PetroTal Announces Completion of 8H Horizontal Well with Record Production of Nearly 8,000 Barrels of Oil per Day

Bretana oil field production surpasses 2019 highwater mark

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - September 15, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) (OTC Pink: PTALF) ("PetroTal" or the "Company") has completed the BN-8H ("8H") well, PetroTal's fourth horizontal well in the Bretana oil field.

Bretana field achieves record production of approximately 15,400 bopd

PetroTal commenced production of its fourth horizontal well 8H on September 4, 2021 with unrestricted flow rates of approximately 7,600 barrels of oil per day ("bopd") over a ten-day period. Selected highlights are as follows:

  • Initial 8H production rates of 7,500 - 8,000 bopd; and,
  • Total current field production is now approximately 15,400 bopd, a record production level for PetroTal.

Completion of well 8H below budget

  • The 8H well cost came in 3% under budget, at US$11.8 million;
  • 8H estimated payout of 8-10 weeks production based on current Brent oil strip, assuming unrestricted rates;
  • Well 8H targeted oil sand intersected 4 meters higher than prognosed; and,
  • The horizontal section of the 8H well was completed with autonomous inflow control device technology ("AICD"), which will better control water influx.

North Peruvian Pipeline ("ONP") Update

PetroTal was able to achieve record field production rates at Bretana due to the ONP being operational again, allowing the Company to unload the approximately 140,000 barrels of oil stored in barges at Pump Station No.1. The ability to store oil in barges combined with back-to-back exports to Brazil and deliveries at the Iquitos Refinery have proven PetroTal's ability to manage ONP disruptions.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

"The initial flow rates from well 8H are very exciting and echo the profile of the prolific 5H horizontal well. Similarly, the clean sands of the 8H well reflect what we have observed in the recently drilled 7D well and the cores obtained in the 3WD water disposal well. It is also rewarding that we have now achieved a new record field production level of 15,400 bopd. The flush production seen from 8H is being monetized into some of the highest Brent oil price markets we have seen all year, providing a significant cash flow impact. Over the next few weeks, we expect to commence drilling the next horizontal well ("BN-9H") in our 2021 campaign. On behalf of PetroTal, I would like to take this opportunity to thank Prime Minister Guido Bellido and the Minister of Energy and Mines, Ivan Merino Aguirre, for responding to the ONP communities' concerns with in-person negotiations to resolve the matter quickly and peacefully that allowed us to achieve this new record production."

ABOUT PETROTAL

PetroTal is a publicly traded, tri‐quoted (TSXV: TAL) (AIM: PTAL) (OTC Pink: PTALF) 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. In early 2020, Petrotal became the second largest crude oil producer in Peru. 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. It is actively building new initiatives to champion community sensitive energy production, benefiting all stakeholders.

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
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; oil production levels, well payout production and the ability of the Company to achieve near term production targets; anticipated future production and revenue; continued operation of the ONP and PetroTal's access thereto, the Company's expectations regarding netbacks and free cash flow; 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, the ability of the Ministry of Energy to effectively achieve its objectives in respect of reducing social conflict and collaborating towards continued investment in the energy sector, 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 most recent management's discussion and analysis and the most recent annual information form 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 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. The Company cautions that such results should be considered to be preliminary.

RESERVES DISCLOSURE: The reserve estimates contained herein were derived from a reserves assessment and evaluation prepared by Netherland Sewell Associates, Inc., a qualified independent reserves evaluator, with an effective date of December 31, 2020 (the "NSAI Reserves Report"). The NSAI Reserves Report has been prepared in accordance with definitions, standards and procedures contained in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51 101") and the most recent publication of the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") The reserve estimates contained herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Volumes of reserves have been presented based on the Company's total working interest. Readers should give attention to the estimates of individual classes of reserves and appreciate the differing probabilities of recovery associated with each category. The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation.

TYPE CURVES: Certain type curve disclosure presented herein represents estimates of the production decline and ultimate volumes expected to be recovered from wells over the life of the well. The type curves represent what management thinks an average well will achieve, based on methodology that is analogous to wells with similar geological features. Individual wells may be higher or lower but over a larger number of wells, management expects the average to come out to the type curve. Over time type curves can and will change based on achieving more production history on older wells or more recent completion information on newer wells. Additional details on well performance and management's type curves are available in the presentation on PetroTal's website at www.petrotal-corp.com.

OIL REFERENCES: All references to "oil" or "crude oil" production, revenue or sales in this press release mean "heavy crude oil" as defined in NI 51-101. All references to Brent indicate Intercontinental Exchange ("ICE") Brent.

NON-GAAP MEASURES: This press release contains financial terms that are not considered measures under generally accepted accounting principles ("GAAP") such as operating netback and free cash flow that do not have any standardized meaning under GAAP and may not be comparable to similar measures presented by other companies. Management uses these non-GAAP measures for its own performance measurement and to provide shareholders and investors with additional measurements of the Company's efficiency and its ability to fund a portion of its future capital expenditures. Netback is calculated by dividing net operating income by barrels sold in the corresponding period. Free cash flow is operating cash flow before hedging minus maintenance capital expenditures. Please refer to the most recent management's discussion and analysis for additional information relating to non-GAAP measures.

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 well payout production, 2021 capital program and budget, free cash flow 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.

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.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/96552


PetroTal Announces Q2 2021 Financial and Operating Results

PetroTal completes 8th producing well, increases water disposal capacity, and outperforms Q2 2021 production guidance under restricted flow conditions

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - August 26, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce its financial and operating results for the six ("H1") and three months ("Q2") ended June 30, 2021.

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 Q2 2021, which are available on SEDAR at www.sedar.com and on the Company's website at www.PetroTal‐Corp.com. All amounts herein are in United States dollars ("USD") unless otherwise stated.

Highlights:

  • Outperformed Q2 2021 production guidance by 2% and Q1 2021 production by 21%, delivering 8,839 bopd under constrained production conditions, as previously described in the Company's July 20, 2021 RNS;
  • Generated a significant increase in revenue of $42.8 million ($53.20/bbl) in Q2 2021 versus $32.4 million ($41.91/bbl) in Q1 2021;
  • Achieved record netback and net operating income in Q2 2021 of $36.88/bbl and $29.7 million, respectively;
  • Operating and direct transportation costs in Q2 2021 were $10.8 million ($13.45/bbl) as compared to $10.6 million ($13.78/bbl) in Q1 2021;
  • Generated free cash flow(1), before leverage and working capital adjustments, in Q2 2021 of $2.4 million and in H1 2021 of $11.5 million, a record for the Company;
  • Strong liquidity position, building total cash quarter over quarter to over $79.5 million as at June 30, 2021 up 5% from March 31, 2021. $25.4 million of total cash is restricted;
  • Net income of $11.4 million for the quarter, demonstrating an efficient operating cost structure, attractive capital base, and supportive fiscal terms;
  • All Q2 2021 bond covenants met with substantial headroom. The Company exited Q2 2021 with a 0.41x leverage ratio which included $40.6 million of net debt calculated per the bond indenture;
  • Continued to de-risk commodity price exposure that brings the total corporate hedge percentage to 44% for the remaining four months of 2021 forecast production, protecting prices of $60/bbl Brent;
  • Necessary modifications to the water disposal system are ongoing. The field can now actively dispose of approximately 80,000 barrels of water per day ("bwpd") and 100,000 bwpd when the modifications are completed in September;
  • Achieved payback on well 7D, approximately 2.5 months post completion;
  • Current constrained production is 8,513 bopd (last seven-day average to August 20, 2021). Unrestrained production is expected to be restored in September;
  • Revised H2 2021 production guidance as a result of a rescheduled and deferred drilling program stemming initially from the COVID-19 protocol's impact and from the water disposal well drilling delays. The 2021 average production range is now guided at 10,000 to 11,000 bopd (from 11,000 - 12,000 bopd). Exit December 2021 production has been slightly revised down to 17,000 - 18,000 bopd (from 18,000 - 19,000 bopd), as the impact of the BN-10H well won't be incorporated until early next year;
  • Updated 2021 EBITDA(1) guidance is between $140 - $145 million for 2021, up materially from the original 2021 $90 million budget;
  • Successfully drilled BN-8H subsequent to the quarter end which is now being completed, and expected to be on time and under budget;
  • Demonstrated importance of an expanded oil marketing strategy with two scheduled Brazilian cargos contracted subsequent to the quarter end;
  • Enhanced the Company's long-term sustainability vision by establishing distinct objectives and performance measurements; and,
  • Advanced government and community relations, ratifying the process of social profit share in nearby communities around PetroTal's oil operations.

    (1) For a description of EBITDA and free cash flow, see Reader Advisories - Non-GAAP Measures below.

Q2 2021 Webcast conference call

The Company will be hosting a conference call on August 26, 2021 at 9:00am Houston time. The link for the live webcast is below:

https://webcasting.brrmedia.co.uk/broadcast/6113a8920ddc2b060ef52b06

Selected Financial Highlights

Three Months Ended   Six Months Ended
                         
(in thousands USD) June 30, 2021 June 30, 2020   June 30, 2021   June 30, 2020
Financial          
  Crude oil revenues $ 42,809 $ 7,413   $ 75,165   $ 39,658
  Royalties (2,306) (123)   (4,054)   (1,929)
  Net operating income 29,678 2,756   49,647   20,565
  Commodity price derivative (income)/loss 4,147 (18,264)   (18,365)   22,156
  Net income (loss) 11,374 16,029   42,159   (15,423)
  Basic and diluted net income (loss)(US$/share) 0.01 0.02   0.05   (0.02)
  Capital expenditures 22,363 8,756   29,476   $ 32,628
Operating          
  Average production (bopd) 8,839 4,185   8,089   6,936
  Average sales (bopd) 8,842 4,729   8,711   7,521
  Average Brent price ($/bbl) 68.83 29.19   64.28   39.67
  Contracted sales price, gross ($/bbl) 66.55 27.30   62.79   42.40
  Netback (US$/barrel) 36.88 6.40   31.49   15.02
  Funds flow provided by (used in) operations 19,627 15,337   24,094   14,611
Balance sheet          
  Cash and restricted cash       79,491   20,379
  Working Capital       62,634   (31,845)
  Total assets       359,788   216,899
  Current liabilities       72,639   76,932
  Equity       180,291   122,789

 
Note:
(1) Funds flow provided by (used in) operations and netback do not have any standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures for other entities. See "Non-GAAP Measures".


Q2 2021 Selected Operational Highlights

Completed the 7D well on April 30, 2021. The well was drilled and completed at a revised final cost of $7.6 million, or 17% below budget. Shortly after completion the well achieved rates in excess of 4,500 bopd, is performing well above type curve expectations, and has achieved payback in 2.5 months.

Commenced drilling and coring of the 3WD (water disposal) well. PetroTal commenced drilling and coring of the 3WD well on May 3, 2021, which was completed subsequent to the quarter end on July 9, 2021. The overall operation and coring program on 3WD were a success, with two cores cut allowing for a more thorough oil in place estimate for the 2021 year-end reserves assessment. The completion of the 3WD well also increased water disposal capacity to 80,000 bwpd which provides enough capacity to achieve near term production targets.

Outperformed Q2 2021 production guidance under restricted flow conditions. Production averaged 8,839 bopd for Q2 2021 compared to guidance of 8,655 bopd. This was 2% above guidance, 21% above Q1 2021, and 111% above Q1 2020 levels which were impacted by the COVID-19 pandemic. Current field production is now 8,513 bopd. Production was largely constrained during the quarter and during the period subsequent due to operational delays on one of the water disposal booster pumps, thereby reducing water disposal rates. The water disposal modifications are still being completed and water disposal capacity has returned to an estimated 80,000 bwpd with water now being injected into both the 2WD and 3WD wells. A new 10" pipeline connection to the facility water tanks was also installed to increase water injection rates. When completed, total available water disposal capacity will be 100,000 bwpd.

Revised H2 2021 guidance. Due to the recent drilling delay, that pushes the impact of the BN-10H well to early next year, PetroTal has rescheduled its H2 2021 development drilling plan. As a result, PetroTal is now scheduled to bring two additional wells onstream in 2021 instead of the previously planned three. The third well is now expected onstream in January 2022. Accrued drilling costs on the deferred well will still materially be captured in Q4 2021, with January 2022 now receiving the flush production benefit instead of December 2021. Capital expenditures are still materially on budget at approximately $100 million for 2021.

2021 Guidance Summary New Original Variance
Average 2021 Brent Price ($/bbl) $67.30/bbl $50.00/bbl $17.30/bbl
2021 Production Range (bopd) 10,000 - 11,000 11,000 - 12,000 (0-1,000)
Q3 2021 Production (bopd) 9,500 - 10,000 11,500 - 12,500 (1,500-3,000)
Q4 2021 Production (bopd) 16,000 - 16,500 16,000 - 17,000 (0-500)
2021 Exit Production (bopd) 17,000 - 18,000 18,000 - 19,000 (1,000)
Oil Wells Commenced 4 5 (1)
Oil Wells Completed 3 4 (1)
EBITDA $140 - $145 million $90 million $50-$55 million
EBITDA Netback ($/bbl) $35.50/bbl $21.40/bbl $14.10/bbl

 

Completed drilling of BN-8H on August 18, 2021. The well was successfully drilled to a final depth of 4,200 meters as expected on August 18, 2021. A total of 1,137 meters of 6-1/8" horizontal section was drilled in very well-developed oil reservoir sands of the Vivian formation. Completion operations are currently ongoing on the BN-8H well and is on track for completion in early September. Post completion of BN-8H, the rig will commence drilling the next horizontal development well ("BN-9H") using a synthetic mud system with a larger diameter drill pipe.

CPF-2 commissioning rescheduled. Due to COVID-19 quarantine protocols, contractor personnel were removed from the field which delayed CPF-2 commissioning work. Startup is now rescheduled for late November and early December for the oil and water treatment infrastructure. The rescheduling is not expected to impact the ability for the field to handle new flush production rates.

Sales and Marketing update. The long-term Brazil export contract PetroTal signed in Q1 2021 is playing a key role in ensuring our ability to maintain oil production from any pipeline disruptions. Two ongoing back-to-back exports via Brazil have allowed us to maintain production during a recent social dispute that shut down Petroperu's ONP pump station one near Saramurillo, in late July 2021. The disruption is expected to be resolved shortly with pipeline operations restored thereafter. As part of PetroTal's new diversified marketing strategy, the Company was able to secure two back-to-back ~240,000 bbl cargo shipments to Brazil in Q3 2021 and sold FOB Bretana. Netbacks from these sales are competitive with the ONP, and PetroTal anticipates no sales disruptions due to the ONP closure. We are working diligently with Petroperu and the Peruvian Government, as well as Saramurillo's leaders, to provide assistance, as needed.

Q2 2021 Selected Financial and Corporate Highlights

Significant liquidity and working capital in hand. PetroTal continues to strengthen its liquidity position. Q2 2021 ending cash totaled $79.5 million, up $3.6 million from March 31, 2021 and up $59.1 million from June 30, 2020 due to proceeds from the Q1 2021 bond issuance. Current net working capital (defined as current assets less current liabilities) continues to show a strong position, ending Q2 2021 in a $62.6 million surplus position vs a $68.2 million surplus ending in Q1 2021. At June 30, 2021, accounts payable and accrued liabilities were approximately $38.6 million.

Record Net Operating Income ("NOI"). PetroTal generated a record $29.7 million ($36.88/bbl) of NOI in the quarter, an increase of $26.9 million over Q2 2020 and $9.7 million over Q1 2021, due to higher realized Brent prices and increased oil production.

Lower per barrel operating costs. Operating costs were flat quarter over quarter at $10.8 million for Q2 2021 versus $10.6 million for Q1 2021 despite the price of diluent increasing significantly in conjunction with the Brent oil price. On a per barrel basis, total operational costs were down 2% at $13.45/bbl in Q2 2021 versus $13.78/bbl in Q1 2021.

Strong royalty profile. Royalties for the quarter were $2.3 million or $2.87/bbl versus $1.7 million or $2.26/bbl in Q1 2021. The increase was due to higher realized Brent prices and higher production for Q2 2021.

Capital expenditures ("CAPEX"). Capital expenditures for Q2 2021 totaled $22.4 million, up 215% from Q1 2021 due to active drilling activity for the majority of the quarter versus little activity in Q1 2021. In total, year to date expenditures were $29.5 million which is $16.5 million below guidance due to the rescheduling of various facility and infrastructure projects into H2 2021. The CPF-2 completion and commissioning dates are now expected late in 2021.

Positive free cash flow generation in H1 2021. PetroTal is pleased to announce it generated record free cash flow in H1 2021 (before changes in working capital), with Q2 2021 contributing another $2.4 million to free cash flow in a drilling heavy quarter. H1 2021 funds flow from operations (before working capital adjustments) totaled $40.9 million, and after total capital expenditures of $29.5 million, resulted in a total of $11.5 million of free cash flow in H1 2021. This was due to robust H1 2021 Brent prices, deferred infrastructure projects into H2 2021 and favorable operating costs. PetroTal estimates that it will continue to generate free cash flow in H2 2021.

Continued positive Net Income. Net income for Q2 2021 was $11.4 million versus $16.0 million in Q2 2020 and $30.8 million in Q1 2021. Based on low cumulative capital of approximately $184 million invested in the asset since 2018, favorable commodity prices and a strong operating cost structure, continued positive earnings are anticipated. For Q2 2021, a $4.1 million derivative loss was realized versus $22.5 and $18.3 million derivative gains in Q1 2021 and Q2 2020, respectively.

Derivative Asset. PetroTal continues to recognize a material derivative asset on its balance sheet. At June 30, 2021, the Company recorded a $31.2 million derivative asset and a $1.4 million derivative liability versus a $39.7 million derivative asset at March 31, 2021 and a $22.5 million liability at June 30, 2020. When the Q1 2021 bond proceeds were received the derivative liability was extinguished and hedges were put in place on oil moving through the ONP. The difference between the Brent prices creating the extinguished liability and the prices at hedged strip created the derivative asset that the Company will continue to realize throughout H2 2021 and early 2022, as physical sales at the port of Bayovar occur by Petroperu. To date, the Company has realized a cash gain of $7.1 million in true up revenue with the remainder of production in the ONP secured by hedges to be received over the next 12 months.

Hedging Update. At June 30, 2021 the Company has outstanding corporate hedges on approximately 677,481 bbls in both put and synthetic put structures expiring from July to Dec 2021. On August 23, 2021 the Company layered in additional hedges totaling 304,626 bbls using a put structure with $60/bbl strike prices, bringing the percentage of hedged forecast volumes to 44% for September to December 2021. In partnership with Petroperu, the Company also has approximately 2.24 million barrels hedged in the ONP, with approximately 80% of barrels locked in between $60 and $62/bbl Brent and more recent hedges, totaling approximately 20% of barrels in the ONP, hedged at approximately $70/bbl Brent.

Strong Balance Sheet. PetroTal reported net debt of approximately $22.7 million as at June 30, 2021 as calculated for valuation purposes, which includes balance sheet derivatives and $40.6 million as calculated for bond covenants. For bond covenant purposes, the Q2 2021 net debt to adjusted EBITDA covenant was 0.41x against a maximum ratio of 3.0x leaving substantial buffer room to withstand potential commodity price volatility and / or accretive M&A transactions.

2020 Sustainability Report Long Term Vision

As previously announced, PetroTal's 2020 sustainability report is available on the Company's website. In addition, PetroTal is in the process of finalizing its long term sustainability objectives and targets for 2023, 2025, and 2030. Below, are the key components that summarize the long term vision:

Environmental Commitment - emissions, use of technology, climate impact, waste management, biodiversity, accident prevention.

Shared Values and Alignment - community alignment and commitment, supplier process, talent and community training and development.

Governance - Ethics management, risk management, human rights, inclusion, macroeconomic values.

Health and Safety - safety of employees, suppliers and contractors.

Detailed objectives have been drafted and set by management with measurement and outcomes currently being finalized and approved by the board of directors. Details will be available to investors on the PetroTal website in the coming quarters.

Recent Project Nomination. PetroTal is pleased to announce that it has been recognized as one of three companies in the oil and gas sector for its citizen socio environmental monitoring program (PROMOSAC). The formal document from the Ministry of Energy is now available here:
https://cdn.www.gob.pe/uploads/document/file/2069295/Programa%20de%20Reconocimiento%20CER%20_Julio2021.pdf.pdf

Community Relations Update. On August 10th, 2021, the Minister of Energy and Mines, Ivan Merino Aguirre, met with a delegation of PetroTal management that included Manolo Zuniga, CEO of PetroTal. Management presented various proposals that will promote continued investment in the energy sector and encourage collaboration between the Ministry and Company. The Company renewed its commitment to work directly with local communities in the Puinahua District of Bretana, to promote investment and training to further harmonize relations between operators. In turn, the Ministry offered assurances that social profitability and peace will be applied directly with community leaders from PetroTal's resource operations to avoid intermediaries and thereby reducing potential social conflict. The news article can be found here: https://bit.ly/2VziOgx

In addition, Manolo Zuniga, attended recent anniversary meetings with families and associates impacted by the violent social demonstration that occurred outside Bretana just over a year ago. The Company delegation offered families condolences, support, and assistance for remembrance and respect for the lives that were lost.

Updated Corporate Presentation. Please see PetroTal's website for an updated version.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented

"We are pleased to share our strong second quarter results which demonstrate continued operational success and resilience in the face of challenges. Our Q2 2021 results were strong, contributing to record net operating income, netbacks, and free cash flow in Q2 2021 and H1 2021 which we anticipate will continue in H2 2021. Despite the water disposal bottlenecks and drilling delays we slightly outperformed production guidance in Q2 2021. With the booster pump issue now fixed and new pipeline infrastructure being put in place we will be able to utilize full water disposal capacity. Wells BN-8H and 9H, on production in H2 2021, are anticipated to lift PetroTal's production to record levels. We are also again reminded that our battle with COVID-19 is not to be underestimated, as we experienced some CFP-2 installation delays which, fortunately should not impact the Company's ability to bring on new oil production in H2 2021. The Company continues to allocate appropriate capital to fighting the COVID-19 pandemic and make health and safety a top priority for all our employees and contractors."

ABOUT PETROTAL

PetroTal is a publicly traded, dual‐quoted (TSXV: TAL) (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
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 costs and results of such activities; the ability of the Company to achieve drilling success consistent with management's expectations; the ability of the Company to achieve near term production targets; anticipated future production and revenue; drilling plans including the timing of drilling, commissioning, and startup; startup plans for oil and water treatment infrastructure, including the timing of startup plans and the impact of delays thereon; oil production levels, including average production and exit production in 2021; the 2021 capital program and budget, including drilling plans; expectations regarding accrued drilling costs on deferred wells and allocation of flush production benefits; the timing of river embankment erosion work; COVID-19 surveillance and control process; hedging program, the terms thereof, and the Company's expectations regarding its hedged positions; cargo loading and shipments, including the timing of loading and shipping and expectations regarding sales from cargo shipments; the Company's expectations regarding net operating income, netbacks, liquid net working capital and free cash flow; the Company's long-term sustainability objectives and targets, and the timing thereof; the Company's proposals for continuous investment in the energy sector and collaboration with local communities; 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, the ability of the Ministry of Energy to effectively achieve its objectives in respect of reducing social conflict and collaborating towards continued investment in the energy sector, 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 MD&A and the most recent annual information form 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 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. The Company cautions that the such results should be considered to be preliminary.

OIL REFERENCES: All references to "oil" or "crude oil" production, revenue or sales in this press release mean "heavy crude oil" as defined in NI 51-101. All references to Brent indicate Intercontinental Exchange ("ICE") Brent.

NON-GAAP MEASURES: This press release contains financial terms that are not considered measures under generally accepted accounting principles ("GAAP") such as EBITDA, EBITDA netback, operating netback, funds flow provided by operations, liquid net working capital and free cash flow that do not have any standardized meaning under GAAP and may not be comparable to similar measures presented by other companies. Management uses these non-GAAP measures for its own performance measurement and to provide shareholders and investors with additional measurements of the Company's efficiency and its ability to fund a portion of its future capital expenditures. EBITDA is calculated as consolidated net income (loss) before interest and financing expenses, income taxes, depletion, depreciation and amortization adjusted for certain non-cash, extraordinary and non-recurring items primarily relating to unrealized gains and losses on financial instruments and impairment losses. PetroTal utilizes EBITDA as a measure of operational performance and cash flow generating capability. EBITDA impacts the level and extent of funding for capital projects investments. EBITDA netback is calculated as EBITDA divided by the number of barrels sold in the period. The Company considers operating and EBITDA netbacks to be a key measure as they demonstrate Company's profitability relative to current commodity prices. Netback is calculated by dividing net operating income by barrels sold in the corresponding period. Funds flow provided by operations, is a non-GAAP measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. A reconciliation from cash provided by operating activities to funds flow provided by operations is included in the MD&A. Liquid net working capital is a measure that includes cash, receivables, payables and short-term obligations. Free cash flow is operating cash flow before hedging minus maintenance capital expenditures.

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, free cash flow, 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 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.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/94443


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, Alberta and Houston, Texas--(Newsfile Corp. - July 20, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") 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.

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.

Corporate Logo

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/90700


PetroTal Announces Q1 2021 Financial and Operating Results

PetroTal secures liquidity, improves risk management position, and advances offtake optionality prior to executing an operationally focused and pivotal development plan

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - May 31, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce its financial and operating results for the three months ("Q1") ended March 31, 2021.

Selected financial and operational information is outlined below and should be read in conjunction with the Company's unaudited consolidated financial statements ("Financial Statements"), management's discussion and analysis ("MD&A") for the quarter ended March 31, 2021, which are available on SEDAR at www.sedar.com and on the Company's website at www.PetroTal‐Corp.com. All amounts herein are in United States dollars ("USD") unless otherwise stated.

Q1 2021 Selected Operational Highlights

Commenced drilling the 7D well, which was successfully completed on April 30, 2021. PetroTal started drilling well 7D on March 29, 2021, reaching a vertical depth of 2,696 meters and encountering excellent oil producing sands. The well was drilled and completed at a revised final cost of $7.6 million, or 17% below budget. After the typical cleanup period and slowly ramping up production during the following week, the 7D averaged over 4,500 bopd over a four-day period, accumulating over 115,000 barrels of oil during its first month of production, and maintaining average production rates of 4,000 bopd during the past four weeks.

Upsized pump on 4H. The Company installed a new electro-submersible pump ("ESP") on the 4H well under budget and on time. Soon after the workover, the well was producing at 400 bopd higher than before the operation and is expected to recapture the incremental cost of the pump over the next few months at current Brent levels.

Production materially on target. Production for Q1 2021 averaged 7,331 bopd which was materially on budget. Current production is 10,225 bopd, notwithstanding that two oil wells remain shut in waiting on water disposal pump enhancements which has reduced production by an estimated 1,200 bopd.

CPF-2 on track and on budget. Materials for phase two of its central processing facility ("CPF-2") continue to be installed and the project is on track for a Q3-Q4 2021 commissioning.

Reiterating 2021 guidance. The Company is reaffirming its 2021 average production target of 11,500 bopd.

Q1 2021 Selected Corporate Highlights

Secured liquidity. The Company completed the placement of a 3-year $100 million senior secured bond with a 12% coupon and a borrowing limit of $125 million. The Company exceeded compliance with all covenants at March 31, 2021 with the newly issued bonds being the only material long term debt on the balance sheet.

Improved corporate risk management. During the quarter, The Company hedged 590,000 barrels in a put structure with a $60/bbl strike price. Subsequent to the quarter end, The Company hedged an additional 622,000 barrels at similar strike prices bringing hedged April 2021 to December 2021 production to 32% of budget.

Improved sales risk management. Working with Petroperu, the Company solidified, through hedging, a $31 million future true-up payment for approximately 1.8 million barrels of oil in the North Peruvian Pipeline ("ONP") and implemented a risk management partnership process with Petroperu for future sales into the ONP. The receipt of the $31 million is subject to the pace of oil movements through the ONP and is expected to be received by PetroTal as sales arrive in Bayovar throughout the next nine to twelve months.

Executed a third route to market strategy. Sold 225,045 barrels, FOB Bretana, through Brazil with competitive commercial terms vs sales through the ONP.

Enhanced existing offtake arrangement. Extended the sales agreement with Petroperu until December 2022 with improved commercial terms under low Brent scenarios.

Q1 2021 and Selected Financial Highlights

Significant liquidity in hand. The Company exited Q1 2021 with $75.8 million of total (restricted and unrestricted) cash compared to $9.6 million at the end of 2020.

Higher net operating income ("NOI"). PetroTal generated nearly $20 million ($25.87/bbl) of NOI in the quarter, an increase of 12% over Q1 2020 despite producing 2,378 bopd less in Q1 2021 vs Q1 2020.

Operating costs. Operating costs for Q1 2021 were $5.5 million ($7.17/bbl) vs $6.0 million ($6.42/bbl) in Q1 2020 driven by lower production rates and offset slightly by higher than estimated one-time fuel use for the new crude oil power generation plant commissioning, which was more expensive in Q1 2021 due to a higher Brent price.

Lower capital expenditures. The Company invested $7.1 million on capital expenditures in the quarter vs $23.8 million in Q1 2020. The bulk of PetroTal's 2021 development capex will occur in Q2 2021 and H2 2021 ensuring flush production from new drills is online during favorable Brent pricing months with hedging in place for downside protection.

Free cash flow generation. With recent elevated Brent prices, the Company estimates it is operating materially above the original $90 million EBITDA budget for 2021 which assumed $50/bbl Brent. Excluding hedging and true-up revenue, and from June until December 2021, it is estimated that for every $1/bbl above $50/bbl Brent, EBITDA increases $2.0 to $2.5 million, making PetroTal potentially free cash flow positive for 2021.

Positive Net Income. Net income for the quarter was $30.9 million vs a net loss of $31.4 in Q1 2020 driven largely by higher commodity prices. Normalizing out derivative changes results in Q1 2021 and Q1 2020 having similar net income figures of $8.5 million and $9.0 million, respectively.

Operations Update

As previously announced, the technical team has completed the new 7D well, seeing favorable rates in the first four weeks, including average production rates during the past week of 4,000 bopd, exceeding booked reserve expectations.

Current total field production is 10,225 bopd and has been impacted by two oil wells being shut in awaiting water disposal pump enhancements, which will be completed shortly. The production impact of the shut in wells is estimated at 1,200 bopd over the last four weeks. As a result, field production during April averaged 7,812 bopd and 9,994 bopd for May.

The Company is currently drilling the 3WD well, its second water disposal well, which is now expected to be completed in the first week of July. This well will enable PetroTal to proceed with enough water disposal capacity (an addition of 50,000 barrels of water per day) to accommodate the next 14 months of drilling and provide important reservoir characterization data for future development.

As previously announced, Mr. Dewi Jones has assumed the role of VP Exploration and Development, effective May 11, 2021.

2020 Sustainability Report

PetroTal is pleased to announce that its 2020 sustainability report has now been posted on the Company's website, in English and Spanish. PetroTal is committed to being a responsible and sustainable energy producer and meeting short and long term social and environmental goals with transparent and aligned projects. Some notable key outcomes from the 2020 report are as follows:

  • Zero discharges or spills;
  • Zero disabling workplace injuries by PetroTal employees;
  • Zero ethical claims or complaints;
  • 23 year reforestation project leading to carbon credits;
  • Promoting solar power in Puinahua district communities;
  • Measuring emissions: 15,043 metric tonnes of direct CO2 GHG emissions which covers scopes 1, 2 and 3 of tonne CO2 calculation;
  • Formally COVID-19 protocol certified; and
  • Productive projects with over 315 families are ongoing in Puinahua.

Q1 2021 Webcast conference call

The Company will be hosting a conference call on June 1, 2021 at 10:00am Houston time. The link for the live webcast is below:

https://webcasting.brrmedia.co.uk/broadcast/60ad31bcfec49008608b46bb

Selected Financial and Operational Highlights

Three Months Ended Twelve Months Ended
(in thousands USD) March 31, 2021 March 31, 2020 December 31, 2020
Financial
Crude oil revenues $ 32,356 $ 32,245 $ 61,740
Royalties (1,748) (1,806) (2,877)
Net operating income 19,969 17,809 28,881
Commodity price derivative (income)/loss (22,512) 40,420 4,788
Net income (loss) 30,975 (31,452) (1,524)
Basic and diluted net income (loss) (US$/share) 0.04 (0.05) 0.00
Capital expenditures 7,113 23,872 42,297
Operating
Average production (bopd) 7,331 9,686 5,675
Average sales (bopd) 8,578 10,313 5,700
Average Brent oil price (US$/barrel) 60.85 50.14 41.74
Average realized price (US$/barrel) 41.91 34.36 29.59
Netback (US$/barrel) 25.87 18.98 13.84
Funds flow provided by (used in) operations 4,467 15,061 16,668
Balance sheet
Cash and restricted cash 75,824 7,373 9,628
Working Capital 68,213 (61,025) (22,157)
Total assets 342,773 194,274 215,138
Current liabilities 69,348 89,914 58,608
Equity 168,595 90,029 137,163

 

Note:

(1) Funds flow provided by (used in) operations and netback do not have any standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures for other entities. See "Non-GAAP Measures".

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented

"Q1 2021 was a great quarter in many ways. From a strategy standpoint it was prudent that the Company shored up its liquidity position before undertaking material operations with pace. The Company is now on solid footing from a liquidity, risk, and safety standpoint and if firmly focused on achieving operational excellence in 2021. We are now in a Brent oil price environment where, subject to such conditions continuing, wells only need to produce approximately 280,000 - 300,000 barrels to payout full cycle, which in some cases, can happen in two to three months. The Company's advancement on a risk, finance, and operational standpoint this quarter was impressive, and we will continue this positive momentum throughout 2021, to the benefit of all stakeholders."

ABOUT PETROTAL

PetroTal is a publicly traded, dual‐quoted (TSXV: TAL) (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 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, including average production and exit production in 2021; the 2021 capital program and budget, including drilling plans; COVID-19 surveillance and control process; 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 MD&A and the most recent annual information form 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 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. The Company cautions that the such results should be considered to be preliminary.

OIL REFERENCES: All references to "oil" or "crude oil" production, revenue or sales in this press release mean "heavy crude oil" as defined in NI 51-101. All references to Brent indicate Intercontinental Exchange ("ICE") Brent.

NON-GAAP MEASURES: This press release contains financial terms that are not considered measures under generally accepted accounting principles ("GAAP") such as operating netback, funds flow provided by operations and free cash flow that do not have any standardized meaning under GAAP and may not be comparable to similar measures presented by other companies. Management uses these non-GAAP measures for its own performance measurement and to provide shareholders and investors with additional measurements of the Company's efficiency and its ability to fund a portion of its future capital expenditures. The Company considers operating netbacks to be a key measure as they demonstrate Company's profitability relative to current commodity prices. Netback is calculated by dividing net operating income by barrels sold in the corresponding period. Funds flow provided by operations, is a non-GAAP measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. A reconciliation from cash provided by operating activities to funds flow provided by operations is included in the MD&A. Free cash flow is operating cash flow before hedging minus maintenance capital expenditures.

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, free cash flow, 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 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.

Corporate Logo

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/85940


PetroTal Provides an Operational and Corporate Update

7D well completed, currently flowing at 4,550 bopd; Management Change Announcement, Q1 2021 reporting and AGM dates

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - May 12, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce the following operational and corporate update. All currency amounts are in United States dollars ("USD"), unless otherwise stated.

Highlights

  • The 7D well has been successfully drilled and completed, flowing at an initial rate of approximately 3,700 barrels of oil per day (bopd) during its first 10 days of production, and has averaged approximately 4,550 bopd during the past three days;
  • The 7D well was drilled and completed in 33 days for a cost of approximately $8.6 million, 7% under the $9.2 million estimate;
  • During the past three days, Bretana oil field production has averaged approximately 11,100 bopd. Two wells, representing 1,200 bopd, are currently shut in awaiting increased water injection pump enhancements;
  • The 3WD water disposal well commenced drilling on May 3, 2021;
  • Mr. Estuardo Alvarez-Calderon, PetroTal's VP Exploration and Development, is retiring at the end of May 2021. Mr. Dewi Jones has assumed the role of VP Exploration and Development as of May 11, 2021;
  • Q1 2021 financial and operating results will be announced on May 31, 2021 along with an updated corporate presentation, and a webcast virtual call on June 1, 2021; and,
  • PetroTal will host a virtual AGM on June 23, 2021.

Well 7D Update

PetroTal has successfully completed the 7D well, the Company's seventh in the Bretana oil field, and first new well of 2021. The well was a deviated hole and penetrated the targeted Vivian formation in excellent quality sands. Total vertical depth of 2,696 meters was reached. The well achieved an initial 10-day average flow rate of 3,700 bopd, which was in line with management's expectations, and is currently producing approximately 4,550 bopd. Total drilling time was 33 days and the well cost approximately $8.6 million, 7% under the $9.2 million estimate. This was the first well executed under PetroTal's enhanced COVID-19 safety protocols and no safety issues were encountered during the operation.

The 7D well sets the stage for the Company to again grow production, with the field currently averaging approximately 11,100 bopd, and the goal of ending 2021 at 18,000 to 19,000 bopd. Overall field production would be approximately 12,300 bopd, inclusive of two wells, representing approximately 1,200 bopd, currently shut in to accommodate water injection enhancements.

3WD Water Disposal Well

The next well, 3WD, commenced drilling on May 3, 2021 and will take approximately 41 days to drill and complete. The Vivian reservoir will be cored, providing important reservoir characterization data for future field development. This future water disposal well will enable the disposal of an additional 50,000 barrels of water per day and will accommodate the Company's expected production growth for at least the following fourteen months.

VP Exploration and Development Change

Effective May 11, 2021 the Company is pleased to announce the appointment of Mr. Dewi Jones to VP Exploration and Development. Mr. Jones is a geologist with over 35 years of experience in Peru and other Latin American basins. Mr. Jones started his career with Occidental Petroleum in Colombia and has also led technically complex development programs for Repsol, Talisman and Pioneer. Mr. Jones was formerly CEO of CGX Energy, having exploration blocks in Guyana adjacent to Exxon's Liza discovery. Mr. Jones is a graduate of Louisiana State University with a B.Sc. in Geology. Prior to this appointment, Mr. Jones was the Director of Exploration and Development with PetroTal and collaborated with Mr. Alvarez-Calderon on many technical aspects over recent months, ensuring a smooth transition of knowledge and culture.

Effective May 31, 2021, Mr. Estuardo Alvarez-Calderon will retire from the Company. Mr. Alvarez-Calderon was instrumental in leading PetroTal from a technical perspective, taking PetroTal from zero to over 13,000 bopd in late 2019 and identifying numerous leads and prospects in both Blocks 95 and 107 for continued organic growth. The Company thanks Mr. Alvarez-Calderon for his significant contributions to PetroTal and wishes him a well-earned and restful retirement.

AGM Update and Q1 2021 Results

PetroTal will release its Q1 2021 financial and operating results on May 31, 2021 to be followed by a webcast presentation on June 1, 2021. Details for the event will be announced over the coming weeks. An updated corporate presentation will also be released.

PetroTal advises that its annual general and special meeting of shareholders will be held via webcast on June 23, 2021 at 10:00 a.m. (Calgary time). Details of the agenda and a link to the meeting will be included in the Company's management information circular to be mailed to registered shareholders and SEDAR filed on May 24, 2021.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

"On behalf of the PetroTal team, I would like to personally thank Estuardo for his contributions to the Company. Estuardo's achievements in his career and at PetroTal have been remarkable and his presence in the office will be missed. I am very excited about Dewi Jones stepping in to fill Estuardo's role. Dewi has been working with PetroTal for some time and the entire management team has a deep trust and confidence in his work and experience.

It is very exciting as a management team to be bringing the new 7D well on for the Company after almost a year lag from completion of the 6H well. The stabilized flow rates of approximately 4,550 bopd look very promising and are in line with our technical estimates. Continuing with our development plan, we commenced drilling the 3WD well that will greatly increase our water disposal capacity."

Qualified Person's Statement

Dewi Jones, the Company's VP, Exploration and Development, who has over 35 years of relevant experience in the oil industry, has approved the technical information contained in this announcement. Mr. Jones received a Bachelor of Science degree in Geology from Louisiana State University (LSU) and is registered on the Texas Board of Professional Geoscientists.

ABOUT PETROTAL

PetroTal is a publicly traded, dual‐quoted (TSXV: TAL) (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 Northern 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 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; COVID-19 surveillance and control process; future development and growth prospects; and the timing of Q1 2021 filings. 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 (including volatility of the Peruvian Sol), legal, political and economic instability in Peru (including in respect of the Peruvian election), 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, 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 initial 10 days of production, average flow rate 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. The Company cautions that the such results should be considered to be preliminary.

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").

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 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.

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.

Corporate Logo

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/83698


PetroTal Announces 2020 Year-End Financial and Operating Results

PetroTal emerges stronger after a collapse in world oil prices and the COVID-19 pandemic

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - April 22, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce its financial and operating results for the year and the three months ("Q4") ended December 31, 2020.

Selected financial, reserves and operational information is outlined below and should be read in conjunction with the Company's audited consolidated financial statements ("Financial Statements"), management's discussion and analysis ("MD&A") and annual information form ("AIF") for the year ended December 31, 2020, which are available on SEDAR at www.sedar.com and on the Company's website at www.PetroTal‐Corp.com. Reserves numbers presented herein were derived from an independent reserves report (the "NSAI Report") prepared by Netherland, Sewell & Associates, Inc. ("NSAI") effective December 31, 2020. All amounts herein are in United States dollars ("USD") unless otherwise stated.

2020 Highlights

  • Drilled and completed the 6H well on schedule and within budget achieving a 10-day flush production average of approximately 4,500 bopd;
  • Successfully and seamlessly reopened the Bretana field in late September 2020 after COVID 19, social, and Northern Oil Pipeline ("ONP") maintenance related issues. There was no additional downtime or related safety issues once startup commenced, with field production rising back to approximately 11,000 bopd (pre shut down levels) ten days later;
  • Completed commissioning of the enhanced central production facilities ("CPF-1"), bringing overall oil production capacity to between 16,000 and 18,000 bopd;
  • Optimized the 2020 capital program to maximize liquidity and operational performance due to the COVID 19 pandemic, ongoing government social related issues, and shut down of the ONP;
  • Signed an extended oil sales contract with Petroperu outlining improved terms, including reduced pipelined tariffs and fees during periods of low oil prices;
  • Raised approximately $18 million in equity to provide 2020 liquidity support;
  • Delivered a material lift in 2020 year ended 3P oil reserves with a lower 2P operating cost profile based on positive technical revisions, historical well performance, and field cost reduction initiatives;
  • Concluded historic collaboration between the local Bretana residents and communities, aligning their goals and objectives with the Company's; and,
  • Executed a route to market diversification strategy through Brazil with comparable margins to the ONP route.

Events Subsequent to December 31, 2020

  • On January 19, 2021, the Company executed a final agreement with Petroperu, restructuring the contingent derivative liability over three years. The amount of the contingent liability represented $16.6 million (based on the November 30, 2020 valuation) and was subsequently paid out (along with the $3 million Peruvian-government COVID emergency response loan), from the $100 million bond offering referred to below. Since that time, the Company through Petroperu, has recently placed hedges, solidifying approximately $30 million of true-up revenue on the 1.8 million barrels in the ONP that originally caused the contingent liability;
  • On February 2, 2021, the Company announced completion of a 3-year $100 million senior secured bond with an annual 12% coupon, issued at a 5% discount. The bonds issued by PetroTal are the Company's only interest bearing debt and the proceeds are for payout of the Petroperu derivative liability with Petroperu and Reactiva loan, totaling $20 million, to support the Company's crude oil price hedging strategy ($15 million), to finance potential acquisitions ($20 million), with the remainder for continued development of the Bretana oil field;
  • On February 18, 2021, the Company announced its 2021 capital development program of $100 million, to be funded from the bond proceeds and internally generated funds from operations, along with existing cash resources;
  • The Company has hedged approximately 32% of expected April to December 2021 oil production. Additionally, Petroperu has now hedged 100% of oil sales through the ONP. This robust hedging program will ensure funding stability to support the 2021 capital development program, in the event that Brent oil price drops materially; and,
  • Pursuant to the Company's oil market diversification strategy, in Q1 2021 the Company completed a second shipment of 225,000 barrels of oil through Brazil for export into the Atlantic region. The oil sale was FOB Bretana and generated revenue of $8.8 million.

Three months ended December 31, 2020 ("Q4") Highlights

  • PetroTal produced 6,410 bopd and sales volumes averaged 5,471 bopd, compared to sales of 2,327 bopd in Q3 2020;
  • Indigenous communities and government bodies reached agreements that will see increased funding for the local communities, thereby allowing for the ONP to resume full operations;
  • The Company's stringent COVID-19 protocols continue to ensure that the camp remains safe;
  • The Company sold 397,000 barrels of oil to the Iquitos refinery and the ONP (at pump station #1 at Saramuro), thereby generating revenues of $12.4 million, net of transportation and fees;
  • PetroTal reached agreement with an international oil trader for an initial shipment to export 106,000 barrels through Brazil into the Atlantic region, via the Amazon river. The December 2020 shipment was sold FOB Bretana, priced at the forward month Brent ICE price, and paid within two weeks of loading at Bretana. Importantly, there are no subsequent oil price adjustments;
  • Operating income of $5.9 million ($11.90/bbl) compared to $2.3 million ($10.86/bbl) in Q3 2020;
  • Funds flow provided by operations of $1.3 million compared to a deficiency of $0.5 million in Q3 2020; and,
  • Capital expenditures were $6.3 million compared to $3.4 million in Q3 2020.

2020 Operational Highlights

  • Six producing wells and one water disposal well were operating during Q4 2020, inclusive of the initial water disposal well that was converted to an oil producer;
  • Approximately $42 million incurred in capital expenditures to drill one oil well, build production facilities and standby-related charges, compared to $89 million in 2019;
  • PetroTal produced a total of 2.1 million barrels of oil in 2020, representing average oil production of 5,675 bopd, an increase of 37% from the average production of 4,131 bopd realized in 2019;
  • Annual independent reserve assessment, as prepared by NSAI shows increases in all reserve categories:
    • Proved ("1P") reserves of 22.3 million barrels ("mmbbl"), an increase of 4% from the 21.5 mmbbl recorded at the end of 2019;
    • Proved plus Probable ("2P") reserves of 51.0 mmbbl, an increase of 7% from the 47.7 mmbbl recorded at the end of 2019; and,
    • Proved plus Probable and Possible ("3P") reserves of 106.1 mmbbl, an increase of 25% from the 84.8 mmbbl recorded at the end of 2019;
  • Original oil in place ("OOIP") estimates for 1P, 2P and 3P reserve categories were unchanged from 2019 at 235, 364 and 579 mmbbls, respectively; and,
  • Net Present Value (after tax, discounted at 10%) ("NPV-10") represents $271 million ($12.15/bbl) for 1P reserves, $621 million ($12.17/bbl) for 2P reserves and $1.2 billion ($11.03/bbl) for 3P reserves based on the NSAI year end 2020 price deck.

2020 Financial Highlights

  • Generated revenue in 2020 of $76.6 million ($36.71/bbl) compared to $82.8 million ($56.24/bbl) in 2019;
  • Royalties to the Peruvian government were $2.9 million compared to $3.4 million for 2019;
  • Generated funds from operations of $16.6 million compared to $30.3 million in 2019, as a result of the significant decrease in oil prices;
  • Operating and transportation costs, were $44.8 million ($21.49/bbl) compared to $37.7 million ($25.59/bbl) for 2019, an improvement of 21%, on a per barrel basis;
  • Net operating income (netback) was $28.9 million ($13.84/bbl) compared to $41.7 million ($28.34/bbl) in 2019;
  • Cash flow generated was $13.4 million compared to $51.1 million in 2019. Cash flow represents netback inclusive of G&A costs, realized gain (losses) on commodity contracts and all other cash transactions; and,
  • At December 31, 2020, the Company held cash of $9.6 million, compared to $21.1 million at the end of 2019.

Selected Financial and Operating Highlights

Note:
(1) Contingent liability will be paid over a three-year period.
(2) The field was shut in on May 7, 2020; for the 37 producing days in Q2 2020, production averaged 11,500 bopd.
(3) The field was shut in from July 1 to July 14 and from August 9 to September 27; for the 28 producing days in Q3 2020 constrained production averaged 8,000 bopd.
(4) Funds flow provided by (used in) operations and netback do not have any standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures for other entities. See "Non-GAAP Measures".

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented

"2020 was an extremely challenging year for the global economy and PetroTal emerged from the downturn in a position of strength, a testament to our team's dedication and resolve. Although our 2020 results were impacted by many one-time events, the Company's announcements over the last six months have been overwhelmingly positive and will underpin our growth through 2021 and beyond. I am excited to continue to deliver on our 2021 capital program, which we anticipate will generate value for our equity, debt, and ESG stakeholders.

"I would like to thank PetroTal's shareholders, directors, employees, and contractors for their continued support and I look forward to keeping all our stakeholders updated on the Company's progress throughout the remainder of 2021."

ABOUT PETROTAL

PetroTal is a publicly traded, dual‐quoted (TSXV: TAL) (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 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, including average production and exit production in 2021; the 2021 capital program and budget, including drilling plans; COVID-19 surveillance and control process; 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 AIF and the MD&A 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.

PRESENTATION OF OIL AND GAS INFORMATION: The reserves information herein sets forth PetroTal's reserves as at December 31, 2020, as presented in the independent reserves report prepared by NSAI, a qualified reserves evaluator, in accordance with the standards contained in the most recent publication of the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") and the reserve definitions contained in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). In addition to the summary information disclosed in this announcement and the press release dated February 24, 2021, more detailed information is included in the AIF. All oil and gas disclosure contained in this press release complies with the requirements of NI 51-101. The term original oil in place (OOIP) is equivalent to total petroleum initially in place ("TPIIP"). TPIIP, as defined in the COGE Handbook, is that quantity of petroleum that is estimated to exist in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered. A portion of the TPIIP is considered undiscovered and there is no certainty that any portion of such undiscovered resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of such undiscovered resources. With respect to the portion of the TPIIP that is considered discovered resources, there is no certainty that it will be commercially viable to produce any portion of such discovered resources. A significant portion of the estimated volumes of TPIIP will never be recovered.

OIL AND GAS INFORMATION: References in this press release 10-day flush production 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. The Company cautions that the such results should be considered to be preliminary.

OIL REFERENCES: All references to "oil" or "crude oil" production, revenue or sales in this press release mean "heavy crude oil" as defined in NI 51-101. All references to Brent indicate Intercontinental Exchange ("ICE") Brent.

NON-GAAP MEASURES: This press release contains financial terms that are not considered measures under generally accepted accounting principles ("GAAP") such as operating netback and funds flow provided by operations, that do not have any standardized meaning under GAAP and may not be comparable to similar measures presented by other companies. Management uses these non-GAAP measures for its own performance measurement and to provide shareholders and investors with additional measurements of the Company's efficiency and its ability to fund a portion of its future capital expenditures. The Company considers operating netbacks to be a key measure as they demonstrate Company's profitability relative to current commodity prices. Netback is calculated by dividing net operating income by barrels sold in the corresponding period. Funds flow provided by operations, is a non-GAAP measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. A reconciliation from cash provided by operating activities to funds flow provided by operations is included in the MD&A.

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, NPV-10, 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.

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.

Corporate Logo

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/81335


PetroTal Provides Risk Management Update

Remaining 1.4 million barrels of oil in the ONP now hedged by Petroperu
Additional 622,000 barrels hedged by PetroTal
PetroTal maintains low cash flow exposure from Peruvian currency fluctuations

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - April 20, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce the following risk management update. All currency amounts are in United States dollars ("USD"), unless otherwise stated.

Highlights:

  • Further to the Company's press release dated March 31, 2021, the remaining 1.4 million barrels of oil in the North Peruvian Pipeline ("ONP") have now been hedged by Petroperu, thereby securing future total true-up revenue payments of approximately USD$31 million for the original 1.8 million barrels;
  • At the corporate level, over 1.2 million barrels in total are now hedged, representing 32% of forecast oil production for April 2021 to December 2021. PetroTal completed a second layer of its oil hedging program for 2021. Approximately 338,000 barrels have been hedged (representing 9% of forecast oil production covering August 2021 to December 2021) in a Put structure with a $60/bbl strike. In addition, 284,000 barrels have been hedged (representing 8% of forecast oil production covering May 2021 to July 2021), in a synthetic Put structure with a swap price of $62.15/bbl and a call strike of $66.00/bbl;
  • To address the recent volatility of the Peruvian Sol, the Company has maintained low cash flow exposure to the currency, with Peruvian Sol accounting for an estimated 8% of operating costs, 60% of Peruvian general and administrative ("G&A") costs, and 8% of capital expenditures; and
  • 2020 year-end results will be announced on April 22, 2021.

Petroperu Hedging Update

Further to the press release dated March 31, 2021, Petroperu has now finalized hedges for the remaining 1.4 million barrels of oil in the ONP, produced from Bretana in 2019 and 2020. In doing so, PetroTal benefits from reduced volatility around the future value of the true-up revenue payments to be received during the remainder of 2021. Based on the hedged amounts, the true-up payment is expected to be approximately USD$31 million, which will be paid to PetroTal when the barrels in the ONP reach the Bayovar port and are exported in batches by Petroperu. In total, 1.8 million barrels of oil in the ONP have been hedged at prices between $60.60/bbl and $62.00/bbl and will be realized when the batches are sold.

Corporate Hedging Update

PetroTal has executed two additional hedges totaling 622,000 barrels to further protect the 2021 capital program. The first hedge is in a Put structure for 338,000 barrels with a strike price of $60.00/bbl covering August 1, 2021 to December 31, 2021. The second hedge is in a costless synthetic Put structure for 284,000 barrels, with a swap price of $62.15/bbl and a call strike of $66.00/bbl, covering May 1, 2021 to July 31, 2021, that allows the Company to receive the floating Brent price above the call strike should commodity prices continue to increase. Including the hedged volume announced on March 31, 2021, PetroTal has hedged a total of 1.2 million barrels at the corporate level, representing 32% of forecast oil production for April 1, 2021 to December 31, 2021. The Company plans to maintain a rolling hedge book as hedges mature and will look to be opportunistic if oil prices increase in the summer driving season.

Foreign Currency Exposure

PetroTal uses USD as its functional currency. Revenues are received in USD and the majority of expenses, including debt service, are paid in USD creating limited consolidated cash flow exposure to fluctuations in the Peruvian Sol. An estimated 8% of operating costs, 60% of Peruvian G&A, and 8% of capital expenditures are paid in Peruvian Sol and therefore a 1% movement in Peruvian Sol would impact these expenditures by approximately USD$180,000 on an annualized basis. From a functional currency perspective, a weakening of the Peruvian Sol versus the USD would consolidate into lower USD translated expenses for the Company.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

"Over the past month we have been working closely with Petroperu to finalize hedging arrangements for the remaining barrels in the ONP. Working with their risk management team has been seamless and we have an efficient working process to execute further derivative strategies together for future oil deliveries through the ONP. The total true-up revenue of around USD$31 million will be a welcome addition to our 2021 liquidity.

"Furthermore, we are now in a position of strength to potentially layer on additional opportunistic hedges with approximately 32% of our volumes currently price protected. We are naturally hedged from a currency standpoint from fluctuations in the Peruvian Sol, which has experienced increased volatility recently.

"Internally, financial and technical fundamentals have never been stronger, and our management team have many years of experience operating in different environments that transition politically. Peru has attracted material external global capital and we believe it will continue to remain an attractive jurisdiction for investment, following the results of the upcoming Peruvian elections."

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 Northern 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; future true-up payments from Petroperu; hedging program and the terms thereof; timing of year end filings; and future development and growth prospects, including future acquisitions. 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 (including volatility of the Peruvian Sol), legal, political and economic instability in Peru (including in respect of the Peruvian election), 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, 2019 and management's discussion and analysis for the year ended December 31, 2020 and for the three and nine months ended September 30, 2020 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, hedging arrangements, exposure to Peruvian Sol, 2021 capital program and 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 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.

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.

Corporate Logo

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/80940


PetroTal Announces Q1 2021 Operations Update

2021 drilling program underway, Q1 2021 4H workover successfully completed, and Q1 2021 exit production on budget

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - April 7, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce the following operational update for Q1 2021. All currency amounts are in United States dollars (unless otherwise stated).

Highlights:

  • PetroTal has commenced its 2021 drilling program by spudding the first well ("7D") on March 29, 2021, with expected completion the first week of May 2021;
  • Successfully completed the workover of well 4H on time and under budget;
  • Continued the installation of expanded production facilities ("CPF-2") that have arrived at the field with start-up dates finalized;
  • Achieved Q1 2021 exit production of 8,275 barrels of oil per day ("bopd") with Q1 2021 production averaging approximately 7,300 bopd;
  • Following completion of the 7D well, the team will drill the second water disposal well ("3WD") on the western flank of the structure, adding 50,000 barrels per day of water disposal capacity;
  • Following completion of the 3WD well, the team will drill four development horizontal oil wells in H2 2021;
  • Total cash liquidity of approximately $76 million, inclusive of an unrestricted balance of $53 million ($23 million are restricted for acquisitions and commodity price hedging). In addition, future Petroperu true-up payments of approximately $36 million to PetroTal are expected, significantly enhancing the 2021 cash flow profile compared to budget; and
  • PetroTal will hold a general investor conference call on April 7, 2021 at 10:30am CT / 4:30pm UK. Details are outlined below.

Q1 2021 Operations Update

The first well in the 2021 development program was spud on March 29, 2021. The 7D deviated well is expected to be complete in the next 30 days, reaching a total depth of 2,880 meters and costing $9.5 million to drill, complete, and tie-in. This well is planned to develop the south side of the Bretana structure and execute an operationally straight forward drill.

Following the 7D well, the Company will drill a water disposal well (3WD), the second water disposal well drilled by PetroTal, that is expected to be completed and online by mid-June 2021. The Company plans to core the 3WD to gather technical data from the western flank of the Bretana structure, which will provide valuable reservoir information for future field development. Following completion of the 3WD well, and as part of the approved 2021 budget, the team will focus on drilling four additional horizontal oil wells, with the first one to the south of the structure and the following three in the northern section of the structure.

The Company has successfully completed the workover of its 4H well which was previously announced on February 18, 2021. The budget for this operation was $1.1 million with an actual spend of $984,000, 7% under budget. The new electro-submersible pump ("ESP") that was installed has a nominal capacity of 12,000 barrels of fluid per day ("bfpd") versus 8,000 bfpd with the old model. Since the workover, the 4H well has been producing approximately 2,300 bopd, compared to 1,872 bopd, prior to the pump failure. The Company plans to install similar higher capacity ESPs in most of the Bretana oil wells to optimize production and oil recoveries.

Notwithstanding the downtime of the 4H well, production still averaged approximately 7,300 bopd in Q1 2021, with a promising March 31, 2021 exit production rate of 8,275 bopd. This is materially on budget and 2021 production guidance is unchanged as announced on February 18, 2021, with an expected year end exit rate of 18,000 to 19,000 bopd.

The Company continues to progress the installation and tie-in of the CPF-2 expansion facilities which will take overall processing capacity to 124,000 bfpd with the ability to handle 24,000 bopd by mid-September 2021, coinciding with completion of two new oil storage tanks, bringing storage capacity at the field to 90,000 barrels of oil. The remaining components of the CPF-2, principally the additional formation water treatment facilities, will be ready in Q3 2021, coinciding with expected production increases. The CPF-2 total investment remains at $24 million, with the remaining $12 million in the 2021 budget, costing $4 million less than originally estimated.

March 31, 2021 Liquidity Update

At March 31, 2021, PetroTal has a cash position of approximately $76 million, of which $53 million is unrestricted, with $20 million dedicated to accretive acquisitions and $3 million as collateral for commodity price hedges. Accounts payable and accrued liabilities are approximately $37 million, a 16% reduction from $44 million at December 31, 2020. Ongoing payments will be managed from expected oil field revenues and internal cash resources. Pursuant to contractual terms with our suppliers, approximately $6 million (16%) is not due until after Q2 2021.

As previously announced on March 31, 2021, PetroTal will benefit from commodity prices hedges that have been placed to ensure cash flow stability for the capital expenditure program and a sufficient cushion over all the bond covenants. The current incremental value of the arranged true-up payments to PetroTal, which is subject to change, is approximately $36 million, based on the March 25, 2021 forward Brent strip oil price forecast.

COVID-19 Surveillance and Control

The Company has fully integrated a robust COVID-19 surveillance and control process into its operations and is equipped to handle increased operational activity to execute its 2021 capital budget. The Company has approximately $1 million budgeted in 2021 for COVID-19 related support. Key features of this plan include a one week quarantine and testing protocol for all incoming field personnel, revamped working conditions into smaller pod teams with mandatory protective equipment, and designated clinics and offsite isolation areas to address issues as they arise.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

"We are excited to start our 2021 drilling campaign. Due to an unprecedented decrease in world commodity prices, the impact of COVID-19, and government related social issues, it has been over a year since our team was drilling for growth and we are very happy to be back doing what we do best for our stakeholders. I am also very encouraged that considering the deferral of drilling, required maintenance activities, and natural field declines, our production levels remain strong as base oil production declines have performed as expected. The successful workover of the 4H well was a valuable operational test that, as a result of the higher production levels and revised expected ultimate recovery, sets the stage for us to do the same in other oil wells, at the appropriate time. With our strong current liquidity position, approximately $36 million of unbudgeted true-up revenue coming in 2021, and a fully funded capital program, I anticipate an exciting growth trajectory for our Company over the coming years.

Investor Presentation Update

PetroTal has updated the corporate presentation and is now available on the Company's website at www.petrotal-corp.com.

General Investor Call Participant Information

Time: 10:30am CT / 4:30pm UK on Wednesday April 7, 2021
Duration: 60 minutes
Dial in (Europe): +44 (0)330 336 9434
Dial in (United States): +1 720-543-0214
Dial in (Canada): +1 647 794 4605
Conference Code: 1609902

ABOUT PETROTAL

PetroTal is a publicly traded, dual‐quoted (TSXV: TAL) (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 Northern 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 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, including average production and exit production in 2021; the 2021 capital program and budget, including drilling plans; future true-up payments from Petroperu; the scale-up of CPF-2 and the timing thereof; COVID-19 surveillance and control process; 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, 2019 and management's discussion and analysis for the year ended December 31, 2020 and for the three and nine months ended September 30, 2020 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.

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.

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.

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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/79650


PetroTal Announces Oil Sales and Risk Management Update

Completion of Second Oil Export through Brazilian Terminal and Hedging Arrangements

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - March 31, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce the second export of Bretana crude oil into the Atlantic region through Brazil and the execution of crude oil price derivative contracts. All currency amounts are in United States dollars (unless otherwise stated).

Highlights:

  • PetroTal has completed the initial implementation of its oil price hedging program for 2021. Approximately 590,000 barrels have been hedged, (representing approximately 16% of forecast oil production covering April 1, 2021 to December 31, 2021), in a Put structure with a $60/bbl strike;
  • The Company completed the second Bretana oil export through Brazil, selling 225,000 barrels of oil at $61/bbl less a quality differential and commercial fees, similar to the first Brazilian export completed in December 2020; and,
  • Physical sales from the 1.8 million barrels of oil in the Northern Oil Pipeline ("ONP") have commenced, with 360,000 barrels to be sold by Petroperu in April for $62/bbl less a $2.06/bbl quality differential, further reinforcing the strong demand for Bretana oil. This will result in PetroTal receiving an incremental true-up payment of approximately $20/bbl over the revenue booked from the original sale, including differential adjustments.

Executed Corporate Hedging Contract

In order to support the 2021 capital development program and mitigate Brent oil price downside risk prior to oil delivery, PetroTal has executed a 590,252 barrel Put option with a strike price of $60/bbl, for the period April 1, 2021 to December 31, 2021. The Company hedged these volumes based on the 2021 budget's monthly oil production profile and will look to layer on additional H2 2021 and H1 2022 hedges as production levels grow following commencement of drilling activity.

Second Oil Export Sale Through Brazil

The Company has completed a second oil export through Brazil of 225,000 barrels of oil, sold FOB Bretana. The oil was loaded into a series of barges at Bretana, destined for transport to a terminal near Manaus, Brazil. The sales invoice is based on the Brent oil price forecast for April 2021 of $61/bbl, and PetroTal has received full payment for this export.

Based on run rate cost assumptions, inclusive of royalties, operating and transportation costs, and export related fees, the Company estimates a netback of approximately $31/bbl, an improvement from the netback realized from the previously announced first export sale through Brazil in December 2020.

PetroTal has now executed a contract for additional Brazilian oil exports through to July 31, 2022 that will supplement existing sales arrangements using the ONP, providing flexibility in the sales program and production continuity.

Petroperu Hedging Program Update

For sales into the ONP, the Company is paid an initial price when oil is delivered to pump station #1 at Saramuro, with a true-up payment received approximately eight months later from Petroperu, based on the Brent price at the Bayovar port. To alleviate the oil price risk associated with PetroTal's monthly deliveries into the ONP, the monthly sales invoices are, pursuant to the previously announced amended oil sales contract with Petroperu, now priced based on the eight month Brent strip price forecast, and Petroperu has placed oil price Swaps for these sales to alleviate significant price adjustments.

With the Company's guidance and in accordance with the amended oil sales contract, Petroperu is facilitating commodity price hedge arrangements for the remaining 1.8 million barrels of oil in the ONP from previous deliveries, produced from Bretana in 2019 and 2020. These arranged volumes carry an average initial price of $44/bbl and are expected to reach the Bayovar port for export by Petroperu over the next six months from April 2021. The current incremental value of the arranged true-up payments to PetroTal, which is subject to change, is approximately $36 million, based on the March 25, 2021 forward Brent strip oil price forecast. As noted below, a Swap arrangement has been placed by Petroperu for the first 360,000 barrels.

Petroperu will continue to hedge the remaining arranged 1.4 million barrels and ongoing future deliveries into the ONP.

First True-up ONP Revenue Sale Tendered in April

The Company was advised that Petroperu has arranged a physical sale in April of 360,000 barrels arriving at the Bayovar port, at April's average Brent price less a $2.06/bbl quality differential. This represents approximately 20% of the arranged barrels that were subject to the contingent derivative liability in 2020. To assure price certainty for PetroTal in April, Petroperu has hedged this volume with a $62/bbl Swap.

Q1 2021 Operations and Financial Update

PetroTal will provide a Q1 2021 operations and financial update on April 7, 2021 followed by a general conference call shortly after. Details on how to participate will be available on our website listed below, prior to the call.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

"We are very pleased to be able to execute our second Brazil shipment, demonstrating this is a viable offtake option that can scale up with operational pace and cost efficiency, based on production activity and ONP availability. Having the Brazilian offtake option ensures healthy commercial competition amongst all oil sales options. The associated commercial terms on all our recent liftings are an indicator of the continued high demand of Bretana crude. We are also extremely happy to enter into the first phase of our 2021 hedging strategy, giving stakeholders greater confidence around our 2021 cash flow profile. We have an exciting operational program planned over the coming months and we look forward to updating our progress shortly."

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 Northern 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; hedging program; drilling activities; anticipated future production and revenue; transportation alternatives and sales continuity, including pursuant to a contract for future exports through Brazil; 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, 2019 and management's discussion and analysis for the year ended December 31, 2020 and for the three and nine months ended September 30, 2020 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: This press release contains metrics commonly used in the oil and natural gas industry, such as netback. "Netback" equals total petroleum sales less quality discount, lifting costs, transportation costs and royalty payments calculated on a bbl basis. These terms have been calculated by management and do not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons. Management uses these oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare PetroTal's operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this press release, should not be relied upon for investment or other purposes.

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, exports, hedging, 2021 cash flow profile 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.

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.

Corporate Logo

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/79026


PetroTal Announces Updated Investor Presentation

Includes 2021 Budget and 2020 year-end Reserves

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - March 1, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce that an updated investor presentation is now available on the Company's website at www.petrotal-corp.com. The updated investor presentation includes the recently announced 2021 budget and 2020 year-end reserve report.

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 Bretaña 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 Northern Peru and is led by a Board of Directors that is focused on safely and cost effectively developing the Bretaña 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

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, water and completion activities and the anticipated 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; future development and growth prospects; and the timing of release of the AIF. 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, 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, 2019 and management's discussion and analysis for the year ended December 31, 2020 and for the three and nine months ended September 30, 2020 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.

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.

Corporate Logo

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/75688