What Happened in PRIO Fourth Quarter
PRIO (PRIO3), Brazil’s largest independent oil producer, swung to a net loss of $185 million in Q4 2025, reversing the $1.07 billion profit recorded in the same period a year earlier. The loss was driven by non-cash items rather than operational weakness — primarily a sharp increase in depreciation and amortization following the consolidation of the Peregrino field, and a tax-base adjustment caused by the real’s Q4 appreciation against the dollar.
For the full year, PRIO earned $405 million (ex-IFRS 16), a 77% decline from 2024’s approximately $1.76 billion. The dramatic drop reflects the accounting impact of integrating Peregrino — the largest offshore acquisition in Brazil’s independent E&P sector — rather than a deterioration in the underlying business.
Total revenue reached $642 million in Q4, up 20% year-on-year, while net revenue was $586 million. For the full year, revenue totaled approximately $2.5 billion, a 3% increase despite the 15% decline in average Brent prices — a testament to PRIO‘s production-led growth model.
Key Drivers Behind PRIO Performance
Production Growth and Peregrino Consolidation
Q4 production averaged approximately 128,000 barrels per day (bpd), up 46% year-on-year and 40,000 bpd above Q3 levels. The jump reflects the closing of PRIO’s acquisition of the remaining 40% stake in Peregrino from Equinor, which brought the company to 100% ownership of Brazil’s second-largest offshore field. Full-year production averaged a record 106,400 bpd.
Sales volumes rose 49% to 10.9 million barrels in Q4, though they trailed total production of 11.8 million barrels. Peregrino dominated the revenue mix at 42.8% of total Q4 revenue, followed by Frade (28.4%), Albacora Leste (16.0%) and the Polvo/TBMT cluster (12.9%).
The D&A and FX Impact
The Q4 loss was overwhelmingly driven by two non-cash factors. First, the consolidation of 100% of Peregrino sharply increased the depreciation and amortization charge, reflecting the asset’s $3.5+ billion carrying value now fully on PRIO’s balance sheet. Second, the real’s appreciation in Q4 created a tax-base adjustment on BRL-denominated fixed and intangible assets, inflating the reported tax expense.
Operationally, however, the quarter was strong. EBITDA rose 7% to $324 million, with the adjusted figure reaching $341 million. The full-year operating result (ex-IFRS 16) was $1.5 billion, while the financial result was negative at $339 million, reflecting the higher debt load from the Peregrino acquisition.
Lifting Cost Improvement
Lifting cost dropped 28% sequentially to $12.5 per barrel in Q4, a meaningful improvement that signals progress on Peregrino integration. Management has guided for a target lifting cost of $7–9 per barrel once Peregrino synergies — including switching from diesel to gas-powered generation, shared logistics with Polvo/TBMT, and contract renegotiations — are fully realized. The company aims to reduce Peregrino’s annual operating expenses from the $550 million inherited from Equinor to approximately $250–300 million.
PRIO Financial Detail
Quarterly and Annual Financial Summary
| Metric | 4Q25 | 4Q24 | YoY |
|---|---|---|---|
| Total Revenue | $642M | $535M | +20% |
| Net Revenue | $586M | $489M | +20% |
| EBITDA | $324M | $303M | +7% |
| EBITDA Margin | 55% | 62% | −7pp |
| Net Income (Loss) | ($185M) | $1,074M | n.m. |
| Lifting Cost / bbl | $12.5 | — | −28% QoQ |
Production and Operational Metrics
| Metric | 4Q25 | FY2025 |
|---|---|---|
| Avg. Production (kbpd) | ~128 | 106.4 (record) |
| Sales Volume (M bbl) | 10.9 | 37.8 |
| Revenue by Field (Q4) | Peregrino 42.8% · Frade 28.4% · ABL 16.0% · Polvo/TBMT 12.9% | |
| Total Revenue (FY) | — | ~$2.5B (+3%) |
| Net Income (FY, ex-IFRS 16) | — | $405M (−77%) |
| Operating Result (FY, ex-IFRS 16) | — | $1.5B |
| Financial Result (FY, ex-IFRS 16) | — | −$339M |
The EBITDA margin compression from 62% to 55% reflects the lower Brent environment and the initial cost profile of the newly consolidated Peregrino field, where operating efficiencies are still being implemented. Management expects margin recovery as the $300 million Peregrino cost-reduction program progresses through 2026.
Management Signals
At its December 2025 Investor Day, PRIO laid out a clear roadmap: production exit rate above 200,000 bpd in 2026, driven by the start of commercial production at the Wahoo field (expected by April 2026) and the ongoing ramp-up of the fully owned Peregrino. The company targets stable production of ~200,000 bpd into 2027.
Organic capex for 2026 is guided at $450–500 million, focused on drilling campaigns at Frade and field optimization. Peregrino’s operating costs are targeted to fall from $550 million annually (under Equinor) to $250–300 million through energy-source switching, logistics sharing, and contract renegotiations.
Management signaled that with leverage expected to reach ~1.5x net debt/EBITDA by Q3 2026, the company intends to establish a formal shareholder return policy, with dividends potentially beginning in late 2026 or early 2027. The share buyback program remains suspended while deleveraging is prioritized.
What to Watch Next
Analysts remain overwhelmingly bullish despite the Q4 loss. XP Investimentos, which names PRIO its top pick in the sector, carries a R$64 target and projects FCFE yields above 30% in 2026 once Wahoo and full Peregrino are contributing. BTG Pactual rates buy at R$65, estimating 16% FCFE yield in 2026 (27% excluding M&A-related outflows) and a potential 14% dividend yield.
Itaú BBA maintains outperform with a reduced R$50 target, projecting 187,000 bpd production in 2026 and a 17% FCFE yield, with a breakeven of approximately $51 per barrel providing meaningful downside protection. Santander is more cautious with a neutral rating and R$55 target. Across 14 analysts, the consensus is overwhelmingly buy with an average target of ~R$56, implying significant upside from recent levels.
The key near-term catalysts are the Wahoo environmental licensing and first oil (expected H1 2026), progress on Peregrino cost reductions, and any announcement of a formal dividend policy. Brent prices — elevated near $90 amid Middle East tensions — provide a favorable backdrop, though the company’s $51 breakeven means it would remain cash-generative even in a substantial downturn.
Analyst Price Targets and Ratings
| Broker | Rating | Target |
|---|---|---|
| XP Investimentos | Buy (Top Pick) | R$ 64 |
| BTG Pactual | Buy | R$ 65 |
| Itaú BBA | Outperform | R$ 50 |
| Santander | Neutral | R$ 55 |
| Avg. (14 analysts) | Buy | ~R$ 56 |
Key Risks
Oil price volatility is the dominant risk. While Brent is currently elevated near $90 due to Middle East tensions, a resolution or demand slowdown could push prices toward or below PRIO’s $51 breakeven. The company’s high operating leverage means earnings are acutely sensitive to crude price swings — as the 77% annual profit decline amid a 15% Brent drop illustrates.
Environmental licensing remains a gating factor. The Wahoo field’s commercial start-up depends on Ibama’s installation license, and any further delays would push back the 200,000 bpd production target and the associated cash flow acceleration. The Albacora Leste redevelopment campaign, expected to begin drilling in mid-2026, faces similar permitting risk.
Execution risk on the Peregrino cost reduction is significant. Cutting annual opex from $550 million to $250–300 million requires fundamental operational changes to a mature, heavy-oil field. Delays or underperformance on this program would compress margins further and delay deleveraging.
FX risk is structural but non-operational. PRIO earns revenue in USD but carries BRL-denominated tax liabilities and asset valuations, creating quarter-to-quarter volatility that, as Q4 demonstrated, can turn accounting profits into losses regardless of underlying operational performance.
Sector Context
PRIO is the largest independent oil producer in Brazil and a unique B3 listing — a pure-play offshore E&P company with a portfolio of mature, low-decline fields acquired through a disciplined buy-and-optimize model. The Peregrino acquisition, completed in late 2025, roughly doubled production capacity and positioned PRIO as the second-largest offshore producer in Brazil after Petrobras.
The stock has rallied strongly in 2026, hitting an all-time high of R$58.90 in early March amid surging oil prices driven by Middle East conflict. PRIO3 has gained approximately 40% year-to-date as investors look through the Q4 accounting loss toward the production step-change expected in 2026. The shares trade at roughly 3–4x forward EV/EBITDA, among the cheapest multiples in the global independent E&P universe.
Peers Brava Energia (BRAV3) and PetroReconcavo (RECV3) also report Q4 results this week. Brava is in an earlier-stage turnaround with higher leverage, while PetroReconcavo faces growth constraints that prompted Itaú BBA to maintain a market-perform rating. Among independents, PRIO remains the consensus top pick for its superior asset quality, production growth trajectory and cash generation potential.