TIDMPTAL
RNS Number : 5079Q
PetroTal Corp.
21 October 2019
PetroTal Completes First Horizontal Well, Spuds Development Well
and Achieves New Record Production at Bretaña
Calgary and Houston - October 21, 2019-PetroTal Corp.
("PetroTal" or the "Company") (TSX-V: TAL and AIM: PTAL) is pleased
to provide an update in respect of its operations and production at
the Bretaña oil field in Block 95 in Peru (100% working interest).
All monetary amounts in this release are in United States
dollars.
HIGHLIGHTS
-- Completed the BN 95-4H ("4H") horizontal well on time and
under budget by approximately $3.0 million using new technology to
maximize oil production
-- 4H initial four-day production rate of 6,200 barrels of oil
per day ("BOPD"), exceeding management's expectations
-- Bretaña reached new record production of over 8,000 BOPD,
with three of five wells online
-- Current Bretaña field production of approximately 7,800 BOPD
-- Interim upgrades to production facilities increased production capacity to 7,500 BOPD
-- Spud the BN 95-5H ("5H") well, which will be the Company's
second horizontal development oil well
PetroTal has successfully completed the 4H well, the Company's
first horizontal well in the Bretaña oil field. The well had an
approximately 500-meter lateral completion utilizing autonomous
inflow control device ("AICD") valves to maximize oil production.
Initial production from the well during the first four days of
production was 6,200 BOPD. The 4H well was drilled updip towards
the crest of the structure and provided data to confirm
management's analysis of the reservoir. The well was drilled under
budget by approximately $3.0 million (representing 20 percent
savings), which will expedite payout of the well. The Company will
announce additional well data, including sustained rates, with its
quarterly financial filings and operations update in November
2019.
During the third quarter, the Company upgraded the production
facilities, expanding PetroTal's production capacity to over 7,500
BOPD. The Company plans to commission phase one of its central
production facilities for Bretaña ("CPF-1") in December 2019, which
will increase full field production capacity to over 10,000 BOPD.
Incremental implementation of phase two of the Company's production
facilities ("CPF-2") is planned for July 2020. When CPF-2 is fully
integrated by year-end 2020, PetroTal will have the capacity to
produce up to 20,000 BOPD. Facility expansion is being implemented
on a modular basis to time facilities with well completions to most
efficiently deploy capital.
As a result of the Company's successful drilling campaign in
Block 95 to date, the Board of Directors has approved an additional
$19.0 million of capital expenditures for 2019. Approximately $14.0
million will be deployed to drill and complete the 5H well, which
will target updip oil to the northern portion of the structure; and
$5.0 million will be directed to bring additional production
facilities to the field by mid-2020, as an interim step to
installing CPF-2 by year-end 2020. The Company expects the interim
capital spent will yield an additional 5,000 BOPD of capacity in
mid-2020. As mentioned above, the CPF-2 should bring total field
oil production capacity to 20,000 BOPD by year end 2020.
Once completed, the 5H well will be the Company's second
horizontal well. Production from the well is expected to help the
Company achieve a targeted exit rate of 10,000 BOPD at year-end
2019. The 5H well will also be completed with AICD valves in the
lateral section. The well is expected to come online simultaneously
with the facilities commissioning at year-end. The Company plans to
drill a second water disposal well in January 2020 as part of a new
capital budget once approved by the Board of Directors.
Management expects to fund the 2019 additional capital spending
with existing working capital and cash flow from operations. As of
September 30, 2019, the Company has cash and cash equivalents of
approximately $40.0 million. The Company produced approximately
4,800 BOPD in the fiscal third-quarter. Management expects average
above 6,500 fourth quarter production above 6,500 BOPD, a projected
increase of over 35 percent over the third quarter average.
Manolo Zuniga, President and Chief Executive Officer,
commented:
"Our drilling campaign continues to yield excellent results. The
strong initial production from the 4H well validates our
development plan. Our first horizontal well completion will provide
significant data and the AICD valve will bring more oil into the
wellbore. We are please to announce a number of recent milestones:
500 days of production, more than 1 million barrels of oil produced
and new record production of over 8,000 BOPD (from only three wells
as the production facilities reached the upper limits of capacity).
Our team is doing an outstanding job in its drilling and capital
discipline. As a result, we asked the Board for additional capital
to continue our development drilling program and make facility
upgrades to sustain oil production of over 10,000 BOPD. This
additional capital will allow the Company to reach free cash flow
generation faster and see our future drilling campaign funded from
cash flow.
Capital discipline is key, and having stressed that from day
one, we have seen the teams in Houston, Lima, and the field execute
at a high level and in a safe and environmentally friendly manner.
To save twenty percent on a single well is a very strong
achievement. Our Board's approval of the additional capital to
continue the development drilling campaign through year-end is
testament to solid execution and ongoing capital efficiency.
Facilities to enable us to attain the 10,000 BOPD mark are
scheduled to be commissioned in December 2019. The 5H well will
help sustain oil production through the first quarter of 2020 which
is key as our next well will be an additional water disposal well
in early 2020 to provide assurance in the field. As part of the
capital raise completed in May 2019, we promised to drill the 5H
well and to drill a second water disposal well to provide assurance
to production at Bretaña, and that is what we are delivering."
ABOUT PETROTAL
PetroTal is a publicly--traded, dual--listed (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 development asset is the Bretaña oil field in Peru's
Block 95 where oil production was initiated in June 2018, six
months after acquisition. 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. 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 / Jimmy Lea
Celicourt Communications (Financial PR)
petrotal@celicourt.uk
T: 44 (0) 208 434 2643
James Spinney / Ritchie Balmer / Eric Allan
Strand Hanson Limited (Nominated & Financial Adviser)
T: 44 (0) 207 409 3494
John Prior / Emily Morris
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 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; drilling, completion, commissioning and workover
activities of oil producing and water disposal wells and facilities
and the results and timing of such activities; the use of AICD
valves to optimize well productivity; the ability of the Company to
achieve drilling success consistent with management's expectations;
anticipated future production and production capacity; exit
production in 2019; engaging a partner to drill the Osheki
prospect; and future development and growth prospects. 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, 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 the Company's annual information form for the year
ended December 31, 2018 and management's discussion and analysis
for the three months ended March 31, 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.
OIL AND GAS INFORMATION: References in this press release to
production test rates, initial test 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 for PetroTal. A pressure transient analysis or well-test
interpretation has not been carried out in respect of all wells.
Accordingly, the Company cautions that the test results should be
considered to be preliminary.
FOFI DISCLOSURE: This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about PetroTal's prospective results of
operations, production, production capacity, capital budget and
capital expenditures, capital efficiencies, payout of wells, cash
flow from operations and free cash flow, growth 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. All FOFI contained in this press release complies
with the requirements of Canadian securities legislation, including
Canadian Securities Administrators' National Instrument 51-101
Standards of Disclosure for Oil and Gas Activities.
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.
110990794 v1
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END
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