PetroTal Announces Q3 2024
Operations and Liquidity Update
Calgary, AB and Houston, TX -
October 8, 2024 -
PetroTal Corp. ("PetroTal"
or the "Company") (TSX:
TAL, AIM: PTAL and OTCQX: PTALF) is pleased to provide the
following operational and financial update. All amounts are in US
dollars unless stated otherwise.
Key
Highlights
· Q3 production
averages 15,160 barrels of oil per day (bopd), a 39% increase on Q3
2023
· 2024 annual
production on track to meet top end of guidance range
· Total cash of $133
million as of September 30, 2024, an 18% increase on Q3
2023
· Well 20H achieves
initial production rates over 5,300 bopd
· President of Peru
grants Supreme Decree for transfer of Block 131 to
PetroTal
Manuel Pablo Zuniga-Pflucker,
President and Chief Executive Officer, commented:
"I
am pleased to report that PetroTal's production exceeded
expectations in Q3 2024. Our operations and logistics teams have
done an outstanding job of managing record low river levels, which
have impacted our ability to export crude through the Brazil route
in recent weeks. We are nearing the end of dry season in the coming
weeks and remain optimistic that production should return to
capacity by the middle of November.
With $133 million of cash in reserve, PetroTal's liquidity
remains healthy, despite a reduction in oil prices over the month
of September. We are committed to a capital returns policy that
includes a stable dividend, balanced with the advancement of our
key development initiatives. With that in mind, the budgeting
process for our 2025 capital program is well advanced, and we look
forward to updating the market on our future development program at
the appropriate time."
Q3
2024 Production
PetroTal produced 15,160 bopd in Q3
2024, above previous guidance of 13,000 bopd. As is to be expected
during the local dry season, production declined 17% relative to
the prior quarter (Q2 2024: 18,290 bopd); however, production
increased substantially (39%) compared to the same period last year
(Q3 2023: 10,909 bopd). Drought conditions have contributed to
record low river levels in Peru's Loreto region in 2024, but
PetroTal has consistently worked to improve its logistics
capabilities and was able to maximize barge fleet capacity during
the quarter. Year to date, through September 30, 2024, the Company
has produced approximately 17,800 bopd, slightly above the full
year production guidance range (FY 2024: 16,500 to 17,500 bopd).
Production has averaged approximately 10,700 bopd during the first
week of October.
Well 20H Drilling & Completion Update
The 20H well at Bretaña, which was
spud on July 26, was completed on September 23. As previously
announced on September 3, PetroTal decided to jointly complete this
well in both the Upper (VS1) and Main (VS2) Vivian sand units. In
response to low river levels, which have constrained the Company's
ability to store and export crude, PetroTal has not been producing
the well continuously; oil production from the 20H well achieved a
peak daily date of 5,357 bopd on October 3, while production has
averaged 3,120 bopd over the six days it has been onstream.
PetroTal will continue to manage production from new wells in
response to river levels, with a view to maximizing total field
output throughout the coming rainy season. The 20H well was drilled
and completed on time and budget, at a cost of approximately $15.5
million.
PetroTal commenced drilling well 21H
at Bretaña on September 25, 2024. This well is expected to be
completed by mid-November, at a total cost of
$14 million. Following this
well, PetroTal plans to drill and complete wells 22H and 23H,
before releasing the rig in Q1 2025.
Cash and Liquidity Update
PetroTal maintained a strong
liquidity position throughout Q3 2024, exiting the quarter with a
total cash position of approximately $133 million, of which of $121
million was unrestricted. This compares to total cash of $96
million at the end of Q2 2024, and $113 million at the same time
last year. PetroTal ended the quarter with accounts payable and
receivable of $81 million and $55 million, respectively.
During the quarter, PetroTal entered
into a hedge agreement for an average of 172,000 barrels per month
through August 2025. The costless collars have a floor price of
$65.00/bbl and a ceiling of $84.25/bbl, with a cap of
$104.25/bbl.
Pursuant to its ongoing share
buyback program, PetroTal repurchased 1.0 million shares in Q3
2024, at an average price of US$0.51/share. The Company also paid a
dividend of $13.7 million (US$0.015/share) on September 13, 2024,
related to Q2 2024 operations.
Block 131 (Cepsa) Acquisition Update
On October 2, 2024, the President of
Peru signed a Supreme Decree allowing for the amendment of the
hydrocarbon exploration and production license for Block 131 in
Peru. As previously announced on May 7, 2024, PetroTal reached a
definitive agreement to acquire a 100% working interest in Block
131 through the acquisition of CEPSA Peruana, S.A.C. The Supreme
Decree represents the last major regulatory hurdle in the transfer
of this asset to PetroTal. The Parties now await the renewal of an
investment certificate from the Peruvian tax authority, expected
within the next 30 business days, at which point the transaction is
expected to close.
Ecuador Export Pilot
As disclosed previously, PetroTal
initiated a pilot shipment of Bretaña crude to Ecuador's OCP
pipeline in mid-July 2024. While one barge was ultimately
successful in delivering its cargo to Puerto Providencia, near the
head of the OCP pipeline, five barges were turned back as the
convoy encountered unseasonably low river levels. PetroTal remains
committed to developing safe, cost-effective options for its crude
oil exports, and will continue to evaluate the commercial viability
of the OCP route against other available options. The Company
anticipates final sale of the Ecuador pilot crude will occur in
October.
Social Update
As of September 2024, PetroTal's
total contributions to the Social Trust Fund amounted to nearly $20
million. Distributions from the Fund will be used to finance
projects that benefit the citizens of Puinahua District, where the
Bretaña Norte field is located. For example, a bidding process is
currently underway to select a contractor for the establishment of
internet connectivity across the entire Puinahua District. This
project was prioritized by the fund's Board of Directors and its
advisory committee. PetroTal was also recently recognized as a
"Company that Transforms / Empresas que Transforman" by IPAE Accion
Empresarial - a private, non-profit business association in Peru.
The distinction is a response to PetroTal's ongoing efforts to
promote socially responsible business practices, in the category
for medium and large companies.
Q3
2024 results webcast link for November 14, 2024
PetroTal will host a webcast for its
Q3 2024 results on Thursday November 14, 2024 at 9am CT (Houston),
3pm GMT (London). Please see the link below to register.
https://stream.brrmedia.co.uk/broadcast/66fd576693baf50dfe9f3597
Corporate Presentation
PetroTal has posted an updated
corporate presentation on its website. Please visit the link below
to view the presentation in full:
https://petrotalcorp.com/investors/
ABOUT
PETROTAL
PetroTal is a publicly traded,
tri‐quoted (TSX: TAL, AIM: PTAL and OTCQX: PTALF) oil
and gas development and production Company domiciled in Calgary,
Alberta, focused on the development of oil assets in Peru.
PetroTal's flagship asset is its 100% working interest in the
Bretana Norte oil field in Peru's Block 95, where oil production
was initiated in June 2018. In early 2022, PetroTal became
the largest crude oil producer in Peru. The Company's
management team has significant experience in developing and
exploring for oil in Peru and is led by a Board of Directors that
is focused on safely and cost effectively developing the Bretana
oil field. It is actively building new initiatives to champion
community sensitive energy production, benefiting all
stakeholders.
For further information, please see the Company's
website at www.petrotal-corp.com,
the Company's filed documents at www.sedarplus.ca,
or below:
Camilo McAllister
Executive Vice President and Chief
Financial Officer
Cmcallister@PetroTal-Corp.com
T: (713) 253-4997
Manolo Zuniga
President and Chief Executive
Officer
Mzuniga@PetroTal-Corp.com
T: (713) 609-9101
PetroTal Investor
Relations
InvestorRelations@PetroTal-Corp.com
Celicourt Communications
Mark Antelme / Jimmy Lea
petrotal@celicourt.uk
T : +44 (0) 20 7770 6424
Strand Hanson Limited (Nominated
& Financial Adviser)
Ritchie Balmer / James Spinney /
Robert Collins
T: +44 (0) 207 409 3494
Stifel Nicolaus Europe Limited (Joint
Broker)
Callum Stewart / Simon Mensley /
Ashton Clanfield
T: +44 (0) 20 7710 7600
Peel Hunt LLP (Joint
Broker)
Richard
Crichton / David McKeown / Georgia Langoulant
T: +44 (0) 20 7418
8900
READER ADVISORIES
FORWARD-LOOKING STATEMENTS: This
press release contains certain statements that may be deemed to be
forward-looking statements. Such statements relate to possible
future events, including, but not limited to: oil production levels
and production capacity; PetroTal's 2024 program for
drilling,
completions and other activities; plans and expectations with
respect to the OCP and Ecuador export pilot (including the
expectation that pilot oil will travel approximately 1,000 km by
barge to Block 19); and PetroTal's expectations with respect to
projects and key initiatives to be financed with contributions from
the Social Trust Fund. All statements other than
statements of historical fact may be forward-looking statements.
Forward-looking statements are often, but not always, identified by
the use of words such as "anticipate", "believe", "expect", "plan",
"estimate", "potential", "will", "should", "continue", "may",
"objective", "intend" and similar expressions. The forward-looking
statements provided in this press release are based on management's
current belief, based on currently available information, as to the
outcome and timing of future events.
The
forward-looking statements are based on certain key expectations
and assumptions made by the Company, including, but not limited to,
expectations and assumptions concerning the ability of existing
infrastructure to deliver production and the anticipated capital
expenditures associated therewith, the ability to obtain and
maintain necessary permits and licenses, the ability of government
groups to effectively achieve objectives in respect of reducing
social conflict and collaborating towards continued investment in
the energy sector, reservoir characteristics, recovery factor,
exploration upside, prevailing commodity prices and the actual
prices received for PetroTal's products, including pursuant to
hedging arrangements, the availability and performance of drilling
rigs, facilities, pipelines, other oilfield services and skilled
labour, royalty regimes and exchange rates, the impact of inflation
on costs, the application of regulatory and licensing requirements,
the accuracy of PetroTal's geological interpretation of its
drilling and land opportunities, current legislation, receipt of
required regulatory approval, the success of future drilling and
development activities, the performance of new wells, future river
water levels, the Company's growth strategy, general economic
conditions and availability of required equipment and
services. PetroTal cautions that
forward-looking statements relating to PetroTal are subject to all
of the risks, uncertainties and other factors, which may cause the
actual results, performance, capital expenditures or achievements
of the Company to differ materially from anticipated future
results, performance, capital expenditures or achievement expressed
or implied by such forward-looking statements. Factors that
could cause actual results to differ materially from those set
forth in the forward-looking statements include, but are not
limited to, risks associated with the oil
and gas industry in
general (e.g., operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses; and health, safety and
environmental risks),
business performance, legal and legislative
developments including changes in tax laws and legislation
affecting the oil and gas industry and
uncertainties resulting from potential delays or changes in plans
with respect to exploration or development projects or capital
expenditures, credit ratings and risks, fluctuations in
interest rates and currency values, changes in the financial
landscape both domestically and abroad, including volatility in the
stock market and financial system, wars (including Russia's war in
Ukraine and the Israeli-Hamas conflict),
regulatory developments, commodity price volatility, price
differentials and the actual prices received for products, exchange
rate fluctuations, legal, political and economic instability in
Peru, access to transportation routes and markets for the Company's
production, changes in legislation
affecting the oil and gas industry, changes in the financial
landscape both domestically and abroad (including volatility in the
stock market and financial system) and the occurrence of
weather-related and other natural catastrophes. Readers are
cautioned that the foregoing list of factors is not exhaustive.
Please refer to the annual information form for the year ended
December 31, 2023 and the management's discussion and analysis for
the three months ended March 31, 2024 for additional risk factors
relating to PetroTal, which can be accessed either on PetroTal's
website at www.petrotal-corp.com
or under the Company's profile on
www.sedarplus.ca.
The forward-looking statements contained in this press release are
made as of the date hereof and the Company undertakes no obligation
to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities
laws.
OIL REFERENCES: All references to "oil" or "crude oil"
production, revenue or sales in this press release mean "heavy
crude oil" as defined in National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities ("NI
51-101").
SHORT TERM RESULTS: References in this press release to peak
rates, initial production rates, current production
rates, 30-day production rates and other short-term production rates
are useful in confirming the presence of hydrocarbons, however such
rates are not determinative of the rates at which such wells will
commence production and decline thereafter and are not indicative
of long-term performance or of ultimate recovery. While
encouraging, readers are cautioned not to place reliance on such
rates in calculating the aggregate production of PetroTal. The
Company cautions that such results should be considered to be
preliminary.
FOFI DISCLOSURE: This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about PetroTal's prospective results of
operations and production results, 2024 drilling program and
budget, well investment payback, cash position, liquidity and
components thereof, all of which are subject to the same
assumptions, risk factors, limitations and qualifications as set
forth in the above paragraphs. FOFI contained in this press release
was approved by management as of the date of this press release and
was included for the purpose of providing further information about
PetroTal's anticipated future business operations. PetroTal and its
management believe that FOFI has been prepared on a reasonable
basis, reflecting management's best estimates and judgments, and
represent, to the best of management's knowledge and opinion, the
Company's expected course of action. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results. PetroTal disclaims any
intention or obligation to update or revise any FOFI contained in
this press release, whether as a result of new information, future
events or otherwise, unless required pursuant to applicable law.
Readers are cautioned that the FOFI contained in this press release
should not be used for purposes other than for which it is
disclosed herein. All FOFI contained in this press release complies
with the requirements of Canadian securities legislation, including
NI 51-101. Changes in forecast commodity prices, differences in the
timing of capital expenditures, and variances in average production
estimates can have a significant impact on the key performance
measures included in PetroTal's guidance. The Company's actual
results may differ materially from these
estimates.