By Brazil Stock Guide — PRIO (B3: PRIO3), Brazil’s largest independent oil and gas producer, reported adjusted net income of $521 million in the third quarter of 2026, a 468% increase from a year earlier, driven by record production, the expansion of its Peregrino operations and sharply lower operating costs.
Total revenue surged 171% to $1.6 billion, while adjusted EBITDA, excluding IFRS 16 accounting effects, rose 235% to $1.1 billion. The results also benefited from a 34% increase in Brent crude prices compared with the third quarter of 2025.
Average daily production reached a record 191,600 barrels, up 117% year-on-year and 11% from the previous quarter. Oil sales totaled 17.2 million barrels, a 94% increase from a year earlier.
The production gains were largely driven by the Wahoo field, where all four producing wells operated throughout the quarter, and by the expansion of the Peregrino field. Peregrino contributed an average of 80,600 barrels per day attributable to PRIO, while the Valente cluster, comprising Frade and Wahoo, produced 73,400 barrels per day.
Peregrino’s 451% year-on-year production increase also reflected an unusually weak comparison base in 2025, when operations were disrupted by a shutdown ordered by Brazil’s oil regulator, ANP. PRIO subsequently acquired an additional 40% stake in the field and assumed operatorship in November 2025.
One of the quarter’s most significant developments was a 55% reduction in lifting costs — the expense of extracting a barrel of oil — to $7.90 per barrel. Costs also declined 11% from the second quarter. PRIO attributed the improvement to economies of scale at Wahoo and operating efficiencies at Peregrino, including the replacement of diesel with natural gas for power generation.
Despite the operational improvements, commercial expenses increased. The company’s oil trading and marketing result was a negative $155 million, compared with a negative $40 million a year earlier, reflecting higher sales volumes and rising maritime freight costs. Taxes on domestic sales and oil exports reached $119 million, largely reflecting an oil export tax introduced in March 2026.
Stronger operating performance also helped PRIO reduce net debt by approximately $586 million during the quarter to $3.46 billion. Its net debt-to-adjusted EBITDA ratio fell to 1.1 times at the end of September. The company also spent $71 million repurchasing 6.1 million shares.
Looking ahead, PRIO expects another well at Frade to begin production in the fourth quarter. In October, the company also acquired the Magnetita and Hematita exploration blocks near its Valente cluster, seeking to expand its resource base while potentially leveraging existing offshore infrastructure.
The results underscore PRIO’s operational transformation following the expansion of Peregrino and the start-up of Wahoo. The challenge now is to sustain efficiency gains and strong cash generation amid volatility in global oil prices and rising transportation and marketing costs.
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