Good morning, ladies and gentlemen, and thank you for participating. I am Marcelo Cruvinel, IR Manager of the company. This is the result of the second quarter of 2021. We are broadcasting it through videocast. We have simultaneous translation through our link. We have our Executive Directors, Marcelo Magalhães, CEO, Troy Finney, Operations Director, and Rafael, our Financial Director and IR Director. At the end, we will have a Q and A session. To participate, send your questions via our chat. We would like to clarify that forward-looking statements during this conference call regarding the business projects are beliefs and assumptions of the management and available information for the company. Future assumptions are subject to significant risks, uncertainty, and assumptions. Investors should understand that general economic conditions, industry conditions, and operating conditions can affect the future results of the company and result in results that differ materially from the forward-looking statements.
I would like to give the floor to Mr. Marcelo Magalhães, our CEO.
Good morning to everyone. I hope that everybody is healthy. I am highly satisfied to comment on our earnings results of the second quarter of 2021. Our second call after IPO, I believe that the company during this quarter continued to deliver our business proposal. Once again, we had results that are highly satisfactory for the company. There was a growth in production. There was a growth in revenue and EBITDA, and we reverted the loss of the last quarter with a net result, which is very significant. This is a result of a planned action, the continuous action, and step by step, we establish the conditions for this company to be able to operate offshore mature assets, increasing our reserves, increasing our production, but mainly adding value and results to our shareholders throughout this process.
Throughout the last months, we are a public company, and we are accelerating this process. A number of the stages demand a little bit of time to consolidate themselves. Nonetheless, we are actively broadening our structure that, as you know, is focused on an operations verticalization operation, which allows us to gradually broaden our capacity, bringing new equipment, training, and recruiting new personnel so that we have a volume of activity in our fields that are superior and ever-growing. We have observed this during this quarter. So now we will go to slide three. As I stated, we have had ever-growing results in the main operating and financial KPIs of the company. In addition to increasing revenue, EBITDA, and profit, a number of operating facts during this quarter create interesting future conditions for the company, especially because as of July 1st, we started operating the Sabiá da Mata, Sabiá Bico-de-Osso.
Also, we started operating these fields where we have a consortium with Sonangol that operated the fields until the end of June. Throughout the last month, we negotiated a transition, and the partners realized that due to the characteristics of these fields that are non-mature reserves, these are recent discoveries. These are fields that represent a long availability of primary development. And, with the subsidiary of Potiguar and due to the verticalized strategy that works with their own team, we will have the conditions to develop these fields in a more effective way. In the upcoming months, a significant part of our investment program will be focused on these two fields, especially drilling a number of development wells. A recent piece of information was that our controlling company won the Potigás natural gas supply.
This was the first process carried out with a state distributor without the presence of Petrobras. We are satisfied that we were chosen for the final stage, and at the end, we won. This is a contract that is valid for 2022 and 2023 with the supply of the total amount of gas of the state of Rio Grande do Norte. We want to work within the new gas market. We have a prospect within our certified reserves and business model to significantly increase gas production, be it Potiguar Basin or the Recôncavo Baiano Basin. We have an expectation to carry out a close at the end of the year, and the development of this gas is something that gives us reassurance. During the first public call, we showed that we were competitive, but we showed that this adds a significant value to the company and its shareholders.
This is why we are optimistic regarding the company's performance in gas. Today represents less than 10% of its revenue. In the upcoming three years, we want it to account between 30% and 35% of the company's total revenue. We want to continue mobilizing new equipment and teams to increase our development program throughout this quarter. We mobilized two new rigs that are under the import process and a light rig that will be used to clean and recover wells. Now we are hiring two third-party rigs that will be mobilized. Here we only hire the equipment, and we operate it through our own teams. This continuous equipment mobilization will allow us to intervene and to obtain a production growth cycle, which is constant.
Now, the approval by ANP on the assignment of the concession of the Remanso cluster and beginning of the process to transfer environmental licenses ownership. Remanso and Miranga cluster, our expectation, and this depends on the approval by ANP and the transfer of the licenses. We would like to take over Miranga 2021. Now, the incorporation of new assets from Petrobras divestment gives us the expectation of increased spend of production and to reduce the average cost of the operation, and as a result, an improvement in our EBITDA and the income of the company. Now we will talk about the new gas market. Those that follow the company can see that the company is positioning itself strongly as a player. We will not only be an upstream gas producer, but we want to embark in the processing and gas commercialization.
We want to be the greatest gas producer onshore in the Northeast of Brazil. The Northeast is an importing gas region, and due to its renewable energy projection characteristics, needs gas as part of its matrix. I believe we have a major potential for growth, and there will be a growth in the demand of gas in the Northeast. Our assets, the ones that exist or the ones that we will take over, the ones that we will buy in the future, allows us to have gas of low production cost of mature assets with no exploratory risks. Mainly, they are very close to all the We're close to the populations, therefore, we will have a competitive molecule. Now, the result of Potigás already shows us, and at the same time, we will be able to generate attractive margins for the company.
We have an important role in occupying this space and perhaps migrate to trading or processing. We will do this in a progressive fashion as the gas market consolidates its regulation. As we are a pioneer in our contract with Potigás, in the future, we want to have access to free industrial consumers and all the network that covers the transportation network in Brazil at more attractive prices to the company. Let's go to our next slide. This slide shows the presence of the company in two onshore basins. We want to complete. We have these two clusters with a mix of potential production and certified reserves that are very interesting with a major perspective of growth. We see this in here. We've seen strong growth throughout the 18 months, and with the takeover of Miranga cluster, we want to ramp up the production.
In Miranga, on the gray side, it has its own characteristic of assets where you mainly have gas. This is gas non-associated, and here there is a high increase in production. This is the most relevant gas producers in the Brazilian onshore, and we believe that we will be relevant, but we expect from next year to deliver this potential to the market. Now I give the floor to Troy Finney, our COO, that will provide us investment data regarding the production of the company.
Thank you, Marcelo. We can go to our next slide now. This slide shows the continued production ramp-up for the entire company. These figures represent. Here, we have the different assets. Here, you can see that there is an increase of production of 11% when compared to the same period of 2020, and during the past three months, we increased 4% in BOED.
This is focused on Potiguar, where we have an intensive program of workovers that we will review in the upcoming slides. Now, in the Potiguar District, as you can see here on the left-hand side, bottom left-hand side, in December of 2019, we had a significant growth in our total production of almost 80%. Recently, we've had a significant growth in gas, and we are preparing in order to trade in the private market of Potiguar. We are ramping up these ramp-up in the upcoming three and six months, and this will continue. If we compare the second quarter of 2020 and Q2 of 2021, you can see that we increased the average number of active rigs in this basin from 1.6 to 2.8.
This will continue with two more rigs this year, and we will reach a level of five rigs by the end of the year in this area, completing our drilling program that we initiated in July. These increases of production are part of our estimates, and we will continue working in this area in order to improve our production. Now, we can go to the Recôncavo District. We are still waiting the transference of these concessions from Petrobras, but during the last three months, we increased the amount of workovers and stimulation so that the second quarter of 2021, we had seven workovers and two stimulations in the district of Recôncavo. We are going to implement an intensive program of workover. We are resuming all the workover projects after a year of pandemic. We expect to close this contract.
We've had a significant reduction in our backlog, but high production continue well failure. During the upcoming months, we will reactivate the reconstruction of Satélite 1 that was suspended because a landslide in one of our fields, and this hampered our production. With this, I will give the next slide to Rafael so he can discuss the cost per barrel.
Good morning to everyone. We will talk about costs. During the quarter, our average production cost was $14.70 per barrel. You can see that year to date, $12.70, this is very similar. In our release, we give you details of everything that you have here. Nonetheless, it is important to highlight that we are trying to demonstrate that based on the feedback that we had received from analysts, we want to see the data of Bahia, of the Potiguar regarding the cost per barrel.
We have the part of revenue, we want to separate oil and gas revenue so we have greater information granularity. If you would like to give us feedback to improve our announcement, they are welcome so we can incorporate it in our releases. Regarding costs, there are two different cost levels. Our asset of the Recôncavo Basin, that 2018, 2019 are these assets, and the green balls are higher. These are the cost of Recôncavo. They are around $20-$22 per barrel. These are fields in a mature stage of development. This is measured because of the ratio water, oil, that in the Recôncavo is 30. For every oil barrel, I produce 30 water barrels.
In Recôncavo, it's 8 because the cost of power when you pump this production and when you extract products from the wells, and then you have necessary chemical treatment, because to produce water barrel costs the same as producing an oil barrel. As you can see here, that here it's lower, $8-$9 per barrel. Our expectation is that as we incorporate new assets, this will drive lower the average weighted cost of the company. Speaking of the quarter, there is a caveat here that the comparison year-on-year was hampered during Q2 of 2020, which was the most critical year regarding the pandemic because there were a number of restriction of people in the fields, and the oil price was negative in the United States. I think it was almost -$10. There was practically a paralyzation of everything that was non-essential.
This was a complex moment. In addition to this, as Marcelo mentioned, we have improved regarding here, we improve the gas prices in Potiguar. So we have carried out a number of maintenance expenses regarding to the outflow process and the compression process of the pipeline network, because as of next year, we want to be able to, with Potigás, we have to be reliable, and the margins of this gas will improve. There were extraordinary costs in the period when you add the operation costs and SG&A, that is more or less BRL 12 million. Then we have BRL 3 million of the operation transference, and we had to bear with the cost of Somangol, and we have costs with M&A as well. As I mentioned, we are preparing to close the Miranga cluster and the Remanso cluster.
When we incorporate Miranga, we will capture operational financial synergies with potential reduction of average production cost measured in BOE, as you can see here. Here you have major figures of our company. Marcelo mentioned part of this, the net revenue of the company increased 34%. It wasn't only a growth from improvement of commodity price, but 11% of the production increase, and there was a gas revenue increased, and this has improved the trading situation of the gas. Our revenue, as you know, we have a relevant part that is hedged. As the oil price increased, this represented gain for us, and this year we had a loss, but within the net revenue, we have the impact of the hedge during the period that was negative.
Regarding costs, we already mentioned this on the past slide. I would highlight that royalties are included in cost and the royalty entry follows the oil price. Therefore, the EBITDA of the company grew 10% vis-à-vis the second quarter of 2020. The depreciation and amortization has increased because of the increase in production. When the production increases, it increases, and with the increase of the investments, we increase the depreciation base. Therefore, there was an increase. This is a line, and with the extension of the concessions of Gás da Forquilha and other assets, this will strongly reduce this line in the future because today, to calculate depreciation, we count the reserves up till the limit of the current concessions. But I believe that we will extend this.
The financial result has been a little bit more volatile, mainly because of the exchange rate variation, and this impacts our loans and financing. In Forquilha, that is in dollars, during the first quarter, we had an exchange rate variation that was high. This quarter was the other way around. There was exchange rate variation. But when we see the semester as a whole, the effect of the volatility is lower, and we were able to generate a net revenue of BRL 82 million . This demonstrates how we're able to generate results from all of these assets. These are our hedge contracts. They are from July 30, June of 2021. We have our hedge policy that is associated to our funding compromises with Forquilha.
The company shall maintain a portion of its projected net production hedge for the next 36 months based on its reserve report in the following proportion. Here you can see the tables, the average price throughout the upcoming three years. Here we have $58 the barrel, and we have $54 the average weighted. This is a three-year horizon and 120 million barrels in reserve for the company. I know that it's difficult to read, but the cash flow statement, our operating cash flow was similar to the EBITDA, discounting income taxes around BRL 120 million . The investment cash flow, as you can see, all the cash investments or working capital, they are considered as an investment, but they have a more financing nature. In operational CapEx, we have BRL 187 million . BRL 57 million would be to use assets and BRL 130 million. Then we have Miranga.
CapEx invested in exploration and production were around BRL 70 million. As Marcelo mentioned, we are mobilizing resources. We started our drilling campaign, and during the third quarter, there will be an acceleration of investments. On our financial side, we received funding from the IPO, and in terms of debt, we continue amortizing according to our calendar. Our debt, Gás da Forquilha, is paid every quarter, so every quarter, we will have a tranche of amortization. This table demonstrate what we have in yellow. Here you can see your estimated schedule of debt payment and acquisitions until 2024. Here you have our installment that is above $100 million regarding the extension of Riacho da Forquilha.
With two expected closing of Miranga and Polo Remanso, they will have a greater disbursement by the end of the year, but we will see payments throughout the next years associated to the Miranga cluster, and we have payments in the upcoming four years. This installment depends on the price of oil. During 2022, 2023, 2024, we can include the payment of these tranches. I will give the floor back to Marcelo.
Thank you, Rafael. I believe that the results that we reported in terms of management are totally aligned with what was expected. There is good consensus amongst the analysts. This strengthens what we want to show to our market that our commitment is to deliver operational delivery and production. This is an initial moment, but everything that we've seen this quarter confirms our business plan and the potential that we have.
This is something that we saw during the IPO. The upcoming stages of substantial value drivers are the takeover of the Miranga and Remanso cluster concessionaire, especially Miranga cluster. There are major expectations of taking over and to deliver significant results. This helps because of our strategy for the gas market. We started the acceleration of the investment program. We initiated our drilling program in Rio Grande do Norte, and we will have this in Bahia. These are infill drilling wells with 100%, there are no exploratory risks. We have had good operating performance, time of drilling, cost of drilling. We've had significant results. During cementing, I believe that as of the upcoming quarters, we will be able to demonstrate these results within the production volume of the company. Riacho da Forquilha is a transition who followed our IPO. We were talking about low-hanging fruit.
Riacho da Forquilha is going toward the final stage of low-hanging fruit. There are a number of consequences because we have greater impacts because of drilling, and sometimes the impact is greater than what is expected, that it takes you longer to put it in a tank because you need proper infrastructure for the outflow of this production. This is why it is good to have the expectation of positive surprises. We are aggressively looking for new opportunities within the new gas market, and Potigás confirms our strategy of competitiveness, and this shows that we can be competitive and create an exceptional return on our gas operational with. We continue developing M&A opportunities. We are focused on the long term. We always want to add value. We don't want to grow for the sake of growing with our current assets. We can grow organically.
We actively pursue to position ourselves in the long run that goes beyond the divestment Petrobras project. We have a sustainable competitive advantage naturally bring M&A. With this, we can go to our Q and A session. It is a pleasure to be here with you. We hope that you can ask questions.
The first question from Conrado from Safra Bank. Good morning. My question is regarding rigs. You have two own rigs and three third-party rigs in addition to a light rig. What do you expect, and where are you going to allocate them? If Miranga is considered.
Currently, what we have are three owned rigs, two are rented rigs, leased rigs from third parties right now, and a light rig that will be used in Potiguar.
There are two new rigs that are being imported and two rigs that we are under the process of contracting. We want to have a fleet of nine rigs of workover service and a light rig. Five of them will be allocated in Potiguar as light rigs and four in Bahia, two in Recôncavo, and preparing two for the development of Miranga.
We have a second question here regarding rigs. This question is from Guilherme from Morgan Stanley. In the release, you contracted two rigs with service providers. How do you see the price dynamic in services? Do you see inflations? What do you see regarding the amount of operators of the country?
I can answer. We were surprised regarding the possible contracted rigs from service providers. They were competitive in terms of cost. I see that the market is still waiting for a significant increase.
We believe that this is going to happen. This is why we are anticipating ourselves and bringing more rigs during the second semester. But we have the opportunity to hire rigs from service providers from Brazil at prices that were more competitive than we had in the past. There is great deal of safety. We see that we have stabilized equipment safety standards above the market. We are educating our service providers, but in terms of cost, we see no difficulties. We are also observing a slight increase in costs for other service providers, Halliburton, Baker. This slight increase is more for capital for cementing.
André has sent two questions, one regarding Conrado's question. He says that he has observed a competitive environment within Petrobras divestment. Can we comment on the assets and milestones for this process?
We are participating in the Bahia Polo and the Sergipe district.
The Polo Bahia has a binding proposal on the 25th, and Sergipe, the proposal was projected. The company continues doing what it knows how to do, is to assess the assets in an analytical fashion with details, and we will not change our assumptions or the way we work because of a market dynamic and a differentiated competitiveness. What is important is to be competitive within a model that will allow us to provide value to our shareholders and not to buy something that can just allow us to grow for the sake of grow. Of course, we never stop. We always analyze the market. This is why in Bahia, we have been careful to create a robust consortium. We have carried out joint efforts with our partners.
It is interesting to see that there is great fine-tuning in terms of what we see in terms of value of this asset and the Bahia cluster, not only because of its synergy, it is highly attractive. In this cluster, we expect to be competitive in a way where we can continue providing value to our shareholders. That is one of our main roles here.
Okay. We have a question. Gas, he said, in our results we talked about deep gas in Potiguar Basin. If we can share expectations in terms of potential because of the size of this reserve.
André , I think that by and large, what we have observed are gas results above the reserve certification. You have seen that in the last 21 years in the Recôncavo, we gradually increased the reserve volumes. Now we can intervene in the fields.
We believe that this will happen in the new assets, but there is an expectation for gas for it to go beyond. Troy has an excellent experience in 2000, 2001, the initial gas production doubled in the Recôncavo. You can see that we have produced an increase of 104% in the Potiguar Basin. By and large, the results are exceeding the expectations. Now we are going to broaden the trading capacity, and this necessarily is to establish the new gas market. We provide gas to Petrobras, we hire the services of Petrobras, and then we are going to process our gas or internally or under other conditions. Finally, we will reach the free market. All of this broadens the ability of monetizing this gas.
We have been positively surprised by some results because now we are working on monetization options that are tactic, where based on a specific action in a well that is still not connected to a network. I will be able to monetize this gas, compression, liquefaction, generation of energy. Then we can bypass all this process that sometimes takes time to integrate to the network and have contracts of middle and long term with the distributor. Troy, if you would like to talk about this.
In the past, we used to talk about the potential for gas in our fish in Potiguar. In the Pendência reservoir, what we are seeing there is that there is more gas and more potential development of gas than we imagined at the beginning. In addition, we are also under the process to assess deep gas zones and high-pressure gas.
We still do not have the results of these tests because of safety reasons, because we have to import a specific equipment to carry out this type of tests. We are in the middle of this. We believe that there is a great potential in these deeper areas, and we are finding other areas in shallower parts of the space and that demonstrate that there is more gas than what we expected. We are seeing these results in our workover, and we are training our technical groups to see gas opportunities.
If I could add something, I could say that as a company, our value proposition is to be more agile, competent, and we have a better cost structure, better than a major company like Petrobras. This is why we can provide quick results.
When we see gas onshore in Brazil, Petrobras never prioritized the development, the fully development of the gas reserves of this field. Petrobras would see the balance of the gas market, and they use fields like Miranga, like an inventory field. It would model the gas production because of the market variation, like excessive thermal power in times of drought. Now, when we want to use fields like Miranga or Riacho da Forquilha, and we maximize gas recovery, I believe we have the opportunity of having significant results because this potential has not been developed like what we see in the oil potential.
Now, lifting costs from Guilherme, I want to understand, with the increase of activities, can we expect a drop of the lifting cost during the second half of the year?
Well, let us separate.
In Potiguar, in the beginning of the drilling campaign and investment accelerator, we expect a production increase that will represent a lifting cost. Now, the other side is that as the oil price increases, a number of wells are enabled, and when there were low prices, they were infeasible, and sometimes you have to see what you have. If I have more rigs, I can intervene in wells that were closed. Now you can start execute them, and you can restore the production of this well. But I would say that the trend should be a slight drop. But we will see what happens after Miranga's closing, that we do not know when it is going to happen, if we will be able to count with the Miranga asset for many years, and I believe that there will be a greater impact, and this will affect the cost levels.
Victor Pereira Irijo.
Well, I would like to understand what is an average period to increase the productivity of the other assets based on the low-hanging fruits, because this increase lasted one year.
In Forquilha, Troy Finney has undergone this process. I would say the low-hanging fruit takes between 18 and 36 months. With Riacho da Forquilha, we are in the threshold of these 18 months. Well, gas fields, well, perhaps this can take place in a lower period of time. We were asked if we were preparing a new structure for Miranga. We are mobilized. Now, the gas field, well, we have to prepare ourselves because instead of interventions, you have to work with the field compression system to withdraw pressure from the gas well so that the gas can flow. When you overhaul a compressor, when you maintenance a compressor, well, you have to plan beforehand.
You have to already buy spare parts. You have to contract a specialized service so that the first thing that we are going to do in Miranga is to revise or review the entire compression system of the field. Perhaps gas low-hanging fruit will be quicker and more effective. Well, we want to deliver. Yesterday, I was in the Miranga field with our transition team reviewing exactly this theme. What point are we regarding our hanging fruits with gas? And I was looking at wells and what did we have in terms of optimization.
We have three questions from Victor Sousa. I will start with, what is the exit rate of 2021 expected for each cluster in terms of oil and gas? And if we will announce a production guidance, a lifting cost or a guide.
Currently, we do not give guidance or CapEx cost.
Indirectly, our reserve report is like a guidance. I would say that one of our goals is to end the year close to our reserve certification. There was a delay in our drilling campaign in Sabiá da Mata and Sabiá Bico-de-Osso fields. We will start drilling these assets on the fourth quarter of this year. These are shallow. They are relatively easy to drill, but we want to end the year totally aligned with our reserve report for the year.
A question about the extension of the debt and the drop of the capital cost if this is associated to M&As.
We are waiting to see. Today, we have a debt in Potiguar of 6% a year in dollars. Today, we could lower if we carried out another funding as we are participating in a number of M&A processes that are relevant.
We are waiting to see what is going to happen because if we are successful in one of the assets, the pathway to be to combine a share follow-on or an issuance of bonds. Or we could also refinance our past debt. Through a bonds process, this could be something more corporative. We are waiting to see what the M&A dynamic will be in the future. As Marcelo said, the Petrobras onshore assets, we will know what will happen. Maybe we can restructure via bonds or only restructure the current liability.
We have a last question from Bruno. He says: Could you talk about the return levels and the assets that were recently sold by Petrobras? Are they in line or below the expected returns? In other words, if we see that there is a fierce fight for the assets that are being sold.
I said more than what I should say regarding M&A. In this call, I do not want to talk about M&A. I am going to strengthen what I said before. We continue with a major team undergoing an analytical process. They are assessing these fields. We are interested in participating in this process, but we have not significantly changed our strategy because of new players or because of a fierce dispute, as you said.
We bring our Q and A session to an end. Marcelo, your final remarks.
I think that during the upcoming months, we will have a significant takeover. This is a value driver. Everything is close to what we planned. Here we are committed to pursue to deliver. We want to deliver our operational and financial KPIs.
Therefore, we will maintain our investment to obtain natural returns of these investments that will result in increase of production and reserve. Somebody asked about guidance. We are certifying our reserves until the end of the year. This is something that we will do every year. We will always have a clear idea of the market situation, not only of what happened until the reserve report was produced and what is the view of the future in the long-term five-year period or yearly period. The reserve report is like an internal guidance for us. This is what we deliver is within the certified curves of the company. I would like to thank everybody. I hope to see you on the next quarter. We will continue delivering consistently results as we done through the first and second quarter of 2021. Thank you very much.