TIDMPTAL
RNS Number : 2774W
PetroTal Corp.
22 April 2021
PetroTal Announces 2020 Year-End Financial and Operating
Results
PetroTal emerges stronger after a collapse in world oil prices
and the COVID-19 pandemic
Calgary, AB and Houston, TX - April 22, 2021 - PetroTal Corp.
("PetroTal" or the "Company") (TSXV: TAL and AIM: PTAL) is pleased
to announce its financial and operating results for the year and
the three months ("Q4") ended December 31, 2020.
Selected financial, reserves and operational information is
outlined below and should be read in conjunction with the Company's
audited consolidated financial statements ("Financial Statements"),
management's discussion and analysis ("MD&A") and annual
information form ("AIF") for the year ended December 31, 2020,
which are available on SEDAR at www.sedar.com and on the Company's
website at www.PetroTal--Corp.com. Reserves numbers presented
herein were derived from an independent reserves report (the "NSAI
Report") prepared by Netherland, Sewell & Associates, Inc.
("NSAI") effective December 31, 2020. All amounts herein are in
United States dollars ("USD") unless otherwise stated.
2020 Highlights
- Drilled and completed the 6H well on schedule and within
budget achieving a 10-day flush production average of approximately
4,500 bopd;
- Successfully and seamlessly reopened the Bretana field in late
September 2020 after COVID 19, social, and Northern Oil Pipeline
("ONP") maintenance related issues. There was no additional
downtime or related safety issues once startup commenced, with
field production rising back to approximately 11,000 bopd (pre shut
down levels) ten days later;
- Completed commissioning of the enhanced central production
facilities ("CPF-1"), bringing overall oil production capacity to
between 16,000 and 18,000 bopd;
- Optimized the 2020 capital program to maximize liquidity and
operational performance due to the COVID 19 pandemic, ongoing
government social related issues, and shut down of the ONP;
- Signed an extended oil sales contract with Petroperu outlining
improved terms, including reduced pipelined tariffs and fees during
periods of low oil prices;
- Raised approximately $18 million in equity to provide 2020 liquidity support;
- Delivered a material lift in 2020 year ended 3P oil reserves
with a lower 2P operating cost profile based on positive technical
revisions, historical well performance, and field cost reduction
initiatives;
- Concluded historic collaboration between the local Bretana
residents and communities, aligning their goals and objectives with
the Company's; and,
- Executed a route to market diversification strategy through
Brazil with comparable margins to the ONP route.
Events Subsequent to December 31, 2020
- On January 19, 2021, the Company executed a final agreement
with Petroperu, restructuring the contingent derivative liability
over three years. The amount of the contingent liability
represented $16.6 million (based on the November 30, 2020
valuation) and was subsequently paid out (along with the $3 million
Peruvian-government COVID emergency response loan), from the $100
million bond offering referred to below. Since that time, the
Company through Petroperu, has recently placed hedges, solidifying
approximately $30 million of true-up revenue on the 1.8 million
barrels in the ONP that originally caused the contingent
liability;
- On February 2, 2021, the Company announced completion of a
3-year $100 million senior secured bond with an annual 12% coupon,
issued at a 5% discount. The bonds issued by PetroTal are the
Company's only interest bearing debt and the proceeds are for
payout of the Petroperu derivative liability with Petroperu and
Reactiva loan, totaling $20 million, to support the Company's crude
oil price hedging strategy ($15 million), to finance potential
acquisitions ($20 million), with the remainder for continued
development of the Bretana oil field;
- On February 18, 2021, the Company announced its 2021 capital
development program of $100 million, to be funded from the bond
proceeds and internally generated funds from operations, along with
existing cash resources;
- The Company has hedged approximately 32% of expected April to
December 2021 oil production. Additionally, Petroperu has now
hedged 100% of oil sales through the ONP. This robust hedging
program will ensure funding stability to support the 2021 capital
development program, in the event that Brent oil price drops
materially; and,
- Pursuant to the Company's oil market diversification strategy,
in Q1 2021 the Company completed a second shipment of 225,000
barrels of oil through Brazil for export into the Atlantic region.
The oil sale was FOB Bretana and generated revenue of $8.8
million.
Three months ended December 31, 2020 ("Q4") Highlights
- PetroTal produced 6,410 bopd and sales volumes averaged 5,471
bopd, compared to sales of 2,327 bopd in Q3 2020;
- Indigenous communities and government bodies reached
agreements that will see increased funding for the local
communities, thereby allowing for the ONP to resume full
operations;
- The Company's stringent COVID-19 protocols continue to ensure that the camp remains safe;
- The Company sold 397,000 barrels of oil to the Iquitos
refinery and the ONP (at pump station #1 at Saramuro), thereby
generating revenues of $12.4 million, net of transportation and
fees;
- PetroTal reached agreement with an international oil trader
for an initial shipment to export 106,000 barrels through Brazil
into the Atlantic region, via the Amazon river. The December 2020
shipment was sold FOB Bretana, priced at the forward month Brent
ICE price, and paid within two weeks of loading at Bretana.
Importantly, there are no subsequent oil price adjustments;
- Operating income of $5.9 million ($11.90/bbl) compared to $2.3
million ($10.86/bbl) in Q3 2020;
- Funds flow provided by operations of $1.3 million compared to
a deficiency of $0.5 million in Q3 2020; and,
- Capital expenditures were $6.3 million compared to $3.4 million in Q3 2020.
2020 Operational Highlights
- Six producing wells and one water disposal well were operating
during Q4 2020, inclusive of the initial water disposal well that
was converted to an oil producer;
- Approximately $42 million incurred in capital expenditures to
drill one oil well, build production facilities and standby-related
charges, compared to $89 million in 2019;
- PetroTal produced a total of 2.1 million barrels of oil in
2020, representing average oil production of 5,675 bopd, an
increase of 37% from the average production of 4,131 bopd realized
in 2019;
- Annual independent reserve assessment, as prepared by NSAI
shows increases in all reserve categories:
o Proved ("1P") reserves of 22.3 million barrels ("mmbbl"), an
increase of 4% from the 21.5 mmbbl recorded at the end of 2019;
o Proved plus Probable ("2P") reserves of 51.0 mmbbl, an
increase of 7% from the 47.7 mmbbl recorded at the end of 2019;
and,
o Proved plus Probable and Possible ("3P") reserves of 106.1
mmbbl, an increase of 25% from the 84.8 mmbbl recorded at the end
of 2019;
- Original oil in place ("OOIP") estimates for 1P, 2P and 3P
reserve categories were unchanged from 2019 at
235, 364 and 579 mmbbls, respectively; and,
- Net Present Value (after tax, discounted at 10%) ("NPV-10")
represents $271 million ($12.15/bbl) for 1P reserves, $621 million
($12.17/bbl) for 2P reserves and $1.2 billion ($11.03/bbl) for 3P
reserves based on the NSAI year end 2020 price deck.
2020 Financial Highlights
- Generated revenue in 2020 of $76.6 million ($36.71/bbl)
compared to $82.8 million ($56.24/bbl) in 2019;
- Royalties to the Peruvian government were $2.9 million compared to $3.4 million for 2019;
- Generated funds from operations of $16.6 million compared to
$30.3 million in 2019, as a result of the significant decrease in
oil prices;
- Operating and transportation costs, were $44.8 million
($21.49/bbl) compared to $37.7 million ($25.59/bbl) for 2019, an
improvement of 21%, on a per barrel basis;
- Net operating income (netback) was $28.9 million ($13.84/bbl)
compared to $41.7 million ($28.34/bbl) in 2019;
- Cash flow generated was $13.4 million compared to $51.1
million in 2019. Cash flow represents netback inclusive of G&A
costs, realized gain (losses) on commodity contracts and all other
cash transactions; and,
- At December 31, 2020, the Company held cash of $9.6 million,
compared to $21.1 million at the end of 2019.
Selected Financial and Operating Highlights
Year-Ended Quarter-Ended
=============================== ==============================================================
(in thousands December December December September June March
USD) 31, 2020 31, 2019 31, 2020 30, 2020 30, 2020 31, 2020
================ ============== =============== =============== =============== ============= =============
Financial
Crude oil
revenues $76,593 $82,790 $17,374 $7,611 $9,839 $41,768
Royalties (2,877) (3,396) (700) (248) (123) (1,806)
Net operating
income 28,881 41,719 5,992 2,324 2,756 17,809
Commodity price
derivatives
loss (1) 4,788 367 (12,969) (4,399) (18,264) 40,420
Net income
(loss) (1,524) $20,152 10,675 3,224 16,029 (31,452)
Basic and
diluted net
income
(loss)
(US$/share) (0.00) 0.03 0.01 0.01 0.02 (0.05)
Capital
expenditures 42,297 88,763 6,315 3,354 8,756 23,872
================= ============== =============== =============== =============== ============= =============
Operating
Average
production
(bopd) (2)(3) 5,675 4,131 6,410 2,444 4,185 9,686
Average sales
(bopd) 5,700 4,033 5,471 2,327 4,729 10,313
Average Brent
oil price
(US$/barrel) 41.74 64.31 44.24 43.34 29.19 50.14
Average
realized price
(US$/barrel) 36.71 56.24 34.52 35.56 22.87 44.51
Netback
(US$/barrel)
(4) 13.84 28.34 11.90 10.86 6.40 18.98
Funds flow
provided by
(used
in) operations
(4) 16,668 29,413 1,293 (548) 862 15,061
================= ============== =============== =============== =============== ============= =============
Balance sheet
Cash 9,628 21,101 9,628 9,788 20,379 7,373
Working Capital (22,157) (11,762) (22,157) (30,407) (31,845) (61,025)
Total assets 215,138 194,181 215,138 205,531 216,899 194,274
Current
liabilities 58,608 59,286 58,608 62,355 76,932 89,914
Equity 137,163 121,057 137,163 126,253 122,789 90,029
================= ============== =============== =============== =============== ============= =============
Note:
(1) Contingent liability will be paid over a three-year period.
(2) The field was shut in on May 7, 2020; for the 37 producing
days in Q2 2020, production averaged 11,500 bopd.
(3) The field was shut in from July 1 to July 14 and from August
9 to September 27; for the 28 producing days in Q3 2020 constrained
production averaged 8,000 bopd.
(4) Funds flow provided by (used in) operations and netback do
not have any standardized meaning prescribed by GAAP and therefore
may not be comparable with the calculation of similar measures for
other entities. See "Non-GAAP Measures".
Manuel Pablo Zuniga-Pflucker, President and Chief Executive
Officer, commented
"2020 was an extremely challenging year for the global economy
and PetroTal emerged from the downturn in a position of strength, a
testament to our team's dedication and resolve. Although our 2020
results were impacted by many one-time events, the Company's
announcements over the last six months have been overwhelmingly
positive and will underpin our growth through 2021 and beyond. I am
excited to continue to deliver on our 2021 capital program, which
we anticipate will generate value for our equity, debt, and ESG
stakeholders.
I would like to thank PetroTal's shareholders, directors,
employees, and contractors for their continued support and I look
forward to keeping all our stakeholders updated on the Company's
progress throughout the remainder of 2021."
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 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; drilling, completions, workovers and other activities
and the anticipated costs and results of such activities; the
ability of the Company to achieve drilling success consistent with
management's expectations; anticipated future production and
revenue; drilling plans including the timing of drilling; oil
production levels, including average production and exit production
in 2021; the 2021 capital program and budget, including drilling
plans; COVID-19 surveillance and control process; hedging program
and the terms thereof; 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 AIF and the MD&A 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.
PRESENTATION OF OIL AND GAS INFORMATION: The reserves
information herein sets forth PetroTal's reserves as at December
31, 2020, as presented in the independent reserves report prepared
by NSAI, a qualified reserves evaluator, in accordance with the
standards contained in the most recent publication of the Canadian
Oil and Gas Evaluation Handbook (the "COGE Handbook") and the
reserve definitions contained in National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities ("NI 51-101").
In addition to the summary information disclosed in this
announcement and the press release dated February 24, 2021, more
detailed information is included in the AIF. All oil and gas
disclosure contained in this press release complies with the
requirements of NI 51-101. The term original oil in place (OOIP) is
equivalent to total petroleum initially in place ("TPIIP"). TPIIP,
as defined in the COGE Handbook, is that quantity of petroleum that
is estimated to exist in naturally occurring accumulations. It
includes that quantity of petroleum that is estimated, as of a
given date, to be contained in known accumulations, prior to
production, plus those estimated quantities in accumulations yet to
be discovered. A portion of the TPIIP is considered undiscovered
and there is no certainty that any portion of such undiscovered
resources will be discovered. If discovered, there is no certainty
that it will be commercially viable to produce any portion of such
undiscovered resources. With respect to the portion of the TPIIP
that is considered discovered resources, there is no certainty that
it will be commercially viable to produce any portion of such
discovered resources. A significant portion of the estimated
volumes of TPIIP will never be recovered.
OIL AND GAS INFORMATION: References in this press release 10-day
flush production 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. The Company
cautions that the such results should be considered to be
preliminary.
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.
NON-GAAP MEASURES: This press release contains financial terms
that are not considered measures under generally accepted
accounting principles ("GAAP") such as operating netback and funds
flow provided by operations, that do not have any standardized
meaning under GAAP and may not be comparable to similar measures
presented 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. The Company considers operating
netbacks to be a key measure as they demonstrate Company's
profitability relative to current commodity prices. Netback is
calculated by dividing net operating income by barrels sold in the
corresponding period. Funds flow provided by operations, is a
non-GAAP measure that includes all cash generated from operating
activities and is calculated before changes in non-cash working
capital. A reconciliation from cash provided by operating
activities to funds flow provided by operations is included in the
MD&A.
FOFI DISCLOSURE: This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about PetroTal's prospective results of
operations, production and production capacity, NPV-10, 2021
capital program and budget, cash flow profile, liquidity 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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END
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