Brava Energia S.A. (BRAV3) Earnings Call Transcript

Good day, everyone. Welcome to Brava Energia's earnings conference call to discuss second quarter 2025 earnings results. The presentation and comments on the results will be made by the company's Chief Executive Officer, Décio Oddone; and other officers of the company. [Operator Instructions] This conference call is being recorded and will be available on the company's Investor Relations website, ri.bravaenergia.com as well as the presentation that we will show here. [Operator Instructions] Before proceeding, we take this opportunity to advise that forward-looking statements are based on the beliefs and assumptions of Brava Energia's management and current information available to the company. Forward-looking statements may involve risks and uncertainties since they relate to future events and therefore, depend on circumstances that may or may not occur. Investors, analysts and journalists should take into account that events related to the macroeconomic environment, market segment and other factors could cause results to differ materially from those expressed in such forward-looking statements. We will now give the floor to Mr. Décio Oddone to start the presentation. Mr. Oddone, please go ahead.

Good afternoon, everyone, to all of you joining us in this conference call to discuss Brava Energia results. This quarter was a good quarter, a quarter of consolidation of the company's trajectory of deliveries of results, a better quarter than the previous one, which had already exceeded Q4 2024, which was the first quarter that we reported as an integrated company as Brava. We will continue to work to post an even better quarter than this one. Over this time, we maintained excellent safety indicators. We posted record production, record revenue, record EBITDA and record net income. We increased the margins. We improved our cash position. We reduced our debt, and we lowered our costs and lengthened the profile of our debt. Since the beginning of the year, we have achieved successive improvements in production, reaching almost 91,000 barrels of oil equivalent on average in July. On occasion, the company exceeded 100,000 barrels. On July 31st, we produced 101,973 barrels of oil equivalent, the volume that does not represent a weekly or monthly average, but it does break a symbolic barrier that is important in our sector, a company producing over a 100,000 barrels daily. This increase in production is due to greater efficiency at Papa-Terra and due to the new wells of the FPSO Atlanta. This production reduced our cost of offshore operations. We reached a lifting cost of $14 per barrel without chartering. In July, we connected the last 2 wells of Phase 1 of Atlanta. And with this, we are now able to reap the results of the investments we made over the past few years in Atlanta. This Phase 1 of Atlanta was completed on time and on budget, which is rare for a project of this size. The next quarter, which we will report on in November, will better capture this progress in our offshore operations, and Travassos will show this in more detail. During the quarter, we also improved in terms of the terms of sale for our oil, Pedro will talk about this. Onshore, we continue to optimize operations, reducing costs and CapEx. Our EBITDA remains a benchmark for the sector, and we make progress on tertiary recovery or EOR, on enhanced oil recovery projects. Boeri will speak more about this. Our EBITDA totaled $235 million, $250 million if we include the results of the oil hedging operations, and we strengthened our cash position in Q2. Pizarro worked hard on liability management operations. We prepaid higher cost debt instruments and reduced the cost of debt. And we just announced fully monetization of the creditor position we had with Yinson, which helped improve leverage as a subsequent event of this quarter. The improvement in operations strengthens cash generation and accelerates deleveraging, our focus for the coming quarters, and Pizarro will elaborate more. To end the initial remarks, I'd like to say that on August 1st, we completed 1 year as a new company. As part of our efforts to integrate teams and build an environment that seeks to create value, we began working to consolidate a culture of safety. That's very important to a company like ours to have an efficient operation, we need to have a safe operation. What we are doing is a result of the effort of the whole team. So I thank everyone for their work. Let's move to the slides now, please. As I said, we posted good numbers. record production, record net revenue, record EBITDA, robust cash position and costs declining. This is the trajectory that we have been experiencing at Brava in the last 3 quarters, and we will continue to work on this path. Some operating highlights before I turn the floor to the other officers of the company. We had an important increase in production, especially in recent times. We had 50,000 barrels in the end of last year, increasing to a level of around 90,000. And this is the result of increased production offshore. As I mentioned, efficiency -- higher efficiency at Papa-Terra and new wells starting up at Atlanta. We can see more clearly on the slide, which brings already the start of the third quarter with the July production above 90,000 barrels daily, a trajectory that we believe will continue. That's what we are working for. I'll turn the floor to Travassos to speak about offshore production.

Good afternoon. I'd like to share with you the good operating results of our offshore operation in Q2 2025. At a glance, looking at the chart, we can see that it really translates the title of the slide. We are now on Slide 7, offshore strong evolution. Okay. Right. Now we are on the right on the correct slide. It's clear to see the strong growth of production of offshore production, both when we compare with the previous quarter or with the previous quarters, because we include the Q4 '24, but when we analyze the last bar, when we compare the operation in July, we can still see growth. This growth is naturally driven by the completion of Phase 1 of the full development of Atlanta. Décio mentioned this in his initial remarks. But this is also due to increased production and greater efficiency at Papa-Terra, and I'll speak more about that in a moment. Now looking at the graph in detail, we can see that there was a production increase in all of our assets one by one. And these values are represented in BOE, barrels of oil equivalent. They represent the working interest of Brava. So 88% of Atlanta, 62.5% stake of Papa and so on and so forth. And I'd like to say that, that percentage amount -- we still have a problem with the slides. Okay. So we can see the share. That's the proportion of oil because we have non-associated gas fields included. Now analyzing individually the results, we can see that in Atlanta alone, there was a production increase greater than 50% quarter-on-quarter. This increase was driven by the connection of wells 4 and 5. In the previous conference call, we spoke about this. These wells were connected on April 13th. Basically, these wells representing full 12,600 barrels of oil daily on average. In the chart, we see an increase in 10,000 barrels when we compare Q1 with Q2, again, because the chart represents the Brava stake still on Atlanta. When we look at the results of July, the third bar, we can see again a production increase driven by the connection of wells 2 and 3. This production tends to increase even more in August in Q3 because these wells were collected on July 19th. So on average, they are not represented in total. And we are at a moment of increasing production. And this should be achieved in the coming weeks. So in September, we will capture the full value of production of Phase 1 of the full development of Atlanta. Now looking at Papa-Terra, we can also see significant production increase quarter-on-quarter. We saw a 50% increase in production in this asset. Well, this result is straight from Papa-Terra. What I would like to highlight in this asset is that in Papa-Terra, we had stability, and this is something to pay attention to. We had the best semester since the acquisition of this asset by 3R with an operating efficiency of 86%, which is very relevant for an asset that is this mature and the result of average production of 19,000. Again, that has translated into 12,000 average production represented in the second half of -- in the second quarter of 2025 when we consider Brava's stake. When we look at the results for July, it represents really well what I spoke about in terms of efficiency. There is some production increment, but it's kind of in line with the result of the quarter, which shows the kind of stability we are having at Papa-Terra. It is important to highlight that stability does not mean that in 1 month, we had 80, the other month, 90, that's not the case. We have had stable operating efficiency at the asset, which gives us a lot of optimism. We see in Papa-Terra good opportunity of extracting value looking forward. Now I'll speak about Parque das Conchas, an asset operated by Shell, which has been showing good operating efficiency. The increase in production we see on the screen is the result of this higher efficiency. And this was obtained after the submersible pump system, the lifting system at Parque das Conchas. There was a campaign there that increased efficiency and increased production a little beyond expected. At the top of the bar in lighter green, we added production from assets Peroá and Manati, the nonassociated gas assets, Peroá is operated by Brava, Manati is operated by Petrobras, and we had a production increase in these 2 assets. In Peroá, we had a reduction of production at UTGC that kind of offset the natural decline of the field, an increase of approximately 20,000 cubic meters of oil per day. Peroá had been operating really well with operating efficiency above 95%, and it is also delivering a lot of value for the company. But the most relevant production increase was obtained with the resumption of Manati. As a reminder, Manati restarted operating in May. That's when Petrobras restarted production. Now we have production superior to 2 million cubic meters a day, and we intend to increase production there in the coming weeks because now the operator is considering a subsea operation and the resumption of 2 wells. So during August, we expect to have a full operation at Manati as well. I will end here. Thank you very much for your attention. I'll turn the floor to Boeri, who will present the results of onshore.

Well, as you can see in the screen, our production chart remains stable, both in the second quarter and in July as well. This was reached due to several different factors. We continue to expand the steam generation process in Rodrigues in the -- with a very positive result in the production, and there was also improvement in the secondary recovery in Macau and Amaro. And we are also seeing the first positive result of a nitrogen injection process in Fazenda Belém. This is a pilot project, and it's still too soon to draw any conclusion. But the production had an important push. We also add to production, especially in Reconcavo, Macau, in Rodrigues today, [indiscernible] production is higher. It's higher -- is the highest one in the last 5 years. So the production reached record levels. We almost doubled the production in the few since the beginning that Brava -- since the beginning of Brava's operation. In terms of CapEx in the second quarter, we removed 3 drilling rigs. One was gone in April, then in May and June. And we still continue to produce a good workover rig. And in the second quarter, most part of the CapEx to generate steam was utilized. We acquired the generators, and now we are in the final stage of installing the last 5 ones. So 4 of them will ramp up this year and the fifth one will start operations in early next year. So in the second half of the year, most of our CapEx for steam generation will be in place. And also, there will be the reduction of the workover rigs that is happening in the third quarter, 1 left in June and the other 1 will leave in September. So CapEx will be much lower than in the second quarter. Now speak about operating efficiency and OpEx reduction. We are still operating in different fronts. Onshore, mainly the main costs are usually maintenance and operation and power costs, energy costs and the maintenance of the subsurface of the wall. Speaking about maintenance and the operation, we reduced the number of onshore rigs for different services, always keeping in mind a way to integrate the different assets. Speaking about energy, I think Pedro will give you more details about all of the actions that we are implementing to ensure our energy consumption since we are one of the largest ones in that location. In terms of OpEx, we made quite good improvements. To give you an idea, all of these interventions have to do with repairs to the surface of the well, like replacement of pumps or centrifuges, et cetera. Historically, these maintenance usually were done by workover rigs that are significant in important moments. To maintain a well with these rigs, usually, it takes 3 to 4 days for every workover. So we hire a small pooling rig, and I think it's the only one that we have available in the country, and we made the workover that used to take 3 to 4 days. Now it only takes 26 hours. And we still have some more room for further improvements. In addition to this reduction in timing and thanks to some of the improvements on the engineering side and the selection of components and the way through which we recover the wells, we also reduced the number of strips in the wall. So if you do things faster, of course, that the maintenance to the bottom of the well is expedited. So finally, we continue to reduce cost, CapEx. We have some important projects ahead of us and EBITDA per barrel is one of the best ones in the industry. And now I turn the floor to Pedro, and he will give us some more details on the commercial area.

Good afternoon, everyone. So I will talk about new business. And I'll start by speaking about oil exports. There was an important increment in spreads in all of the ship cargo in relation to the past quarter. This movement in part reflects, especially vis-a-vis the first quarter, the fact that there was a mismatch as previously explained. There was a mismatch in -- misprint vis-a-vis the period because the majority of the shipments were offload. So the improvement in spreads becomes more visible in the second quarter for that reason, but this was also followed by a recovery in fuel oils of low sulfur, especially in the Asian market because at the end of the first quarter, they struggled with excess supply -- the Asian market is one of the main destinations of our imports and exports. In this quarter, due to all of these changes in the international market, we were very assertive because we were able to demonstrate the flexibility of all of the shipments associated to Parque das Conchas, which opened good opportunities in the U.S. market. Still speaking about oil, I would like to say that we had a record offload level. We had multiple offloads per week and scattered between Atlanta, Parque das Conchas, Papa-Terra and our refinery unit in Potiguar. Then we also signed a new agreement in Papa-Terra, which will reflect the investments in the improvements of the platform. And this will bring about a good profitability increment that should start in the third quarter in terms of spread. Number three, in July, we ended the trade contract that we had with Shell at Parque das Conchas, and now we entered a new phase, which is solely managed by Brava, and we will be able to show the results throughout the third and fourth quarters. Speaking about products and the margins of the refinery, the results were also very positive. I would like to highlight trading from Brava over trading and contracts with Raizen. And the results led to better pricing for both GLP and diesel oil in the domestic market. Natural gas, I would like to emphasize, number one, the maintenance of positive margins despite market conditions having a surplus of supply and an increment of availability and ramp-up of Route 3, I would like to highlight the trade strategies that were implemented in the second half of last year. And then next, we have the signature of a partnership to process natural gas in Potiguar and the investment involves $65 million. This is an agreement signed between Brava and PetroReconcavo, and this was recently approved by CADE, and we hope to conclude this transaction throughout the third quarter. And number three, so advances that will lead to the opening of Manati gas process -- to process gas for Brava in Bahia. And this will lead to better revenues, better costs, then we will make use of idle installations in that area. So I will conclude my presentation here.

And now Pedro. Thank you. Good afternoon, everyone. So now let me go through the financial highlights of the second quarter of 2025. Starting with net revenue, the company posted the best quarter in terms of revenue, an all-time high, reaching $24 million, which is 9% above the revenues from the first quarter. The next slide, we show a breakdown of revenue between offshore and onshore. We now see that the revenue increase vis-a-vis the first quarter comes from offshore, impacted by increased production in Atlanta and Papa-Terra, which totaled $272 million in the quarter -- I mean, onshore, if you look at downstream in revenues of the year, we reached $272 million in the quarter. Next slide, we show adjusted EBITDA that also posted record numbers of $235 million in the second quarter. And if you look at the effects of hedging contracts, which were settled in the period, we would have $250 million. As a reminder, our adjusted EBITDA contemplates other expenses as though they were part of the operation costs. I would like to highlight offshore EBITDA margin, which superseded 50% and EBITDA per barrel of Brava, which is one of the best in Latin America. Following slide, we show the evolution of lifting onshore stability and the reduction in offshore assets stemming from higher production in Papa-Terra and Atlanta. Discounting chartering, we arrived at $12 per barrel in offshore, even though there is further room for reduction both in Atlanta and Papa-Terra. Next slide, we show CapEx for the period with a progressive reduction since the third quarter of 2024. As for onshore, with the reduction in the number of drilling rigs, we achieved $57 million in the quarter. But as mentioned before, the trend is for further reductions since we do not have any program or schedule drilling campaign for the third and fourth quarter. In offshore, we concluded Atlanta with the demobilization of PLS in June, and we started Phase 2 with the acquisition of materials for the next 2 wells. Next slide, we show the capital structure of the company. Gross debt remains flat vis-a-vis the first quarter. However, with an increase of $100 million in our cash position, net debt contemplating obligations and acquisitions was down by $100 million. We started our -- on our deleverage path. And considering prepayment of receivables of FPSO Atlanta, which occurred in the past few days, we would have been below 2x, which is our goal for the end of the year. Next slide here, we show the amortization profile before and after our intense liability management work, we were able to reprofile our obligations. We reduced the average cost of the debt, and now we have enough liquidity to cover all of our obligations until 2028. I would like to emphasize that prepayment of receivables at FPSO Atlanta not only reinforce our cash operation by $260 million, but also this has an effect in cash generation of at least $40 million at present value, already contemplating the effects of 2025. As a subsequent event, we also received $16 million related to 25% of the partial sale transaction of PGN in Potiguar. And we also received some precatory notes for the company in the amount of $100 million, which should be posted in the third quarter. Next slide, we have the company's cash flow. Maybe this is -- maybe one of the most important highlights of the second quarter. Our operating cash generation was BRL 1.6 billion, quite robust. We had investments close to BRL 810 million and the financial result, if excluding the effect of exchange rate variation and nonrecurring effects like monetization of shares in treasury and the payment was close to BRL 220 million, meaning that our free cash flow after financial results was quite robust considering or not considering the nonrecurring effects. On the bottom of the slide, we present our hedging position. We have about of 45% of oil production hedged until the end of the year, about 35% in Q1 2026, and we started hedging the last 6 months of 2026. The biggest part of our position is protected in collar type of contracts in which we protect at $62 per barrel. However, we do not miss the upside in case the Brent price increases to up to $77. With the current hedge position, we have a lot of resilience in our cash position -- cash generation, and we continue on the path of deleveraging in the coming months. With this final message, I turn the floor back to Décio.

Okay. Before we close the presentation, let's speak a little about the next steps for the second half '25. We will continue to focus on free cash generation and deleveraging, which is our #1 priority. We have been unlocking synergies after the merge. In the recent moves made, we will accelerate this movement. And we have been working with Pizarro, Boeri, Pedro and Travassos, as they said, to continue to cut down costs, both in onshore operations, Papa-Terra mainly, offshore Papa-Terra and onshore and to reduce our G&A. In terms of growth, as Pizarro mentioned, we started preparing the drilling campaign of the next 2 wells at Papa-Terra and Atlanta. We have acquired some equipment for that. And the expectation is to start this by the end of the year to have these 2 wells connected by 2027 when we are going to have a significant increase in production resulting from the connection of these wells. We are also going to know more with the completion of the pilot project of enhanced oil recovery. These are the projects of nitrogen in Potiguar Basin, and we will start a polymer project as well to try to improve the recovery factor and production of our mature fields onshore. We received some news which is the individualization of Jubarte field and BC-10. So we are going to negotiate a compensation for that with Petrobras. And we will move to the closing of the deal for the partial sale of UPGN at Guamaré so that we can complete this deal and start the year with a new partnership operational. So these are the next steps that we intend to take over the next 2 quarters. We are in a path of deleveraging and reducing costs and increasing production. We have a lot of work ahead of us. With that, we end the presentation and open the floor to questions.

[Operator Instructions] First question from Vicente Falanga with Bradesco BBI.

Décio, Pizarro, Pedro, Travassos, Boeri, the whole team. I have 2 questions. You mentioned that you had good results in the pilot project of nitrogen injection in Fazenda Belem. Can you give us more on the results obtained, production, estimate of increased recovery factor? And when will these projects be scaled up to other wells, including those that were closed? And my second question is you talked about -- well, you posted a significant cash generation quarter-on-quarter. What is the expectation of cash generation in Q3 and Q4?

Thank you, Vicente. Before I turn the floor to Boeri, we started with the nitrogen injection project in Potiguar, in Fazenda Belem. And our goal was to identify the parameters that make this injection efficient. The goal is that this operation will be paid by the additional oil volumes that we will lift from these wells. We are at the very beginning of the process. And hopefully, in the coming months, we will have a pretty good idea of how the project will perform and the adjustments we'll need to make in injection factors. Boeri?

Hello, Vicente. Thank you for the question. With a nitrogen project, we have finalized the injection in the wells of Fazenda Belem and in the wells in Estreito and we are now injecting nitrogen in Alto Rodrigues wells. And as Décio said, it is still too early to have any conclusions, but Fazenda Belem has quickly presented a relevant production increase, Fazenda Belém reached the production of 900-odd barrels, an amount that we didn't achieve since 2019. But it is too early to come to any conclusions about the project. It involves logistics, it involves costs, and it's about learning, continuing to learn with the process. As for polymer injection, we haven't stated that yet. The polymer injection plant is ready to arrive in the country, and we will start injecting for injectors in Salina Cristal field. And next year, we will expand to 10 injectors in Salina Cristal. And with the results, we will see how the rest of the field would evolve. We have potential in Salina Cristal and Canto do Amaro. And with nitrogen, we intend to continue to evolve at Fazenda Belem, Alto Rodrigues, Estreito and then others. So that's what we intend to do for now. As for cash generation, Vicente, I can answer that myself. For the next 2 quarters, we have a positive outlook in terms of cash generation. We will maintain our efforts to cut down costs, we'll have a production increase, especially at Atlanta with the connection of the last 2 wells. And with that resulting volume and with the reduction of CapEx because we've lived through the phase of highest CapEx at Atlanta and now it's under control, and we expect now to have an acceleration in cash generation and deleveraging. As Pizarro said, we want to finish with net debt over EBITDA below 2 by year-end.

Next question from Monique Greco with Itaú BBA.

I think I've got to ask 3 questions. One is a follow-up to Falanga's question. But my first question is about CapEx. This path of reducing CapEx starts becoming more visible now with Q2 results. And Pizarro mentioned that this reduction is going to be even greater in the second half of the year. What can we expect in terms of CapEx for Q3 and Q4? Should we consider that estimate of $450 million maintained for this year? The follow-up question is on CapEx as well. It's about EOR with nitrogen. So I have a question. Once the pilot projects are confirmed, and you start scaling up these projects, should this have a reflection on onshore CapEx increasing again because of the nitrogen projects when they are scaled up? And my third question has also to do with onshore. Now zooming out of the quarter. How are you thinking about the possibility of resuming the process of divestment of onshore assets in the midterm?

All right. We are working with a CapEx level of about $450 million, perhaps a little more than that this year. This is our target. It will really depend on the final number. I mean, will depend on the evolution of the projects of the 4 new wells at Atlanta and Papa-Terra that we are expecting until the end of the year. It really depends on when the rig will be released. This operation doesn't rely only on us. But that's the target that we have in mind, $450 million for the year with the significant reduction in the second half for the reasons we have mentioned. If it's not $450 million, it might be a little more, but this is the result of this campaign of the second and third wells at -- the third and fourth well at Atlanta and Papa-Terra field. Onshore, we should not increase the CapEx with the EOR project, enhanced oil recovery. We are basically doing some modeling where we would have OpEx. And our evaluation is whether the oil volume coming out of which well will pay for the additional OpEx that we would have with polymer or nitrogen injection. So we should not expect an increased CapEx because of that -- because of the OpEx. And we don't have any onshore divestment in our radar, except for those little fields that are not material in case we identified that it's best to get them out of the portfolio. But a large-scale divestment of our assets, that's not in our plan. Thank you very much, Monique. Thank you Décio.

Next question from Luiz Carvalho with BTG.

Congratulations on this turnaround of your results. This was really good to see. I have 3 -- probably 3 questions. My first question, Travassos. Not very long ago, we talked and you expressed how optimistic you were with Papa-Terra. And right after the last developments in the field. Can you give me an update about the main opportunities or main challenges, what could the company eventually do to boost production further going towards the next quarters? And the second question maybe to Pizarro or Décio. I think -- well, you did some very good work in terms of liability management. You have Yinson and your focus was trying to give more predictability to that deleveraging of the balance sheet. I mean you also mentioned hedging. I would just like to understand or know whether there is anything else that should merit my attention, maybe revisit the discussion of divesting of some assets or maybe thinking about synergies after the merger of the 2 companies. What do you see down the road that could be an addition to the process that would allow you to extract something else out of the process? In the Clara Camarao refinery, you had a contract with Raizen and from what I notice from their communication, they decided to terminate the contract or cancel the contract. So how do you impact of that contract termination in the operations you have there, if there is any kind of downside when you look at the previous numbers?

Thank you, Luiz. I think Travassos can answer the first question, because he is working a lot with Papa-Terra and he's very excited and eager to answer.

Well, thank you. Thank you for your question. My answer will be divided in different phases of Papa-Terra. Papa-Terra today, Papa-Terra in the near future and Papa-Terra in the long run. Presently, we are intensively working in 3 pillars related to that asset. I mean, security or safety is something that is present in everything we do. But we are working hard to recover the integrity of the asset. We have teams dedicated to do that. Inspection teams and construction and assembly teams, this is a constant and ongoing work. We are also doing some work related to increasing efficiency because we are implementing different systems. We had single system. When a pump would stop working, we would do everything one-off. But today, see that things are constant and continuous in terms of the efficiency of the asset is very important. And the third pillar is cost reduction. Cost reduction is very important. Efficiency of the equipment also is very important. Papa-Terra, there were some equipment that were leased. And today, I'm returning the equipment. I get rid of that cost and now I use the equipment from the platform itself. This is a clear example because today, we have the offload system. I used to have a least boat in the past, but no longer. Now we operate the offload through the unit system. So the first phase involves these 3 pillars. And we measure the performance and the results on a daily basis. Papa-Terra of the near future involves 2 wells. I mean, the 52 and 53 wells, our drilling operation already has the rig confirmed. So it should start by the end of this year. We are looking at it very closely because that involves IBAMA license. We've got some very positive feedbacks from IBAMA, therefore, we do not expect any surprises. We have more than 80% of all contracts already signed. The main contracts are signed for rigs and the main services as well. So I would say that there is very, very low risk in these projects. And Papa-Terra of a more distant future, we don't have anything already materialized. But from now to next year, we will be also talking about increasing the recovery factor of Papa-Terra. So in fact, I am even more optimistic in terms of the results and all of the value that we can still extract from this asset. Thank you for your question.

I mean oil sales, I think I also have some good news. I would just like to add 2 or 3 more points, but there is one recent thing we just renewed our resale contract for Papa-Terra already reflecting part of the investments and all the improvements, as Travassos mentioned, especially to our logistic process. But also, we are adopting more creative solutions that reflect the quality of the oil. We believe that starting in the third quarter, we will see improvements in terms of spread against Brent, about 2 high digits. So this is one of the drivers where we see a lot of room for future improvement in the next 2, 3 years. Second question, Luiz, I will invert the sequence. Synergies, well, we will start capturing synergies after some of the structural movements we recently had. I mean divestment of assets, we don't have it in our radar or anything. We're very pleased with what we have now. The company totally integrated onshore and offshore, so we can manage CapEx in a moment when there is price reduction as the one we're experiencing now. That's why we don't have in the radar any kind of changes to that divestment strategy. As for liability management, I mean, we often talk about what else can be done. Our cash position is very robust, what we are now discussing it, what kind of cash level we should maintain and what kind of debt position we should have? And then I will ask Pizarro just to add to my comments.

Thank you, Luiz. I think there are 2 aspects that Décio mentioned. One is on synergies. We work hard to get involved in partnerships. And you know that we incorporated the old 3R that was Macau in 3R Potiguar. And so we have any -- for onshore, which the tax regime is optimized. We more recently incorporated Enauta Energia to our holding company. And so with that, Atlanta is part of a corporation that for many years, they accumulated tax losses, in 2025, but with the prepayment of receivables of Atlanta FPSO, in this respect, now our tax burden is much lower, especially our main asset, Atlanta for the next few years. We have tax losses in other partnerships. But if you look at the entire base, we have more than BRL 3 billion and we are working towards optimizing the utilization in the next coming years. And all in all, we have BRL 1 billion potential of decreasing our tax burden in the coming years. And this is something that is being done in a coordinated fashion with our liability management. How are we going to get into new debt? How can we integrate the debt of the holding to the different subsidiaries? So all of that is part of a package of liability management. And as Décio was saying the second thing that we are also discussing is what are the debt that we can plan for prepayment or that eventually we can re-profile them with further cost reductions. Well, certainly, we did what matters most. Therefore, the opportunities are not as large, but we still see opportunities in this 12-month horizon. There are some debentures that can be prepaid in the next quarters. And this is something that we will still pursue in an attempt to reduce the cost of debt further. That used to be over 10%, then got close to 9% earlier this year and in the last quarter, we disclosed something like 8.7%, and now we are finally very close to 8%, 8.1%, 8.2%, considering the cost of issuance of the instruments. If you consider the cost of trading, we would be below 8% for the company. So this is a continuous work. And of course, we will try to reduce the net financial expense that we have in our cash flow, which is already much lower, but we still see further reduction opportunities. And finally, referring to the contract with Raizen at Guamaré, we are working well with positive results, but I would like Pedro to give you some more light about our bunker sales in Guamaré.

Thank you, Luiz, for your question. As you said it yourself, we terminated our contract with Raizen. So in the second quarter, everything is already under Brava's management. The bunker produced at Potiguar accounts for 65% of all of the volumes produced in that basin, the product, therefore, is very important for our sales profile. The agreement involved 2 main things. One, a margin or a fixed long-term spread and the term was quite long when it was being managed by Raizen with a small premium vis-a-vis Brent. And the second thing was a business plan to develop Potiguar as a sales channel and bunker services to the domestic market. We took over the management of this flow. And since then, we already have more than a dozen shipments conducted by Brava with a very diversified range of clients. We have the Caribbean and other countries using our products in. Our midterm objective still remains the same. We are looking at opportunities in the domestic market because the premium is even more attractive in terms of our product. So far, I don't have much more to say, but we are working diligently and seeing further opportunities.

Our next question comes from Mr. Gabriel Barra with Citi.

I have 2 follow-up questions. One, I think Pizarro talked about the tax benefits you have and one part came with this prepayment of instant credits. Let's talk about numbers and time line to recover that credit. We have to consider that with instant credit alone that involves like $1 million in NPV. And in addition to that, you have the entire rearrangement. With the merger of the 2 companies, there are some accumulated losses. So if you could give me some light about the time line for the recovery. This is important, so I can discuss numbers. My second question is about the deleveraging of the company, liability management, capital allocation. Because at the end of the day, we are talking about the future of the company and how the company is to behave dividend company or what have you. We talked about your dividend payout policy in the future, given the fact that now you are integrating the company, you are growing. So I would just like to get a better understanding about that. Now that things are moving along in the desirable direction with the integration. I think that moment is approaching. And speaking about the operation, you just took over Guamaré. So I want to hear from you about what that means in practical terms. Now you're operating asset, and it's no longer in the hands of a third party. So in practical terms, whether this will bring about further synergies or if there is any operating aspect that should merit our attention?

Thank you. I will ask Pizarro to talk about tax credits and synergies.

Thank you, Barra. At the holding company, we have a base of about BRL 1 billion of accumulated tax losses, and this comes from something that happened in the past because the previous 3R, the incorporated Ouro Preto. And later on, we made a transaction [indiscernible] Brava. And so this original incorporation already carried some tax losses and being a holding, you continue to accumulate. So from then on, we already had BRL 1 billion, but the transaction to prepay receivables led to BRL 800 million in the base. This BRL 1.8 billion is something that we will use up very quickly with Atlanta because Atlanta is our most profitable asset. But if you were to look only receivables from FPSO Atlanta, the optimization of that $40 million NPV, so $45 million, half of it should be utilized this year. The other half will come less of that BRL 1.8 billion. And this should be utilized between 2027 and 2028 at the most thinking of a more compressed Brent scenario. So conservatively speaking, this is calculated to be $40 million, but it could come up to $55 million. From the past, we are also carrying over a tax loss of BRL 800 million offshore and BRL 360 million was carried over. This partnership that we have Parque das Conchas and looking at offshore assets after the reorganization, we also have about BRL 300 million, including the payment of the exchange rate debenture this last month that we paid of $500 million that was at 3R Potiguar. If we look at all of that, as I was saying, BRL 3.3 billion that we intend to utilize in the period of 3 to 4 years. This will certainly reduce the effective tax rate of the company coming at the last line of taxes, and this will help the cash generation of the company as a whole. And then you also asked about capital allocation. As we've been saying, our #1 priority is operating delivery and leverage without losing sight of the future. So acquisition opportunity not in our radar right now, but we always feel like to look at opportunities and evaluate if these opportunities are in line with our company and criteria. In terms of dividend payout policy, when the right time comes, we will discuss that with the Board. Your other question, I think, was about Guamare. We took over the operational terminal. Recently, the operation led to a substantial cost reduction. So I'll ask Pedro to conclude the answer.

In fact, this was a very important event for the company. For over a year, we work to lead a very smooth transaction. The company made many investments. We use our own resources to update software and to have all the licenses to verticalize the operation at that terminal. And with that, we would continue with the control we had with Transpetro. As you said after the third quarter, we should start noting the financial results of the termination of that contract. We had important savings of cost of some dozens of millions of reals and the result will be disclosed later on.

Next question from Tasso Vasconcellos with UBS.

Décio, Pizarro, Pedro, Travassos, and Boeri. I have 2 questions. It's been 6 or 7 months with stabilized operation in both Papa-Terra and Atlanta, which is very different from what we saw in both fields historically. What were the main lessons learned throughout this process. And looking forward, where do you see the major production risks at these 2 fields, if by any chance, they fall below the current expectations. And my second question is linked to the first one. But looking at the company as a whole, and operational trends and in terms of cash generation, both have improved quite a lot. After some quarters when they were kind of below the expectations. What would be the main lessons learned of the company along this process of operating improvement?