The shares of oil company PetroRio (PRIO3) rose 1.15% around 1 pm on Tuesday (3), being quoted at R$ 25.45 per share. In the last 12 months the shares are up 33.53%.
However, it is worth noting that the company’s shares have shown strong fluctuations on the Brazilian Stock Exchange (B3), given the large movement in the price of a barrel of oil in the foreign market, the uncertainties regarding the war between Ukraine and Russia, and now the weak demand from China with the worsening of the coronavirus in the country – which has been promoting lockdowns.
PetroRio will report its figures for the first quarter of 2022 tomorrow (4), after the market closes – that is, from 5 pm, Brasília time.
See below what to expect from PetroRio’s results and whether it is worth investing.
What to expect from PetroRio
We, from PagBank, expect positive results for PetroRio (PRIO3), given the higher oil prices and the higher production announced by the company, increased by 2,900 barrels of oil equivalent (kboed). That is, an advance of 9%, reaching 35.2 kboed in this first quarter, after the fourth quarter of 2021 was more complicated due to production stops at Tubarão Martelo.
A very important factor that the company will probably continue to present is the reduction in Lifting cost (oil extraction cost) – which in the fourth quarter of 2021 was US$ 11.8, the lowest ever recorded.
The reduction in the cost of extraction is necessary for the company to have protection against the volatility of Brent oil in the international market.
Another important factor is that PetroRio manages to be profitable and generate profit even with the price of a barrel of oil close to US$ 40 a barrel. This, according to PetroRio, will still be lower in 2022, aiming to reach US$ 11 per barrel. But the company considered that the indicator should fluctuate between $10 and $12.
Another relevant movement was the interconnection between the Polvo and Tubarão Martelo fields. And more recently, the company received the operating license for the Frade field.
PetroRio informed that it was granted by the Brazilian Institute of Environment and Renewable Natural Resources (Ibama) the Operating License (LO) for the drilling of new wells in Campo de Frade. Thus, PetroRio (PRIO3) mobilized the Norbe VI rig, in order to start the Campo de Frade Revitalization Campaign in the coming days.
At the end of April, it announced the completion of the acquisition of 90% of the Albacora Leste field operation. Albacora Leste is located at a water depth of 1,200 meters, in the north of the Campos Basin, 23 km from the Frade field.
The company estimates an economically recoverable reserve of close to 280 million barrels for the Albacora Leste field. long-term price of US$ 62 per barrel of oil.
Is it worth keeping an eye on PRIO3?
We remain confident in PetroRio’s shares (PRIO3), given the prospect of short-term earnings growth — boosted by higher oil prices and benefits from recently acquired stakes in pre-existing assets.
In the long term, its low leverage, with a net debt/EBITDA ratio (the company’s debt level at -0.25), can make the company comfortable to promote future investments in the improvement of its fields.
Without forgetting, of course, the increase in its production with the acquisition of part of the Albacora Leste fields from Petrobras (PETR3/PETR4). It is also worth noting that the company is still waiting for the acquisition of the Albacora Oeste field.
The target price for the shares, with the median of Bloomberg’s projections, is R$36.50 for the next 12 months, with a potential of 43.4% considering the price of R$25.45.