PetroReconcavo (RECV3.SA): 2Q26 Preview: Higher QoQ figures ahead on better oil prices

Research evidence excerpt

PetroReconcavo (RECV3.SA): 2Q26 Preview: Higher QoQ figures ahead on better oil prices

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17 Jul 2026 17:31:34 ET │ 13 pages

PetroReconcavo (RECV3.SA)

2Q26 Preview: Higher QoQ figures ahead on better oil prices

CITI'S TAKE

We update our model to reflect 2Q26 production data, fresh

macroeconomic estimates, the most recent Citi Commodities team

forecasts on oil, and our view on the thesis. That said, we expect higher QoQ Buy

figures in 2Q26, mainly reflecting higher oil prices, partially offset by lower Price (17 Jul 26 17:00) R$10.29

average FX, lower production and gas sales (noting the 21-day stoppage in

Guamaré UPGN), and negative effects on hedge positions, while expecting Target price R$11.00↓

lifting costs to increase (in USD terms) given the FX trend, partially offset by from R$13.00

the company’s efforts to increase efficiency. We thus expect EBITDA of Expected share price return 6.9%R$395mn and net income of R$232mn during the period, positively

impacted by MTM effects on financial results. However, from a cash flow Expected dividend yield 13.6%

perspective, we do not expect an improvement in FCF generation since the Expected total return 20.5%

company may have paid March hedge figures in 2Q, hindering the Market Cap R$3,020Mdeleverage process.

US$595M

We also keep our Buy rating on the thesis while decreasing our target price to R$11

(from R$13), mainly factoring lower oil prices in line with Citi’s Commodities team

forecasts. Despite the decrease in TP and in O&G production, we still have a positive

view on RECV3 given the low leverage and the high likelihood of converting a Price Performance

significant part of its FCF into attractive dividends ahead. Meanwhile, we note the (RIC: RECV3.SA, BB: RECV3 BZ)