PetroTal Announces Q4 and
2023 Financial and Operating Results
Q4 2023 average sales
and production of 15,033 bopd and 14,865 bopd,
respectively
2023 average year on year
production growth of 17% to 14,248 bopd
Generated 2023 free funds
flow of $91 million
Returned over $61 million
through dividends and share buybacks in 2023
2023 Return on Capital
Employed of 30%
Calgary, AB and Houston, TX -
March 21, 2024-PetroTal
Corp. ("PetroTal" or the "Company") (TSX: TAL, AIM: PTAL and OTCQX:
PTALF) is pleased to report its operating and audited financial
results for the three ("Q4") and twelve months ended December 31,
2023 ("2023").
Selected financial and operational
information is outlined below and should be read in conjunction
with the Company's audited consolidated financial statements and
management's discussion and analysis ("MD&A") for the three and
twelve months ended December 31, 2023, which are available on
SEDAR+ at www.sedarplus.ca and on the Company's website at
www.PetroTal‐Corp.com. All amounts herein are in United States
dollars unless otherwise stated.
Selected Q4 and 2023 Highlights
·
Average Q4 sales and production of 15,033 and
14,865 barrels ("bbls") of oil per day ("bopd"), respectively,
impacted by a severe dry season and consequent low river levels
that limited barge transport and tanker unloading capacity at
Manaus;
·
Average 2023 sales and production of 14,421 bbls
and 14,248 bopd, respectively, within guidance range for the year
and generating a production growth rate of 17% over
2022;
·
2023 return on capital employed of 30% compared to
49% in 2022;(1)
·
Exited 2023 in a strong cash position with $111
million in total cash ($91 million unrestricted), after repaying
$80 million of bonds in early 2023 and returning over $61 million
in dividends and share buybacks in 2023;
·
Capital expenditures ("capex") totaled $32.2
million in Q4 and were focused on drilling well 16H, bringing 2023
total capex spend to just over $108 million, lower than guidance of
approximately $120 million;
·
Successfully drilled three new oil wells and one
water disposal well in 2023. During 2023, the three new oil
wells produced nearly 1 million bbls of oil and generated
approximately $45 million in net operating income representing
nearly a full payout of their cost to drill by December 31,
2023;
·
PetroTal successfully executed workover operations
on wells 1XD and 2XD in May and June 2023, with both wells
producing between 500 and 700 bopd since July 2023 and accumulating
over 180,000 bbls of oil in the second half of 2023 thereby
recovering their workover cost approximately 2.5 times by the end
2023;
·
Generated Q4 EBITDA2 and free funds
flow2 of $50.8 million ($36.71/bbl) and $8.1 million
($5.87/bbl), respectively, and 2023 EBITDA and free funds flow of
$210.8 million ($40.06/bbl) and $90.7 million ($17.23/bbl)
respectively and in line with cash flow guidance for
2023;
·
Delivered Q4 net income of $21.5 million
($0.02/share) and over $110.5 million for 2023 ($0.12/share);
and,
·
Paid total dividends of $0.06/share and
repurchased 11.3 million common
shares in 2023, representing approximately $61
million of total capital returned to shareholders (approximately
11% of December 31, 2023, market capitalization).
(1) Return on capital employed = earnings before interest and tax
("EBIT") / (Total Assets - Current Liabilities)
(2) Non-GAAP (defined
below) measure that does not have any standardized meaning
prescribed by GAAP and therefore may not be comparable with the
calculation of similar measures presented by other entities. See
"Selected Financial Measures" section.
Manuel Pablo Zuniga-Pflucker,
President and Chief Executive Officer, commented:
"PetroTal's operational and financial targets were achieved in
2023, increasing average production 17% over 2022, repaying $80
million in debt and returning over $61 million to shareholders in
the form of dividends and share buybacks. The Company managed
through a challenging dry season, to achieve market guidance and
exit December 2023 with production of approximately 20,000
bopd.
2024 is off to a record start having maintained nearly 19,000
bopd over the first two months in an eighty-dollar oil price
environment, enabling us to maintain a robust cash position through
the first quarter. With continued advancements on the OCP oil
export pilot through Ecuador, the Company will continue to
prioritize derisking oil sales so PetroTal can embark on new
production growth projects.
With its strong, debt free, balance sheet, PetroTal will
continue to evaluate accretive growth opportunities. I would
like to thank shareholders for their continued support, as well as
PetroTal's board of directors and the rest of the PetroTal team for
their continued valuable contributions to our
success."
Selected Financial Highlights
The table below summarizes
PetroTal's comparative financial position.
|
|
Three Months
Ended
|
Year Ended December
31
|
|
|
Q4-2023
|
|
Q3-2023
|
|
2023
|
|
2022
|
|
|
|
$/bbl
|
$ 000
|
$/bbl
|
$ 000
|
$/bbl
|
$ 000
|
$/bbl
|
$ 000
|
|
Average Production (bopd)
|
|
14,865
|
|
10,909
|
|
14,248
|
|
12,200
|
|
Average sales (bopd)
|
|
15,033
|
|
11,553
|
|
14,421
|
|
13,168
|
|
Total sales (bbls)(1)
|
|
1,383,061
|
|
1,062,851
|
|
5,263,485
|
|
4,806,431
|
|
Average Brent price
|
$82.21
|
|
$84.65
|
|
$81.53
|
|
$98.92
|
|
|
Contracted sales price, gross
|
$81.05
|
|
$84.31
|
|
$80.54
|
|
$96.67
|
|
|
Tariffs, fees and differentials
|
($20.28)
|
|
($19.25)
|
|
($20.33)
|
|
($21.96)
|
|
|
Realized sales price, net
|
$60.77
|
|
$65.05
|
|
$60.21
|
|
$74.71
|
|
|
Oil
revenue(1)
|
$60.77
|
$84,046
|
$65.05
|
$69,142
|
$60.21
|
$316,911
|
$74.71
|
$359,106
|
|
Royalties(2)
|
$7.00
|
$9,676
|
$5.49
|
$5,835
|
$5.82
|
$30,648
|
$6.66
|
$31,991
|
|
Operating expense
|
$7.24
|
$10,010
|
$8.45
|
$8,982
|
$6.16
|
$32,446
|
$6.86
|
$32,954
|
|
Direct Transportation:
|
|
|
|
|
|
|
|
|
|
Diluent
|
$1.46
|
$2,020
|
$1.72
|
$1,829
|
$1.30
|
$6,857
|
$1.96
|
$9,440
|
|
Barging
|
$0.60
|
$828
|
$0.80
|
$845
|
$0.66
|
$3,475
|
$1.34
|
$6,431
|
|
Diesel
|
$0.10
|
$142
|
$0.13
|
$141
|
$0.10
|
$516
|
$0.23
|
$1,083
|
|
Storage
|
$1.45
|
$2,001
|
$1.99
|
$2,114
|
$0.78
|
$4,115
|
$0.76
|
$3,668
|
|
Total Transportation
|
$3.61
|
$4,991
|
$4.64
|
$4,929
|
$2.84
|
$14,963
|
$4.29
|
$20,622
|
|
Net
Operating Income(3,4)
|
$42.92
|
$59,369
|
$46.47
|
$49,396
|
$45.39
|
$238,854
|
$56.90
|
$273,539
|
|
G&A
|
$6.21
|
$8,588
|
$6.92
|
$7,355
|
$5.33
|
$28,049
|
$4.14
|
$19,891
|
|
EBITDA(3)
|
$36.71
|
$50,781
|
$39.55
|
$42,041
|
$40.06
|
$210,805
|
$52.77
|
$253,648
|
|
Adjusted EBITDA(3,5)
|
$29.13
|
$40,284
|
$50.76
|
$53,953
|
$37.83
|
$199,127
|
$53.28
|
$256,070
|
|
Net
Income
|
$15.57
|
$21,529
|
$23.86
|
$25,359
|
$20.99
|
$110,505
|
$39.22
|
$188,527
|
|
Basic Shares Outstanding (000)
|
|
912,314
|
|
916,700
|
|
912,314
|
|
862,209
|
|
Market Capitalization(6)
|
|
$556,512
|
|
$522,519
|
|
$556,512
|
|
$431,104
|
|
Net
Income/Share ($/share)
|
|
$0.02
|
|
$0.03
|
|
$0.12
|
|
$0.219
|
|
Capex
|
|
$32,157
|
|
$17,011
|
|
$108,453
|
|
$94,203
|
|
Free
Funds Flow(3) (7)
|
$5.87
|
$8,127
|
$34.76
|
$36,944
|
$17.23
|
$90,674
|
$33.68
|
$161,868
|
|
% of
Market Capitalization(6)
|
|
1.5%
|
|
7.1%
|
|
16.3%
|
|
37.5%
|
|
Total Cash(8)
|
|
$111,299
|
|
$112,827
|
|
$111,299
|
|
$119,969
|
|
Net
Surplus (Debt) (3) (9)
|
|
$57,298
|
|
$86,545
|
|
$57,298
|
|
$74,224
|
1. Approximately 85% of Q4
2023 sales were through the Brazilian route vs 82% in Q3
2023.
2. Royalties at year to date
December 31, 2023 and December 31, 2022 include the impact of the
2.5% community social trust.
3. Non-GAAP (defined below)
measure that does not have any standardized meaning prescribed by
GAAP and therefore may not be comparable with the calculation of
similar measures presented by other entities. See "Selected
Financial Measures" section.
4. Net operating income
represents revenues less royalties, operating expenses, and direct
transportation.
5. Adjusted EBITDA is net
operating income less general and administrative ("G&A") and
plus/minus realized derivative impacts.
6. Market capitalization for
Q4, 2023, Q3 2023, and Q4 2022 assume share prices of $0.61 $0.57,
and $0.50 respectively.
7. Free funds flow is defined
as adjusted EBITDA less capital expenditures. See "Selected
Financial Measures" section.
8. Includes restricted cash
balances.
9. Net Surplus (Debt) = Total
cash + all trade and net VAT receivables + short and long term net
derivative balances - total current liabilities - long term debt -
non current lease liabilities - net deferred tax - other long term
obligations.
Q4
2023 Financial Variance Summary
|
|
Three Months
Ended
|
Year Ended December
31
|
|
US$/bbl Variance Summary
|
Q4 2023
|
Q3 2023
|
Variance
|
2023
|
2022
|
Variance
|
|
Oil
Sales (bopd)
|
15,033
|
11,553
|
3,480
|
14,421
|
13,168
|
1,253
|
|
Contracted Brent Price
|
$81.05
|
$84.31
|
($3.26)
|
$80.54
|
$96.67
|
($16.13)
|
|
Realized Sales Price
|
$60.77
|
$65.05
|
($4.28)
|
$60.21
|
$74.71
|
($14.50)
|
|
Royalties
|
$7.00
|
$5.49
|
$1.51
|
$5.82
|
$6.66
|
($0.84)
|
|
Total Opex and
Transportation
|
$10.85
|
$13.09
|
($2.24)
|
$9.00
|
$11.15
|
($2.15)
|
|
Net
Operating Income(1,2)
|
$42.92
|
$46.47
|
($3.55)
|
$45.39
|
$56.90
|
($11.51)
|
|
G&A
|
$6.21
|
$6.92
|
($0.71)
|
$5.33
|
$4.14
|
$1.19
|
|
EBITDA
|
$36.71
|
$39.55
|
($2.84)
|
$40.05
|
$52.77
|
($12.72)
|
|
Net Income
|
$15.57
|
$23.86
|
($8.29)
|
$20.99
|
$39.22
|
($18.23)
|
|
Free Funds Flow(1,3)
|
$5.87
|
$34.76
|
($28.89)
|
$17.23
|
$33.68
|
($16.45)
|
Q4
2023 Financial Variance Commentary
·
Weaker contracted Brent price of $81.05/bbl
compared to the preceding
quarter of $84.31/bbl, resulting in a 7% lower realized price of
$60.77/bbl.
·
Lower operating expenses per bbl resulting from
higher sales volumes in Q4 2023 compared to Q3 2023. Q4 2023
operating expenses included additional floating storage costs
caused by longer than usual barge travel times during the final
months of the dry season.
·
Capital spending in the quarter was $32 million
compared to $17 million in Q3 2023 driven by the drilling
commencement of well 16H and continued investment in water handling
facilities. This resulting in a decrease in Q4 2023 free
funds flow(1,3)
dollar figure to approximately $8.1 million
compared to $37 million in Q3 2023.
·
Liquidity was flat in Q4 2023 compared to Q3 2023,
with total cash decreasing by $1.5 million to $111 million driven
by favorable working capital timing.
·
Strong balance sheet position in Q4 2023 with no
debt and a net surplus (1,4)
of $57 million now inclusive of a $42
million net deferred tax liability.
1. See "Selected Financial
Measures"
2. Net operating income
represents revenues less royalties, operating expenses, and direct
transportation.
3. Free funds flow is defined
as adjusted EBITDA less capital expenditures.
4. Net Surplus (Debt) = Total
cash + all trade and net VAT receivables + short and long term net
derivative balances - total current liabilities - long term debt -
non current lease liabilities - net deferred tax - other long term
obligations.
Financial and Operating Updates Subsequent to December 31,
2023
Robust oil production. Production continues to trend ahead of 2024 guidance with the
Company producing 20,453 bopd in January and 17,411 bopd in
February 2024. March production to date has averaged 15,600
bopd with the Company's most recently drilled well (16H) producing
around 2,500 bopd and nearing full investment payout. The
field was shut down from March 6, 2024 until March 8, 2024 as a
safety precaution after an independently operated barging incident
caused a small release of oil into the Puniuaha river approximately
2km away from the field. No injuries were reported and the
cleanup has been substantially completed. The field downtime
did not materially impact Q1 2024 production and the Company is
still expected to meet Q1 2024 production guidance of 18,500 bopd.
Well 17H update. The
Company has completed drilling well 17H on time, materially on its
$14 million budget, and commenced production on March 1,
2024. The well has a total depth of approximately 4,960
meters with a lateral section of 1,245 meters. Production
since start up has averaged 3,300 bopd under natural flow
conditions allowing the well continuing to clean out drilling
fluids and reach maximum initial production.
Well 18H drilling commencement. The Company commenced drilling well 18H on March 5,
2024 with an estimated cost of $14 million. The well is
expected to take approximately 60 days to drill and complete with
initial production estimated to occur by mid May
2024.
OCP
pilot project. PetroTal is
pleased to announce continued advancement on the OCP pilot oil
shipment with the signing of three key approvals. In early
February 2024, the Company received approval letters from the
Ecuadorian Ministry of Environment and Ecuadorian Navy along with
the successful signing of a use of port agreement with
Petroecuador. The Company is awaiting on a final letter from
the Port Subsecretariate to start the 100,000 bbl pilot.
Pending success of the first pilot, the Company anticipates an
additional pilot in the second half of 2024 with recurring sales
expected in Q4 2024.
2024 Budget guidance. On
January 22, 2024, the Company released its 2024 guidance,
forecasting an average 2024 production and sales target of 17,000
bopd, delivering an estimated 20% growth rate over 2023 average
production. If this forecast is acheived, PetroTal will generate
approximately $200 million in EBITDA underpinned by a total 2024
capex spend of $134 million and allowing for a stable return of
capital program. Should production and/or Brent price
outperform the Company's base case budget assumptions (Brent oil at
$77/bbl), liquidity sweep for shareholder return upside is
possible. At March 15, 2024, the Company estimates it is
trending in line with budget expectations.
2023 year ended reserves.
On February 12, 2024, PetroTal announced its
updated reserves profile ending December 31, 2023. The
Company was able grow its 2P after tax per share reserves value to
$1.80/share with a $1.64 billion after tax net present value of
reserves, discounted at 10% ("NPV10") and associated 2P reserves of
100 million bbls. The Company's 2023 year ended 2P reserve
replacement ratio is at 167%, with an associated 2P reserve life
index of 19 years. For the full text of this announcement,
please refer to PetroTal's press release dated February 12, 2024,
filed on SEDAR+ (www.sedarplus.ca) and posted on PetroTal's website
(www.petrotalcorp.com). In addition to the summary
information disclosed in this press release, more detailed
information will be included in the annual information form for the
year ended December 31, 2023, to be filed on SEDAR+
(www.sedarplus.ca) and posted on PetroTal's website
(www.petrotalcorp.com) on March 28, 2024.
Corporate presentation update. The Company has updated its Corporate Presentation,
which is available for download or viewing at
www.petrotal-corp.com.
Q4
and 2023 full year webcast link for March 21,
2024
PetroTal will host a webcast for its
Q4 2023 and 2023 full year results on March 21, 2024 at 9am CT
(Houston). Please see the link below to register.
https://stream.brrmedia.co.uk/broadcast/65d6373035af67d51a41b45b
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 Bretana 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:
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
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 guidance.
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. Without limitation, this press release contains
forward-looking statements pertaining to: PetroTal's drilling,
completions, workovers and other activities; the Company's plans
and expectations with respect to the OCP pilot oil shipment and its
continued advancement; anticipated future production and revenue;
drilling plans including the timing of drilling, commissioning, and
startup; PetroTal's 2024 guidance, including in respect of its
production and sales target of 17,000 bopd and estimate that it
will deliver a 20% growth rate over 2023 production and anticipated
benefits thereof (i.e., that PetroTal will generate approximately
$200 million in EBITDA as a result, underpinned by a total 2024
capex spend of $134 million and allowing for a stable return of
capital program and shareholder return upside); expectations with
respect to well 17H production; 2024 budget guidance; plans
with respect to well 18H including in respect of anticipated costs,
completion and timing thereof including the Company's plans to
begin production at well 18H in May of 2024; the Company's
expectation to meet Q1 2024 production guidance of 18,500 bopd;
expectation that the Company will continue to prioritize derisking
oil sales so it can embark on new production growth projects;
average 2024 production; intentions with respect to return of
capital and the 19 year 2P reserve life index. In addition,
statements relating to expected production, reserves, recovery,
replacement, 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. 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.
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; changes in the financial
landscape both domestically and abroad, including volatility in the
stock market and financial system; and wars (including Russia's war
in Ukraine and the Israeli-Hamas conflict). Please refer to the
risk factors identified in the Company's most recent annual
information form and MD&A which are available on SEDAR+ at
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 NI 51-101. All references to Brent
indicate Intercontinental Exchange ("ICE") Brent. Recovery factor
percentages include historical production.
RESERVES DISCLOSURE: All reserves values, future net revenue
and ancillary information contained in this press release are
derived from from an independent reserves report prepared by
Netherland, Sewell & Associates, Inc. ("NSAI") effective
December 31, 2023 unless otherwise noted. Estimates of reserves and
future net revenue for individual properties may not reflect the
same level of confidence as estimates of reserves and future net
revenue for all properties, due to the effect of aggregation. There
is no assurance that the forecast price and cost assumptions
applied by NSAI in evaluating PetroTal's reserves will be attained
and variances could be material. It should not be assumed that the
estimates of future net revenues presented in the tables below
represent the fair market value of the reserves. The recovery and
reserve estimates of PetroTal's oil reserves provided herein are
estimates only and there is no guarantee that the estimated
reserves will be recovered. Actual oil reserves may be greater than
or less than the estimates provided herein. There are numerous
uncertainties inherent in estimating quantities of crude oil,
reserves and the future cash flows attributed to such reserves. The
reserve and associated cash flow information set forth herein are
estimates only. Proved reserves are those reserves that can be
estimated with a high degree of certainty to be recoverable. It is
likely that the actual remaining quantities recovered will exceed
the estimated proved reserves. Probable reserves are those
additional reserves that are less certain to be recovered than
proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the
estimated proved plus probable reserves. Proved developed producing
reserves are those reserves that are expected to be recovered from
completion intervals open at the time of the estimate. These
reserves may be currently producing or, if shut-in, they must have
previously been on production, and the date of resumption of
production must be known with reasonable certainty. Possible
reserves are those reserves expected to be recovered from known
accumulations where a significant expenditure (e.g., when compared
to the cost of drilling a well) is required to render them capable
of production. They must fully meet the requirements of the
reserves category (proved, probable, possible) to which they are
assigned. Certain terms used in this press release but not defined
are defined in NI 51-101, CSA Staff Notice 51-324 - Revised
Glossary to NI 51-101, Revised Glossary to NI 51-101, Standards of
Disclosure for Oil and Gas Activities ("CSA Staff Notice 51-324")
and/or the COGEH and, unless the context otherwise requires, shall
have the same meanings herein as in NI 51-101, CSA Staff Notice
51-324 and the COGEH, as the case may be.
SHORT TERM RESULTS: References in this press release to peak
rates, production rates since inception, current production rates,
initial seven 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.
SPECIFIED FINANCIAL MEASURES: This press release includes
various specified financial measures, including non-GAAP financial
measures, non-GAAP financial ratios and capital management measures
as further described herein. These measures do not have a
standardized meaning prescribed by generally accepted accounting
principles ("GAAP") and, therefore, may not be comparable with the
calculation of similar measures by other companies. Management uses
these non- GAAP measures for its own performance measurement and to
provide shareholders and investors with additional measurements of
the Company's efficiency and its ability to fund a portion of its
future capital expenditures. "Adjusted EBITDA" (non-GAAP financial
measure) is calculated as consolidated net income (loss) before
interest and financing expenses, income taxes, depletion,
depreciation and amortization and adjusted for G&A impacts and
certain non-cash, extraordinary and non-recurring items primarily
relating to unrealized gains and losses on financial instruments
and impairment losses, including derivative true-up settlements.
PetroTal utilizes adjusted EBITDA as a measure of operational
performance and cash flow generating capability. Adjusted EBITDA
impacts the level and extent of funding for capital projects
investments. Reference to EBITDA is calculated as net operating
income less G&A. "Net Operating Income" (non-GAAP financial
measure) is calculated as revenues less royalties, operating
expenses, and direct transportation. The Company considers Net
Operating Income measure as they demonstrate Company's
profitability relative to current commodity prices. "Net surplus
(debt)" (non-GAAP financial measure) is calculated by adding
together total cash, trade and VAT receivables, and short and
long-term net derivative balances less total current liabilities,
long-term debt, non-current lease liabilities, deferred tax, and
other long-term obligations. Net surplus (debt) is used by
management to provide a more complete understanding of the
Company's capital structure and provides a key measure to assess
the Company's liquidity. "Free funds flow" (non-GAAP financial
measure) is calculated as net operating income less G&A less
exploration and development capital expenditures less realized
derivative gains/losses and is calculated prior to all debt
service, taxes, lease payments, hedge costs, factoring, and lease
payments. Management uses free funds flow to determine the amount
of funds available to the Company for future capital allocation
decisions. Please refer to the MD&A for additional information
relating to specified financial measures. "Free cash flow"
(non-GAAP financial measure) is calculated as EBITDA less G&A
less Capex prior to the realization of any derivative
impacts.
OIL AND GAS MEASURES: This press release contains metrics
commonly used in the oil and natural gas industry which have been
prepared by management, such as "reserves life index", "reserves
replacement" and "per share reserves value". These terms do not
have a standardized meaning and may not be comparable to similar
measures presented by other companies, and therefore should not be
used to make such comparisons. "Reserve life index" is calculated
as total Company interest reserves divided by annual production.
"Reserves replacement" is calculated as reserves in the referenced
category divided by estimated referenced production. "Reserves per
share" or "per share reserves value" is calculated as reserves in
the referenced category divided by the number of shares of
PetroTal's common stock issued and outstanding. These terms
have been calculated by management and do not have a standardized
meaning and may not be comparable to similar measures presented by
other companies, and therefore should not be used to make such
comparisons. Management uses these oil and gas metrics for its own
performance measurements and to provide shareholders with measures
to compare PetroTal's operations over time. Readers are cautioned
that the information provided by these metrics, or that can be
derived from the metrics presented in this press release, should
not be relied upon for investment or other
purposes.
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, free funds flow, cost estimates,
NPV10, tax rates, budget, EBITDA, 2024 capex, 2024 average
production and production and sales targets, balance sheet
strength, shareholder returns 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.
