AZTE3

Azevedo & Travassos Energia S.A. is a Brazilian publicly held 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 name change 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 in turn had 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 exploration and production assets belonging to smaller independent producers, as well as small companies that are already producers, targeting fields considered non-mature and with a low level of development. Following these acquisitions, the company allocates capital to technical interventions, well reactivation, drilling of new wells, and operational improvements, with the goal of expanding reserves and production. ATE and its subsidiaries report operating in a single operating segment, focused on oil sales, and in 2024 they began reflecting ATP’s and Phoenix’s operations in their consolidated financial statements.

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, the main onshore oil and natural gas production hub in Brazil, 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 activities from geophysical and geological surveys to the commercialization of crude oil and, increasingly, natural gas. The production process of the subsidiaries follows the typical E&P industry sequence: acquisition and interpretation of seismic data, drilling of exploratory wells, long-term testing to evaluate discoveries, preparation and submission of development plans to the National Agency of Petroleum, Natural Gas and Biofuels (ANP), installation of production and flow infrastructure and, finally, sale of the extracted hydrocarbons. Oil production in the Potiguar Basin is transported to proprietary gathering stations, from where it is picked up by buyers in spot operations, with the current reported volume around 30 barrels of oil equivalent per day, still an initial level relative to the physical potential of the assets.

On the commercial front, Azevedo & Travassos Energia does not currently have significant 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 this 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 investment recovery and an equal share thereafter, as well as holding a call option subject to proved and probable reserves.

Azevedo & Travassos Energia’s geographic footprint is concentrated in Brazilian territory, with an operational focus in the state of Rio Grande do Norte. As of the date reported, there is no revenue abroad or significant exposure to foreign regulation, which underscores 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, hosts some of the main players in the onshore oil and gas segment 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 gathering station of the Periquito Field, aimed at enabling commercial production of natural gas and the flow of additional volumes from nearby fields.

From a regulatory standpoint, Azevedo & Travassos Energia, as a holding company for equity interests, 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 is regulated by the ANP, a federal agency linked to the Ministry of Mines and Energy, which establishes technical standards, conducts bidding rounds for concessions, oversees 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 on natural gas, such as the Gas Law and the New Gas Law, which address transportation, flow, treatment, processing, and commercialization. In addition to ANP authorizations, operations depend on environmental licensing at the state level, 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 initial 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, recovery and reforestation projects monitored by state environmental agencies, and logistics practices aimed at reducing fuel consumption. The company also mentions internal training programs on environmental best practices and awareness initiatives with surrounding communities, signaling an intention to evolve toward more formalized ESG governance in line with regulatory requirements and standards in the oil and gas sector.

The listing of AZTE3 shares on B3, with an "A" category public company registration granted by the CVM and trading admission approved in January 2025, places Azevedo & Travassos Energia among the publicly traded companies in the oil and gas sector 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 into 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 separately, providing greater visibility into the evolution of reserves, production, capital expenditures (CAPEX), and operating performance of its fields and partnerships in the Potiguar Basin, within a sectoral environment characterized by heavy regulation, high capital intensity, and exposure to global oil and gas market dynamics.