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.

Corporate Logo

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


PetroTal Announces Grant of Performance Share Units

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - February 26, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") announces the annual grant of performance share units ("PSUs") to officers and employees of the Company.

PetroTal granted an aggregate of 14,205,198 PSUs, of which 7,463,529 are to officers of the Company in accordance with the provisions of the Company's PSU plan. The PSUs to the officers will vest three years from the date of grant and each PSU will entitle the holder to acquire, for nil cost, between zero and two common shares of the Company ("Shares"), subject to the achievement of performance conditions relating to the Company's total shareholder return, net asset value and certain production and operational milestones. The remaining PSUs vest annually, on an equal basis, over the next three years. The Corporate Governance and Compensation Committee of the Board is charged with overseeing the PSU plan.

Summary of PSU grants to officers

 Manuel Pablo Zuniga-Pflucker, President and CEO   3,243,929
 Douglas Urch, Executive Vice President and CFO   2,296,471
 Estuardo Alvarez-Calderon, Vice President, Exploration and Development   1,923,129

 

Further details regarding the PSU plan are set out in the management information circular of the Company dated July 29, 2020, which is available on SEDAR at www.sedar.com.

Following this grant, the Company has a total of 23,516,953 PSUs outstanding.

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 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/75544


PetroTal Announces 2020 Year-End Oil Reserves

7% increase in 2P Reserves to 51.0 million barrels
and 25% increase in 3P Reserves to 106.1 million barrels

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - February 24, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company"), a Peruvian focused E&P company, is pleased to announce the results of its 2020 year-end reserve evaluation by Netherland, Sewell & Associates, Inc. ("NSAI") for the Bretaña oil field, operated 100% by PetroTal. All currency amounts are in United States dollars (unless otherwise stated) and comparisons refer to December 31, 2019.

HIGHLIGHTS:

  • Proved ("1P") reserves increased by 4% to 22.3 million barrels ("mmbbl") from 21.5 mmbbl, Proved plus Probable ("2P") reserves increased by 7% to 51.0 mmbbl from 47.7 mmbbl and Proved plus Probable and Possible ("3P") reserves increased by 25% to 106.1 mmbbl from 84.8 mmbbl;
  • Relative to 2020 oil production of 2.1 mmbbl, reserve replacement was 38% in 1P reserves and 157% in 2P reserves; Bretaña's reserve life index ("RLI") for 1P and 2P reserves is now 6.4 years and 14.6 years, respectively;
  • Original oil in place ("OOIP") estimates for 1P, 2P, and 3P reserve categories were unchanged from 2019 at 235, 364, and 579 mmbbls, respectively;
  • NSAI attributes a corresponding 2P recovery factor of 15.0%, increased from 13.6% at year-end 2019 due to performance of the existing wells;
  • A 19% decrease in total 2P operating costs resulting in an undiscounted saving of $232 million driven by further calibration and optimization to the Company's actual cost structure;
  • Net Present Value (before tax, discounted at 10%) (NPV-10) is calculated at $317 million ($14.21/bbl) for 1P reserves, $830 million ($16.27/bbl) for 2P reserves;
  • The 2021 development program combined with all future development and abandonment costs, represent total finding and development costs of $11.52/bbl for 1P reserves, $4.96/bbl for 2P reserves and $3.16/bbl for 3P reserves; and,
  • On a 2P basis, this represents a recycle ratio of 4.7 times, based on the total $4.96/bbl finding and development cost relative to a netback of $23.40/bbl (assumed at $50.00/bbl Brent oil price).

2020 Year-end Reserves Summary

The summary below sets forth PetroTal's reserves as at December 31, 2020, as presented in the independent reserves report prepared by NSAI, a qualified reserves evaluator. The figures in the following tables have been prepared 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, more detailed information will be included in PetroTal's annual information form for the year ended December 31, 2020 (the "AIF") to be filed on SEDAR (www.sedar.com) and posted on PetroTal's website (www.petrotal-corp.com) in April 2021.

Six Year Crude Oil Price Forecast - NSAI Report

Year-End Forecast: 2021 2022 2023 2024 2025 2026
Brent (USD$/bbl) - January 1, 2021 $49.42 $52.85 $56.04 $57.87 $59.00 $60.15
Brent (USD$/bbl) - January 1, 2020 $67.94 $70.06 $71.66 $73.27 $74.57 $76.22

 

The oil price projections used by NSAI are based upon an average of December 31, 2020 and 2019 forecasts of Brent Crude futures prices prepared by qualified reserves evaluators: GLJ Petroleum Consultants Ltd., McDaniel & Associates Consultants Ltd. and Sproule Associates Limited.

Year-End Crude Oil Reserves (mmbbl)

CATEGORY 2020 2019 Change
Proved
Developed Producing 12.0 11.2 +7%
Undeveloped 10.3 10.3 0%
Total Proved 22.3 21.5 +4%
Probable 28.7 26.2 +10%
Total Proved plus Probable 51.0 47.7 +7%
Possible 55.1 37.1 +49%
Total Proved plus Probable & Possible 106.1 84.8 +25%

 

Represents gross and net barrels since PetroTal owns a 100% working interest and a 100% net revenue interest in these properties. Royalties are paid from sales proceeds.

Year-End Net Present Value at 10% - Before Tax ($ millions)

CATEGORY 2020 2019 Change
Proved
Developed Producing $135 $202 -33%
Undeveloped $182 $232 -22%
Total Proved $317 $434 -27%
Probable $513 $665 -23%
Total Proved plus Probable $830 $1,098 -24%
Possible $891 $777 +15%
Total Proved plus Probable & Possible $1,721 $1,875 -8%

 

Using the December 31, 2019 NSAI price deck on the December 31, 2020 NSAI reserves, holding all other assumptions constant, the year-end net present values (before tax) discounted at 10% would increase by the following approximate amounts: 1P - $250 million, 2P - $480 million, 3P - $780 million.

Year-End Net Present Value at 10% - After Tax ($ millions)

CATEGORY 2020 2019 Change
Proved
Developed Producing $134 $137 -2%
Undeveloped $137 $158 -13%
Total Proved $271 $295 -8%
Probable $350 $452 -23%
Total Proved plus Probable $621 $746 -17%
Possible $607 $529 15%
Total Proved plus Probable & Possible $1,228 $1,275 -4%

 

Year-End Reserves Value per Share - After tax

CATEGORY Dec. 31, 2020 Dec. 31, 2019
Reserves per share US$/sh CAD$/sh GBP/sh US$/sh CAD$/sh GBP/sh
Proved $0.33 $0.43 0.24 $0.44 $0.59 0.33
Proved plus Probable $0.76 $0.98 0.56 $1.11 $1.48 0.84
Proved plus Probable & Possible $1.50 $1.93 1.10 $1.90 $2.53 1.43

 

Represents NPV-10 (after tax) divided by the number of common shares issued as of December 31 of each respective year and excludes other balance sheet items at the relevant date. Canadian share prices are converted at the respective year end foreign exchange conversion rates. Common share count as at December 31, 2020 totaling 816.2 million shares and as at December 31, 2019 totaling 672.2 million shares.

Reserve Life Index

CATEGORY Dec. 31, 2020 (1) Dec. 31, 2019 (3)
Proved 6.4 years 7.7 years
Proved plus Probable 14.6 years 17.0 years
Proved plus Probable & Possible (2) 30.3 years 30.3 years

 

(1) Based on 2020 year-end reserves divided by annualized Q1 2020 production of approximately 9,686 bopd.
(2) The license for Block 95 expires in 2041.
(3) Based on 2019 year-end reserves divided by annualized Q4 2019 production of approximately 7,757 bopd.

Future Development Costs

The following information sets forth development and abandonment costs deducted in the estimation of PetroTal's future net revenue attributable to the reserve categories noted below:

CATEGORY ($ million) 2020 2019 Change
Proved
Developed Producing $15 $16 -6%
Undeveloped $104 $108 -4%
Total Proved $119 $124 -4%
Probable $75 $70 +7%
Total Proved plus Probable $193 $194 -1%
Possible $104 $105 -1%
Total Proved plus Probable & Possible $297 $299 -1%

 

Future development costs ($/bbl) 2020 2019 Change
Proved $11.52 $12.04 -4%
Proved plus Probable $4.96 $5.32 -7%
Proved plus Probable & Possible $3.16 $4.06 -22%

 

The future development and abandonment costs are estimates of the future capital expenditures required to convert the corresponding reserves to proved developed producing ("PDP") reserves. Future development per barrel is determined using the future development capital divided by the 1P, 2P, or 3P reserves, less cumulative PDP.

2020 Year-End Gross Reserves Reconciliation (mmbbl)

Proved Proved plus
Probable
Proved plus
Probable & Possible
December 31, 2019 21.5 47.7 84.8
Technical Revisions 3.8 5.9 24.0
Economic Factors (1.0) (0.6) (0.6)
Production (2.1) (2.1) (2.1)
December 31, 2020 22.3 51.0 106.1

 

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

Considering the challenging conditions 2020 presented, we are extremely happy with the 2020-year end reserve report. The recovery factor improvements in our 2P and 3P categories support our thesis of continued reservoir performance over time matching that of nearby analogous fields with higher recovery factors. With additional time and field data, we expect to see continual recovery improvements. We are also very proud of the hard working operations and commercial teams at PetroTal which were able to demonstrate and justify to our reserve evaluators, a decrease in 2P operating costs by 19%, equating to $232 million, in undiscounted savings over the remaining reserve life. We will continue to run operations prudently with attention to optimization, cost reductions and safety for the benefit of all our stakeholders.

Qualified Person's Statement

Estuardo Alvarez-Calderon, the Company's Vice President, 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. Alvarez-Calderon received a Bachelor of Science degree in Geology from the University of Texas at Austin and is registered on the Texas Board of Professional Geoscientists.

The recovery and reserve estimates provided in this news release are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual reserves may eventually prove to be greater than, or less than, the estimates provided herein. In certain of the tables set forth below, the columns may not add due to rounding.

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.

OIL AND GAS INFORMATION: This press release contains metrics commonly used in the oil and natural gas industry, such as netback, OOIP, finding and development costs, recycle ratio, reserve life index and net asset value.

"Netback" equals total petroleum sales less quality discount, lifting costs, transportation costs and royalty payments calculated on a bbl basis.

"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.

"Finding and development costs" are calculated as the sum of field capital plus the change in future development costs for the period divided by the change in reserves that are characterized as development for the period. Finding and development costs take into account reserves revisions during the year on a per boe basis. The aggregate of the exploration and development costs incurred in the financial year and changes during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year.

"Recycle ratio" is measured by dividing the netback for the applicable period by finding and development cost per boe for the year. The recycle ratio compares netback from existing reserves to the cost of finding new reserves and may not accurately indicate the investment success unless the replacement reserves are of equivalent quality as the produced reserves.

"Reserve life index" is calculated as total Company interest reserves divided by annual production.

"Net asset value" is based on present value of future net revenues discounted at 10% before tax on reserves, net of estimated net debt at year end divided by the basic shares outstanding at year end.

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.

FOFI DISCLOSURE: This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about PetroTal's prospective results of operations, production, NPV-10, future net revenue, future development and abandonment costs, 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/75307


PetroTal Announces 2021 Capital Budget of US$100 million

Targeting 2021 average oil production between 11,000 and 12,000 bopd, with a 2021 exit range of 18,000 to 19,000 bopd

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - February 18, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce its 2021 capital program of US$100 million. The program will be fully funded from the recently announced US$100 million bond issue, supplemented with funds generated from operations and existing cash resources.

The drilling focused development program is expected to start in March 2021 and continue through December 2021. The program is designed to enable PetroTal to more than double production from Q1 2021 to Q4 2021, and complete phase two of the highly scalable central processing facility ("CPF-2") in Q3 2021. All amounts are quoted in US dollars.

2021 Capital Program Highlights

  • Drill and complete three horizontal development wells, one deviated production well and a second water disposal well at the Bretana oil field;
  • Complete the second phase of CPF-2 in Q3 2021, taking overall fluid production capacity up to 124,000 barrels per day, sufficient to handle 24,000 barrels of oil per day ("bopd");
  • Target average 2021 oil production between 11,000 and 12,000 bopd with a target 2021 exit range of 18,000 to 19,000 bopd,
  • Generate cash flow ("EBITDA") of approximately $90 million, based on a forecast Brent oil price of $50 per barrel flat;
  • Total 2021 capital expenditures of $100 million, fully funded from proceeds of the recent $100 million bond issue, funds from operations and existing cash resources; and,
  • In addition to ongoing Environmental, Social and Governance ("ESG") initiatives, PetroTal has allocated over $1 million in operating and capital spending for specific community investments.

2021 CAPITAL BUDGET

Based on the successful 2019 and 2020 drilling results, PetroTal will spud five new development wells at Block 95 costing approximately $7 million for the deviated well and between $12- $14 million per horizontal well. Four of these oil wells are expected to be producing in 2021, with the fifth well on production in February 2022. A second water disposal well is planned in May at an estimated cost of $9 million, providing an expected 50,000 barrels of water per day of additional disposal capacity and enabling oil production growth beyond 20,000 bopd.

Completion of CPF-2 in Q3 2021 for an estimated $12 million will boost fluid handling capacity to 124,000 barrels per day, sufficient for approximately 24,000 bopd. The additional investment will bring total investment in CPF-2 to $24 million, approximately $4 million less than the original estimate. Extensions to the loading dock to handle larger oil volumes and optimal integration of CPF-1 and CPF-2 will require $3 million. Commissioning CPF-2 for commencement in Q3 2021 is designed to facilitate our Q4 2021 average oil production target of between 16,000 and 17,000 bopd.

Remaining notable capital investments include injection pumps, electrical infrastructure, and various field and security upgrades. These smaller capital items will complement the expected operational pace and fluids growth profile throughout 2021. In addition, a $1 million workover on the 4H well will commence in March that will result in a higher capacity pump being installed. The 4H well has been shut in since late January due to a transformer failure during the commissioning of the new crude oil power generation plant, thereby causing issues with the original pump. With the enhanced capacity pump, the estimated lost production of approximately 100,000 barrels of oil will be recovered in Q3 2021 and will lead to consistently higher production rates and a higher estimated ultimate recovery for the 4H well.

COMMUNITY RELATIONS

Included in the 2021 operating and capital budget are amounts related to community and social focused projects. Notable items include over $1 million allocated for community upgrades to electricity and water systems, building infrastructure and a commitment to provide diesel at Bretaña for community use. In addition, as part of these corporate social awareness initiatives, PetroTal has delivered certified construction materials for a 200-meter bridge in the community of Urarinas. This will benefit more than 65 families, including 175 children, who will have direct access to their school, and can avoid commuting via boat. As in past years, PetroTal will continue to provide ongoing agricultural and aquaculture training to over 300 local families to promote the local economy. Additionally, as part of our overall COVID-19 protocol we continue assisting the local communities of the Bretana district with medical supplies and testing kits.

BLOCK 107

Approximately $1.8 million will be allocated for continued technical and permitting work at Block 107, representing approximately 2% of the 2021 total capital program.

Capital Budget Summary $ millions
Drilling and Completion $68
Production Facilities $13
Infrastructure and ESG $17
Other - Block 107 $2
Total 2021 Capital Budget $100

 

PRODUCTION GUIDANCE

With this capital program, PetroTal estimates 2021 average production of between 11,000 and 12,000 bopd, an increase from the 2020 average production of 5,675 bopd, and well above the Q4 2020 average production of 6,413 bopd.

The first 2021 development well is expected to be on production in April and increase oil production rates to pre-May 2020 shut-in levels of between 10,500 and 11,500 bopd, inclusive of base reservoir declines. In addition, before the end of June 2021, PetroTal will drill a water disposal well, resulting in H1 2021 average production of 9,000 to 10,000 bopd, equivalent to the Q1 2020 pre COVID-19 rate. Three additional horizontal development wells are expected on production through H2 2021 with the final well of the 2021 program drilled in late 2021 and on production in early February 2022. Production is expected to average between 14,000 and 15,000 bopd in H2 2021.

PRODUCTION AND CAPITAL PROFILE

Q1 Q2 Q3 Q4 2021
New oil wells completed* 0 1 1 2 4
New water disposal wells 0 1 0 0 1
Oil production (bopd) 7,000 - 8,000 10,000 -
11,000
11,500 -12,500 16,000 -17,000 11,000 -12,000
Total CAPEX ($ millions) 15 30 30 25 100

 

*Excludes one horizontal well to commence drilling in December 2021 and be completed in early 2022

CAPITAL PROGRAM FUNDING

The fully subscribed $100 million bond offering, which closed on February 16, 2021, allows PetroTal to kickstart its 2021 capital program in March 2021 and immediately commence near term operations without working capital constraints. The 2021 capital budget has been planned conservatively and is fundable down to an unhedged $44/bbl Brent flat for the remainder of 2021. At $50/bbl Brent flat, the 2021 budget is substantially funded out of cash flow by 2021 year end, allowing PetroTal the flexibility to allocate additional liquidity from the bond issuance to the highest return weighted projects, while maintaining strong credit metrics. With an enhanced risk management focus, PetroTal plans to implement a robust hedging program with an emphasis on protecting the 2021 capital budget and ensuring covenant compliance should oil prices fall materially from current levels. The program may include swaps, puts, and collars over the next twelve months' production.

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

"We are excited about our early achievements in 2021. As a management team, we overcame many unique challenges in 2020 and we are now positioned stronger than before the pandemic. With the successful placement of our three year bond, we can pivot into a forward leaning position operationally and have the financial confidence to execute what we do best, namely development of the Bretana oil field. We believe our approved 2021 capital budget is balanced and paced appropriately to fit our short and long-term targets. Ongoing operational success and financial discipline will allow the Company to be rewarded in a rising oil price environment. We intend for 2021 to be a year of operational excellence as we continue to demonstrate our repeatable organic growth story to the market. Having additional liquidity will also allow our highly experienced technical team to evaluate further opportunities to the benefit of our stakeholders.

2021 will be a defining year for the Company as we look to double production and realize scale and synergies that compete with the best oil plays in the world. I would like to sincerely thank the entire PetroTal team, the Board, our shareholders, and our new bondholders for their continued support in what is an exciting period for PetroTal."

Qualified Person's Statement

Estuardo Alvarez-Calderon, the Company's Vice President, 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. Alvarez-Calderon received a Bachelor of Science degree in Geology from the University of Texas at Austin 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 contact:

Douglas Urch
Executive Vice President and Chief Financial Officer
Durch@PetroTal-Corp.com
T: (713) 609-9101

Manuel Pablo Zuniga-Pflucker
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; the $100 million bond issue and the closing thereof; drilling, water 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; decline rates; the 2021 capital program and budget, including drilling plans, the proposed scale-up of CPF-2 and the timing thereof; development of Block 107; commitment to ESG principles; 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. 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, 2019 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.

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, operating costs, EBITDA, 2021 capital program and budget (including the expectation that such budget will be cash flow funded by 2021 year end), bond offering 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.

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.

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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