AZTE3 Azevedo & Travassos Energia

Azevedo & Travassos Energia S.A. is a Brazilian publicly traded company, with common shares traded on B3 under the ticker AZTE3, structured as a holding company primarily focused on the onshore oil and natural gas exploration and production sector. The company was created in August 2023, initially under the name REAG54 Participações Ltda., with a generic focus on equity interests. Over the course of 2024, its profile was redefined in the context of a corporate reorganization involving Azevedo & Travassos S.A. and the Iduna private equity fund, with its conversion into a corporation in March 2024 and subsequent change of name to Azevedo & Travassos Energia S.A., approved in September 2024. At this same stage, Azevedo & Travassos Petróleo S.A. (ATP) was incorporated into the company’s structure; ATP had in turn acquired Phoenix Oleo & Gas S.A., marking the consolidation of Azevedo & Travassos Energia’s focus on the onshore oil and gas business.

Azevedo & Travassos Energia’s business model is based on operating as a holding company with investments concentrated in the exploration, development, production, and commercialization of oil and natural gas. The company’s stated strategy is to acquire E&P assets belonging to smaller independent producers, as well as small existing producers, targeting fields considered non-mature and with a low level of development. Following these acquisitions, the company allocates capital to technical interventions, reactivation of wells, drilling of new wells, and operational improvements, with the aim of increasing reserves and production. ATE and its subsidiaries report operating in a single operating segment, focused on oil sales, and in 2024 they began to reflect in their consolidated financial statements the operations of ATP and Phoenix.

Phoenix Oleo & Gas, an indirect subsidiary of Azevedo & Travassos Energia, is the company’s main operating vehicle in the upstream segment. Founded in 2006, Phoenix holds onshore concession contracts in the Potiguar Basin, Brazil’s main onshore oil and natural gas production hub, near the city of Mossoró in the state of Rio Grande do Norte. The assets include six producing oil fields and two exploratory blocks, with nine wells in production, six wells to be reactivated, and plans to drill twelve new wells, subject to the issuance of environmental licenses. The disclosed in situ volumes for the concession areas indicate approximately 22.3 million barrels of oil (VOIP) and 432.4 million cubic meters of gas (VGIP, in situ volumes), in addition to recoverable reserves registered with the ANP. ATP has been conducting seismic and geological reprocessing to support field development plans and future independent reserve certification.

Azevedo & Travassos Energia concentrates its operations in the exploration and production (upstream) chain, covering everything from geophysical and geological survey activities to the commercialization of crude oil and, increasingly, natural gas. The production process of the subsidiaries follows the typical sequence of the E&P industry: acquisition and interpretation of seismic data, drilling of wildcat wells, long-duration tests to evaluate discoveries, preparation and submission of development plans to the National Agency for Petroleum, Natural Gas and Biofuels (ANP), installation of production and transportation infrastructure, and finally, sale of the hydrocarbons extracted. Oil production in the Potiguar Basin is transported to the company’s own gathering stations, from where it is picked up by buyers in spot operations, with the current reported volume at around 30 barrels of oil equivalent per day, still an initial level compared with the physical potential of the assets.

On the commercial front, Azevedo & Travassos Energia does not yet have any material concentration in a single customer, since no buyer individually accounted for more than 10% of net revenue in 2024. Sales are directed to local customers in the Brazilian domestic market, and all reported revenue is generated in the country. In addition to its own production via Phoenix, the expansion strategy includes operational partnerships with other independent E&P companies. In June 2024, ATP entered into an agreement with Petro-Victory Energy Corp., a company listed on the Toronto Stock Exchange, to develop concession contracts in the Andorinha Field and in block POT-T-281, also in the Potiguar Basin. Under the arrangement, ATP provides the CAPEX for drilling, completion, and intervention in specific wells, in exchange for a majority share of the net results from these assets until recovery of the investment and then a 50/50 share thereafter, and also holds a call option subject to proved and probable reserves.

Azevedo & Travassos Energia’s geographic presence is concentrated in Brazilian territory, with operational focus in the state of Rio Grande do Norte. As of the reporting date, there is no revenue from abroad or material exposure to foreign regulation, which reinforces the domestic nature of its operations. The Potiguar Basin, where Phoenix’s concession fields and blocks and the assets under partnership with Petro-Victory are located, is home to some of the main onshore oil and gas players in the country, enabling technical and logistical synergies with the existing regional infrastructure. The company also completed, in March 2025, the installation of a gas compression unit and the commissioning of facilities at the Periquito Field gathering station, aimed at enabling commercial natural gas production and the transportation of additional volumes from nearby fields.

From a regulatory standpoint, Azevedo & Travassos Energia, as a holding company, does not require specific government licenses for its corporate purpose, but its subsidiaries are subject to an extensive regulatory framework. Oil and natural gas exploration and production in Brazil are regulated by the ANP, a federal agency linked to the Ministry of Mines and Energy, which establishes technical rules, conducts bidding rounds for concessions, supervises operations, and monitors compliance with development plans and contractual obligations. The company’s activities fall under the concession regime defined by the so-called Petroleum Law, supplemented by subsequent regulations relating to natural gas, such as the Gas Law and the New Gas Law, which cover transportation, evacuation, treatment, processing, and commercialization. In addition to ANP authorizations, operations depend on state-level environmental licensing, with an emphasis on operational safety, protection of underground aquifers, and effluent management.

Regarding environmental, social, and governance practices, Azevedo & Travassos Energia is at an early stage in structuring its ESG agenda. The company does not yet publish a specific report on the topic but states that it adopts procedures aimed at reducing emissions, minimizing and properly treating waste, and protecting the environment in the areas where it operates. Among the initiatives cited are industrial water reuse systems, advanced effluent treatment, protection of aquifers through casing and cementing of wells to high technical standards, rehabilitation and reforestation projects overseen by state environmental agencies, and logistics practices aimed at reducing fuel consumption. The company also mentions internal training programs in environmental best practices and awareness-raising initiatives with surrounding communities, signaling its intention to evolve toward more formalized ESG governance in line with regulatory requirements and oil and gas sector standards.

The listing of AZTE3 shares on B3, with "Category A" public company registration granted by the CVM and trading admission approved in January 2025, places Azevedo & Travassos Energia within the universe of publicly traded oil and gas companies in Brazil. The corporate reorganization that led to the partial spin-off of Azevedo & Travassos S.A. and the contribution of ATP to ATE’s equity consolidated, in a listed structure, the onshore exploration and production assets previously allocated within the group. As a result, the company now reports its E&P activities on a standalone basis, offering greater visibility into the evolution of reserves, production, capital expenditures (CAPEX), and operational performance of its fields and partnerships in the Potiguar Basin, within an industry environment characterized by heavy regulation, intense capital requirements, and exposure to the dynamics of the global oil and gas market.