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Long term Objectives

To be the safest, most efficient and most lucrative oil and gas onshore operator in Brazil, being recognized as the operator of reference in terms of safety of our employees and  compliance and respect to the environment, the laws and regulations and in the good relationship with the neighboring communities. Within the areas in which we already are the operator, we expect to have all of the main fields/ reservoirs fully developed in terms of secondary recovery with water injection. In a 10 years horizon, we aim at expanding our operations to other oil fields in the Reconcavo Basin and to at least two other mature onshore basins in Brazil.

Scope

We are specialists in the operation of onshore mature and/or marginal fields which present significant upside potential for increase in the recovery of its oil and natural gas reserves through the implementation of secondary and tertiary recovery techniques with efficient cost structure. For such, we can opt to internalize some activities that are usually outsourced, such as the operation of rigs, inspection of pipes, pump shops, etc. We prefer assets with low and predictable decline rates and conventional reservoirs. We operate both as a contractor rendering services through risk production agreements for majors oil companies such as Petrobras, and through directly owned concessions acquired  in ANP auctions or through direct negotiations with other companies. Our geographic focus of operations is in Brazil, with the possibility to eventually analyze attractive opportunities in other countries in situations where we judge to possess significant competitive advantages.

Competitive Advantages

We list below our main competitive differentials:

• We are the largest independent onshore oil producer in Brazil and we have a proven track record of success, without parallel in the management of onshore mature fields in Brazil.
• Strong cash flow generation supported by efficient operations in terms of production and costs. Zero indebtedness.
• Experienced management team composed of specialized professionals and engaged founding shareholders with large experience in the oil business.
• We enjoy excellent reputation before our customer, the regulatory agencies, our suppliers and our work force.
• We benefit from an existing base of abundant, high quality reserves in our current operations.
• Agility in the reaction to external changes, such as price fluctuations or changes in technical interpretations, allowing for greater efficiency in the capital allocation. 

Logic of the Strategy.

Our focus on onshore mature fields practically eliminates the exploratory risk and the need for large initial investments in building the infrastructure for collecting and processing the production, largely reducing the overall risk and improving the rate of return. Moreover, by focusing on mature assets with marginal profitability for major oil companies, we avoid direct competition with companies with much greater resources than us and at the same time we offer alternatives for them to maximize the value of assets considered low priority in their portfolios. Our value proposition necessarily calls for a greater and faster recovery of the oil reserves from these fields and for optimized operational and capital costs, which allows us to make possible projects considered uneconomical or of very low priority for the majors, increasing the useful life and the profitability of the fields. We operate all of our fields, allowing us flexibility and control over the development of these fields, such as the pace and allocation of the investments, the management of the production and the control of the expenditures. PetroReconcavo’s effectiveness in managing these variables is the great competitive differential of the company.