PetroTal Corp. is pleased to announce a signed government agreement to end the social protest, previously announced on March 3, 2022, and recommencement of production and oil sales upon opening of the loading dock.
Protest Conclusion
On Wednesday April 6, 2022, Peruvian government officials reached an agreement with the Asociación Indigena de Desarrollo y Conservación de Bajo Puinahua ("AIDECOBAP"), to end the social protest, which has been blocking PetroTal's loading dock. AIDECOBAP was protesting against the government on three core issues: prosecution of protesting rights, allocation of the Basic Needs Trust capital to close the social gaps that exist in Peru, and that the government expedite the formalization of the Bretana 2.5% social fund, offered by PetroTal, into the Block 95 license contract.
Peruvian government officials, which included the Prime Minister, with support from PetroTal and local community members, agreed to the following items:
· The Ministry of Energy and Mines presented the proposal for a Ministerial Resolution for the creation of a technical working group to analyze the needs of local communities in the Block 95 area;
· Perupetro has agreed to propose the incorporation of the 2.5% social development fund as an addenda into the license contract through a supreme decree; and,
· AIDECOBAP will immediately lift the blockade near PetroTal's loading dock.
Based on the current trust framework, PetroTal has funded trust allocations totaling $1.1 million to date, for the eligible fortnight periods in 2022. The working group will observe, recommend and support social trust policy, while day to day operations of the social trust will be managed by an independent third party. PetroTal will also continue to fund and support its ongoing social project commitments directly or via independent project contractors. PetroTal wishes to thank local residents and government officials for continued support through this protest period.
Production Restoration Plan
In anticipation of an agreement being reached, PetroTal has oil barge support ready to arrive within hours of the loading dock's formal reopening. The first technical priority is to unload approximately 90,000 barrels of crude oil stored at the oil field, with four to five barges currently engaged. Next, the operations team will ramp production back up over a five to seven day period. This production, along with the stored volumes, will be sold to the Iquitos refinery and through the Brazilian sales export route thereafter.
In Q1 2022, PetroTal produced over 1 million barrels of oil, approximately 11,700 bopd, despite being significantly production constrained for most of March 2022. This is a PetroTal record for quarterly production and equates to a sixth straight quarter of production growth for the Company.
ONP Pipeline Status
As previously announced on March 3, 2022, the Petroperu operated Northern Peruvian Pipeline remains closed due to erosion caused by the rainy season, with no firm timeline of maintenance completion provided by Petroperu. The Company is now focusing all efforts to maximize sales to the Iquitos refinery and the Brazilian export route. Commercial and technical efforts to eventually sell 400,000 barrel (13,000 bopd) monthly cargos through the Brazil route are being explored.
CPF-2 Approval
The Company's fully commissioned central processing facility ("CPF-2") received ministry approval on March 11, 2022 and is now able to operate up to 26,000 bopd.
Bond Update
Bondholders have formally accepted PetroTal's call provision notice regarding repayment of the $20 million in bonds dedicated to M&A activities. PetroTal made the payment on April 1, 2022, and now has $80 million in bonds remaining with no required amortization payments in 2022.
Liquidity Update
The Company's cash position at March 31, 2022 is approximately $53 million, of which $32 million is restricted.
Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented
"We are pleased with this agreement that has ended the protesting near our loading dock. We are also extremely appreciative of Perupetro and the Peruvian government's support towards PetroTal's social fund initiative that is aimed at creating long lasting peace in the region for the benefit of all and without any discrimination whatsoever. We can now turn our focus to operational optimization and continued development of Bretana."
