PetroTal Corp. is pleased to announce its financial and operating results for the year and the three months (“Q4”) ended December 31, 2019.
Reserves numbers presented herein were derived from an independent reserves report (the “NSAI Report”) prepared by Netherland, Sewell & Associates, Inc. (“NSAI”) effective December 31, 2019. All amounts herein are in United States dollars (“USD”) unless otherwise stated.
2019 HIGHLIGHTS
The Company reached several key operational and financial achievements during 2019 as described below:
Q4 Highlights
- Drilled and completed the Company’s first horizontal well (4H), having a 500 meter lateral and utilizing autonomous inflow control device (“AICD”) valves to maximize oil production;
- Drilled and completed the 5H well, the longest horizontal well drilled in Peru. The well reached the target Vivian formation at a vertical depth of 2,696 meters and then with an 863 meter horizontal section inside the main productive oil reservoir;
- Commissioning of the new $31.6 million Central Production Facility (“CPF”) commenced on December 22, 2019 with the successful hydrostatic test of the new 20,000 barrel oil storage tank;
- Earned net income of $18.2 million ($0.03 per share basic) compared to a net loss of $2.2 million in Q4 2018;
- Higher operating net back of $28.6 million compared to $2.3 million in Q4 2018;
- For Q4 2019 the Company recognized funds flow generated of $22.2 million, as compared to utilization of negative $1.9 million in Q4 2018;
- Achieved a record quarterly oil production of 7,767 bopd, an increase of 670% over Q4 2018 (1,158 bopd), and an increase of 63% over Q3 2019 (4,760 bopd);
- Q4 2019 sales volumes averaged 9,509 bopd compared to 1,199 bopd in Q4 2018; and,
- Capital expenditures were $26.9 million in Q4 2019 compared to $4.4 million in Q4 2018.
2019 Operational Highlights
- At December 31, 2019, six producing wells and one water disposal were operating, inclusive of the initial water disposal that was converted to an oil producer;
- The Company invested $88.4 million to drill five producing oil wells, a water disposal well and build production facilities, nearly a three fold increase from capital expenditures of $23.2 million in 2018;
- The Company achieved an exit rate production of 13,300 bopd at the end of 2019 with the Q4 average being 7,767 bopd. PetroTal produced a total of 1.5 million barrels of oil in 2019, representing average oil production of 4,131 bopd, an increase of 431% from the average production of 958 bopd realized in 2018;
NSAI Report shows increases in all reserve categories:
- Proved (“1P”) reserves of 21.5 million barrels (“mmbbl”), an increase of 20% from the 17.9 mmbbl recorded at the end of 2018;
- Proved plus Probable (“2P”) reserves of 47.7 mmbbl, an increase of 21% from the 39.4 mmbbl recorded at the end of 2018; and,
- Proved plus Probable and Possible (“3P”) reserves of 84.8 mmbbl, an increase of 8% from the 78.7 mmbbl recorded at the end of 2018;
- Net Present Value (before tax, discounted at 10%) (“NPV-10”) represents $434 million ($20.19/bbl) for 1P reserves, $1.1 billion ($23.02/bbl) for 2P reserves and $1.9 billion ($22.11/bbl) for 3P reserves; and,
- Original oil in place (“OOIP”) estimates for each category of reserves also increased, with the 2P estimate increasing from 329 mmbbl to 364 mmbbl.
2019 Financial Highlights
- Generated revenue of $77 million ($52.32/bbl) compared to $10 million ($59.10/bbl) in 2018;
- Royalties to the Peruvian government were $3.4 million (4% of revenue) during 2019 compared to $0.5 million (5% of revenue) for 2018;
- Generated funds from operations of $51.9 million compared to $30 thousand in 2018, as a result of the significant increase in revenue generation;
- Operating and transportation costs, were $31.9 million ($21.68/bbl) for 2019 compared to $4.9 million ($27.60/bbl) for 2018, an improvement of 22% on a per barrel basis;
- Net operating income (netback) in 2019 was $41.4 million ($28.09/bbl) compared to $5.1 million ($28.72/bbl) in 2018;
- Cash flow generated was $29.7 million compared to negative $3.4 million in 2018. Cash flow represents netback inclusive of G&A costs, realized gain (losses) on commodity contracts and all other cash transactions; and,
- At December 31, 2019, the Company had cash of $21.1 million, compared to $26.3 million at the end of 2018.
2019 Other Highlights
- On November 4, 2019, the Company announced the addition of Mr. Douglas Urch, as Executive Vice President and Chief Financial Officer of the Company;
- On December 12, 2019, the Company’s board of directors declared its inaugural dividend of $0.9 million to shareholders of record on December 20, 2019; and,
- On December 19, 2019, Ms. Eleanor Barker and Dr. Roger Tucker were appointed as Independent Non-Executive Directors.
Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:
“As a Company, we achieved a great deal in 2019. We set ourselves a number of ambitious targets at the beginning of the year and were able to meet or exceed all of them. We were also able to generate significant value for our shareholders by increasing our production by 431% year-on-year. Our ability to deliver an exit rate of 13,300 bopd for 2019 is a testament to the expertise and hard work of PetroTal’s workforce during the period.”
Whilst we are currently focusing on balance sheet strength and liquidity, in light of the difficult trading environment, we remain well placed to deliver value for all our stakeholders. In closing, I would like to thank PetroTal’s shareholders, directors, employees and contractors for their continued support. We look forward to announcing further developments as the year progresses.”
