PetroTal Corp. (TAL) (PTAL) (PTALF) (“PetroTal”) 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
Oil wells completed
Q1 (actual): 1 (10H)
Q2 (actual): 1 (11H)
Q3 (actual): 0
Q4 (constrained): 2 (13H + 12H)
2022: 4
Average Production (bopd)
Q1 (actual): 11,746
Q2 (actual): 14,467
Q3 (actual): 12,229
Q4 (constrained): 16,500
2022: 13,500 – 14,000
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.”
