Prio’s December Production Aligns with Expectations, Boosted by Peregrino

Prio (PRIO3) released its December 2024 production figures on Tuesday, meeting market expectations. The company’s output reached 106,300 barrels of oil equivalent per day (boe/d), a 38% monthly increase.

This surge stems from Prio’s newly acquired stake in the Peregrino field, finalized in early December. The Peregrino field, situated in the Campos Basin and operated by Equinor, contributed 37,100 boe/d to Prio’s total production.

This figure accounts for Prio’s 40% ownership in the field. Without Peregrino, Prio‘s organic production would have decreased by 4%. Albacora Leste field experienced a 14% drop in production.

This decline resulted from a turbine replacement and maintenance on the gas production system. Other assets remained relatively stable. Frade field saw a 1% increase, while Polvo and Tubarão Martelo fields combined for a 2% decrease.

Prio’s acquisition of Peregrino has pushed its production back above the 100,000 boe/d mark. This boost sets a positive tone for the company’s fourth quarter 2024 results.

Production in Q4 was 25% higher than in Q3. Analysts expect Prio’s output to stabilize around 100,000 boe/d until Wahoo field comes online.

Stock Performance and Investment Potential

In 2024, PRIO3 shares fell 13%, underperforming both oil prices (-4%) and Petrobras (+19%). This decline is attributed to delays in Wahoo’s environmental licensing process. However, recent developments suggest the licensing is progressing.

The public hearing request period ended on Monday, indicating potential approval soon. Even if Wahoo’s production is delayed until 2026, Prio is expected to generate strong cash flow.

The company’s dollar-denominated revenues provide a hedge against Brazilian macroeconomic fluctuations. Analysts maintain a buy recommendation for PRIO3, citing limited downside risk.

They highlight the potential for significant upside following Wahoo’s environmental approval. Prio currently trades at a 14% free cash flow yield, assuming Wahoo begins production in the second half of 2025.

This valuation, combined with the company’s growth prospects, presents an attractive investment opportunity in the Brazilian oil sector.

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