TIDMPTAL
RNS Number : 0860U
PetroTal Corp.
31 March 2021
PetroTal Announces Oil Sales and Risk Management Update
Completion of Second Oil Export through Brazilian Terminal and
Hedging Arrangements
Calgary, AB and Houston, TX - March 31, 2021 - PetroTal Corp.
("PetroTal" or the "Company") (TSXV: TAL and AIM: PTAL) is pleased
to announce the second export of Bretana crude oil into the
Atlantic region through Brazil and the execution of crude oil price
derivative contracts. All currency amounts are in United States
dollars (unless otherwise stated).
Highlights:
- PetroTal has completed the initial implementation of its oil price hedging program for 2021. Approximately 590,000 barrels have been hedged, (representing approximately 16% of forecast oil production covering April 1, 2021 to December 31, 2021), in a Put structure with a $60/bbl strike;
- The Company completed the second Bretana oil export through
Brazil, selling 225,000 barrels of oil at $61/bbl less a quality
differential and commercial fees, similar to the first Brazilian
export completed in December 2020; and
- Physical sales from the 1.8 million barrels of oil in the
Northern Oil Pipeline ("ONP") have commenced, with 360,000 barrels
to be sold by Petroperu in April for $62/bbl less a $2.06/bbl
quality differential, further reinforcing the strong demand for
Bretana oil. This will result in PetroTal receiving an incremental
true-up payment of approximately $20/bbl over the revenue booked
from the original sale, including differential adjustments.
Executed Corporate Hedging Contract
In order to support the 2021 capital development program and
mitigate Brent oil price downside risk prior to oil delivery,
PetroTal has executed a 590,252 barrel Put option with a strike
price of $60/bbl, for the period April 1, 2021 to December 31,
2021. The Company hedged these volumes based on the 2021 budget's
monthly oil production profile and will look to layer on additional
H2 2021 and H1 2022 hedges as production levels grow following
commencement of drilling activity.
Second Oil Export Sale Through Brazil
The Company has completed a second oil export through Brazil of
225,000 barrels of oil, sold FOB Bretana. The oil was loaded into a
series of barges at Bretana, destined for transport to a terminal
near Manaus, Brazil. The sales invoice is based on the Brent oil
price forecast for April 2021 of $61/bbl, and PetroTal has received
full payment for this export.
Based on run rate cost assumptions, inclusive of royalties,
operating and transportation costs, and export related fees, the
Company estimates a netback of approximately $31/bbl, an
improvement from the netback realized from the previously announced
first export sale through Brazil in December 2020.
PetroTal has now executed a contract for additional Brazilian
oil exports through to July 31, 2022 that will supplement existing
sales arrangements using the ONP, providing flexibility in the
sales program and production continuity.
Petroperu Hedging Program Update
For sales into the ONP, the Company is paid an initial price
when oil is delivered to pump station #1 at Saramuro, with a
true-up payment received approximately eight months later from
Petroperu, based on the Brent price at the Bayovar port. To
alleviate the oil price risk associated with PetroTal's monthly
deliveries into the ONP, the monthly sales invoices are, pursuant
to the previously announced amended oil sales contract with
Petroperu, now priced based on the eight month Brent strip price
forecast, and Petroperu has placed oil price Swaps for these sales
to alleviate significant price adjustments.
With the Company's guidance and in accordance with the amended
oil sales contract, Petroperu is facilitating commodity price hedge
arrangements for the remaining 1.8 million barrels of oil in the
ONP from previous deliveries, produced from Bretana in 2019 and
2020. These arranged volumes carry an average initial price of
$44/bbl and are expected to reach the Bayovar port for export by
Petroperu over the next six months from April 2021. The current
incremental value of the arranged true-up payments to PetroTal,
which is subject to change, is approximately $36 million, based on
the March 25, 2021 forward Brent strip oil price forecast. As noted
below, a Swap arrangement has been placed by Petroperu for the
first 360,000 barrels.
Petroperu will continue to hedge the remaining arranged 1.4
million barrels and ongoing future deliveries into the ONP.
First True-up ONP Revenue Sale Tendered in April
The Company was advised that Petroperu has arranged a physical
sale in April of 360,000 barrels arriving at the Bayovar port, at
April's average Brent price less a $2.06/bbl quality differential.
This represents approximately 20% of the arranged barrels that were
subject to the contingent derivative liability in 2020. To assure
price certainty for PetroTal in April, Petroperu has hedged this
volume with a $62/bbl Swap.
Q1 2021 Operations and Financial Update
PetroTal will provide a Q1 2021 operations and financial update
on April 7, 2021 followed by a general conference call shortly
after. Details on how to participate will be available on our
website listed below, prior to the call.
Manuel Pablo Zuniga-Pflucker, President and Chief Executive
Officer, commented:
"We are very pleased to be able to execute our second Brazil
shipment, demonstrating this is a viable offtake option that can
scale up with operational pace and cost efficiency, based on
production activity and ONP availability. Having the Brazilian
offtake option ensures healthy commercial competition amongst all
oil sales options. The associated commercial terms on all our
recent liftings are an indicator of the continued high demand of
Bretana crude. We are also extremely happy to enter into the first
phase of our 2021 hedging strategy, giving stakeholders greater
confidence around our 2021 cash flow profile. We have an exciting
operational program planned over the coming months and we look
forward to updating our progress shortly."
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 Bretana
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 Bretana 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 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) 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; hedging program; drilling activities; anticipated future
production and revenue; transportation alternatives and sales
continuity, including pursuant to a contract for future exports
through Brazil; and future development and growth prospects. All
statements other than statements of historical fact may be
forward-looking statements. In addition, statements relating to
expected production, reserves, recovery, 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.
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, 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 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 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, 2019 and management's discussion and
analysis for the year ended December 31, 2020 and for the three and
nine months ended September 30, 2020 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: This press release contains metrics
commonly used in the oil and natural gas industry, such as netback.
"Netback" equals total petroleum sales less quality discount,
lifting costs, transportation costs and royalty payments calculated
on a bbl basis. 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.
OIL REFERENCES: All references to "oil" or "crude oil"
production, revenue or sales in this press release mean "heavy
crude oil" as defined in National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities ("NI 51-101"). All references
to Brent indicate Intercontinental Exchange ("ICE") Brent.
FOFI DISCLOSURE: This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about PetroTal's prospective results of
operations, production, exports, hedging, 2021 cash flow profile
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 NI 51-101.
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