TIDMPTAL
RNS Number : 3161D
PetroTal Corp.
18 February 2020
PetroTal announces 2019 Year-End Oil Reserves and Operational
Update
20% increase in 1P Reserves to 21.5 million barrels
and 21% increase in 2P Reserves to 47.7 million barrels
Calgary and Houston - February 18, 2020-PetroTal Corp.
("PetroTal" or the "Company") (TSX-V: TAL and AIM: PTAL), the
Peruvian focused E&P company, is pleased to announce the
results of its 2019 year-end reserve evaluation by Netherland,
Sewell & Associates, Inc. ("NSAI") for the Bretana oil field,
operated 100% by PetroTal, and to provide an update on current
activity and production. All currency amounts are in United States
dollars (unless otherwise stated) and comparisons refer to December
31, 2018.
HIGHLIGHTS:
-- P roved ("1P") reserves increased by 20%, to 21.5 million
barrels ("mmbbl") from 17.9 mmbbl, Proved plus Probable ("2P")
reserves increased by 21% to 47.7 mmbbl from 39.4 mmbbl and Proved
plus Probable and Possible ("3P") reserves increased by 8% to 84.8
mmbbl from 78.7 mmbbl;
-- Related to 2019 oil production of 1.5 mmbbl, reserve
additions replaced 240% in 1P reserves, 553% in 2P reserves and
407% in 3P reserves; Bretana's reserve life index for 1P and 2P
reserves is now 7.7 years and 17.0 years, respectively;
-- Net Present Value (before tax, discounted at 10%) (NPV-10) is
calculated at $434 million ($20.19/bbl) for 1P reserves, $1.1
billion ($23.02/bbl) for 2P reserves and $1.9 billion ($22.11/bbl)
for 3P reserves;
o Using the 2019 year-end Brent oil price strip, NPV-10 is
calculated at $280 million for 1P reserves, $722 million for 2P
reserves and $1.2 billion for 3P reserves;
-- The successful 2019 development program combined with all
future development and abandonment costs represent total finding
and development costs of $12.04/bbl for 1P reserves, $5.32/bbl for
2P reserves and $4.06/bbl for 3P reserves;
-- Original oil in place ("OOIP") estimates for each category of
reserves have also increased, with the 2P estimate increasing from
329 mmbbl to 364 mmbbl;
-- NSAI attributes a corresponding 2P recovery factor of 13.6%,
increased from 12% at year-end 2018;
-- On a 2P basis, this represents a recycle ratio of 6.5 times,
based on the total $5.32/bbl finding and development cost relative
to a netback of $35/bbl (at $65/bbl Brent oil price);
-- Drilling has commenced for the Bretana 6H well, planned to
have the longest lateral to date with an estimated drill time of 60
days; and
-- Current oil production at Bretana is approximately 10,000 barrels of oil per day ("bopd").
2019 Year-end Reserves Summary
The summary below sets forth PetroTal's reserves as at December
31, 2019, as presented in the independent reserves report prepared
by NSAI. The figures in the following tables have been prepared in
accordance with the standards contained in the Canadian Oil and Gas
Evaluation Handbook (the "COGE Handbook") and the reserve
definitions contained in National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities ("NI 51-101"). In addition to
the summary information disclosed in this announcement, more
detailed information will be included in PetroTal's annual
information form for the year ended December 31, 2019 (the "AIF")
to be filed on SEDAR (www.sedar.com) and posted on PetroTal's
website (www.Petrotal-corp.com) in April 2020.
Five Year Crude Oil Price Forecast - NSAI Report
Year-End Forecast: 2020 2021 2022 2023 2024 2025
Brent (USD$/bbl) - January
1, 2020 (1) $66.33 $67.94 $70.06 $71.66 $73.27 $74.57
------ ------ ------ ------ ------ ------
Brent (USD$/bbl) - January
1, 2019 (1) $68.20 $70.98 $73.35 $75.40 $77.35 $79.40
------ ------ ------ ------ ------ ------
Year-End Strip projection:
------ ------ ------ ------ ------ ------
Brent (USD$/bbl) - January
1, 2020 (2) $63.71 $59.37 $57.32 $56.70 $57.06 $57.72
------ ------ ------ ------ ------ ------
(1) The oil price projections used by NSAI are based upon an
average of three December 31, 2019 forecasts of Brent Crude futures
prices prepared by Canadian independent consultants.
(2) Represents the forward strip oil price as at December 31,
2019, escalating at 2% per year after 2025.
Year-End Crude Oil Reserves (mmbbl)
CATEGORY 2019 2018 Change
Proved
----- ----- -------
Developed Producing 11.2 1.6 600%
----- ----- -------
Undeveloped 10.3 16.3 -37%
----- ----- -------
Total Proved 21.5 17.9 20%
----- ----- -------
Probable 26.2 21.5 22%
----- ----- -------
Total Proved plus Probable 47.7 39.4 21%
----- ----- -------
Possible 37.1 39.3 -6%
----- ----- -------
Total Proved plus Probable
& Possible 84.8 78.7 8%
----- ----- -------
Represents gross and net barrels since PetroTal owns a 100%
working interest and a 100% net revenue interest in these
properties. Royalties are paid from sales proceeds.
Year-End Net Present Value at 10% - Before Tax ($ millions)
CATEGORY 2019 2018 Change
Proved
------- ------- -------
Developed Producing $202 $52 287%
------- ------- -------
Undeveloped $232 $99 134%
------- ------- -------
Total Proved $434 $151 187%
------- ------- -------
Probable $665 $385 72%
------- ------- -------
Total Proved plus Probable $1,098 $536 105%
------- ------- -------
Possible $777 $718 8%
------- ------- -------
Total Proved plus Probable
& Possible $1,875 $1,254 50%
------- ------- -------
Year-End Net Asset Value ("NAV") per Share
CATEGORY Dec. 31, 2019 Dec. 31, 2018
NAV per share US$/sh CAD$/sh US$/sh CAD$/sh
--------------------------------- ------- -------- ------- --------
Proved $0.65 $0.87 $0.28 $0.37
------- -------- ------- --------
Proved plus Probable $1.63 $2.17 $0.72 $0.96
------- -------- ------- --------
Proved plus Probable & Possible $2.79 $3.72 $1.00 $1.33
------- -------- ------- --------
Represents NPV-10 divided by common shares issued as of December
31 of each respective year. Canadian share prices are converted at
the respective year end foreign exchange conversion rates.
Reserve Life Index ("RLI")
CATEGORY
Dec. 31, 2019
(1)
Proved 7.7 years
----------------
Proved plus Probable 17.0 years
----------------
Proved plus Probable & 30.3 years (2)
Possible
----------------
(1) Based on 2019 year-end reserves divided by average Q4 2019
production of approximately 7,757 bopd, annualized.
(2) The license for Block 95 expires in 2041.
Future Development Costs
The following information sets forth development and abandonment
costs deducted in the estimation of PetroTal's future net revenue
attributable to the reserve categories noted below:
Proved $124 million
Proved plus Probable $194 million
Proved plus Probable & Possible $299 million
The future development and abandonment costs are estimates of
capital expenditures required in the future for PetroTal to convert
the corresponding reserves to proved developed producing
reserves.
OPERATIONS UPDATE
The Company commenced drilling the Bretana 6H well on February
17, 2020, following successful completion of the annual rig
maintenance program. This well will take approximately 60 days to
drill and complete and is expected to have a 1,100-meter lateral
section; longer than the 5H (863 meters) and 4H (500 meters) wells.
Following 6H, the Company will drill a second water disposal well
followed by three other horizontal oil wells. PetroTal's current
oil production is approximately 10,000 bopd. Production has
fluctuated during the commissioning of the Central Processing
Facility which commenced in late December and is now nearing
completion.
Manolo Zuniga, President and Chief Executive Officer,
commented:
"Following the Company's successful drilling campaign in 2019,
we are very pleased to see a meaningful upgrade of reserves in the
1P and 2P categories. PetroTal is glad to see that NSAI's 2P OOIP
estimate now approximates our internal estimate. We are confident
that future production data will substantiate the higher recovery
factors, and in the end, all of the above serves to create value
for our stakeholders.
We look forward to achieving further growth in 2020, with new
oil wells and increases in recovery factor, and I would like to
sincerely thank our team, as well as our shareholders for their
ongoing support of PetroTal."
Qualified Person's Statement
Estuardo Alvarez-Calderon, the Company's Vice President,
Exploration and Development, who has over 35 years of relevant
experience in the oil industry, has approved the technical
information contained in this announcement. Mr. Alvarez-Calderon
received a Bachelor of Science degree in Geology from the
University of Texas at Austin and is registered on the Texas Board
of Professional Geoscientists.
The recovery and reserve estimates provided in this news release
are estimates only, and there is no guarantee that the estimated
reserves will be recovered. Actual reserves may eventually prove to
be greater than, or less than, the estimates provided herein. In
certain of the tables set forth below, the columns may not add due
to rounding.
ABOUT PETROTAL
PetroTal is a publicly--traded, dual--quoted (TSXV: 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 flagship asset is the Bretana oil field in Peru's Block
95 where oil production was initiated in June 2018, six months
after acquisition, and within 18 months has exceeded the initial
10,000 bopd goal. Additionally, the Company has large exploration
upside and is actively engaged to find a partner to drill the
Osheki prospect and other prospects in Block 107. The Company's
management team has significant experience in developing and
exploring for oil in all of Peru's oil producing basins and is led
by a Board of Directors that is focused on safely and cost
effectively developing the Bretana oil field. More information on
the Company can be found at www.PetroTal--Corp.com.
For further information, please see the Company's website at
www.petrotal-corp.com , the Company's filed documents at
www.sedar.com , or below:
Douglas Urch
Executive Vice President and Chief Financial Officer
Durch@PetroTal-Corp.com
T: (713) 609-9101
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@PetroTal-Corp.com
T: (713) 609-9101
Celicourt Communications
Mark Antelme / Jimmy Lea
petrotal@celicourt.uk
T : 44 (0) 208 434 2643
Strand Hanson Limited (Nominated & Financial Adviser)
James Spinney / Ritchie Balmer
T: 44 (0) 207 409 3494
Numis Securities Limited (Joint Broker)
John Prior / Emily Morris
T: +44 (0) 207 260 1000
Stifel Nicolaus Europe Limited (Joint Broker)
Callum Stewart / Nicholas Rhodes / Ashton Clanfield
Tel: +44 (0) 20 7710 7600
READER ADVISORIES
FORWARD-LOOKING STATEMENTS: This news release contains
forward-looking statements. More particularly, and without
limitation, this news release contains statements concerning
PetroTal's assessment of future plans and operations for the
Company. When used in this document, the words "will,"
"anticipate," "believe," "estimate," "expect," "intent," "may,"
"project," "should," and similar expressions are intended to be
among the statements that identify forward-looking statements. The
forward-looking statements are founded on the basis of expectations
and assumptions made by PetroTal. Although PetroTal believes that
the expectations represented by such forward-looking statements are
reasonable, there can be no assurance that such expectations will
be realized. Any number of important factors could cause actual
results to differ materially from those in the forward-looking
statements including, but not limited to: PetroTal may not obtain
the required approvals from the TSX Venture Exchange and other
factors more fully described from time to time in the reports and
filings made by PetroTal with securities regulatory authorities.
Please refer to the risk factors identified in the Company's annual
information form for the year ended December 31, 2018 and
management's discussion and analysis for the three and ninex months
ended September 30, 2019 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.
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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