PetroReconcavo (RECV3) Plunges Nearly 6% After Earnings Report: “Operations Disappoint,” Say Analysts
- Why Did PetroReconcavo’s Stock Drop?
- Capex Surge: A Double-Edged Sword?
- EBITDA and Debt: The Fine Print
- Analyst Ratings: Diverging Views
- FAQs: Your Quick Guide to the RECV3 Sell-Off
30 PM on Friday, November 7, 2025, following the release of its third-quarter 2025 (3Q25) results the night before. Analysts pointed to operational disappointments and higher capital expenditures (capex) as the primary drivers behind the decline. The BTCC team notes that while EBITDA aligned with expectations, rising extraction costs and lower production weighed heavily on investor sentiment. Here’s a DEEP dive into the numbers and what they mean for the oil and gas player.
Why Did PetroReconcavo’s Stock Drop?
The immediate trigger for the sell-off was the company’s weaker-than-expected operational performance. Production dipped 3% quarter-over-quarter to 26,400 barrels of oil equivalent per day (boe/d), with declines in the Bahia and Potiguar fields due to well repairs and lower output from the Tiê field. Extraction costs jumped 12% sequentially to $15.5 per boe, further squeezing margins. Gustavo Cunha, an analyst at BTG Pactual, summed it up: “The operational quality disappointed—lower production and higher costs aren’t a recipe for confidence.”
Capex Surge: A Double-Edged Sword?
PetroReconcavo’s capex reached R$796 million year-to-date, exceeding its own guidance. The Itaú BBA team, led by Monique Greco, flagged this as a concern: “Sustaining production growth has been a challenge, and the higher spending adds pressure.” However, the company argues these investments—like deep and horizontal drilling in untapped reservoir zones—are necessary to unlock long-term value. XP analysts echoed this, though they noted the shift from positive to negative free cash Flow (FCF) in 2Q25 as a “turning point” for the investment thesis.
EBITDA and Debt: The Fine Print
While the R$350 million EBITDA matched consensus, unadjusted FCF swung to a negative R$260 million, partly due to midstream asset acquisitions in Rio Grande do Norte. Excluding this, FCF WOULD have been a slim R$29 million. Debt levels also crept up, adding to investor unease. TradingView data shows RECV3’s relative strength index (RSI) now hovering near oversold territory, reflecting the market’s bearish tilt.
Analyst Ratings: Diverging Views
Despite the slump, BTG Pactual and XP maintain “buy” ratings with price targets of R$19 and R$15, respectively, citing undervaluation. Itaú BBA stays neutral (R$16.50 target), cautioning that execution risks remain. As one trader quipped, “This is either a buying opportunity or a value trap—time will tell.”
FAQs: Your Quick Guide to the RECV3 Sell-Off
What caused PetroReconcavo’s stock to fall?
The drop stemmed from operational setbacks—lower production and higher costs—plus concerns over rising capex and debt.
Is PetroReconcavo still a good investment?
Analysts are split. Bulls see upside if new drilling pays off; bears worry about cash burn and execution risks.
How does this quarter compare to past performance?
3Q25 marked a deterioration from 2Q25, when FCF turned negative due to aggressive spending.
