Record barrels, a new tariff, and a patient board: Prio's Q2 2026 balancing act
Prio's second-quarter 2026 was textbook Albacora Leste-flavored: record production, record sales, and a sharply lower leverage ratio. But the story is bigger than the numbers. As CEO Roberto Monteiro put it, the quarter had "2 aspects explaining this excellent quarter" — a higher oil price driven by war and, more importantly, an operational side that delivered Wahoo Field at its promised 40,000 barrels a day and pushed the company to a group-wide record of 172,000 barrels per day. That operational muscle is what moves the needle, even as a new export tax and a global trade war cloud the outlook.
A production machine finds new gears
The headline number is 172,000 barrels per day, but the real proof of execution is in the field-by-field detail. At Wahoo, the fourth well came online after a vessel failure forced a quick pivot to Prio's own Genesis vessel — a live demonstration of the vertical-integration thesis. At Peregrino field, the A15 well in the Isolado reservoir began producing, and management now practically guarantees 100,000 barrels a day through year-end. On the call, Jean Calvi walked through the quarter's operational highlights: “We are starting to produce those 40,000 barrels from Wahoo field... the company's overall efficiency for the period was 94%.” — Jean Calvi, Operations Executive · 2026-08-05 That efficiency—despite a gas-lift line failure at Frade and a hydrate shutdown at Albacora Leste—is striking. July efficiency at Albacora Leste is already back to 95%.
The operational gains also show up in lifting cost. The quarter came in at $8.90 per barrel, and management guided to $7–8 in Q3 as Peregrino switches from diesel to gas. That is a meaningful step toward the $7 target once envisioned. As Roberto noted in a prior call, “the lifting cost, we reached $7.4 per barrel. Today, average production in the quarter was 91,000 barrels daily... now we are at 100,000... the trend is that the lifting cost until the end of the year... will be around that.” — Roberto Monteiro, CEO · 2023-08-08 The company has since blown past that 100,000 level, and the cost trajectory is intact.
Financial muscle and a new tax headwind
The financial picture is equally strong. CFO Milton Rangel highlighted adjusted EBITDA of $878 million for the quarter, bringing the first half to $1.730 billion—already above all of last year's EBITDA. Leverage fell to 1.5x, and cash generation remains robust despite $114 million spent on share buybacks. The company's debt profile is being actively managed, with rollovers extending maturities and the average cost of debt at a competitive 6.40%.
But the quarter also introduced a new, possibly durable threat: an export tariff on Brazilian crude. Of the $113.9 million in "domestic sales and export taxes," $111 million relates to this tariff, which caught the market off guard. On the call, an executive laid out the company's legal challenge:
We were often caught by surprise... what the company has been doing... is to try to take this to court, judicialize it as we call it... It's not a measure to regulate the market... this is a very delicate point in our view.
The argument is nuanced: Brazil produces more than it can refine, so curtailing exports merely starves the world of product while refining margins balloon. The tariff is a real drag on 2026 cash flow, and management's base case is that it may last about 60 more days, but the uncertainty is squarely on the table.
Capital allocation: plenty of cash, patience on policy
Given the strong cash generation, investors are pressing on dividends. The company owns just over 9% of its own shares, aims for 10%, and will cancel shares to keep the buyback going. But the Board has decided to wait before formalizing a payout policy, citing geopolitical and macroeconomic volatility. Roberto was explicit: “We're executing the policy... It's a matter of being cautious... on practical effect now because now we are buying back shares.” — Roberto Monteiro, CEO · 2026-08-05 This echoes a theme from the November 2025 call, when he spoke of the need to see leverage stabilize before resuming buybacks: “the moment it stabilizes and the moment we understand that it's starting to drop... then I think it is the right moment for the company to go back to the market and start the buyback.” — Roberto Monteiro, CEO · 2025-11-05 That patience is prudent given the dividend policy is designed to be flexible—it can be suspended for M&A, and M&A market activity is itself hostage to oil price volatility.
The company's cash generation is doing the talking: net debt is expected to fall to ~$3.8 billion by year-end and $3 billion by end-2027, with leverage reaching 0.8x if oil stays at $80. CapEx is set to drop sharply after the Wahoo and Peregrino investments, freeing up even more cash.
Outlook: more barrels, more patience
Looking ahead, Prio is guiding to slightly above 200,000 barrels per day by year-end, with the next big catalyst being the closing of the remaining 20% of Peregrino between October and November. Arapuca tieback is making progress, and two new Frade wells could add 4,000–5,000 barrels a day. The operational machinery is humming. The key swing factors—export tax, oil price, M&A, and the delayed payout policy—are all external or discretionary. As Roberto summarized in his closing remarks, “it was not an easy game, but we had a good result.” — Roberto Monteiro, CEO · 2026-08-05 For a company that thrives on operational surprises, the real test is whether it can sustain this momentum while navigating a geopolitical and fiscal landscape that remains anything but calm.