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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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/74815


PetroTal Announces Completion of US$100 Million Senior Secured Bond Issue

Funding will support ongoing Bretana oil field development

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - February 17, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce that on February 16, 2021 it completed the issuance of the US$100 million issue of senior secured bonds, previously announced on February 2, 2021. The new bond issue will be PetroTal's only interest bearing debt and will be used to retire the existing derivative liability with Petroperu, continue development of the Bretana oil field, support the Company's crude oil price hedging strategy, and finance potential acquisitions. Details of the 2021 capital budget will be released on February 18, 2021.

Pareto Securities acted as sole bookrunner and manager of the bond issue.

Douglas Urch, Chief Financial Officer, commented:

"We are pleased to finalize this inaugural US$100 million bond issue for PetroTal. This funding supports the ongoing development of the Bretana oil field, building on the success achieved to date, and that is expected to achieve production of 20,000 barrels of oil per day during H2 2022. The confidence shown by the bond investors supplements the existing equity investment of our shareholders."

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 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; use of proceeds from the $100 million bond issue, including retiring the existing derivative liability with Petroperu, development of the Bretana oil field, support for price hedging and financing potential acquisitions; oil production levels, including target production of 20,000 barrels of oil per day in H2 2022; 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.

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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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/74696


PetroTal Announces Successful US$100 Million Bond Issue

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - February 2, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") announces that it has successfully completed the placement of a 3-year US$100 million senior secured bond (as announced on January 12, 2021) with a fixed coupon of 12% and a borrowing limit of $125 million (the "Bond").

PetroTal intends to use the net proceeds from the Bond to repay all existing outstanding loans (in particular the restructured derivative liability with Petroperu, details of which were announced on January 19, 2021), to finance the continued development of the Bretana oil field, to provide support for crude oil hedging transactions, and to finance potential acquisitions.

The Bond is expected to close on or about February 16, 2021, subject to customary closing conditions.

Pareto Securities acted as sole bookrunner and manager of the bond issue.

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

"PetroTal is pleased with the investor interest in this $100 million inaugural bond offering. This financing significantly enhances PetroTal's liquidity and will immediately lead to a return to development activity at the Bretana oil field, with the next well expected to commence drilling by the end of Q1 2021. Additionally, the bond offering provides PetroTal with capital that enables us to pursue synergistic and accretive transactions to diversify the Company's operations. As promised to our shareholders, all this will allow PetroTal to exit this pandemic crisis stronger than before."

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 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

NO OFFER: The information contained in this press release is for information purposes only and does not purport to be full or complete or constitute: (a) a prospectus or offering memorandum; or (b) an admission document prepared in accordance with AIM rules. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF PETROTAL CORP. The publication, distribution or release of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. The Company does not intend to register any securities referred to herein in the United States or to conduct a public offering of securities in the United States.

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: the Bond, including the size and terms thereof; the closing of the Bond and the timing thereof; the use of proceeds from the Bond; and PetroTal's business strategy, generally, including development of the Bretana oil field and potential future acquisitions. 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. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e. g. , operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company's production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. 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 and management's discussion and analysis for the year ended December 31, 2019 which are available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

OIL 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.

NOT FOR DISTRIBUTION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/73389


PetroTal Advises of Gran Tierra Ownership Reduction

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - January 25, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") advises that, as announced by Gran Tierra Energy Inc. ("GTEI") on January 20, 2021, Gran Tierra Resources Limited ("GTRL") has sold an aggregate of 109,006,250 common shares in the Company ("Common Shares"). The Company understands that multiple entities purchased the shares sold by GTRL and that, following the sale, GTRL continues to hold 137,093,750 Common Shares, representing 16.8% of PetroTal's issued and outstanding Common Shares. PetroTal was not a party to the agreements and did not receive any proceeds from the sale transactions.

The Company has 816,167,379 Common Shares in issue and there are no shares held in treasury. For purposes of the Disclosure Guidance and Transparency Rules, the total number of voting rights (TVR) in the Company is 816,167,379. This figure may be used by shareholders as the denominator for the calculations by which they determine if they are required to notify their interest in, or a change of their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

PetroTal and GTEI are parties to a Relationship Agreement dated December 17, 2018, in accordance with the Company's AIM admission process. The Relationship Agreement primarily covered that, as long as GTEI owned more than a 20% ownership of PetroTal, PetroTal and GTEI maintain business independence, arms' length relationships and that GTEI's voting rights were restricted to 30%, notwithstanding if the actual ownership was higher. As a result of the share sale transaction, the Relationship Agreement will automatically terminate in 56 days.

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 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, the termination of the Relationship Agreement. 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. 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.

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

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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/72713


PetroTal Announces Completion of Arrangement with Petroperu, and Two Year Extension of Oil Sales Contract

Update on Third-Party Sale of Shares

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - January 19, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce that it has executed final agreements with PETROPERU S.A. ("Petroperu") to complete the restructuring (the "Arrangement") of the contingent liability referenced in PetroTal's June 12, 2020 press release and to extend the oil sales contract with Petroperu ("Oil Sales Contract") for an additional two years.

Highlights

  • Oil sales to Petroperu under the Oil Sales Contract for deliveries through the Northern Oil Pipeline ("ONP") have been extended for an additional two years beyond December 23, 2020;
  • At PetroTal's expense, Petroperu will place commodity price hedges on all oil sold through the ONP, after the oil is delivered by PetroTal to Pump Station # 1 at Saramuro, which will substantially limit PetroTal's exposure to the impact of oil price fluctuations in the period until Petroperu ultimately sells the oil from the Bayovar port;
  • The amount of the contingent liability at November 30, 2020 was $16.6 million. PetroTal will pay this amount to Petroperu over three years in equal monthly installments, with interest at an annual rate of 6.12%. The amount can be prepaid at any time, without penalty and is expected to be prepaid following successful completion of the contemplated bond issue announced on January 12, 2021;
  • Based on the current Brent oil price forward curve, when the physical oil sales are arranged by Petroperu, which is expected over the next six months, this will result in PetroTal receiving payments from Petroperu totalling approximately $26.1 million; and,
  • The Company continues to develop an alternative export route through to the Atlantic, based on the success of the first 106,000 barrel pilot in December 2020, and PetroTal has now arranged a second 200,000 barrel pilot in February 2021, FOB Bretana.

Arrangement

Pursuant to the Arrangement, PetroTal and Petroperu have agreed to resolve the entire contingent liability that arose due to the significant reduction in oil prices in early 2020, on a one‐time basis that will result in the obligation being paid evenly over a three year period, together with interest at an annual rate of 6.12%. From the total of 2.4 million barrels of oil that gave rise to the contingent liability, approximately 575,000 barrels were sold between July and November 2020, and the remaining 1.8 million barrels of oil are either in the pipeline or storage tanks.

Based on the average oil price for November 2020, the contingent liability was $16.6 million. The actual liability or asset value will be determined based on the future Brent oil price when the remaining 1.8 million barrels of oil are sold. For reference, assuming the physical oil sales are completed by Petroperu over the next six months based on the current Brent forward curve, PetroTal will receive payment from Petroperu of approximately $26.1 million.

As part of the security package, the production facilities of PetroTal at Bretana have been pledged to Petroperu as security under the Arrangement and additional security will be pledged pursuant to a trust agreement that is expected to be finalized within 30 days. Along with the contractual monthly repayments, PetroTal may make additional pre‐payments to facilitate an earlier payout, without penalty and PetroTal expects to prepay the Arrangement following successful completion of the contemplated bond issue announced on January 12, 2021. Once Petroperu has been repaid in full, the security arrangements will terminate, and all pledged production facilities and other security will be released back to PetroTal.

As noted above, PetroTal is expected to continue to benefit from higher projected oil prices when the oil volumes that have been sold to Petroperu under the Oil Sales Contract and the oil swap contract are sold by Petroperu, which is expected to occur by the end of Q2 2021.

Amendments to the Oil Sales Contract

In order to solidify the long‐term operating and commercial relationship between PetroTal and Petroperu, the parties have amended certain terms of the Oil Sales Contract. The key changes are:

  • Extension of the term for an additional two years, effective from December 23, 2020;
  • Given the extended time for Petroperu to realize the export sales, future invoices submitted by PetroTal will be due 240 days from when PetroTal delivers the oil at Saramuro;
  • PetroTal will continue to have the ability to immediately factor future invoices, at a nominal rate, and therefore cash flow is expected to remain largely unaffected by this longer invoice period;
  • The initial differential at the time Bretana oil is sold to Petroperu has been adjusted to $6 per barrel (previously $4 per barrel). If the actual differential is less than the initial $6 per barrel at the time the oil is physically sold 8 to 12 months later, then PetroTal will recapture the difference as revenue, and if the actual differential is higher than $6 per barrel then PetroTal will pay the difference. As a reference, the first cargo of Bretana oil was sold in July 2020 with a differential of $1.39 per barrel to Brent and, a second cargo (of three oil blends), was sold in November 2020 with a differential of $4.25 per barrel to Brent. As the basis for ongoing price determination, the differential for each subsequent physical sale by Petroperu will be utilized for prevailing invoices;
  • Future value fluctuation settlements will occur at the date the physical oil is sold by Petroperu;
  • To minimize the future price differential, Petroperu will use their best efforts to sell the Bretana oil at the best market conditions;
  • Petroperu will hedge future sales of the Bretana oil sold into the ONP to limit price exposure, at the Company's expense; and,
  • Once Petroperu has been repaid in full and the securities are released, PetroTal will fund an escrow reserve account with a pledge in favor of Petroperu for $2.5 million (to be increased up to $6 million by monthly installments of $0.55 million) to secure the financial costs associated to the hedge and future price differential.

Update on Third-Party Sale of Shares

On December 14, 2020, the Company announced that it had been informed by Gran Tierra Resources Ltd. ("GTRL"), a control person of PetroTal, that GTRL had entered into a private purchase and sale agreement with Remus Horizons PCC Limited ("Remus") in respect of the purchase by Remus of 218,012,500 common shares of PetroTal currently held by GTRL.

On January 18, 2021, GTRL informed PetroTal that the purchase and sale agreement has been terminated. PetroTal was not a party to the agreement and would not have received any proceeds from the transaction had it been completed.

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

"PetroTal is pleased to finalize this agreement with Petroperu that effectively deals with the legacy contingent liability and ensures that PetroTal is substantially protected against future oil price volatility through hedging arrangements. Petroperu's pipeline and refinery network are important elements of PetroTal's ongoing Bretana oil field development, and the Company embraces the strong working relationship it has with Petroperu. In addition to the Company's recently announced successful pilot oil export through Brazil, this agreement with Petroperu that ensures future oil sales into the ONP, along with settlement of the contingent liability, significantly enhances PetroTal's operations."

Updated Corporate Presentation

As announced on January 12, 2021, an updated corporate presentation is now available on the Company's website at www.petrotal‐corp.com.

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 settlement of the contingent liability with Petroperu pursuant to the Arrangement and the timing thereof; the pledge of additional security pursuant to the Arrangement; and future oil sales and price hedging under the Oil Sales Agreement. 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. 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 liability or entitlements under the Arrangement, including the final amount and settlement thereof, oil sales and hedging arrangements under the Oil Sales Contract 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.

Corporate Logo

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/72333


PetroTal Announces Contemplated $100 Million Bond Issue and Operations Update

Funds anticipated to be primarily invested to expand development of the Bretana oil field and prepay 100% of Petroperu's restructured debt

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - January 12, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce that it has mandated Pareto Securities AS to arrange a series of fixed income investor virtual meetings commencing January 14, 2021.

Subject to, inter alia, market conditions, a new USD 100 million senior secured three year bond issue (the "Bond Issue") may follow. The proceeds of the potential Bond Issue will be used to settle in full the cumulative oil price difference liability owed to Petroperu (approximately USD 16.6 million - as previously announced); to finance the ongoing development of PetroTal's flagship Bretana oil field in Northern Peru; to provide funds to support the Company's hedging program; and to finance potential synergistic acquisitions.

Further details will be provided as and when appropriate.

Bretana Oil Field Update

On January 7, 2021, the Company announced that, coincident with full commencement of Petroperu's Northern Oil Pipeline (ONP) operations, PetroTal's production was approximately 9,500 barrels of oil per day (''bopd'') and was expected to increase as operations returned to a stabilized level. Since January 7, 2021, oil production has increased to an average of 10,025 bopd, with optimization continuing.

Additionally, as PetroTal continues to ensure it has export optionality, the Company has now signed an agreement for a second pilot shipment through Brazil in February 2021, of up to 220,000 barrels of oil. The increased volume of this shipment over the initial pilot export is expected to improve overall economics and lead towards the establishment of regular exports, complementing sales into the ONP and to the Iquitos refinery.

Proceeds from the contemplated Bond Issue will allow PetroTal to resume development drilling at Bretana in March 2021. In anticipation of expected higher oil production, the modular processing equipment for expansion of the second phase of Central Processing Facilities (CPF#2) is complete and is currently en route to Bretana.

Updated Corporate Presentation

The Company announces that an updated presentation is now available on the Company's website at www.petrotal-corp.com.

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

Pareto Securities AS
Fixed income sales
T : 47 22 87 87 71

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

This announcement includes inside information.

READER ADVISORIES

NO OFFER: The information contained in this press release is for information purposes only and does not purport to be full or complete or constitute: (a) a prospectus or offering memorandum; or (b) an admission document prepared in accordance with AIM rules. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF PETROTAL CORP. The publication, distribution or release of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. The Company does not intend to register any securities referred to herein in the United States or to conduct a public offering of securities in the United States.

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: the Bond Issue being conducted and the successful marketing and closing thereof; the terms of the securities proposed to be issued under the Bond Issue; the use of proceeds of the potential Bond Issue; the Company holding virtual investor meetings and the results thereof; the Company providing further details in respect of the Bond Offering; and PetroTal's business strategy, generally, including development of the Bretana oil field and potential future acquisitions.. 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. Although the Company believes that the expectations and assumptions on which the forward‐looking statements are based are reasonable, undue reliance should not be placed on the forward‐looking statements because the Company can give no assurance that they will prove to be correct. Since forward‐looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e. g. , operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company's production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. 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 and management's discussion and analysis for the year ended December 31, 2019 which are available on SEDAR at www.sedar.com. The forward‐looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward‐looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

OIL 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.

NOT FOR DISTRIBUTION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW

Corporate Logo

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/71821


PetroTal Q4 2020 Operations Update

Current Oil Production at 9,500 bopd with the ONP pipeline fully operational and Brazil export viability confirmed

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - January 7, 2021) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce that following the recommencement of operations of Petroperu's Northern Oil Pipeline ("ONP"), oil production at the Bretana oil field is currently at 9,500 barrels per day ("bopd") and expected to reach 10,000 bopd in the next few days. Total oil production for 2020 was 2.08 million barrels (5,675 bopd), as compared to 1.5 million barrels (4,131 bopd) in 2019. All amounts herein are in United States dollars ("US$") unless otherwise stated.

Highlights

  • Total oil produced in 2020 was 2.08 million barrels (5,675 bopd), significantly impacted by the Covid-19 pandemic and ensuing social unrest;
  • 59% of the 2020 oil production was produced during the first four months of the year, before the pandemic forced Petroperu to shut down the ONP in early May 2020;
  • In December 2020, the Company successfully completed a 106,000 barrel FOB Bretana pilot oil export via Brazil, and is preparing for a second pilot of 200,000 barrels during February 2021;
  • The successful initial Brazil export pilot, as well as the storage of produced oil in contracted barges, allowed the Company to produce 590,000 barrels in the fourth quarter ("Q4") of 2020, even with the ONP shut down during the entire quarter;
  • With the ONP now fully operational, production from the Bretana oil field is currently 9,500 bopd and is expected to reach 10,000 bopd in the next few days;
  • As a result of higher oil prices, the Company's contingent derivative liability was reduced to $2.7 million at December 31, 2020; and,
  • At year-end 2020, the Company had cash resources of approximately $9.6 million.

Petroperu Pipeline Operations

Petroperu announced on January 3, 2021 that they had completed their assessment of the pump stations and the ONP, including the area of the ONP that required an inspection, and that the ONP is now fully operational. Pump Station No.1, at Saramuro, started pumping oil towards Pump Station No.5 on December 28, 2020 allowing the Company to unload, before the end of the 2020, 38,000 barrels of the 131,300 barrels of oil stored in six contracted barges at Saramuro, with the remaining 93,300 barrels unloaded during the first week of January. All oil unloaded at Pump Station No.1 is invoiced to Petroperu at the beginning of each following month. The Petroperu announcement can be found at:

(https://www.petroperu.com.pe/petroperu-reinicia-operacion-del-oleoducto-norperuano?pdf=1).

2020 Oil Production

The Company achieved annual oil production for 2020 of 2.08 million barrels (5,675 bopd), as compared to annual oil production in 2019 of 1.5 million barrels (4,131 bopd). The Bretana oil field was shut in for a total of 121 days as a result of the Peruvian government health department-directed Covid-19 related shut in (71 days) and subsequent social disruption (50 days). Considering the need to also constrain production during this period, PetroTal had to shut in or constrain production for approximately 47% of 2020.

For Q4 2020, PetroTal produced throughout the quarter, although at constrained rates in order to manage market availability to deliver oil to the Iquitos refinery, the ONP, the successful 106,000 barrel pilot Brazilian export, and ultimately store oil in the Company's tanks and contracted barges prior to delivery. Average oil production from the Bretana oil field in Q4 2020 was 6,413 bopd, compared to 2,444 bopd for Q3 2020, and 7,757 bopd for Q4 2019.

At December 31, 2020, PetroTal held 29,700 barrels of oil in its tank inventory and 133,300 barrels of oil in contracted barges, comprising 93,300 barrels awaiting delivery into the ONP at Saramuro and 40,000 barrels on their way to the Iquitos Refinery. The barges have now completed delivery of this oil to the ONP and Iquitos.

Contingent Derivative Liability

At November 30, 2020, the contingent liability was $16.6 million and, upon imminent document approval by Petroperu, will be structured into a three-year payment arrangement. Additional amendments to the sales agreements will, among other things, result in placement of hedges for the 1.8 million barrels of oil in the pipeline network to ensure that the realized price is based on the respective forecasted Brent oil prices to protect from any oil price downside until the barrels are ultimately sold.

As a result of higher oil prices, the Company's contingent derivative liability relating to oil sold to Petroperu was reduced to $2.7 million at December 31, 2020. The contingent liability relates to the timing difference between when Petroperu provides an initial payment for the oil and when the final settlement price is calculated. The amount of the ultimate liability will be crystallized when the oil is sold by Petroperu, which is expected to commence in February 2021, with further cargos until the end of Q2 2021.

Liquidity Update

At December 31, 2020, PetroTal had cash resources of approximately $9.6 million, with accounts payable and accrued liabilities of approximately $44.3 million, an increase of $4.0 million from September 30, 2020. Ongoing payments will be managed from expected oil field revenues and internal cash resources. Pursuant to contractual terms with our suppliers, approximately $12.6 million, (28%) are not due until after Q1 2021.

The Company continues to work towards finalizing a significant credit facility to support the planned capital program and a return to development drilling at the Bretana oil field.

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

"We are pleased to have returned to normalized Bretana oil field operations and reliable pipeline operations. We are also pleased that the initial Brazil export pilot was a success, and we are already preparing for a second pilot of 200,000 barrels during February 2021. This will ultimately benefit all parties and help to encourage continued investment in Peruvian oil field developments. On behalf of PetroTal, I would like to recognize the support of the indigenous communities, Petroperu and the Peruvian government, to ensure that a solid investment proposition exists in Peru and the ongoing investment that benefits Peru. Additionally, I would like to thank our shareholders for their continued support, along with the dedication of the PetroTal team."

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 with more than 10,000 bopd of production. 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 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; increased oil production volumes due to the reopening of the Bretana oil field and resumption of oil production therefrom; the effects and duration of the Funding Agreement; PetroTal's plans regarding community support, the environmental and corporate governance; and the ongoing effects of Covid-19 on the Company and its employees. 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 reopening of existing infrastructure, its ability to deliver production and the anticipated capital expenditures associated therewith; successful implementation of the Decree; prevailing commodity prices and actual prices received for PetroTal's products; the availability and performance of drilling rigs, facilities, pipelines, inventory and barge storage capacity, other oilfield services and skilled labour; royalty regimes; exchange rates; the application of regulatory and licensing requirements; current legislation; the success of future drilling and development activities; and general economic conditions. 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. 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 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.

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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/71555


PetroTal Completes First Oil Export Sale through Brazilian Terminal

Initial shipment of 106,000 barrels of oil into Brazil for export to the Atlantic region

Calgary, Alberta and Houston, Texas--(Newsfile Corp. - December 30, 2020) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce the first export of Bretana oil into the Atlantic region through Brazil. This provides PetroTal with an additional option to monetize oil sales, beyond the Company's existing important sales arrangements with Petroperu using the Northern Oil Pipeline ("ONP"), and to the Iquitos refinery. This will facilitate future oil production growth when the Company continues development of the Bretana oil field, targeting to reach 20,000 barrels of oil per day in Q1 2022.

This initial shipment of 106,000 barrels was arranged between PetroTal and Novum Energy Trading, a British Virgin Islands registered Corporation ("Novum"), to establish the viability of Bretana oil exports using the Amazon river through Brazil. In early December 2020, a convoy of barges were loaded at Bretana and have now reached the terminal area near Manaus, Brazil for transfer into a tanker that will deliver the oil to the Atlantic region.

The sale was completed FOB at the Bretana field, where the oil was loaded onto the barges, with the invoice based on the February 2021 ICE Brent oil price forecast, net of transportation costs and export-related fees associated with the Brazilian - Atlantic coast route. The net proceeds of US$2.7 million have been received and are not subject to any further price adjustments when this oil is sold to the end user by Novum.

Based on the success of this initial export shipment, PetroTal and Novum have signed a letter of intent to establish long term sales through Brazil to complement the Company's existing sales arrangements with Petroperu's ONP and the Iquitos refinery. Future export cargos through Brazil are expected to be at least 200,000 barrels and, with the volume efficiencies expected, will result in a higher netback per barrel for PetroTal.

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

"We are pleased that all parties worked seamlessly together to manage the logistics associated with this pilot shipment. This represents a milestone achievement for PetroTal, since having the ability to manage oil sales to both the Pacific and Atlantic coasts provides for maximum flexibility and pricing. The ONP will continue to play an important role in the Company's ongoing growth."

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, the members of the board of directors of the Company and the termination of the Relationship Agreement. 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. 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.

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

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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/71158