TIDMPTAL
RNS Number : 7708C
PetroTal Corp.
13 October 2022
PetroTal Announces Q3 2022 Operations and Liquidity Update
Calgary, AB and Houston, TX - October 13, 2022 - PetroTal Corp.
("PetroTal" or the "Company") (TSX-V: TAL, AIM: PTAL and OTCQX:
PTALF) is pleased to announce the following operational and
corporate updates.
Q3 2022 Production
PetroTal's Q3 oil production was approximately 1.12 million
barrels, representing 12,229 barrels of oil per day ("bopd"), which
was the Company's second best producing quarter to date. The
current technical production capacity of the Bretana oilfield is
approximately 18,000 bopd, prior to the upcoming completion of well
13H. The third quarter is a seasonally dry quarter, but this year
the river water levels were unusually low, so PetroTal took the
precaution of loading barges to a reduced capacity to ensure their
safe operation while traveling. As a result, production was
constrained during this period to match reduced export capacity,
which has been impacted from the continued closure of the Northern
Peruvian Pipeline ("ONP"). As the dry period passes and water
levels rise, the Company expects to return to increased levels of
barge capacity.
Well 13H Update
On October 4, 2022, well 13H reached its total depth and is now
being completed. At an unconstrained level, the Company expects to
again have production capacity of over 20,000 bopd that can be
quickly activated once river levels normalize, and additional
barges are made available.
ONP and Barging Update
The ONP remains down as Petroperu continues to work through
maintenance activities related to damage at various points on the
pipeline. The Company is working with the new management of
Petroperu to develop a view on when it may be able to resume
exports through the ONP, but currently assumes this will not happen
in 2022.
The Company is also working actively to expand the capacity of
its export route to Brazil, both through expansions of the barge
fleet and optimization of the round trip time with the eventual
goal of reaching 1 million barrels of capacity. The Company expects
to continue increasing its monthly Brazilian export capacity from
the initial 120,000 barrels exported in December 2020 to an average
of 600,000 barrels per month in 2023, without reliance on the ONP.
In May and August 2022, the Company exported 470,000 and 450,000
barrels respectively, to Brazil, prior to being impacted by low
river levels.
Liquidity Update
As at September 30, 2022 the Company had approximately $93
million in total cash with $18 million being restricted. At the end
of Q3 2022, accounts payable were approximately $50.6 million, and
estimated accounts receivable were $123.7 million. Subsequent to
the quarter end, $12 million was received related to Brazilian
export sales. The majority of remaining receivables are amounts
owing from Petroperu related to June's sales export at Bayovar and
for oil that entered the ONP in February 2022. The overdue amount
owing from Petroperu, related to the July sales export is $64
million (including VAT). PetroTal has been working diligently with
the finance group at Petroperu to establish a repayment schedule
for the $64 million and to ensure the February invoice amount is a
priority once their credit is reactivated.
Adjusted 2022 Guidance - Assuming no ONP availability
Adjusted Guidance Q1 (actual) Q2 (actual) Q3 (actual) Q4 (constrained) 2022
2 (13H +
Oil wells completed 1 (10H) 1 (11H) 0 12H) 4
------------ ------------ ------------ ----------------- ---------
Average Production 13,500 -
(bopd) 11,746 14,467 12,229 16,500 14,000
------------ ------------ ------------ ----------------- ---------
USD millions, unless otherwise stated Guidance
Realized Brent (USD/bbl) $80
----------------
Average Production (bopd) 13,500 - 14,000
----------------
Net operating income $309
----------------
G&A ($22)
----------------
Net derivative settlements $22
----------------
Adjusted EBITDA $309
----------------
CAPEX ($98)
----------------
Free cash flow $211
----------------
Debt Reduction Strategy
The Company now expects the full bond settlement to be made by
the end of Q1 2023, at which time, there will be a reduction of the
call premium, saving approximately $2.6 million in buyout costs.
Thereafter, as previously indicated and liquidity permitting, the
Company expects to begin a capital return program to shareholders.
PetroTal is currently in compliance with all bond covenants and
expects to remain so prior to the expected retirement date.
Manuel Pablo Zuniga-Pflucker, President and Chief Executive
Officer, commented:
"We continue to work with our trader to increase their overall
available contracted barging fleet size to alleviate oil export
constraints, which have been compounded by the unavailability of
the ONP since early 2022. We are adjusting our 2022 guidance to
reflect a conservative sales scenario, which we hope to exceed
should the ONP become a viable sales option in Q4 2022. Under this
conservative scenario, cash flow is still very strong allowing the
Company to deliver on its promised shareholder return program in
2023. Additionally, we are looking forward to finalizing the
ongoing successful working table discussions related to the social
trust."
ABOUT PETROTAL
PetroTal is a publicly traded, tri quoted (TSXV: 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 2020, 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.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)
Ritchie Balmer / James Spinney / Robert Collins
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
T: +44 (0) 7711 627449
READER ADVISORIES
OIL REFERENCES: All references to "oil" or "crude oil"
production, revenue or sales in this press release mean "heavy
crude oil" as defined inNI 51-101. All references to Brent indicate
Intercontinental Exchange ("ICE") Brent.
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;
PetroTal's revised 2022 guidance and budget including, but not
limited to, estimated or anticipated production levels, capital
expenditures and drilling plans; the intention to redeem the
outstanding bonds; PetroTal plans to deliver strong operational
performance and to generate free cash flow and growth; capital
requirements and the Company's ability to access capital on
desirable terms and within required timelines; the ability of the
Company to achieve drilling success consistent with management's
expectations; the ability of the Company to achieve near term
production targets and operate at unrestricted levels; anticipated
future production and revenue; drilling plans including the timing
of drilling, commissioning, and startup and the impact of delays
thereon; oil production levels, including average and exit
production in 2022; sales expansion through alternative exports
routes, including barging and trucking; the Company's proposals for
collaboration with local communities; and future development and
growth prospects. 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, the ability
of the Ministry of Energy to
effectively achieve its 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, 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, 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, wars (including Russia's war in Ukraine), 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. The ongoing war between Russia and Ukraine has the
potential to threaten the supply of oil and gas from the region.
The long-term impacts of the war between these nations remains
uncertain. 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, increased operating and capital
costs due to inflationary pressures, business, financial
conditions, results of operations and other factors relevant to the
Company. Please refer to the risk factors identified in the
Corporation's annual information form (filed April 28, 2022) and
MD&A (filed August 25, 2022) (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.
SPECIFIED FINANCIAL MEASURES: This press release includes
various specified financial measures, including non-GAAP financial
measures, non-GAAP financial ratios and capital management measures
as further described herein. These measures do not have a
standardized meaning prescribed by generally accepted accounting
principles ("GAAP") and, therefore, may not be comparable with the
calculation of similar measures 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. "Adjusted EBITDA" (non-GAAP financial
measure) is calculated as consolidated net income (loss) before
interest and financing expenses, income taxes, depletion,
depreciation and amortization and adjusted for G&A impacts and
certain non-cash, extraordinary and non-recurring items primarily
relating to unrealized gains and losses on financial instruments
and impairment losses, including derivative true-up settlements.
PetroTal utilizes adjusted EBITDA as a measure of operational
performance and cash flow generating capability. Adjusted EBITDA
impacts the level and extent of funding for capital projects
investments. Reference to EBITDA is calculated as net operating
income less G&A. "Free cash flow" (non-GAAP financial measure)
is calculated as net operating income less G&A less exploration
and development capital expenditures and is calculated prior to all
debt service, taxes, lease payments, hedge costs, factoring, and
lease payments. Management uses free cash flow to determine the
amount of funds available to the Company for future capital
allocation decisions. Please refer to the MD&A for additional
information relating to specified financial measures.
FOFI DISCLOSURE: This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about PetroTal's revised budget and
guidance, prospective results of operations, production and
production capacity, free cash flow, revenue, adjusted EBITDA, debt
repayment, liquidity, shareholder returns 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.
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