TIDMPTAL
RNS Number : 3029A
PetroTal Corp.
01 June 2021
PetroTal Announces Q1 2021 Financial and Operating Results
PetroTal secures liquidity, improves risk management position,
and advances offtake optionality prior to executing an
operationally focused and pivotal development plan
Calgary, AB and Houston, TX - June 1, 2021 - PetroTal Corp.
("PetroTal" or the "Company") (TSXV: TAL and AIM: PTAL) is pleased
to announce its financial and operating results for the three
months ("Q1") ended March 31, 2021.
Selected financial and operational information is outlined below
and should be read in conjunction with the Company's unaudited
consolidated financial statements ("Financial Statements"),
management's discussion and analysis ("MD&A") for the quarter
ended March 31, 2021, which are available on SEDAR at www.sedar.com
and on the Company's website at www.PetroTal--Corp.com. All amounts
herein are in United States dollars ("USD") unless otherwise
stated.
Q1 2021 Selected Operational Highlights
Commenced drilling the 7D well, which was successfully completed
on April 30, 2021. PetroTal started drilling well 7D on March 29,
2021, reaching a vertical depth of 2,696 meters and encountering
excellent oil producing sands. The well was drilled and completed
at a revised final cost of $7.6 million, or 17% below budget. After
the typical cleanup period and slowly ramping up production during
the following week, the 7D averaged over 4,500 bopd over a four-day
period, accumulating over 115,000 barrels of oil during its first
month of production, and maintaining average production rates of
4,000 bopd during the past four weeks.
Upsized pump on 4H. The Company installed a new
electro-submersible pump ("ESP") on the 4H well under budget and on
time. Soon after the workover, the well was producing at 400 bopd
higher than before the operation and is expected to recapture the
incremental cost of the pump over the next few months at current
Brent levels.
Production materially on target. Production for Q1 2021 averaged
7,331 bopd which was materially on budget. Current production is
10,225 bopd, notwithstanding that two oil wells remain shut in
waiting on water disposal pump enhancements which has reduced
production by an estimated 1,200 bopd.
CPF-2 on track and on budget. Materials for phase two of its
central processing facility ("CPF-2") continue to be installed and
the project is on track for a Q3-Q4 2021 commissioning.
Reiterating 2021 guidance. The Company is reaffirming its 2021
average production target of 11,500 bopd.
Q1 2021 Selected Corporate Highlights
Secured liquidity. The Company completed the placement of a
3-year $100 million senior secured bond with a 12% coupon and a
borrowing limit of $125 million. The Company exceeded compliance
with all covenants at March 31, 2021 with the newly issued bonds
being the only material long term debt on the balance sheet.
Improved corporate risk management. During the quarter, The
Company hedged 590,000 barrels in a put structure with a $60/bbl
strike price. Subsequent to the quarter end, The Company hedged an
additional 622,000 barrels at similar strike prices bringing hedged
April 2021 to December 2021 production to 32% of budget.
Improved sales risk management. Working with Petroperu, the
Company solidified, through hedging, a $31 million future true-up
payment for approximately 1.8 million barrels of oil in the North
Peruvian Pipeline ("ONP") and implemented a risk management
partnership process with Petroperu for future sales into the ONP.
The receipt of the $31 million is subject to the pace of oil
movements through the ONP and is expected to be received by
PetroTal as sales arrive in Bayovar throughout the next nine to
twelve months.
Executed a third route to market strategy. Sold 225,045 barrels,
FOB Bretana, through Brazil with competitive commercial terms vs
sales through the ONP.
Enhanced existing offtake arrangement. Extended the sales
agreement with Petroperu until December 2022 with improved
commercial terms under low Brent scenarios.
Q1 2021 and Selected Financial Highlights
Significant liquidity in hand. The Company exited Q1 2021 with
$75.8 million of total (restricted and unrestricted) cash compared
to $9.6 million at the end of 2020.
Higher net operating income ("NOI"). PetroTal generated nearly
$20 million ($25.87/bbl) of NOI in the quarter, an increase of 12%
over Q1 2020 despite producing 2,378 bopd less in Q1 2021 vs Q1
2020.
Operating costs. Operating costs for Q1 2021 were $5.5 million
($7.17/bbl) vs $6.0 million ($6.42/bbl) in Q1 2020 driven by lower
production rates and offset slightly by higher than estimated
one-time fuel use for the new crude oil power generation plant
commissioning, which was more expensive in Q1 2021 due to a higher
Brent price.
Lower capital expenditures. The Company invested $7.1 million on
capital expenditures in the quarter vs $23.8 million in Q1 2020.
The bulk of PetroTal's 2021 development capex will occur in Q2 2021
and H2 2021 ensuring flush production from new drills is online
during favorable Brent pricing months with hedging in place for
downside protection.
Free cash flow generation . With recent elevated Brent prices,
the Company estimates it is operating materially above the original
$90 million EBITDA budget for 2021 which assumed $50/bbl Brent.
Excluding hedging and true-up revenue, and from June until December
2021, it is estimated that for every $1/bbl above $50/bbl Brent,
EBITDA increases $2.0 to $2.5 million, making PetroTal potentially
free cash flow positive for 2021.
Positive Net Income. Net income for the quarter was $30.9
million vs a net loss of $31.4 in Q1 2020 driven largely by higher
commodity prices. Normalizing out derivative changes results in Q1
2021 and Q1 2020 having similar net income figures of $8.5 million
and $9.0 million, respectively.
Operations Update
As previously announced, the technical team has completed the
new 7D well, seeing favorable rates in the first four weeks,
including average production rates during the past week of 4,000
bopd, exceeding booked reserve expectations.
Current total field production is 10,225 bopd and has been
impacted by two oil wells being shut in awaiting water disposal
pump enhancements, which will be completed shortly. The production
impact of the shut in wells is estimated at 1,200 bopd over the
last four weeks. As a result, field production during April
averaged 7,812
bopd and 9,994 bopd for May.
The Company is currently drilling the 3WD well, its second water
disposal well, which is now expected to be completed in the first
week of July. This well will enable PetroTal to proceed with enough
water disposal capacity (an addition of 50,000 barrels of water per
day) to accommodate the next 14 months of drilling and provide
important reservoir characterization data for future
development.
As previously announced, Mr. Dewi Jones has assumed the role of
VP Exploration and Development, effective May 11, 2021.
2020 Sustainability Report
PetroTal is pleased to announce that its 2020 sustainability
report has now been posted on the Company's website, in English and
Spanish. PetroTal is committed to being a responsible and
sustainable energy producer and meeting short and long term social
and environmental goals with transparent and aligned projects. Some
notable key outcomes from the 2020 report are as follows:
- Zero discharges or spills;
- Zero disabling workplace injuries by PetroTal employees;
- Zero ethical claims or complaints;
- 23 year reforestation project leading to carbon credits;
- Promoting solar power in Puinahua district communities;
- Measuring emissions: 15,043 metric tonnes of direct CO2 GHG
emissions which covers scopes 1, 2 and 3 of tonne CO2
calculation;
- Formally COVID-19 protocol certified; and
- Productive projects with over 315 families are ongoing in Puinahua.
Q1 2021 Webcast conference call
The Company will be hosting a conference call on June 1, 2021 at
10:00am Houston time. The link for the live webcast is below:
https://webcasting.brrmedia.co.uk/broadcast/60ad31bcfec49008608b46bb
Selected Financial and Operational Highlights
Three Months Ended Twelve Months
Ended
======================================= ==================================== ===============
(in thousands USD) March 31, March 31, December 31,
2021 2020 2020
======================================= ================ ================== ===============
Financial
Crude oil revenues $32,356 $32,245 $61,740
Royalties (1,748) (1,806) (2,877)
Net operating income 19,969 17,809 28,881
Commodity price derivative
(income)/loss (22,512) 40,420 4,788
Net income (loss) 30,975 (31,452) (1,524)
Basic and diluted net income
(loss) (US$/share) 0.04 (0.05) 0.00
Capital expenditures 7,113 23,872 42,297
======================================== ================ ================== ===============
Operating
Average production (bopd) 7,331 9,686 5,675
Average sales (bopd) 8,578 10,313 5,700
Average Brent oil price (US$/barrel) 60.85 50.14 41.74
Average realized price (US$/barrel) 41.91 34.36 29.59
Netback (US$/barrel) 25.87 18.98 13.84
Funds flow provided by (used
in) operations 4,467 15,061 16,668
======================================== ================ ================== ===============
Balance sheet
Cash and restricted cash 75,824 7,373 9,628
Working Capital 68,213 (61,025) (22,157)
Total assets 342,773 194,274 215,138
Current liabilities 69,348 89,914 58,608
Equity 168,595 90,029 137,163
======================================== ================ ================== ===============
Note:
(1) 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
"Q1 2021 was a great quarter in many ways. From a strategy
standpoint it was prudent that the Company shored up its liquidity
position before undertaking material operations with pace. The
Company is now on solid footing from a liquidity, risk, and safety
standpoint and if firmly focused on achieving operational
excellence in 2021. We are now in a Brent oil price environment
where, subject to such conditions continuing, wells only need to
produce approximately 280,000 - 300,000 barrels to payout full
cycle, which in some cases, can happen in two to three months. The
Company's advancement on a risk, finance, and operational
standpoint this quarter was impressive, and we will continue this
positive momentum throughout 2021, to the benefit of all
stakeholders."
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 MD&A and the most recent annual
information form 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
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, funds
flow provided by operations and free cash flow 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. Free cash flow is operating cash flow before hedging
minus maintenance capital expenditures.
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, 2021 capital
program and budget, cash flow profile, free cash flow, 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 National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities.
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