PRIO 2Q26 Results: Strong FCF Anchors a Solid Quarter as Expected

Research evidence excerpt

J P M O R G A N

Latin America Equity Research

04 August 2026

PRIO

2Q26 Results: Strong FCF Anchors a Solid Quarter as

Expected

Overweight

PRIO3.SA, PRIO3 BZ

Price (04 Aug 26):R$58.45

Latam Oil, Gas & Petrochemicals

Our take: In a solid 2Q26, PRIO's Adj. EBITDA of $901.3M (+2.6% q/q) came

3.4% above our estimate of $871.3M - Neutral. Results were supported by

stronger realized prices and production of 172kbpd, partly offset by the 12% crude

oil export tax in effect during the quarter (extended into 3Q26 - see note here),

which limited full capture of higher Brent. The standout was again operational

efficiency: lifting cost fell to $8.9/bbl (from $9.4/bbl in 1Q26, -5.3% q/q),

reflecting the optimization of Peregrino OPEX and the dilution of Valente-cluster

costs following the completion of Wahoo's four producing wells. As a result, the

EBITDA margin expanded to 74% at $901.3M, surpassing our estimates of

$871.3M. In our calculations, FCF was positive at $440M (17.5% annualized

yield), even as the company repurchased 9.3M shares and continued to advance its

growth projects. Net debt declined ~$326M q/q, bringing leverage down to 1.5x

ND/EBITDA (from 2.0x in 1Q26). We expect a neutral reaction to this set of

results.

Operational milestones: Wahoo completed and Peregrino back above

100kbpd. The quarter was marked by the conclusion of the Wahoo

development - the first project fully executed by PRIO - which reached

40kboed after the third and fourth wells were connected in April and June,

respectively. In Peregrino, PRIO began developing the Isolado reservoir

(well A-15 online in late May), returning the field above 100kbpd, and

completed the repair of the gas import pipeline, which should replace

diesel-fired generation with gas and further reduce OPEX and the field's

carbon footprint. On the downside, a gas-lift line failure in Frade

temporarily interrupted three wells in early May, while Albacora Leste's

ABL-68 was normalized in early July.

Strong FCF of $440M (17.5% annualized yield). We calculate FCF was

positive at $440M (17.5% annualized yield), derived from an operating

result of $879M that comfortably covered capex of $285M and smaller

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