By Brazil Stock Guide – PRIO (PRIO3), one of Brazil’s largest independent oil and gas producers, is entering the final months of 2025 fine-tuning two simultaneous and transformative moves: the closing of its acquisition of the Peregrino field, in its final negotiation stage with Equinor, and the start-up of Wahoo, expected to deliver first oil in the first half of 2026. Between both milestones, the company is managing a complex operational transition — coordinating teams, capital, and assets — as it prepares to lift production capacity to 200,000 barrels of oil per day.
Peregrino: Prio’s largest acquisition to date
Located in the Campos Basin, Peregrino was developed by Equinor, Norway’s state-controlled oil company, and began producing in 2011 — becoming the Norwegian group’s largest project in Brazil. In 2022, Prio announced the acquisition of a 60% stake in the field for US$ 3.35 billion, divided into two stages: 40% to be consolidated now and the remaining 20% after the final closing scheduled for 2026.
Following a 63-day regulatory shutdown earlier this year, production has resumed at over 100,000 barrels per day. Speaking to analysts during the company’s quarterly call, CEO Roberto Monteiro confirmed that all ANP approvals have been secured and that IBAMA will handle the subsequent environmental license transfer.
“There are no more regulatory obstacles. What remains is to adjust the final price, taking into account the downtime period. There’s goodwill on both sides,” Monteiro said during the call.
Once completed, the transaction will give Prio 100% ownership of Peregrino, consolidating a long-cycle heavy-oil asset that should add more than 40,000 barrels per day to group output. The move represents the company’s boldest expansion yet: output should rise to 150,000 barrels/day after closing and reach 200,000 once Wahoo comes online.
Beyond scale, full control of Peregrino will allow cost optimization and operational synergies across logistics, maintenance, and workforce management. Prio and Equinor teams are already working side by side offshore and onshore to ensure a smooth handover.
Wahoo: installation progressing on schedule
In parallel, Prio is accelerating Wahoo, also located in the Campos Basin. COO Francilmar Fernandes confirmed that subsea equipment installation has started following the project’s license approval in September.
“Everything is on schedule. The next step is commissioning, with first oil expected between March and April 2026,” Fernandes said.
Two wells have already been drilled, showing better-than-expected reservoir quality, and two more will be completed by early 2026. Prio has invested US$ 670 million of the US$ 870 million total budget, with the remaining US$ 200 million to be disbursed between late 2025 and early 2026.
Wahoo will be tied back to the Frade FPSO, requiring final adjustments in compression and processing systems. The project marks Brazil’s first large-scale tie-back between separate fields led by an independent operator, boosting efficiency and recovery factors.
Efficiency and capital structure
Prio ended the quarter with US$ 2 billion in cash and a net-debt-to-EBITDA ratio of 2x, according to CFO Milton Rangel. The company’s US$ 700 million bond issuance and partial repurchase of 2026 notes extended debt maturity, raising average duration to 4.4 years.
Monteiro emphasized that M&A will remain secondary in the near term: “The focus now is 100% operational. We want to capture synergies, stabilize Peregrino, and bring Wahoo into production.”
Share buyback and dividends: timing matters
Asked by analysts about capital allocation, Monteiro said Prio intends to resume share buybacks once leverage starts to decline — expected after Wahoo’s ramp-up and Peregrino’s full integration in 2026.
“There’s no investment today with a return higher than our own stock,” he said, stressing that buybacks will only resume once the deleveraging trend becomes clear.
On dividends, Monteiro reaffirmed that payouts remain off the table for now while leverage is above target levels: “Dividends aren’t taboo, but this isn’t the moment. First we reduce debt and execute buybacks. Once we’re comfortable with leverage, we can talk about distributions.”
Other fronts: Albacora, safety, and ESG
Alongside its flagship assets, Prio continues improving Albacora Leste, which reached a record 91% operational efficiency. The company also reinforced its health, safety, and environment (HSE) structure under former ANP executive Thiago Ormond.
Monteiro welcomed the regulator’s tougher inspection standards: “The ANP’s stricter oversight gives comfort to our operations. Safety is non-negotiable.”
On the social side, the Prio Institute continues to support programs like Mar Aberto, which integrates local fishing communities into the oil and gas supply chain.
A new Prio emerging
With Peregrino and Wahoo in full operation, Prio will cement its position as Brazil’s largest independent oil producer, with lifting costs projected to fall from US$ 17.4 per barrel to around US$ 10, driving strong cash generation and a leaner balance sheet.
“Our focus is to deliver Peregrino and Wahoo within the next eight months. That’s when the new Prio will truly emerge,” Monteiro concluded.
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