TIDMPTAL
RNS Number : 6406U
PetroTal Corp.
07 April 2021
PetroTal Announces Q1 2021 Operations Update
2021 drilling program underway, Q1 2021 4H workover successfully
completed, and Q1 2021 exit production on budget
Calgary, AB and Houston, TX - April 7, 2021 - PetroTal Corp.
("PetroTal" or the "Company") (TSXV: TAL and AIM: PTAL) is pleased
to announce the following operational update for Q1 2021. All
currency amounts are in United States dollars (unless otherwise
stated).
Highlights:
- PetroTal has commenced its 2021 drilling program by spudding
the first well ("7D") on March 29, 2021, with expected completion
the first week of May 2021;
- Successfully completed the workover of well 4H on time and under budget;
- Continued the installation of expanded production facilities
("CPF-2") that have arrived at the field with start-up dates
finalized;
- Achieved Q1 2021 exit production of 8,275 barrels of oil per
day ("bopd") with Q1 2021 production averaging approximately 7,300
bopd;
- Following completion of the 7D well, the team will drill the
second water disposal well ("3WD") on the western flank of the
structure, adding 50,000 barrels per day of water disposal
capacity;
- Following completion of the 3WD well, the team will drill four
development horizontal oil wells in H2 2021;
- Total cash liquidity of approximately $76 million, inclusive
of an unrestricted balance of $53 million ($23 million are
restricted for acquisitions and commodity price hedging). In
addition, future Petroperu true-up payments of approximately $36
million to PetroTal are expected, significantly enhancing the 2021
cash flow profile compared to budget; and
- PetroTal will hold a general investor conference call on April
7, 2021 at 10:30am CT / 4:30pm UK. Details are outlined below.
Q1 2021 Operations Update
The first well in the 2021 development program was spud on March
29, 2021. The 7D deviated well is expected to be complete in the
next 30 days, reaching a total depth of 2,880 meters and costing
$9.5 million to drill, complete, and tie-in. This well is planned
to develop the south side of the Bretana structure and execute an
operationally straight forward drill.
Following the 7D well, the Company will drill a water disposal
well (3WD), the second water disposal well drilled by PetroTal,
that is expected to be completed and online by mid-June 2021. The
Company plans to core the 3WD to gather technical data from the
western flank of the Bretana structure, which will provide valuable
reservoir information for future field development. Following
completion of the 3WD well, and as part of the approved 2021
budget, the team will focus on drilling four additional horizontal
oil wells, with the first one to the south of the structure and the
following three in the northern section of the structure.
The Company has successfully completed the workover of its 4H
well which was previously announced on February 18, 2021. The
budget for this operation was $1.1 million with an actual spend of
$984,000, 7% under budget. The new electro-submersible pump ("ESP")
that was installed has a nominal capacity of 12,000 barrels of
fluid per day ("bfpd") versus 8,000 bfpd with the old model. Since
the workover, the 4H well has been producing approximately 2,300
bopd, compared to 1,872 bopd, prior to the pump failure. The
Company plans to install similar higher capacity ESPs in most of
the Bretana oil wells to optimize production and oil
recoveries.
Notwithstanding the downtime of the 4H well, production still
averaged approximately 7,300 bopd in Q1 2021, with a promising
March 31, 2021 exit production rate of 8,275 bopd. This is
materially on budget and 2021 production guidance is unchanged as
announced on February 18, 2021, with an expected year end exit rate
of 18,000 to 19,000 bopd.
The Company continues to progress the installation and tie-in of
the CPF-2 expansion facilities which will take overall processing
capacity to 124,000 bfpd with the ability to handle 24,000 bopd by
mid-September 2021, coinciding with completion of two new oil
storage tanks, bringing storage capacity at the field to 90,000
barrels of oil. The remaining components of the CPF-2, principally
the additional formation water treatment facilities, will be ready
in Q3 2021, coinciding with expected production increases. The
CPF-2 total investment remains at $24 million, with the remaining
$12 million in the 2021 budget, costing $4 million less than
originally estimated.
March 31, 2021 Liquidity Update
At March 31, 2021, PetroTal has a cash position of approximately
$76 million, of which $53 million is unrestricted, with $20 million
dedicated to accretive acquisitions and $3 million as collateral
for commodity price hedges. Accounts payable and accrued
liabilities are approximately $37 million, a 16% reduction from $44
million at December 31, 2020. Ongoing payments will be managed from
expected oil field revenues and internal cash resources. Pursuant
to contractual terms with our suppliers, approximately $6 million
(16%) is not due until after Q2 2021.
As previously announced on March 31, 2021, PetroTal will benefit
from commodity prices hedges that have been placed to ensure cash
flow stability for the capital expenditure program and a sufficient
cushion over all the bond covenants. 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.
COVID-19 Surveillance and Control
The Company has fully integrated a robust COVID-19 surveillance
and control process into its operations and is equipped to handle
increased operational activity to execute its 2021 capital budget.
The Company has approximately $1 million budgeted in 2021 for
COVID-19 related support. Key features of this plan include a one
week quarantine and testing protocol for all incoming field
personnel, revamped working conditions into smaller pod teams with
mandatory protective equipment, and designated clinics and offsite
isolation areas to address issues as they arise.
Manuel Pablo Zuniga-Pflucker, President and Chief Executive
Officer, commented:
"We are excited to start our 2021 drilling campaign. Due to an
unprecedented decrease in world commodity prices, the impact of
COVID-19, and government related social issues, it has been over a
year since our team was drilling for growth and we are very happy
to be back doing what we do best for our stakeholders. I am also
very encouraged that considering the deferral of drilling, required
maintenance activities, and natural field declines, our production
levels remain strong as base oil production declines have performed
as expected. The successful workover of the 4H well was a valuable
operational test that, as a result of the higher production levels
and revised expected ultimate recovery, sets the stage for us to do
the same in other oil wells, at the appropriate time. With our
strong current liquidity position, approximately $36 million of
unbudgeted true-up revenue coming in 2021, and a fully funded
capital program, I anticipate an exciting growth trajectory for our
Company over the coming years.
Investor Presentation Update
PetroTal has updated the corporate presentation and is now available on the Company's website at www.petrotal-corp.com.
General Investor Call Participant Information
Time: 10:30am CT / 4:30pm UK on Wednesday April 7, 2021
Duration: 60 minutes
Dial in (Europe): +44 (0)330 336 9434
Dial in (United States): +1 720-543-0214
Dial in (Canada): +1 647 794 4605
Conference Code: 1609902
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; 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; future true-up payments from Petroperu; the scale-up of
CPF-2 and the timing thereof; 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 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: 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.
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 and production capacity, 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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Venture Exchange) accepts responsibility for the adequacy or
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