TIDMPTAL
RNS Number : 0176X
PetroTal Corp.
25 April 2019
PetroTal Announces Fiscal Year-end Financial Results and
Operations Update
Calgary, Alberta and Houston, Texas - April 24, 2019-PetroTal
Corp. ("PetroTal" or the "Company") (TSX-V: TAL and AIM: PTAL) is
pleased to provide a summary of its 2018 year-end financial and
operating results.
Selected financial, reserves and operational information is
outlined below and should be read in conjunction with the Company's
audited consolidated financial statements ("Financial Statements"),
management's discussion and analysis ("MD&A") and annual
information form ("AIF") for the year ended December 31, 2018,
which are available on SEDAR at www.sedar.com and the Company's
website at www.PetroTal-Corp.com. Reserves numbers presented herein
were derived from an independent reserves report (the "NSAI
Report") prepared by Netherland, Sewell & Associates, Inc.
("NSAI") effective December 31, 2018. All figures referred to in
this press release are denominated in U.S. dollars.
2018 HIGHLIGHTS
-- Commenced operation of Bretaña oil field assets, bringing the field on production in five months;
-- Completed the Long-Term Testing facility installation and initiated production, 25 percent under budget;
-- Full field oil production facilities brought online in October 2018;
-- Declared commercialty in the Bretaña field in November 2018;
-- 176,000 barrels ("bbl") of oil produced during 2018, and approximately 280,000 barrels to date;
-- Proved ("1P") Reserves estimated at approximately 17.9 million(1) bbl of oil gross;
-- Proved + Probable ("2P") Reserves estimated at approximately 39.4 million(1) bbl of oil gross;
-- Proved + Probable + Possible ("3P") Reserves estimated at approximately 78.7 million(1) bbl of oil gross;
-- Pre-tax NPV-10 of approximately $535 million for 2P Reserves and $1.25 billion for 3P Reserves; and
-- 2P Reserves NPV-10 increase of 90%.
Note:
1. Reserves include a total of approximately 2,963.6 Mbbl (3P)
of oil for surface facility use across all categories (960.7 Mbbl
(1P) and 1,818.2 Mbbl (2P)). See "Summary of Oil Reserves and Net
Present Values as of December 31, 2018" for a summary of Company
reserves, which exclude these amounts.
OPERATIONS UPDATE
The Company's objective of developing the Bretaña oil field on a
modular basis and putting the field online by year-end 2018 was
accomplished ahead of schedule and under budget. Although the
Company initially estimated the process to bring the field online
would take 10-12 months and approximately $24 million in capital
costs, it was accomplished in five months for a total capital cost
of approximately $18 million. In October, the field's first phase
oil production facilities were installed on time and within budget.
The Company was able to declare commerciality in Bretaña with the
achievement of sustained production operations. PetroTal
successfully completed a secondary listing on the AIM Market of the
London Stock Exchange, with first trading on December 24, 2018. The
year-end oil reserves, which were previously announced on April 11,
2019, are summarized in the charts below.
2018 YEAR- RESERVES SUMMARY
The summary below sets forth PetroTal's reserves as at December
31, 2018, as presented in the NSAI Report. The figures in the
following tables have been prepared in accordance with the
standards contained in the Canadian Oil and Gas Evaluation Handbook
(the "COGE Handbook") and the reserve definitions contained in
National Instrument 51-101 - Standards of Disclosure for Oil and
Gas Activities ("NI 51-101"). In addition to the summary
information disclosed in this press release, more detailed
information is included in the AIF.
The reserves estimated by NSAI on the charts below exclude up to
three million barrels that are expected to be used for power
generation in the field.
SUMMARY OF OIL RESERVES AND NET PRESENT VALUES AS OF DECEMBER
31, 2018
Company Future Net Revenue
Heavy Oil Reserves(2) Before Income Taxes (USM$)(4)(5)(6)
-------------------------------------------------------------
(Mbbl)(1) Discounted Discounted Discounted Discounted Discounted
-----------------------
Category Gross Net(3) at 0% at 5% at 10% at 15% at 20%
--------------- ----------- ---------- ----------- ----------- ----------- ---------- ----------
Proved Developed
Producing 1,559.0 1,559.0 75,696.3 61,506.5 51,624.6 44,472.9 39,112.0
Proved
Undeveloped 15,378.5 15,378.5 202,879.9 143,618.9 99,380.2 66,606.6 42,129.6
----------- ---------- ----------- ----------- ----------- ---------- ----------
Total Proved 16,937.5 16,937.5 278,576.2 205,125.4 151,004.8 111,079.5 81,241.6
Probable
Undeveloped 20,597.8 20,597.8 772,240.6 523,525.2 384,528.6 299,631.9 243,749.6
----------- ---------- ----------- ----------- ----------- ---------- ----------
Proved +
Probable 37,535.4 37,535.4 1,050,816.8 728,650.6 535,533.4 410,711.4 324,991.2
Possible
Undeveloped 38,278.9 38,278.9 1,684,251.1 1,060,626.2 718,814.0 516,783.2 389,791.8
----------- ---------- ----------- ----------- ----------- ---------- ----------
Proved +
Probable
+ Possible 75,814.2 75,814.2 2,735,067.9 1,789,276.8 1,254,347.5 927,494.6 714,783.0
Notes:
1. Totals may not add because of rounding. Mbbl are thousands of barrels.
2. PetroTal owns a 100 percent company gross interest and a 100
percent company net interest in these properties. Company reserves
exclude a total of approximately 2,963.6 Mbbl (3P) of oil for
surface facility use across all categories (960.7 Mbbl (1P) and
1,818.2 Mbbl (2P)).
3. Net reserves do not include deductions for royalty expenses
for net oil volumes; government royalties are included in property
and mineral taxes.
4. Based on NSAI's December 31, 2018 escalated price forecast.
See "Summary of Pricing and Inflation Rate Assumptions - Forecast
Prices and Costs".
5. It should not be assumed that the undiscounted or discounted
net present value of future net revenue attributable to the
Company's reserves estimated by NSAI represent the fair market
value of those reserves.
6. All future net revenues are estimated using forecast prices
and cost assumptions, arising from the anticipated development and
production of reserves, after the deduction of royalties, operating
costs, development costs and abandonment and reclamation costs but
before consideration of indirect costs such as administrative,
overhead and other miscellaneous expenses. There is no assurance
that the forecast prices and costs assumptions will be attained,
and variances could be material. The recovery and reserve estimates
of the Company's reserves provided herein are estimates only and
there is no guarantee that the estimated reserves will be
recovered. Actual reserves may be greater than or less than the
estimates provided herein.
SUMMARY OF PRICING AND INFLATION RATE ASSUMPTIONS - FORECAST
PRICES AND COSTS
The forecast cost and price assumptions assume increases in
wellhead selling prices and include inflation with respect to
future operating and capital costs. Crude oil benchmark reference
pricing, inflation and exchange rates utilized by NSAI as at
December 31, 2018 were as follows:
Period Ending Oil Price (US$/BBL
12-31-2019 63.88
-------------------
12-31-2020 68.20
-------------------
12-31-2021 70.98
-------------------
12-31-2022 73.35
-------------------
12-31-2023 75.40
-------------------
12-31-2024 77.35
-------------------
12-31-2025 79.40
-------------------
12-31-2026 81.61
-------------------
Thereafter, escalated 2 percent on January 1 of each year.
Future Development Costs
The following information sets forth development costs deducted
in the estimation of PetroTal's future net revenue attributable to
the reserve categories noted below:
Proved $178.0 million
Proved + Probable $251.1 million
Proved + Probable + Possible $368.8 million
The future development costs are estimates of capital
expenditures required in the future for PetroTal to convert the
corresponding reserves to proved developed producing reserves.
In 2019, the Company drilled and completed a second oil
producing well at Bretaña, the BN 95-2-2-2XD, on time and within
budget. The well came online at approximately 2,250 bbl of oil per
day ("BOPD") in a vertical completion in the Vivian formation. The
well, which reached total depth on April 9, 2019, was completed as
an oil producer in the Vivian formation in the northern portion of
the Bretaña structure. The well was brought online at an initial
rate of approximately 2,250 barrels of oil per day ("BOPD"). This
is an early production rate and more detailed production data will
be announced in due course. The team also spud a third oil
development well, the BN-95-3H, which will be a horizontal producer
in the Vivian formation, and which is expected to come online in
mid-June.
Manolo Zuniga, PetroTal's President and Chief Executive Officer,
stated:
"We are executing on multiple fronts and in 2018 we accomplished
many milestones that will set the Company up for future success and
growth. Our operations team has been hitting on all cylinders,
bringing the field online early, either on or under budget, and
moving into commercial production at year end. Our reserves report
showed a significant increase in present value across all reserve
categories. With our 2P pre-tax NPV-10 at approximately $535
million, we have grown the value to our stakeholders by 90
percent."
"To date in 2019 we have drilled and completed the second
producing oil well at Bretaña, having come online only one week ago
at 2,250 BOPD. This rate was over the course of five days and we
will provide more detail on the well and its production when we
have sustained production data, to allow for a better stabilized
rate. We have moved on with the spud of the third oil producing
well which we expect to be online in mid-June. The original
producer is still producing approximately 800 BOPD, in line with
our internal expectations due to normal declines expected as water
is produced from the aquifer that is the main drive mechanism for
the Vivian formation."
NEAR AND MEDIUM-TERM OBJECTIVES
-- Drill and complete up to four wells to materially contribute to production totals in 2019;
-- Install phase two production facilities in the field with oil production capacity of 10,000 BOPD;
-- Secure farm-out partner and drill high impact Osheki exploration well on Block 107;
-- Continue Bretaña development drilling and install future phases of production facilities; and
-- Look for strategic and synergistic acquisitions to expand the Company's asset base in Peru.
FINANCIAL HIGHLIGHTS
The following table summarizes key financial highlights
associated with the Company's financial performance for the years
ended December 31, 2018 and 2017. See the Financial Statements and
MD&A for further details.
December 31, 2018 December 31, 2017
US$000s US$000s
------------------ ------------------
Net Revenues 9,994 -
Net Loss (4,621) (2,754)
Total Assets 96,097 98,766
Total Liabilities 18,570 16,723
Total Shareholders'
Equity 77,527 82,043
OTHER COMPANY UPDATES
Charles Fetzner, VP of Asset Development, resigned from the
Company for personal family reasons effective as of April 18, 2019.
Mr. Fetzner was a founder of PetroTal LLC, the original private
company, in December 2015 and was part of the new management team
following the completion of PetroTal's go-public transaction on
December 18, 2017.
Mr. Zuniga commented "We wish Chuck and his family the best and
we fully understand his desire to spend time with his family at
this time. Chuck was an integral part of our transition from a
private company to public entity. Mr. Estuardo Alvarez-Calderon, VP
of Exploration and Production, will assume Chuck's responsibilities
which include the important Osheki farm-in process. Again, we wish
the Fetzner family the best."
As previously announced on September 14, 2018 and October 31,
2018, the Corporation has issued an aggregate of 4,008,333
performance share units ("PSUs") to certain officers of the
Company. The original terms of the PSUs provided for vested in
equal tranches over three years. The Board of Directors has amended
the terms of the PSUs to provide that the PSUs awarded to
executives will vest three years from the date of issuance. The
Board believes the change to the vesting terms will strengthen the
link between executive compensation and long-term shareholder
value.
ABOUT PETROTAL
PetroTal is a publicly-traded, dual-listed (TSX-V: TAL and AIM:
PTAL) oil and gas development and production company domiciled in
Calgary, Alberta, focused on the development of oil assets in Peru.
PetroTal's development asset is the Bretaña oil field in Peru's
Block 95 where oil production was initiated in June 2018.
Additionally, the Company has large exploration prospects and is
engaged in finding a partner to drill the Osheki prospect in Block
107. The Company's management team has significant experience in
developing and exploring for oil in Northern Peru and is led by a
Board of Directors that is focused on safely and cost effectively
developing and exploiting the Bretaña oil field. More information
on the Company can be found at www.PetroTal-Corp.com.
For further information, please contact:
Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9101
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T: (713) 609-9101
Mark Antelme / Henry Lerwill
Celicourt Communications (Financial PR)
petrotal@celicourt.uk
T: 44 (0) 207 520 9261
James Spinney / Ritchie Balmer / Eric Allan
Strand Hanson Limited (Nominated & Financial Adviser)
T: 44 (0) 207 409 3494
John Prior / Emily Morris / George Price
Numis Securities Limited (Joint Broker)
T: +44 (0) 207 260 1000
Jonathan Wright / Hugh R. Sanderson
GMP FirstEnergy (Joint Broker)
T: +44 (0) 20 7448 0200
READER ADVISORIES
FORWARD-LOOKING STATEMENTS: This press release may contain
certain statements that may be deemed to be forward-looking
statements. Such statements relate to possible future events,
including, but not limited to: PetroTal's business strategy,
objectives, strength and focus, including developing the Bretaña
oil field on a modular basis; drilling and completion activities
and the results of such activities; construction of production
facilities; securing a farm-out partner in Osheki; future
acquisitions; the ability of the Company to achieve drilling
success consistent with management's expectations; anticipated
future production and revenue; and future development and growth
prospects. All statements other than statements of historical fact
may be forward-looking statements. In addition, statements relating
to expected production, reserves, recovery, costs and valuation are
deemed to be forward-looking statements as they involve the implied
assessment, based on certain estimates and assumptions that the
reserves described can be profitably produced in the future.
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" and similar expressions. 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, reservoir characteristics, recovery factor,
exploration upside, prevailing commodity prices and the actual
prices received for PetroTal's products, the availability and
performance of drilling rigs, facilities, pipelines, other oilfield
services and skilled labour, royalty regimes and exchange rates,
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, the Company's growth
strategy, general economic conditions and availability of required
equipment and services. Although the Company believes that the
expectations and assumptions on which the forward-looking
statements are based are reasonable, undue reliance should not be
placed on the forward-looking statements because the Company can
give no assurance that they will prove to be correct. Since
forward-looking statements address future events and conditions, by
their very nature they involve inherent risks and uncertainties.
Actual results could differ materially from those currently
anticipated due to a number of factors and risks. These 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), commodity price and 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 and uncertainties resulting from potential delays or
changes in plans with respect to exploration or development
projects or capital expenditures. Please refer to the risk factors
identified in AIF and MD&A, which are available on SEDAR at
www.sedar.com. 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
FOFI DISCLOSURE: This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about PetroTal's prospective results of
operations, production, NPV-10, future net revenue, future
development costs 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 made as of the date of this press release
and was provided for the purpose of providing further information
about PetroTal's anticipated future business operations. 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.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this press release.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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