PetroTal Announces Second Quarter Financial Results and Operations Update

PetroTal Announces Second Quarter Financial Results and Operations Update

Calgary, Alberta and Houston, Texas – August 29, 2019—PetroTal Corp. (“PetroTal” or the “Company”) (TSX-V: TAL and AIM: PTAL) is pleased to provide a summary of its financial and operating results as of June 30, 2019.

Selected financial and operational information is outlined below and should be read in conjunction with the Company’s unaudited consolidated financial statements (“Financial Statements”) and management’s discussion and analysis (“MD&A”) for the three and six months ended June 30, 2019, which are available on SEDAR at www.sedar.com and the Company’s website at www.petrotal-corp.com. All figures referred to in this press release are denominated in U.S. dollars.

2019 SECOND QUARTER HIGHLIGHTS and OPERATIONAL UPDATE

• Produced approximately 280,000 barrels of oil (“BO”) during the second quarter

• Production averaged 3,100 barrels of oil per day (“BOPD”) versus 944 BOPD prior quarter

• Successfully drilled and completed two oil development wells

• Received approval of the Environmental Impact Assesssment allowing for full field development

• Completed an upsized and oversubscribed placement of common shares, raising ~$24 million net

THIRD QUARTER SUBSEQUENT EVENTS

• Re-completed water disposal well into producer in August, initial production rate of 2,700 BOPD

• Increased oil production to approximately 5,500 BOPD in August 2019

• July and August (to date) 2019 cumulative production approximated 285,000 BO

OPERATIONS UPDATE

The Company continued the development of the Bretaña oil field and produced an average of 3,100 BOPD during the quarter, compared to 944 BOPD in the 2019 first quarter.

The Company drilled and completed the BN 95-2XD and BN 95-3D wells in the northern section of the field. These two development oil wells allowed the Company to increase production to over 5,000 BOPD, as expected by management.

In August, the Company re-completed the existing water disposal well, drilled by the previous operator, and converted it to an oil producer (“BN 95-1”). The initial production rate of the BN 95-1 was approximately 2,700 BOPD.

Currently the Company is producing just over 5,500 BOPD, managing each of the wells at different pump rates due to capacity of facilities which are constrained to between 5,000 and 6,000 BOPD. Due to these capacity limits, since the BN 95-3D was completed, the BN 95-1XD well has been shut in.

The Company’s field production was reduced in July to around 4,000 BOPD due to lack of storage during the recent pipeline downtime. Subsequently, the Company was able to complete the first sale through the northern oil pipeline, a batch of 200,000 BO, allowing the Company to ramp production back to current levels.

With recent drilling the success of the and the operational knowledge of the field engineers, the Company is confident it can reach the projected goal of 5,000 BOPD for this fiscal third quarter.

Also, the Company drilled a new water disposal well, the BN-2W, on the flanks of the field, which was placed into operation following the injectivity test. This well was required prior to re-completing the existing water disposal well. Injectivity tests showed capacity of the water disposal well at 40,000 barrels of water per day.

Additional facilities to grow oil production volumes to 10,000 BOPD by year-end are still on track, and the commissioning of those facilities is expected to begin in December 2019.

Manolo Zuniga, President and Chief Executive Officer, stated:

“The Company continues to meet targets and execute at a high level. The success of our development program has us at the upper limits of our facilities in the field, and our team is committed to optimizing production operations to assure we meet our targets. We continue to experience excellent results from the development program and that should give confidence to stakeholders that the team we have has the knowledge and experience to operate fields like Bretana.

Our successful capital raise has given us the confidence that we can accelerate the production ramp to 10,000 BOPD by year end, months ahead of our original plan. We have already started the procurement process to add facilities in mid-2020 to allow for another step increase in production capacity to 12,000-14,000 BOPD. We have consistently demonstrated capital discipline, and we continue to find ways to optimize field operations to unlock the value to our stakeholders.”

FINANCIAL HIGHLIGHTS

The following table summarizes key financial highlights associated with the Company’s financial performance. See the Financial Statements and the MD&A for further details.

Six months ended June 30,

2019

2018

$ thousands except where defined

Oil revenues (before royalty expense)

12,628

-

Expenses

(13,720)

(2,944)

Net loss

(1,092)

(2,944)

Net loss per weighted average Common share – basic and diluted ($)

0.00

(0.00)

Exploration and evaluation asset expenditures

395

12,939

Property plant and equipment expenditures

34,244

178

Net working capital surplus (deficit)

17,776

42,554

Total assets

145,833

97,363

Total liabilities

45,675

16,864

Shareholders' equity

100,158

80,499

Common Shares outstanding (000's)

672,196

537,741

ABOUT PETROTAL

PetroTal is a publicly‐traded, dual‐listed (TSX‐V: 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 development asset is the Bretaña oil field in Peru's Block 95 where oil production was initiated in June 2018, six months after acquisition. 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 Northern Peru and is led by a Board of Directors that is focused on safely and cost effectively developing the Bretaña oil field. More information on the Company can be found at www.PetroTal‐Corp.com.

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9101

Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T: (713) 609-9101

Mark Antelme / Jimmy Lea
Celicourt Communications (Financial PR)
petrotal@celicourt.uk
T: 44 (0) 207 520 9261

James Spinney / Ritchie Balmer / Eric Allan
Strand Hanson Limited (Nominated & Financial Adviser)
T: 44 (0) 207 409 3494

John Prior / Emily Morris / George Price
Numis Securities Limited (Joint Broker)
T: +44 (0) 207 260 1000

Jonathan Wright / Hugh R. Sanderson
GMP FirstEnergy (Joint Broker)
T: +44 (0) 20 7448 0200

READER ADVISORIES 

FORWARD-LOOKING STATEMENTS: This press release may contain 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, completion, and workover activities of oil producing and water disposal wells and the results and timing of such activities; the ability of the Company to achieve drilling success consistent with management’s expectations; anticipated future production, revenue and cash flow; exit production in 2019; and future development and growth prospects. All statements other than statements of historical fact may be forward-looking statements. 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, 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 and 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. Please refer to the risk factors identified in the Company’s annual information form for the year ended December 31, 2018 and management’s discussion and analysis for the three months ended March 31, 2019 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 AND GAS INFORMATION: References in this press release to production test rates, initial test production rates, and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for PetroTal. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the Company cautions that the test results should be considered to be preliminary.

FOFI DISCLOSURE: This press release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about PetroTal’s prospective results of operations, production, payout, cash flow, budget 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 made as of the date of this press release and was provided 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 Canadian Securities Administrators’ National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.


PetroTal Successfully Converts Water Disposal Well to Oil Producer with Uplift of 2,700 Barrels of Oil per Day

PETROTAL SUCCESSFULLY CONVERTS WATER DISPOSAL WELL TO OIL PRODUCER WITH UPLIFT OF 2,700 BARRELS OF OIL PER DAY

Calgary and Houston August 21, 2019—PetroTal Corp. (“PetroTal” or the “Company”) (TSX-V: TAL and AIM: PTAL) is pleased to provide an update in respect of its operations and production at the Bretaña field in Block 95 (PetroTal: 100% Working Interest) in Peru.

HIGHLIGHTS

  • Company has successfully completed the BN 95-2WD well (the “2WD”)
  • Following completion of the 2WD, the Company successfully converted the existing water disposal well (“BN 95-1W”) into an oil producer, renamed the BN 95-1
  • BN 95-1 initial production rate of 2,700 barrels of oil per day (“BOPD”) exceeds management expectations
  • Current production approximates 5,500 BOPD
  • Total field production in August has averaged approximately 5,000 BOPD as expected
  • Company spud the BN 95-4 well, a development oil well planned with a horizontal completion

PetroTal has completed a new water disposal well, BN 95-2WD, and proved injection capacity, thus allowing the Company to recomplete BN 95-1W and make it an oil producer, BN 95-1.  Management expected the BN 95-1 to deliver initial uplift of 1,500-2,000 BOPD.  The initial production rate over the first seven days was 2,700 BOPD.  Management plans to provide more information on the BN 95-1 well at the end of August.  The Company has spud the BN 95-4 well, intended to be a horizontal completion into the Vivian formation.  The BN 95-4 well is expected to take 60 days to drill and complete, with a 500-meter lateral completion scheduled.

Total Bretaña field production is currently at 5,500 BOPD, with the BN 1XD still shut-in, allowing us to reach an August average production of 5,000 BOPD as expected.  The central processing facilities to increase Bretaña’s total oil field production, expected to be commissioned in December, should bring total field production up to 10,000 BOPD by year-end with the successful drilling and completion of two additional oil development wells, the BN 95-4 and BN 95-5.

Manolo Zuniga, President and Chief Executive Officer, commented: 

“Continued execution at Bretaña and stable production above 5,000 BOPD should give confidence to all stakeholders in our ability to unlock value.  The water disposal injectivity test rate of approximately 40,000 barrels of water per day shows just how permeable the Vivian formation is.  It also allows us to optimize our capital budget and push our next water disposal well to next year, allowing us to focus on oil producing wells in next year’s capital budget.  The operations team continue to do an outstanding job.  

The re-completion of BN 95-1W into an oil producer, at a capital cost of approximately $2.3 million, provides a payout in less than 30 days and is an excellent example of capital efficiency.  With current production of 5,500 BOPD, we expect to meet our quarterly target of 5,000 BOPD for the third quarter.  We have spud the BN 95-4 well and we are hopeful that this scheduled horizontal completion, with new technology to keep water cuts at lower levels during the initial months, will add to the existing production base, as well as provide valuable information to evaluate reserves at year-end 2019.”

For further information, please contact:

Greg Smith
Executive Vice President and Chief Financial Officer
Gsmith@Petrotal-Corp.com
T: (713) 609-9101

Manolo Zuniga
President and Chief Executive Officer
Mzuniga@Petrotal-Corp.com
T: (713) 609-9101

Mark Antelme / Jimmy Lea
Celicourt Communications (Financial PR)
petrotal@celicourt.uk
T: 44 (0) 207 520 9261

James Spinney / Ritchie Balmer / Eric Allan
Strand Hanson Limited (Nominated & Financial Adviser)
T: 44 (0) 207 409 3494

John Prior / Emily Morris / George Price
Numis Securities Limited (Joint Broker)
T: +44 (0) 207 260 1000

Jonathan Wright / Hugh R. Sanderson
GMP FirstEnergy (Joint Broker)
T: +44 (0) 20 7448 0200

READER ADVISORIES 

FORWARD-LOOKING STATEMENTS: This press release may contain 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, completion, and workover activities of oil producing and water disposal wells and the results and timing of such activities; the ability of the Company to achieve drilling success consistent with management’s expectations; anticipated future production, revenue and cash flow; exit production in 2019; and future development and growth prospects. All statements other than statements of historical fact may be forward-looking statements. 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, 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 and 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. Please refer to the risk factors identified in the Company’s annual information form for the year ended December 31, 2018 and management’s discussion and analysis for the three months ended March 31, 2019 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 AND GAS INFORMATION: References in this press release to production test rates, initial test production rates, and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for PetroTal. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the Company cautions that the test results should be considered to be preliminary.

FOFI DISCLOSURE: This press release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about PetroTal’s prospective results of operations, production, payout, cash flow, budget 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 made as of the date of this press release and was provided 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 Canadian Securities Administrators’ National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.