TIDMPTAL
RNS Number : 3475Q
PetroTal Corp.
18 June 2020
Completion of US$18 million Equity Placing and Appointment of
Broker
Financial and Operations Update
Calgary and Houston - June 18, 2020 - PetroTal Corp. ("PetroTal"
or the "Company") (TSX--V: TAL and AIM: PTAL) is pleased to
announce that its GBP14.1 million placing, as announced on June 12,
2020 ("Placing"), has now been completed and trading on AIM in the
141,203,891 new Common Shares, issued pursuant to the Placing
("Placing Shares") will commence this morning. All monetary amounts
in this release are in United States dollars, unless otherwise
indicated.
Financial and Operational Update
Further to the announcement of June 12, 2020 (the
"Announcement") concerning the three year arrangement with
PETROPERU S.A. ("Petroperu") the Company provides a further update
on the current financial and operational status of the Company.
Contingent liability
Petroperu and the Company have agreed to structure the
contingent liability due to Petroperu under the Bretana field oil
sales contract ("Oil Sales Contract") and oil swap contracts with
Petroperu (together, the "Contracts") into a liability to Petroperu
to be paid by PetroTal over a three year period.
At May 31, 2020, approximately 2.1 million barrels ("mmbbls") of
oil produced by PetroTal and sold to PetroPeru under the Contracts
were either in the pipeline or storage tanks.
The amount of this contingent liability to Petroperu will be
definitively determined when the security arrangements for
PetroTal's obligations are finalized, expected to be within the
next 30 days. Based on current Brent oil prices, the liability is
expected to be approximately $26 million, as determined by the
difference between the current Brent oil price and the previously
booked sales prices for the 2.1 mmbbls that PetroTal has sold to
Petroperu up to May 31, 2020. PetroTal will be required to make
equal monthly payments, for 36 months, to Petroperu based on the
amount of the liability so determined.
The above-mentioned liability could be adjusted as PetroTal
benefits from the higher forecast oil prices in the second half of
2020 and into 2021, when the underlying barrels are physically sold
by Petroperu. The eventual sale by Petroperu of PetroTal's oil at
currently forecasted Brent prices would see the liability drop by
$7 million to approximately $19 million. A recent Platt's article
showcases this possibility, when it reported that Petroperu has
finalized arrangements to sell to BP 420,000 barrels of Bretana oil
on July 10, 2020, based on the immediately prevailing 10-day
average Brent price, less a quality differential of approximately
3.5%. The liability adjustment is further showcased by the fact
that the remaining oil is not expected to be sold by Petroperu
until October 2020 and into early 2021, when we expect higher Brent
oil prices.
Sales terms
Under the original terms of the Oil Sales Contract, invoices
submitted to Petroperu for oil sales were payable 180 days after
submission which, at the time, reflected the time estimated for the
oil to transit the Northern Oil Pipeline ("ONP") and be sold by
Petroperu. The amendment to the invoice terms to 240 days reflects
an updated estimate of this transit time.
To support the Company's liquidity, all prior invoices submitted
by PetroTal under the Oil Sales Contract have been factored, at a
nominal cost, through local Peruvian banks utilizing a facility
arranged by Petroperu. As per the terms of a typical factoring
facility, at the end of the 240 day period Petroperu will pay the
due amount to the local Peruvian banks. PetroTal will continue to
factor future invoices on the same terms. The extension of the
invoice terms from 180 to 240 days is not expected to have any
impact on the timing of PetroTal's cash flows from oil sales.
Trade Payables
To ensure all suppliers were fully aligned with the Company's
development strategy, the Company insisted they provide attractive
payment terms for their services. This has allowed the Company to
execute on time and budget from day one and expects to continue
doing so.
The Company has accounts payable and accrued liabilities of
approximately $49 million, excluding the contingent liability to
Petroperu. Of this amount, $33.7 million represents accounts
payable, with 47% of the amount not due until subsequent quarters,
up to Q2 2021. Accruals for various projects underway total $10.8
million with expected due dates ranging from Q3 2020 to Q2 2021.
The balance of $4.7 million is value-added tax ("VAT") that will be
offset against VAT collected on subsequent oil sales. Most of the
amounts owed relate to the Company's drilling program in late 2019
and early 2020, along with construction of the central processing
facilities at Bretana.
The current amount owing to our suppliers is approximately $18
million. In coordination with our suppliers, $6.6 million of this
amount is expected to be paid by the end of June to facilitate the
re-opening of the Bretana oil field in early July 2020.
Cash
As referred to in the Announcement, taking into account the
collection of oil sales invoices related to oil sales in March,
April and May, 2020 in the next few weeks and the net proceeds of
the Placing, PetroTal will have cash of approximately $28 million;
leaving the business well funded to continue the development of the
Bretana oil field, albeit at a slower pace. The credit facility
mentioned in the Announcement will further position the Company to
complete Bretana's development and secure the required hedging
strategy.
Bretana oil field
While the Bretana oil field remains shut in, operating costs at
the field are minimal at approximately $0.1 million per month. The
Company is confident in its ability to ramp up activity at Bretana,
ahead of the planned reopening in July, to ensure the oil field
will return to normal operating status.
Bretana production and development
At the time of the shut in of the Bretana oil field in early
May, the Company was producing approximately 11,433 barrels of oil
per day ("bopd") from seven wells. Comparatively, in Q1 2020,
PetroTal produced 9,688 bopd, up 25% from 7,767 bopd in Q4 2019.
From April 1, 2020 to May 3, 2020, when the oilfield was shut in
due to the Peruvian government Covid-19 health directive, average
production was 11,465 bopd. Due to the field shut down, average
first half production will be 6,934 bopd.
When the field reopens, the Company expects that the production
level attained at the time of field shut down will be achieved,
following a short period of production evaluation.
Subject to the Brent oil price remaining at or above
approximately $40 per barrel, the Company plans to drill another
production well in Q4 2020 and anticipates average production of
9,100 bopd for 2020, inclusive of 11,190 during the second half of
2020.
Other capital projects, including further expansion of the
central processing facilities and drilling an additional water
disposal well, are currently deferred.
Appointment of Broker
The Company is pleased to announce the appointment of Auctus
Advisors LLP as Joint Broker with immediate effect. Stifel Nicolaus
Europe Limited remains as Joint Broker and Strand Hanson as
Nominated & Financial Adviser.
Total voting rights
Following admission of the Placing Shares to trading on AIM, the
Company will have 814,555,701 Common Shares in issue and there are
no shares held in treasury. For the purposes of the Disclosure
Guidance and Transparency Rules, the total number of voting rights
in the Company is calculated as the number of outstanding Common
Shares, less the Common Shares not able to be voted on due to
restrictions applicable to certain holders which results in a total
voting rights figure of 812,822,411 Common Shares. This figure may
be used by shareholders as the denominator for the calculations by
which they determine if they are required to notify their interest
in, or a change of their interest in, the Company under the FCA's
Disclosure Guidance and Transparency Rules.
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 its 100% working interest in Bretaña
oil field in Peru's Block 95 where oil production was initiated in
June 2018, and in early 2020 became the second largest crude oil
producer in Peru. 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 the Bretaña oil field.
For further information, please see the Company's website at
www.petrotal-corp.com , the Company's filed documents at
www.sedar.com , or contact:
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
Stifel Nicolaus Europe Limited (Joint Broker)
Callum Stewart / Simon Mensley / Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Auctus Advisors LLP (Joint Broker)
Jonathan Wright / Rupert Holdsworth Hunt / Harry Baker
T: +44 (0) 7711 627449
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: PetroTal's business strategy, objectives, strength
and focus; the Company's ability to resume operations in accordance
with developing public health efforts to contain COVID-19;
additional cost reductions; and liability under the Swap Contract
and Sales Contract and the settlement of such liability . 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" and similar
expressions. The forward--looking statements are based on certain
key expectations and assumptions made by the Company. 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 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 and uncertainties resulting from
potential delays or changes in plans with respect to exploration or
development projects or capital expenditures. In addition, the
Company cautions that current global uncertainty with respect to
the spread of the COVID-19 virus and its effect on the broader
global economy may have a significant negative effect on the
Company. While the precise impact of the COVID-19 virus on the
Company remains unknown, rapid spread of the COVID-19 virus may
continue to have a material adverse effect on global economic
activity, and may continue to result in volatility and disruption
to global supply chains, operations, mobility of people and the
financial markets, which could affect interest rates, credit
ratings, credit risk, inflation, business, financial conditions,
results of operations and other factors relevant to the Company.
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 nine 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.
FOFI DISCLOSURE: This press release contains future--oriented
financial information and financial outlook information
(collectively, "FOFI") about PetroTal's temporary shut down of
operations, the anticipated resumption of operations, storage
capacity, cost reductions, pipeline transportation arrangements,
liability under the Swap Contract and Sales Contract 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 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.
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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