Good morning, ladies and gentlemen, and thank you for waiting. I am Marcelo Cruvinel, new IR manager, and thank you very much for participating in our earnings results of the third quarter of 2021. This is transmitted via video cast through the internet, and we have simultaneous translation in English. We have our executive, Marcelo Magalhães, CEO, Rafael Cunha, our CFO, and Troy Finney, our COO, is here as well. At the end of the presentation, we will have Q and A session. Should you have questions, please send them through our chat. Before proceeding, we would like to clarify that forward-looking statements regarding current prospects and operational targets are based on the management current perception and future consideration, are not guarantees of performance.
They involve risks, and you should understand that general economic conditions may affect the future results of the company and differ from the current expectations and include several risks and uncertain. Marcelo Magalhães will start with his remarks.
Good morning to everyone. It's a pleasure to be here with you. Here we have an additional quarter after IPO in the Novo Mercado. If I could characterize this quarter with one word, I could say that this is a solid quarter. As you can see in the highlights, our revenue, our EBITDA has grown, profit has grown, and production has grown as well. So everything that we proposed to deliver to the market has been materialized, and we have continuously delivered exceptional operational results. In terms of growth, I am going to highlight the point that is still not within our perspective, that is the growth of production.
It's not a significant growth, but it is not what we want when we take into account the capacity and the assets of this company. We are being very cautious here, and now we are mobilizing a great amount of human resources and materials, especially rigs, to work in the field. There has been certain delay. We always communicate to the market that this is an immature market, and this is why we have a strategy for this. The equipment and rig ramp-up that is necessary, and Troy will elaborate on this, has been slower, especially because of operational safety matters. Currently, I would focus in a number of aspects that satisfy us. Number one, important milestones regarding the commercialization and the sale of gas. Subsequently, we will report a significant growth in gas commercialization and what this represents in the company's revenues.
We are pioneers in the gas market. We signed a contract with Potigás to supply gas to Rio Grande do Norte throughout 2022 and 2023. This is the first contract where an independent supplier will supply a state. We also won PBGÁS. These two volumes are a very adequate match in terms of our production for Potiguar in the upcoming years. This is a very important aspect from our operation. We are satisfied how these contracts were carried out, and at the same time, we are highly competitive and with these public processes, and this gives us interesting margin and profit. Here, as you can see our highlights here, especially in the last nine months, we have a 13% growth vis-à-vis the same period last year. It is very good. In mature fields, the operational aspect, that's something that we're paying attention to.
We have had 18 months without lost time accidents in the company and three years in Bahia asset. I believe that there are a number points of operational progress that still are not wholly reflected in our production, but I believe that in the future, we will deliver what we want. We started drilling wells in Potiguar assets. We had some drilling processes where we reached further depths because now our teams are trained to go after important targets in our assets and also more aggressive hydraulic fracturing activities that we carried out. Here we have new drillings, deeper drillings, and some fracturings. It is still too early to carry out a definite assess, but I would like to highlight that everything that we are executing in the two areas of the company, when executed, they surpass our expectations. I believe that these are the most important points to highlight.
The next slide, please. Here we have a breakdown of our growth amongst our two assets. As we have mentioned, the growth in this moment is strong in Potiguar. That is still in a premature level of development. We have focus there, and we are ready to assume the Miranga cluster. We need the publication of the transference of environmental licenses. We are waiting for this to be published in the national journal . In the next days, we expect to see this so we can close the Remanso cluster. The Bahia asset is. We have 12 contracts with Petrobras, as we have mentioned in the past. An investment here is lower because they have been operated successfully for 21 years. But as soon as we close this, we will have a reactivation of the investments in this area because we will improve our numbers after closing.
Now in terms of increase, here we see a longer historic curve, which demonstrates how the consistency of our production increased delivery. It is important to highlight that we see the growth of natural gas share earlier than what we expected. This is connected to something that I mentioned, that we are extremely satisfied in terms of gas commercialization with Potiguar asset. This is something positive. Now after the IPO with the pandemic in a different level, there is a major resumption of investments. Also, the good price of gas. Now Troy will give you information regarding our operations. Troy, you have the floor.
Thank you very much, Marcelo. I am going to show the basins where we are focused on. As Marcelo mentioned, our focus right now is more on Potiguar, where we are already developing 32 concessions.
Here you can see that the oil production increase is 13%, and in gas it is almost 80%. For BOED, we have 23 points. Now, in terms of oil development, we are a little bit delay regarding our rigs. Now we have three rigs doing workover. This month we added one additional rig, so now we have four rigs, and we are going to include two more rigs in the upcoming months. So that in 2022, during the second semester of 2022, we believe that we will have six rigs carrying out services and workovers. Now the amount of projects that we have available, well, are focused on activities and workovers that are more complex. We have fracturing. We are opening new zones here. So you can see that in our comparison here, you can see the drop in the number of workovers.
This is because the complexity that we are facing in these wells in our projects. The results obviously demonstrate project per project. This is an additional factor. We have to execute the reservoirs are responding properly to drilling and workovers. We believe that we have had a delay because of safety, because we want to reassure that these equipment reach the demanded level. We want to follow international standards above the standards of the Brazilian standards. This is important for us to carry out our program. Workovers are focusing on hydraulic fracturing. We are redesigning these hydraulic fracturings. We have had fracturings with interesting results so that we can continue developing this activity with our internal unit and also third-party units that are in the market. The increase of natural gas is higher than what we foresaw.
With the development of the gas market and the contracts that we are achieving in order for next year, we are increasing gas, and it is a balance to increase the system capacity. The system that we received from Petrobras had a number of compression machines that had been shut down, and they had to be renewed. They needed a lot of maintenance and overhauls, and we are in a process to update these machines and to meet the capacity that we have in the field. Today, we are restricting the production that we can deliver to the market because of these compression systems, and we are strongly focusing our efforts on this area in order to improve and to produce the gas that we already have. During this period, we drilled the well up to the deepest level with our rig.
Now we are looking for deeper gas zones, and these are areas that present higher pressures. There are some interesting situations, and we are in a stage to complete this process in Boa Esperança. Our focus on gas is increasing month by month, and we are starting specific projects in order to develop the gas capacity that we can find in Potiguar. Now we can go to Bahia. In our Bahia asset, we are already prepared to receive the Miranga cluster. The past, you can see that the production was more or less flat. We are carrying out workovers and well services in order to maintain production in the 17 fields. We are within the closing of the 12 Petrobras fields, like Marcelo mentioned.
We will initiate an intensive investment plan, and recently we were successful in the biggest hydraulic fracturing in a very mature field that is 20 years old, and we have interesting results. We continue testing these frontiers, and we want to update reserves that are still in these mature fields. The plan is to increase the number of rigs. We have two rigs right now, and we want to have five rigs and five rigs working in Miranga in the upcoming three or six months. I will give the floor to Rafael so he can talk about the cost of our production.
Can we go to the next slide, please? When we talk about production cost, our quarter was slightly below last quarter but very consistent in terms of the average of the year.
The third quarter was $12.54 per barrel, a nine-month stack, it was $12.58 per barrel. As I said, I believe that there is a little bit of maintenance catch-up associated to gas. There were wells that were shut down during 2020 because of COVID and the low oil prices. In Bahia, we felt the effect of a preparation of personnel and support services to assume the Miranga cluster that we believe that we will see in brief. So costs were impacted here. We always describe in this chart the difference between the production cost of different assets. Here in the circles, you can see the cost of the Remanso asset, $21, $22 per oil barrel, and it is different when we have $8.
This is because of the nature of these fields and the state of maturity, because the Remanso asset is in a water injection stage that is advanced. Here we can see how you incorporate these new assets like we saw with Riacho da Forquilha in 2020 that had a steep drop. Our expectation is that when we incorporate Miranga asset, that is a younger asset than Remanso in terms of revitalization. It is a gas asset, and it represents lower costs. Therefore, our expectation is that when we add this new asset to the portfolio, we will be able to reduce our production cost in the upcoming quarters. We can go to the next slide now. Here we have DRE the net revenue in our quarter compared to the same quarter last year, grew 30%. Our net revenue is net.
We will give you more details, but there was a loss in derivatives. This net revenue contemplates this, the growth of royalties that are paid to the Union. We pay according to the spot price, and then it captures the hedge. Cost and expenses and the EBITDA effect. This was a 13% growth. Depreciation, there was a high volume of depreciation, especially with the extension of concessions that will increase our reserve base, and we will drop the depreciation entry. With a high number of depreciation, I would highlight the financial results. There was a steep drop. Even with the valuation of the dollar, our financial results were not as impacted as the past because our investment strategy is to invest our cash in dollars, and this practically offsets the effect of the increase of our debt that is pegged to the dollar.
The general result is that we had a net revenue of BRL 23 million accumulated. Speaking about hedges, this table shows the summary of our hedge position on September 30th. We have 5.1 million barrels hedged for the upcoming 36 months. Here we can see quarter by quarter, and the average price hedged would be $55 per barrel. This is mark-to-market. This would be a loss of BRL 448 million on September 30th, and this is in our balance. Throughout our quarter, we liquid 528,000 bbl. We had $58 per barrel, and this was 528,000 bbl of oils that were settled at an average price. Here in our chart, here you can see the price. The yellow line is the average Brent spot price up till September, and the red line would be the hedge contracts that we had in each one of these periods.
Here we can see that the commodities are volatile. There was a low of $10 per barrel, and throughout 2021, we were profitable because of our hedge position. In 2021, we are suffering with the hedge effect, and it is fulfilling its role, that is to protect us and give us a predictability of our cash flow. Because of Gas da Forquilha, that we received funding, if we were not hedged, this could be a catastrophe for us. In the lower chart, you can see the volumes quarter by quarter, and the yellow line are the average hedge price for each one of the periods. Here we have some points that I would like to highlight. We are committed to hedge 36 x, but we reached the limit of our financing. We do not have to add any more these three months ahead as of now.
Every time the period matures, our loan has matured, there are some adjustments that we have to carry out because of the rule of 80% in 12 months and 40% from 25- 56 months. With the closing of Miranga and the closing of Remanso that has a part of its production where we incorporate the portion of our hedge production will drop in the upcoming months, and these hedges will not affect as much the consolidated result of the company. We have to see that gas share will increase in our revenues. We can go to our next slide. In a summarized fashion, you can see the cash flow of the company here, operating cash flow BRL 106 million. Throughout the period, there was a negative impact of BRL 45 million of working capital and assets and liabilities. Accounts receivable followed the increase of the oil price.
In terms of CapEx, we are accelerating our CapEx. How we work with part of this stock is for investment is within our CapEx. Here we see the CapEx we have to replace, subtract this here, this line, in order to have the CapEx that is used to invest in oil. When we see the nine-month stack of 2021, this is around BRL 150 million in workovers, drills, and facility, and BRL 60 million in the Miranga asset. Now we can go to the next slide. Now, financial statements, we continue paying our loans, especially after the acquisition of Riacho da Forquilha. Here we have BRL 93 million. In October, we were paying month by month Miranga. This was also settled with no major movement. We continue paying off our financing that will deleverage the company.
Here you can see our outlook and how we see our obligations and the remaining acquisitions. We have to remember that there is a process of the extension of Gas da Forquilha and Potiguar, and this is $56 million. This process has been slow. We hope to see this in the first quarter of 2022, the closings of Remanso Miranga. We expect this to happen this year. During this month, there is a disbursement of $21 million of Remanso cluster, but it will be lower because there will be price adjustment taking into account the cash flow that has been accumulated since 2020, the Miranga closing, $4 million, and there are deferred assets that come from the past years. Here you can see the cash position of the company at the end of the quarter, BRL 1.2 billion. Quarter on quarter, year on year, you can see the results.
These are commitments in green regarding the acquisitions of Petrobras. In yellow, the amortization of our debt. Here we have a sound cash position, and we have a robust cash generation for the upcoming quarters. I will hand it back to Marcelo.
We can go now to our last slide. Some final remarks before we go to our Q and A session. I believe that Rafael, Troy, and I mentioned everything that is going on. We have delivered a sound quarter from the financial point of view and the operational point of view. What we can see are a number of characteristics that allow us to believe that this is a major process of improvement. We are increasing our execution capacity. The results are above expectations. We are adding two assets with our own conception, especially Miranga, that I visited yesterday. Our team is ready and encouraged.
Our gas asset, mainly non-associated, that will allow us to increase our production significantly in the first months. This is something that the company is known for having a verticalized structure, and we can obtain results as soon as we start working in our fields. Troy Finney has great experience in gas, and in Bahia, he has achieved excellent results. We expect this to have. Our pricing prospect is positive. Gas would be more stable. Oil, I believe that the market believes that the price will be at a high for some time. We will have more freedom to manage our hedge position. With the increase of production volume, the increase of operations, and better pricing, we believe that we will be able to deliver results much better than what we expected.
Now we're focused on mobilizing human resources, logistics, and equipment that are necessary to have a productive and safe operation. We see the acceleration of the investment program. Progressively, this will increase. Our perspective is to continue drilling in new infills. We have a partnership with Sonangol, and I believe that we have great expectations in terms of the initial production. We already mentioned the short-term expectation of taking over these new assets. In the beginning of the year, we have to issue our first sustainability report. Today in the new gas market, you have seen major instability with the monopolistic company with aggressive positions.
We are satisfied to sign contracts that are highly competitive for the company, and they are very healthy for the development of the gas market in our country, supplying gas at a lower cost than of the competition because we have the cheapest molecule for production in Brazil, and I can state this to you. Therefore, in addition to all the effort and the mobilization so that the company can progressively increase its productivity, we're paying attention to market opportunities, and M&A is always focused on generating value to our shareholders, and always with a long-term view. This company will complete 22 years as a national operator. We are always positioning ourselves as leader of the onshore transformation. Now, we will go to our Q and A session. Marcelo.
Here we have similar questions, but people are asking us to give details about the lack of maturity of the service industry and the impact that we expect for the acceleration of our activities and with the increase of the activity of other players in the industry, if we see, for example, delay or cost pressure.
This is no surprise. It is not by chance that 40 years ago, as a strategy, we internalized this service. When you expand rapidly in the short term, you go to the market. This is a market like any other market that had a monopoly as a buyer throughout seven decades, and they would carry all bets or a company would win a contract wholly or would lose it entirely. So mobilize, demobilize, that it never allowed the industry to increase productivity and safety.
When we go to the market to hire equipment and services, we can see that the level of the operational safety concept of the service providers are below our expectations, and this is why we continue with our demands, and the trade-off is that it takes longer time to do this. I believe that some of these questions are regarding Miranga, to execute the development program in Miranga. As Marcelo just stated, we have been planning this, and we have strong relationships with a number of service company to fill the existing gaps between our internal services and the services that we have to seek in the market. We are seeing a number of contracts in this area. These would be services for pumping, hydraulic fracturing. These are services that we need to optimize the gas production and to optimize the number of workovers.
There is a question from Paola.
Once again, our expectation is to do this in the short term. We cannot control how the national journal publishes these licenses, but we expect to operate the Miranga asset.
We have now a question from Bruno, and he asks if it would be possible to talk about the expected trajectory for the Bahia asset that has been contracting or diminishing.
If you see the filing of our reserve report, it anticipates a certain increase, not as high as the other asset for Bahia, considering the 17 concessions or the five that we have, or the 12 that we have with the Petrobras contract. We expect to see growth. This is dynamic because now there is an assessment of return of each one of the projects.
We believe that we have a number of projects in Remanso for the upcoming years that will result in a slight production increase, but never at the same level of the other assets that we are incorporating because when we took over Miranga cluster, when we see project by project, this cluster is more economically attractive. Remanso also has been working for 20 years, and most of the projects have been carried out. Now, when there is a limitation of rigs, we will prioritize our efforts in Miranga, but we are preparing ourselves to mobilize sufficient equipment so we do not have to trade off, so that we can develop all the assets the best way possible.
After we bought the 12 fields, there are a number of drilling opportunities within these fields, and this has been defined in the past years, and we plan to carry this out in 2022. These projects are in our plan. Some of these projects are planned to start next year.
Potiguar asset , Conrado asked: How long, when do we expect to conclude the compression projects, and what would be the strategy for the additional gas volume?
I am going to talk about the compression system. The company is intense in this area, and we are accelerating the overhauls in order to put these machines to work in a safe fashion so we can increase our production. The time that we believe would be the upcoming two years to update this system.
This system can work with 1 million cubic meters of gas to carry out compression, as you know. We are already selling this asset at 300,000 cu m ,350,000 cu m, and we have an estimate that this will gradually improve throughout the upcoming two years. I believe that the overhaul of the compression strategy, we carried out a partnership with a specialized company so they can lease machines while the other machines are going through overhauls. I think this is a continuous process that takes time, and the objective is to revitalize the capacity that we have today, but to reequip the system with the expanded capacity that would be at a level of 1 million of cubic meters per day, which is the target of the company.
The commercial aspect, we have been pressured by the current contractors to increase the amount of areas contracted, and this also allows us to improve prices in some cases. Our main strategy is to have the regional distributors as an anchor, which with good pricing, so when you start working with liquid, and GLP, this remunerates properly our molecule. The expectation is that the incremental volumes that we will have safely, we will be able to have a broad portfolio of contracts with the free market, assessing some virtual pipeline aspects and deliveries through GNC and GNV, that gradually will elevate the average price of our molecule. Therefore, the profit of the gas business will increase throughout time.
Changing the theme, we have the last report of reserve certifications had the oil price below $50 and the gas price based on past contracts. What can we expect here?
We are going to close the reserve report in January. We are in the middle of the process with the certifier to validate all the projects with new prices, with new costs, and we will have a new outlook in January and February.
Troy, I believe that price and also the results that we attain through a number of interventions throughout the last 11 months will give us increase in reserve volumes in our report. This is our expectation.
This is from Bruno from Morgan. How does the company assess the remaining onshore projects, or could you expand to offshore?
The answer would be no here. Obviously, we have already analyzed in past of shallow waters.
I don't believe that the company will participate in offshore in the short and mid-run. The remaining onshore opportunities are open. You have to remember that Miranga, Riacho da Forquilha were assets where we presented the best nominal proposal, but they were considered for Petrobras, the best feasible proposals. I believe that a lot of things are going to happen in these assets that are still open, but here, we have a long-term view, and we have plenty of patience to wait and see what is going to happen.
The last question, if there are no relevant acquisitions in the short term, do you plan to pay out dividends in 2021 and 2022?
To pay out dividends, yes, our bylaws has minimum dividends of 25% of net income. How much are going to pay? We don't see these assets as assets that generate cash
We believe that we will pay dividends in the mid and long run. In the short term, we will pay what is within the bylaws of the company, and depending on the pipeline of M&A, we can increase this. This is not something that we've discussed with our Board, but this will happen at the right time.
We have one more question about M&A. How does the company see other possibilities of M&A?
We're monitoring this area. We're talking with lots of people. I believe that the market will present a good level of consolidation. The main point is answering the same question, are we providing value to our shareholders? If the answer is yes, we will continue engaged in a number of these processes, and we need a long-term strategic assessment, and here we expect to see what we will do regarding future expansion projects.
Currently, we are clearly positioning ourselves as a focus company on onshore mature fields in the northeast of Brazil. This is a company that practically tripled its volume throughout the past two years, and because of this, we need to incorporate new areas, new routines, new processes, many new people, and this is something that we see seriously. Because our operations demand a lot of safety, and we also need discipline when we allocate capital. We are focused in properly execute our assets because we believe that there are exceptional expectations here.
What about the Novo Mercado? Do you want to monetize the molecule together with state participants?
We've been seeing a number of alternatives. I cannot give you details. These are things that we will not disclose because this is under assessment. This is a dynamic market. It's an intensive market.
We have a pipeline of transportation and distribution in our country that is limited. As we propose to become a significant player, mainly in the northeast, we are seeing different ways of taking our gas, being competitive, providing profit to our company, to areas, to industry that still do not use gas in their energy matrix.
With this, we bring our questions to an end. Marcelo, you have the floor for your final remarks.
I am very satisfied with this call. All of us are very satisfied with our results. We do recognize that there is room for improvement, and this demands effort and work. Here, there is plenty of work engagement. I spent the day visiting the facilities, Miranga and Remanso, with Board members. We're feeling like the army that is ready to invade, but we can't do it right now.
There is a lot to do in the future, and there are many good things that we will show in the upcoming quarterly earnings results to our shareholders.