Delivered Q1 2023 production of 12,193 bopd representing 17.5% growth over Q4 2022
Achieved record sales volumes of 21,500 bopd in March 2023 through Brazil exports and Iquitos
Fully repaid the Company’s corporate bonds
Formalized the shareholder return policy and minimum liquidity requirement
PetroTal Corp. (“PetroTal” or the “Company”) (TSX: TAL, AIM: PTAL and OTCQX: PTALF) is pleased to report its operating and financial results for the three months (“Q1”) ended March 31, 2023.
Selected financial and operational information is outlined below and should be read in conjunction with the Company’s unaudited consolidated financial statements and management’s discussion and analysis (“MD&A”) for the three months ended March 31, 2023, 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 unless otherwise stated.
Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:
“I am pleased to report that the Company has achieved production in excess of 20,000 bopd for over 74 days since late February 2023. Q1 2023 was a transformational quarter for our business, as we repaid our corporate bonds in full, reinitiated a material and rewarding return of capital program, and upsized the barging fleet. With the recent permit approval of the L2 West Platform, the Company can now drill for more than two years ahead, allowing for increasing production levels to be achieved. Our value proposition is very clear; we can deliver both material production growth per share and a significant free cash flow yield, instead of having to prioritize one over the other.”
Q1 2023 Selected Highlights
· Achieved average quarterly sales of 12,618 barrels (“bbls”) of oil per day (“bopd”), up 21% from the fourth quarter (“Q4”) of 2022;
· Delivered monthly record sales in March 2023, with over 660,000 bbls of oil sold through Brazil and to the Iquitos refinery;
· Fully repaid the remaining $80 million in corporate bonds in the first quarter of 2023, paving the way for a significant dividend and share buyback program to commence in the second quarter of 2023;
· Reinstated a return of capital program, including a USD$0.015 per share quarterly eligible dividend payable in June 2023, representing an annualized yield of 10% based on a US$0.60/share trading price and intends to commence a normal course issuer bid (“NCIB”) share buyback program in the second quarter of 2023, subject to approval by the Toronto Stock Exchange (“TSX”);
· Generated $53.5 million ($47.12/bbl) and $47.9 million ($42.23/bbl) of net operating income and EBITDA, respectively over Q1 2023, an average 10.5% increase from the Q4 2022 net operating income and EBITDA, as a result of higher sales volumes in Q1 2023 compared to Q4 2022;
· In conjunction with the oil trading company handling Bretana oil exports through Brazil, negotiated an upsized barging fleet, thereby allowing the Company to have access to over 1.5 million bbls of barging capacity, an increase of approximately 25% from the previous capacity of 1.2 million bbls;
· Completed well 14H on March 27, 2023. The well has produced at a constrained average rate of 2,880 bopd during May 2023 to date, in line with expectations;
· Completed a fourth water disposal well in late January 2023, increasing the Company’s disposal capacity to over 150,000 bbls of water per day (“bwpd”) when fully tied into the Company’s field disposal system; and,
· Exited Q1 2023 with $71.6 million in total cash and a $71.1 million net surplus. (see note 9 below)
Selected Q1 2023 Financial and Operational Highlights
|
Q1-2023 |
|
Q4-2022 |
|
|
|
($ thousands) |
$/bbl |
$ thousands |
$/bbl |
$ thousands |
|
Average Production (bopd) (1) |
|
12,193 |
|
10,374 |
|
Average sales (bopd) |
|
12,618 |
|
10,420 |
|
Total sales (bbls) |
|
1,135,611 |
|
958,624 |
|
Average Brent price |
$82.51 |
|
$88.61 |
|
|
Contracted sales price, gross(1) |
$80.32 |
|
$88.22 |
|
|
Tariffs, fees and differentials |
($20.01) |
|
($21.71) |
|
|
Realized sales price, net |
$60.31 |
|
$66.51 |
|
|
Oil revenue |
$60.31 |
$68,494 |
$66.51 |
$63,755 |
|
Royalties(2) |
$5.49 |
$6,238 |
$6.08 |
$5,824 |
|
Operating expense |
$5.60 |
$6,354 |
$7.42 |
$7,115 |
|
Direct Transportation: |
|
|
|
|
|
Diluent |
$1.20 |
$1,368 |
$1.33 |
$1,274 |
|
Barging |
$0.80 |
$906 |
$0.86 |
$824 |
|
Diesel |
$0.10 |
$113 |
$0.15 |
$144 |
|
Storage |
$0.00 |
$0 |
$0.16 |
$152 |
|
Total Transportation |
$2.10 |
$2,387 |
$2.50 |
$2,394 |
|
Net Operating Income(4) |
$47.12 |
$53,515 |
$50.51 |
$48,422 |
|
G&A |
$4.90 |
$5,559 |
$5.57 |
$5,339 |
|
EBITDA(3) |
$42.22 |
$47,956 |
$38.78 |
$43,083 |
|
Adjusted EBITDA(3) |
$35.92 |
$40,825 |
$37.91 |
$36,338 |
|
Net Income |
$14.82 |
$16,979 |
$38.78 |
$37,176 |
|
Basic Shares Outstanding |
|
883,800 |
|
862,209 |
|
Market Capitalization(6) |
|
$521,046 |
|
$431,104 |
|
Net Income/Share |
|
$0.019 |
|
$0.043 |
|
Capex |
|
$32,919 |
|
$32,024 |
|
Free Funds Flow(3) (7) |
$8.13 |
$7,906 |
$3.80 |
$4,314 |
|
% of Market Capitalization(6) |
|
2% |
|
1% |
|
Total Cash(8) |
|
$71,635 |
|
$119,969 |
|
Net Surplus (Debt) (3) (9) |
|
$71,117 |
|
$74,225 |
1. Approximately 86% of sales over Q1 2023 were through the Brazilian route vs 84% in Q4 2022.
2. Royalties in Q1 2023 include the impact of the 2.5% community social trust.
3. Non-GAAP (defined below) measure that does not have any standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures presented by other entities. See “Selected Financial Measures” section.
4. Net operating income represents revenues less royalties, operating expenses, and direct transportation; See “Selected Financial Measures” section.
5. Adjusted EBITDA is net operating income less general and administrative (“G&A”) and plus/minus realized derivative impacts. See “Selected Financial Measures” section.
6. Market capitalization for Q1 2023 and Q4 2022 assume share prices of US$0.59 and US$0.50, respectively.
7. Free funds flow is defined as adjusted EBITDA less capital expenditures. See “Selected Financial Measures” section.
8. Includes restricted cash balances.
9. Net Surplus/Debt = Total cash + all trade and VAT receivables + short and long term net derivative balances – total current liabilities – long term debt – non current lease liabilities – deferred tax – other long term obligations.
Financial and Operating Highlights Subsequent to March 31, 2023
Drilling Commencement of Well 15H. The Company commenced drilling well 15H on April 11, 2023. The well is expected to cost approximately $15 million with completion anticipated in mid June 2023. The well will reach approximately 4,550 meters in total depth with an expected 1,100 meter lateral section.
Approval of the L2 West Platform. On April 15, 2023, PetroTal received approval from Perupetro to install and finalize construction of a new west drilling platform (“L2 West Platform”) at Bretana. This project is budgeted at approximately $11 million and will allow Q3 and Q4 2023 drilling locations to commence as scheduled in addition to locations in the 2024 and 2025 long range plan.
Robust Current Oil Production. Production was approximately 21,000 bopd for the month of April 2023 and has averaged 21,140 bopd in May 2023, to date. Near the end of April 2023, the Company fully recovered constrained production volumes from January and February 2023 and now is slightly ahead of plan year to date.
ONP Reopening. The Northern Peruvian Pipeline (“ONP”) resumed pipeline operations on April 12, 2023, after over a year of being shut down for maintenance and social unrest related reasons. The Company expects that an estimated 270,000 bbls of oil already in the pipeline will be exported in late Q2 2023 at the Bayovar port by Petroperu, generating between $5 and $6 million in net revenue for the Company at current oil prices. PetroTal has not re-commenced shipping oil through the ONP. It will consider that option once Petroperu’s full credit lines are reopened and functioning normally.
Return of Capital Policy. The Company has formalized its dividend and share buyback policy. Subject to maintaining a minimum liquidity level of $60 million, including unused credit facility capacity, the Company will a). pursue a share buyback program of approximately $3 million per quarter and b). pay eligible dividends in 2023 equal to the sum of USD$0.015 per share per quarter and incremental amounts from available cash consistent with maintaining the minimum liquidity level.
Strong Liquidity. The Company continues to receive regular scheduled payments from Petroperu and Brazil export revenue payments are current. Following payment of the June 2023 dividend, the Company anticipates having approximately $60 to $70 million of total cash.
2023 Virtual and in Person AGM
The Company is pleased to announce its 2023 annual general and special meeting of shareholders (“AGM”) will be held on June 15, 2023 (10:00am MT/15:00 UK) at the offices of Stikeman Elliott LLP in Calgary, Alberta. The Company’s Management Information Circular and Proxy Statement in respect of the AGM is available on SEDAR (www.sedar.com) and the Company’s website (www.petrotal-corp.com)
Updated Corporate Presentation and Investor Webcast
PetroTal will host a virtual investor webcast meeting on May 15, 2023 beginning at 9:00am Central Time (3:00pm London time). See the link below to join the webcast. The Company has also provided an updated corporate presentation, with the Q1 2023 results, on its website
https://stream.brrmedia.co.uk/broadcast/6436734e09685ed9886963e9
ABOUT PETROTAL
PetroTal is a publicly traded, tri‐quoted (TSX: 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 2022, 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.
