PetroTal Announces Strategic
Acquisition of Block 131 in Peru
Addition of 900 bopd of
production effective January 1, 2024
Recoverable reserve
estimates up to 4.9 million bbls
Significant upside potential
from deeper reservoirs
Calgary, AB and Houston, TX -
May 8 2024 - PetroTal Corp.
("PetroTal" or the
"Company") (TSX: TAL, AIM:
PTAL and OTCQX: PTALF) is pleased to announce the execution of a
definitive agreement (the "Acquisition Agreement") to acquire a
100% working interest in Peru's Block 131, including the producing
Los Angeles field, through the acquisition of CEPSA Peruana, S.A.C.
("CEPSA Peru"), which
represents the entire Peruvian business unit of Compania Española
de Petroleos S.A.U. ("CEPSA"), for a purchase price of
approximately $5.0 million in cash, subject to adjustment as set
forth in the Acquisition Agreement (the "Acquisition").
Manuel Pablo Zuniga-Pflucker,
President and Chief Executive Officer, commented:
"This is PetroTal's first acquisition since entering Peru in
late 2017. This transaction marks an important step forward in
delivering on our ongoing growth vision. The assets being acquired
are synergistic, highly accretive to the Company's current
operations and we have immediate plans for development once the
transaction is complete. All production from the assets is directed
to the Iquitos refinery.
Completion of this acquisition will add approximately 900 bopd
to our current 18,500 bopd of Bretana production, with the
potential for further upside in the near to medium term.
Furthermore, our operational team is assessing the potential upside
in the deeper zones of the Los Angeles field, that were previously
penetrated but were not tested. Finally, the location of Block 131
is of strategic importance, as it is connected by a 130km highway
to the Company's Block 107 prospect. We look forward to announcing
further updates on this acquisition process in due
course."
The assets to be acquired, pursuant
to the Acquisition, (the "Assets") are currently producing
approximately 900 barrels of oil per day ("bopd") from four wells
previously drilled into the Cretaceous aged Cushabatay sand at the
Los Angeles field.
With strong aquifer support, these wells are producing with a low
base decline profile, high recovery factor, and at a
40-45º API oil
quality. The Company's expectation is for near term development and
production growth from this block.
Strategic Rationale
Management and the Board of PetroTal
believe the Acquisition provides the following strategic
attributes:
·
Low-cost light
oil reserve additions with upside potential.
o Recoverable reserves estimated between
3.0 and 4.9 million barrels of oil
("bbls");
·
Iquitos Refinery
capacity synergies. Block
131's light oil production will allow PetroTal to increase the
sales capacity of heavier Bretana crude through Iquitos and allow
more oil to be sold in dry river conditions; and,
·
Netback
enhancements. From the
combined lighter oil mix sold to Iquitos, lower Brent differentials
can potentially be realized.
Operational Strategy
PetroTal's management team have identified three near term low
risk operational initiatives at Block 131:
·
Identification of bypassed oil for low risk
horizontal well locations drilled high on structure;
·
Potential use of hydraulic pumps (vs ESPs) and
optimized tubing to reduce operating costs; and,
·
Implementation of an operationally straightforward
solution to lower chemical costs from treating
asphaltene.
Asset Background
Discovered in 2013, CEPSA Peru's
assets include the Los Angeles oil field on Block 131 (100% working
interest), which are all located onshore Peru. At March 31, 2024
the assets have produced a total of approximately 7.6 million
barrels. The assets are held under a concession agreement expiring
in 2037 and are subject to a 23.9% royalty rate at field production
levels under 5,000 bopd with a similar scaling factor as Block 95
above 5,000 bopd. All the crude oil produced is
sold to Petroperu, the State-owned oil company, and transported by
barge along the Ucayali River, passing by PetroTal's Bretana oil
field, to the refinery in Iquitos.
The
Acquisition
Completion of the Acquisition is
subject to the satisfaction of certain conditions, including, but
not limited to, required regulatory
approvals. Closing will occur
following the satisfaction of such conditions. The effective date
of the Acquisition will be January 1, 2024.
Evercore Group LLC is acting as the
exclusive financial advisor to PetroTal with respect to the
Acquisition.
Stikeman Elliott LLP is acting as
legal counsel to PetroTal with respect to the
Acquisition.
Q1
2024 results webcast link for May 9, 2024
PetroTal will host a webcast for its
Q1 2024 results and to discuss the Cepsa acquisition on May 9, 2024
at 9am CT (Houston) and 3pm BST (London). Please see the link below
to register.
https://stream.brrmedia.co.uk/broadcast/660bc6a92eae5d4dcf2e6319
Qualified Person's Statement
Estuardo Alvarez-Calderon, a
consultant to the Company, 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.
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:
Camilo McAllister
Executive Vice President and Chief Financial
Officer
Cmcallister@PetroTal-Corp.com
T: (386) 383 1634
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 forward-looking information (collectively referred to
herein as "forward-looking statements") within the meaning of
applicable securities laws. Forward-looking statements are often,
but not always, identified by the use of words such as "guidance",
"outlook", "anticipate", "target", "plan", "continue", "intend",
"consider", "estimate", "expect", "may", "will", "should", "could"
or similar words suggesting future outcomes. More particularly,
this press release contains statements concerning: PetroTal's
business strategy, objectives, strength and focus; the Acquisition;
satisfaction or waiver of the closing conditions to the
Acquisition; receipt of required regulatory approvals for the
completion of the Acquisition; the purchase price of the
Acquisition net closing adjustments; the anticipated benefits of
the Acquisition, including the impact of the Acquisition on the
Company's operations, reserves, inventory and opportunities,
financial condition and overall strategy; expectations with respect
to reserves, oil production levels and decline rates related to the
Assets following the Acquisition; and development for the Assets,
including the ability to replicate prior results.
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
business plan of PetroTal, CEPSA Peru and the Assets; the receipt
of all approvals and satisfaction of all conditions to the
completion of the Acquisition; the timing of and success of
future drilling, development and completion activities; the
geological characteristics of PetroTal's properties; the
characteristics of the Assets; the successful integration of the
Assets into PetroTal's operations; the ability of existing
infrastructure to deliver production and the anticipated capital
expenditures associated therewith, 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: counterparty risk to closing the
Acquisition; unforeseen difficulties in integrating the Assets into
PetroTal's operations; incorrect assessments of the value of
benefits to be obtained from acquisitions and exploration and
development programs (including the Acquisition); 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). Please refer to the risk factors identified in the
Company's most recent AIF 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.
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") in respect of the Company and the Assets, including
prospective results of operations and production and components
thereof, including pro forma the completion of the Acquisition, 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 document was approved by
management as of the date of this document and was provided for the
purpose of providing further information about PetroTal's 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 document, 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 document should not be used for purposes other
than for which it is disclosed herein. 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.
OIL REFERENCES: All references to "oil" or "crude oil"
production, revenue or sales in this press release mean "light
crude oil" as defined in NI 51-101. All references to Brent
indicate Intercontinental Exchange Brent.
RESERVES DISCLOSURE. All reserves values and ancillary
information contained in this press release relating to Assets are
derived from the are derived from an independent assessment of
reserves attributable to the Assets, which was completed by
Netherland Sewell and Associates Inc. ("NSAI"), a qualified
independent reserves evaluator as defined in Canadian National
Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities ("NI 51-101"), with an effective date of March 31, 2024
(the "Reserves Report"), and prepared in accordance with the most
recent publication of the Canadian Oil and Gas Evaluation Handbook
("COGEH") and the standards established by NI 51-101. Estimates of
reserves for individual properties may not reflect the same level
of confidence as estimates of reserves 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'
reserves will be attained and variances could be
material.
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. Possible reserves are those additional reserves
that are less certain to be recovered than probable reserves. There
is a 10% probability that the quantities actually recovered will
equal or exceed the sum of proved plus probable plus possible
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. Undeveloped 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.
