TIDMPTAL
RNS Number : 7924F
PetroTal Corp.
20 July 2021
PetroTal Announces Q2 2021 Operations Update
PetroTal completes water disposal well, commences drilling next
horizontal well (BN-8H), and exits Q2 2021 with strong cash
liquidity
Calgary, AB and Houston, TX - July 20, 2021 - PetroTal Corp.
("PetroTal" or the "Company") (TSXV: TAL and AIM: PTAL) is pleased
to announce the following operational update for Q2 2021. All
currency amounts are in United States dollars (unless otherwise
stated).
Highlights:
-- Q2 2021 production averaged 8,825 barrels of oil per day
("bopd") which was 2% higher than guidance of 8,655 bopd;
-- PetroTal completed its second water disposal well ("3WD"),
thereby potentially doubling its produced formation water disposal
capacity to approximately 100,000 barrels of water per day ("bwpd")
once the CPF-2 facilities are completed;
-- Two cores were successfully recovered from the 3WD which
should enhance reservoir models and understanding of Bretana's oil
in place estimates;
-- The 7D oil well continues to outperform expectations
producing approximately 260,000 barrels of oil since it started
producing on April 30, 2021. The well achieved payout in early July
and has averaged over 2,500 bopd from July 1 to July 16, 2021;
-- PetroTal is currently producing a constrained 8,800 bopd and
successfully disposing of all the produced formation water into the
2WD and 3WD water disposal wells, however, water disposal pumping
capacity is operating at reduced levels. Over the next month, the
Company will continue optimizing water disposal pumping capacity to
further enhance production rates to 10,000 bopd;
-- Drilling commenced on the Company's next horizontal well
(BN-8H) on July 12, 2021. The BN-8H well should be completed by
early September at a cost of $12.25 million and is expected to
boost field production to over 13,000 bopd;
-- Phase two of PetroTal's central processing facility ("CPF-2")
is on track for Q4 2021 completion;
-- Total cash liquidity at June 30, 2021, was approximately $79 million, of which $54 million is unrestricted. At June 30, 2021, accounts payable and accrued liabilities were approximately $37 million; and,
-- As part of PetroTal's commitment to our local stakeholders,
the Company recently joined the Indigenous Chamber of Commerce of
Peru and was also recognized by The Ministry of Energy and Mines
(MINEM) for Community Citizen Socio-Environmental Monitoring
Program ("PROMOSAC"), developed with community participation,
reflective of the Company's focus on community support.
Completion of two new wells. PetroTal commenced drilling a
second water disposal well, 3WD, on May 3, 2021. It was
successfully completed on July 9, 2021, approximately one month
later than the original estimate due to a required sidetrack.
Despite the drilling delay, and inclusive of the coring operation,
the total well cost is expected to be $11.9 million, compared to
the budget of $9.8 million. The additional expenditure is partially
offset by cost savings on the 7D development well that was
completed in late April 2021 and has already accumulated
approximately 260,000 barrels of oil and achieved payout in early
July.
Valuable reservoir data collected. Two cores were cut and
recovered while drilling the 3WD well, one from the top of the
Vivian oil reservoir and the second throughout the oil-to-water
transition zone that shows a better-than-expected shorter
transition zone. This will be verified by the ongoing petrophysical
studies, allowing for a more thorough estimate of oil in place for
the 2021 year-end reserves assessment.
Q2 2021 oil production. As stated in the May 31, 2021
announcement, current production levels were approximately 9,000
bopd inclusive of well shut ins, and as a result of drilling
delays, created a restricted production level for most of Q2 2021.
Q2 2021 oil production averaged 8,825 bopd, up 20% from 7,331 bopd
in Q1 2021, and 2% higher than guidance of 8,655 bopd. Current
field production is 8,800 bopd and while the 3WD water disposal
well has now been completed, one of the booster pumps is not fully
operational, constraining water injection rates. This results in
current field oil production being constrained just below 9,000
bopd. The booster pump is expected to be either repaired or
replaced over the next month, allowing PetroTal to restore
production rates to the unencumbered 10,000 bopd level.
Horizontal well BN-8H has commenced drilling. Drilling of the
next horizontal development well ("BN-8H") commenced on July 12,
2021, and is expected to cost $12.25 million. The well will take
approximately 53 days to drill and complete and is prognosed to be
4,200 meters in total length. This will be the first horizontal
well in 2021 with the last development well, 7D, being a deviated
well. The Company expects that, upon completion of the BN-8H and
fixing the water pumping disposal capacity, to ramp production to
over 13,000 bopd and meet Q3 2021 average production guidance of
11,750 bopd.
CPF-2 nearing completion. The final installations for CPF-2 are
ongoing with the crude oil treatment, storage tanks, and water
treatment all scheduled for completion in early Q4 2021. This will
provide for approximately 100,000 bwpd water disposal capacity.
June 30, 2021 liquidity update. At June 30, 2021, PetroTal had a
cash position of approximately $79 million, of which $54 million is
unrestricted, $20 million is dedicated to accretive acquisitions
and $5 million is collateral for commodity price hedges. Accounts
receivable from current oil sales, including VAT, is $16.7 million,
and accounts payable are approximately $37 million. Pursuant to
contractual terms with suppliers, approximately $7 million (19%) of
the accounts payable balance is due after Q3 2021. Ongoing payments
will be managed from expected oil field revenues, internal cash
resources, and the $100 million February 2021 secured bond issue
proceeds. The Company maintains access to an additional $25 million
from the bond issue for potential acquisitions and development
drilling.
Recognition by Ministry of Energy and Mines (MINEM). PetroTal is
pleased to acknowledge being recognized by MINEM for its Community
Citizen Socio-Environmental Monitoring Program ("PROMOSAC"). The
Company was one of three, selected out of a group of thirty-three
nominations. This award seeks to recognize those Peruvian companies
with a strong commitment to local community, the environment, and
local social and economic monitoring initiatives. Furthermore,
PetroTal is also supporting the Indigenous Chamber of Commerce of
Peru and will work closely with this emblematic institution
promoting mutually beneficial projects to empower the local
communities.
Manuel Pablo Zuniga-Pflucker, President and Chief Executive
Officer, commented:
"We are pleased to continue meeting our goals even though Peru
continues to suffer the consequences of a third Covid-19 wave.
After successfully completing the 7D well that continues to
outperform our 3P forecast, we completed the 3WD well which will
effectively double our water disposal capacity to approximately
100,000 bwpd. We are now starting to drill more of our prolific
horizontal wells which are weighted nicely in the back half of the
2021 capital investment program. Despite some operational
challenges, the Company was able to slightly beat Q2 2021
production guidance, even considering curtailed production rates.
The core data extracted from the 3WD well will be useful for oil in
place calibration in our 2021 year-end reserves report. The field
is now producing approximately 8,800 bopd and should ramp up
quickly as we optimize water disposal operations and prepare to
receive production from the new BN-8H oil well in early September
which will allow us to take Bretana's oil production to new
highs."
ABOUT PETROTAL
PetroTal is a publicly traded, dual--quoted (TSXV: TAL and AIM:
PTAL) 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, and in early 2020 became the second largest crude oil
producer in Peru. Additionally, the Company has large exploration
prospects and is engaged in finding a partner to drill the Osheki
prospect in Block 107. 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.
For further information, please see the Company's website at
www.petrotal-corp.com , the Company's filed documents at
www.sedar.com , or below:
Douglas Urch
Executive Vice President and Chief Financial Officer
Durch@PetroTal-Corp.com
T: (713) 609-9101
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@PetroTal-Corp.com
T: (713) 609-9101
PetroTal Investor Relations
InvestorRelations@PetroTal-Corp.com
Celicourt Communications
Mark Antelme / Jimmy Lea
petrotal@celicourt.uk
T : 44 (0) 208 434 2643
Strand Hanson Limited (Nominated & Financial Adviser)
James Spinney / Ritchie Balmer
T: 44 (0) 207 409 3494
Stifel Nicolaus Europe Limited (Joint Broker)
Callum Stewart / Simon Mensley / Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Auctus Advisors LLP (Joint Broker)
Jonathan Wright / Rupert Holdsworth Hunt / Harry Baker
T: +44 (0) 7711 627449
READER ADVISORIES
FORWARD-LOOKING STATEMENTS: This press release contains certain
statements that may be deemed to be forward-looking statements.
Such statements relate to possible future events, including, but
not limited to: PetroTal's business strategy, objectives, strength
and focus; drilling, completions, workovers and other activities
and the anticipated timing, costs and results of such activities;
the ability of the Company to achieve drilling success consistent
with management's expectations; anticipated future production and
revenue; drilling plans including the timing of drilling; oil
production levels; the 2021 capital program and budget, including
drilling plans; the scale-up of the central processing facility and
the timing thereof; hedging program and the terms thereof; and
future development and growth prospects. All statements other than
statements of historical fact may be forward-looking statements. In
addition, statements relating to expected production, reserves,
recovery, costs and valuation are deemed to be forward-looking
statements as they involve the implied assessment, based on certain
estimates and assumptions that the reserves described can be
profitably produced in the future. Forward-looking statements are
often, but not always, identified by the use of words such as
"anticipate", "believe", "expect", "plan", "estimate", "potential",
"will", "should", "continue", "may", "objective" and similar
expressions. The forward-looking statements are based on certain
key expectations and assumptions made by the Company, including,
but not limited to, expectations and assumptions concerning the
ability of existing infrastructure to deliver production and the
anticipated capital expenditures associated therewith, reservoir
characteristics, recovery factor, exploration upside, prevailing
commodity prices and the actual prices received for PetroTal's
products, including pursuant to hedging arrangements, the
availability and performance of drilling rigs, facilities,
pipelines, other oilfield services and skilled labour, royalty
regimes and exchange rates, the application of regulatory and
licensing requirements, the accuracy of PetroTal's geological
interpretation of its drilling and land opportunities, current
legislation, receipt of required regulatory approval, the success
of future drilling and development activities, the performance of
new wells, the Company's growth strategy, general economic
conditions and availability of required equipment and services.
Although the Company believes that the expectations and assumptions
on which the forward-looking statements are based are reasonable,
undue reliance should not be placed on the forward-looking
statements because the Company can give no assurance that they will
prove to be correct. Since forward-looking statements address
future events and conditions, by their very nature they involve
inherent risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of
factors and risks. These include, but are not limited to, risks
associated with the oil and gas industry in general (e.g.,
operational risks in development, exploration and production;
delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses; and health, safety and
environmental risks), commodity price volatility, price
differentials and the actual prices received for products, exchange
rate fluctuations, legal, political and economic instability in
Peru, access to transportation routes and markets for the Company's
production, changes in legislation affecting the oil and gas
industry and uncertainties resulting from potential delays or
changes in plans with respect to exploration or development
projects or capital expenditures. In addition, the Company cautions
that current global uncertainty with respect to the spread of the
COVID-19 virus and its effect on the broader global economy may
have a significant negative effect on the Company. While the
precise impact of the COVID-19 virus on the Company remains
unknown, rapid spread of the COVID-19 virus may continue to have a
material adverse effect on global economic activity, and may
continue to result in volatility and disruption to global supply
chains, operations, mobility of people and the financial markets,
which could affect interest rates, credit ratings, credit risk,
inflation, business, financial conditions, results of operations
and other factors relevant to the Company. Please refer to the risk
factors identified in the Company's annual information form for the
year ended December 31, 2020 and management's discussion and
analysis for the year ended December 31, 2020 and for the three
months ended March 31, 2021 which are available on SEDAR at
www.sedar.com. The forward-looking statements contained in this
press release are made as of the date hereof and the Company
undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise, unless so required by
applicable securities laws.
OIL REFERENCES: All references to "oil" or "crude oil"
production, revenue or sales in this press release mean "heavy
crude oil" as defined in National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities ("NI 51-101"). All references
to Brent indicate Intercontinental Exchange ("ICE") Brent.
FOFI DISCLOSURE: This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about PetroTal's prospective results of
operations, production and production capacity, 2021 capital
program and budget, cash flow profile, liquidity and components
thereof, all of which are subject to the same assumptions, risk
factors, limitations and qualifications as set forth in the above
paragraphs. FOFI contained in this press release was approved by
management as of the date of this press release and was included
for the purpose of providing further information about PetroTal's
anticipated future business operations. PetroTal disclaims any
intention or obligation to update or revise any FOFI contained in
this press release, whether as a result of new information, future
events or otherwise, unless required pursuant to applicable law.
Readers are cautioned that the FOFI contained in this press release
should not be used for purposes other than for which it is
disclosed herein. All FOFI contained in this press release complies
with the requirements of Canadian securities legislation, including
NI 51-101.
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