditional level, and we accelerate the process of workover, improving in all the aspects, the production platform. These are the bottlenecks that we are considering. We describe this in a very clear way, and that continuity plan is a guide, and we are going to follow it to increase the uptime and decrease the number of incidents and problems with future production. The final question, M&A, the company recently signed a contract of service with Seacrest, and highlighting that there are news in the media reporting that Seacrest is finding a buyer. The question, are you assessing operations with Seacrest? Thank you for the question, Tácio. Considering the news and M&A, the news that you have are the same that I have, so I'm not going to comment.
It does not make sense to comment it now. But the company currently signing the contract with Seacrest has something that I consider fundamental to assure that our resources, especially so, are used in a strategic way. And I told you this in our event. I see RSO, one of the biggest competitive differentials of Petro Recôncavo, enabling one to execute our plans more efficiently and cheaper than the market, and also protecting us from possible variations and shortage in supply chain. I firmly believe that we are going to have shortage. We experience some right now in supply chain onshore because there are different companies investing at the same time, and the onshore is really relevant. And here in Brazil, we have resource competition onshore and offshore. So RSO is one of the main platforms of competitive advantage of Petro Recôncavo.
Use it well, assure maximum efficiency to be able to provide drilling services. That is our year decision to some partners to get closer to the operations and lowering costs for all the companies. This is part of the strategy that I consider fundamental for the company onshore, generally speaking, so we can, as an industry, reduce costs and increase efficiency. So we do not have any process of M&A with Seacrest and Petro Recôncavo. What we have is an agreement of partnership. RSO of Petro Recôncavo and Seacrest should drill the wells in the next six months. This question is Eduardo Muniz. The first is about environmental license paralyzation cessation. Does it impact the operation in Petro Recôncavo? The answer is no. Environmental licensing in Brazil is always a concern, and it's necessary that every company has a process to manage and understand the requirement of environmental licenses.
We know this in Brazil. Environmental licensing is a system that can improve, and in the industry, there is a demand. I talked about it in my career about Brazil placing the levels of requirement for environmental level, whatever they want, based on restrictions and demands of environmental licensing. The companies onshore and offshore do not find difficulty fulfilling these factors. Of course, we request predictability, and this is easy to understand, easy to estimate, considering our planning in order to assure that it is aligned with our development. But we do not have currently any difficulty that we see as a process that is going to be in conflict with our development. But it's a constant concern of getting closer and understanding. We have lots of data. We have lots of capacity. We have been licensing for many years, new operations and new wells.
So we do it so well. Go ahead. I have assets that are pending processes offshore because of ANP. But just to clarify, all the licenses at Petro Recôncavo are OEMAs, the authorities that license the states. And at a state level, things are working well. We have licenses issued in Rio Grande do Norte and Bahia with no problems, but the normal complexities. Eduardo has another question: if we can detail more details, the royalties reduction effect, if there is a changing methodology. This is complex to understand, but currently, a great part of the benefit the company has in royalties is related to ANP of a reduction of royalties quota on the incremental production of every field. We do it for every field. Normally, we did at the same time that we needed the extension of concession to ANP.
We also request a benefit of royalties reduction, and then we got it throughout the year of 2023. The great majority of the fields have this benefit for every oil field. We establish a curve of production with normal quota, 10% of oils, and incremental production. That is a reduction to 5%. The average quota of the company is dropping as time goes by and the production increases. Also this average quota is reduced. Maybe I can give you more information to help you understand, but the movement forces are these. Perfect, Rafael. Next question is Leonardo Marcondes, Bank of America, about gas. The first is about monetization. He sees this evolution quarter after quarter. He would like to hear about the expectations of price evolution and about the financial benefits of the onset of operation, UTG São Roque, and processing costs.
We have a migration of a reality. The first contracts, when we sign, open up the market of natural gas. We sign with Potigás, PBGás, and Bahiagás to the environment. In 2023, we signed different agreements with some characteristics in addition to price. First, we match the extension of concessions, and we understand the environment and the possibility to expand natural gas production. We signed long-term contracts, 10 years, 2032, 2032, establishing levels of prices that are already more aligned to the historical average of market stability on prices. Also, the perspective for the future that we have for natural gas prices. More recent contracts have this point of view on how we see the prices of natural gas. This contract also states in hedge and price safety bring minimum price clause, and this ensures a price that is really positive.
So we keep on developing our natural gas reserves. Another question: costs. Costs. UTG São Roque brings a positive upside. We do not hire third parties because of four concessions to Miranga and to Remanso. In addition to being internal operation, it's a very simple plant. It's UTG. Basically, it removes liquid water so we can deliver gas. We see a cost reduction that is very big. So the Capex of this plant is really inferior to UPG and normal. So when we divide this plant, we have production increments. We are going to see a dilution in the processing costs. Thank you, João.
I have some advantages just on top of that, just complementing this answer that you reduce and internalize some of these costs, and you also eliminate costs of treatment that are not necessary for this gas, capitalizing it, transport costs that you would pay for this gas that are internalized. But the big advantage that I'd like to hit your attention is the fact that we can use our gas and the expansion of offerings to other partners in the region decrease the load of UTG, UPG, and Catu. So we can have a solution that is more competitive, reduced Capex, and more time to develop our own UPG and in Catu. So it's an integrated system to full gas that brings important competitiveness for Petro Recôncavo. So we conclude the list of questions. Now I pass the floor back for your final considerations.
Thank you so much for your attention, for the questions. We are here focused on keeping on going in this process, updating you frequently, especially in critical topics, resilience and reliability in our operations. I believe this is one of the main topics that we have to be discussed in the next meetings. Thank you so much.