PetroTal Corp. announces the following corporate updates.
Peruvian political changes
On December 7, 2022, the Peruvian Congress voted to remove Mr. Pedro Castillo as President of Peru. Pursuant to Peruvian constitutional law, the Vice-President, Ms. Dina Boluarte assumes the Presidency. Following this change, there will be a reassessment of all government Ministers before a new cabinet is named. This process is expected to occur smoothly and should not impact PetroTal's operations.
Petroperu Agreement Finalized
PetroTal and Petroperu have finalized an agreement outlining the repayment terms of the $64 million in true up revenue owed to the Company by Petroperu from the Company's July 2022 export of approximately 720,000 barrels of oil to an international refiner. On December 1, 2022, the Company received $10.9 million from Petroperu as part of a schedule of payments, which is expected to be fully repaid by August 1, 2023.
Production Impact from River Blockade
Since the Company's Q3 2022 financial and operating results were released on November 17, 2022, the Company has been producing nearly 14,000 barrels of oil per day ("bopd"), reaching 18,000 bopd recently. As a result of the river blockade, PetroTal has reduced production to between 4,500 bopd and 5,000 bopd since November 30, 2022, to manage storage levels and will need to further reduce production levels should the blockade persist as the Northern Peruvian Pipeline ("ONP") remains unavailable due to ongoing repairs.
AIDECOBAP River Blockade
On November 25, 2022, Asociacion Indigena de Desarrollo y Conservacion de Bajo Puinahua ("AIDECOBAP") followers detained a barge traveling to Brazil with crude oil purchased from PetroTal. The crew was taken hostage in an effort to force the Company to sign an addendum related to the social trust prior to formal working table approval. Approximately 48 hours later, the crew of the barge was released, however, territorial control of the river pathway continues, limiting further barge movements to and from the Company's oilfield.
PetroTal strongly condemns the taking of hostages and using force and violence as a negotiating tactic and calls on Peruvian government intervention to prevent further unnecessary escalation. The Company recommends that the terms in the draft addendum, already agreed with Perupetro, be duly agreed upon with the entire working table to ensure a repeatable social trust model in other oil producing districts in the region of Loreto where Block 95 is located. Since January 1, 2022, PetroTal has been contributing 2.5% of the value of its fiscalized oil production, when operating without social disruption, to a dedicated bank account which has now grown to nearly $7 million. This blockade is not only impacting the trust fund, but also our social programs, thereby upsetting the local communities that understand this is an unnecessary protest without any logic.
Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:
"We are committed to ensuring that the proposed 2.5% Trust Fund is properly implemented so it may provide critical long-term funding to all the Puinahua District communities. We are also pleased to conclude our true up payment agreement with Petroperu and will continue to communicate with them in good faith regarding the additional factoring amounts owed for Q1 2022 oil deliveries into the ONP and the reopening of the pipeline when appropriate repairs are concluded."
