November 29, 2018 - 4:05 PM EST
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PetroTal Announces Third Quarter Financial Results and Provides Operations Update

Canada NewsWire

CALGARY and HOUSTON, Nov. 29, 2018 /CNW/ - PetroTal Corp. ("PetroTal" or the "Company") (TSXV: TAL) is pleased to provide a summary of its financial and operating results as of September 30, 2018.

Selected financial and operational information is outlined below and should be read in conjunction with the Company's unaudited consolidated financial statements ("Financial Statements") and management's discussion and analysis ("MD&A") for the three and nine months ended September 30, 2018, which are available on SEDAR at www.sedar.com and the Company's website at www.petrotal-corp.com.  All figures referred to in this press release are denominated in U.S. dollars.

2018 THIRD QUARTER HIGHLIGHTS

  • Produced approximately 72,000 barrels of oil ("Bbls") during the third quarter and over 135,000 Bbls to date
  • Recorded revenue and net income of $4.1 million and $0.5 million, respectively, in first period of revenue recognition in the Company's nine month history, significantly ahead of schedule

OPERATIONS UPDATE

The Company placed the Bretaña oil field online at approximately 1,000 barrels of oil per day ("BOPD") during the initial testing and commissioning phase.  In the third-quarter, production averaged 757 BOPD.  To date, the well has accumulated approximately 135,000 Bbls and the Company has been able to increase production as of November 8, 2018 to approximately 2,000 BOPD.  The Company expects to average between 1,250 and 1,450 BOPD for the quarter ending December 31, 2018.

Current facilities are designed to manage approximately 6,000 BOPD and 10,000 barrels of formation water per day.  The discovery well is also producing aquifer water, as expected, at current rates of approximately 3,000 barrels of water per day for a total fluid production of approximately 5,000 barrels per day.  The Company has in place and operating water injection pumps and a water disposal well which was drilled by the previous operator.

In addition, the Company has completed refurbishment and construction on the existing drilling pad and is now able to drill additional wells in 2019 without causing material interruptions to production.  Mobilization of a drilling rig has commenced and, once fully tested, will be taken to Bretaña to begin drilling the Company's second oil well.  The expected spud date is February 2019 with first production expected in late March 2019.  This second oil well will be drilled down to the Chonta Formation to comply with the current exploration commitment and investigate the potential for light oil.  It will be completed as an oil producer at the top of the target Vivian Formation.  The Company has received a drilling permit to drill a follow up oil well at Bretaña which would be the Company's third oil producer.  The Company has also received an extension for the ongoing long-term testing at Bretaña until May 31, 2019 providing the Company sufficient time to obtain approval of the already submitted full field development EIA study.

During the quarter, the Company executed an initial oil sales contract with PetroPeru, Peru's state oil company and owner of the Iquitos refinery, pursuant to which the Company is entitled to sell up to 1,000 BOPD to the refinery during the initial long-term testing phase.  The Company successfully negotiated a discount equivalent to 14 percent from Brent; however, the Company does not pay pipeline tariffs during the contract term, as all oil is barged directly to the refinery.   The crude oil is currently picked up at the Bretaña field and transported to the refinery by PetroPeru.  Crude oil produced in excess of the contracted 1,000 BOPD is being sent to the Iquitos refinery as well as to the Conchan refinery near Lima, also owned by PetroPeru, with less diluent for evaluation under separate agreements.  The Company believes the use of the refinery in Lima, as well as other nearby markets, is key to establishing new and competitive markets for its crude oil.

Manolo Zuniga, President and Chief Executive Officer stated:

"Our team continues to deliver positive operational results and we are pleased with the initial well test and early production results thus far.  Strong realized oil prices for the September quarter of over $61.00 per barrel plus our ability to barge directly to the refinery, which saves on pipeline tariffs, provides key cash to the Company at this stage.  First revenue and first net income are all key milestones for PetroTal and have been achieved ahead of schedule.  We continue to monitor oil prices, however we remain fully funded to drill our second oil producer in the first quarter of 2019.  As mentioned above, we have begun to mobilize the rig to Bretaña to continue development of the oil field.  We will enter 2019 with ample cash to drill the follow up well and grow production with no current debt on the balance sheet.  Our initiative to list on the London Stock Exchange's AIM market is ongoing and we continue to investigate that opportunity." 

FINANCIAL HIGHLIGHTS

The following table summarizes key financial highlights associated with the Company's financial performance.



Three Months Ended September 30,

Three Months Ended June 30,

($US thousands)


2018

2017

2018

2017







Revenues


4,144

-

-

-

Expenses


3,637

-

1,400

-

Net income  (loss)


507

-

(1,400)

-







Total assets


91,322

-

98,918

-

Total liabilities


11,655

-

19,819

-

Shareholders' equity


79,667

-

79,099

-

 

ABOUT BRETAÑA FIELD

Oil in the Bretaña field was first discovered in the 1970's and was subsequently re-discovered by Gran Tierra Energy Inc. ("Gran Tierra"). Several wells have been drilled to delineate the field and recent seismic has de-risked the structure. The rediscovery well drilled by Gran Tierra in 2014 tested 18.5 degrees API oil from the Vivian formation. The Northern oil fields in Peru have produced over one billion barrels of oil, mostly from the Vivian formation. The Company acquired the assets in Peru on December 18, 2017 from Gran Tierra. The well currently under long-term testing initially tested at a rate of 3,095 BOPD of 18.5 API oil from the horizontal sidetrack in 2013. The well had been shut-in since that time until the Company put the well on production in June of this year.

ABOUT PETROTAL

PetroTal is a publicly-traded oil and gas development and production company focused on the development of oil assets in Peru.  The Company's management team has significant experience in developing oil fields in Northern Peru and is led by an experienced Board of Directors, focused on safely and cost effectively developing and exploiting the Bretaña oil field.

READER ADVISORIES

FORWARD-LOOKING STATEMENTS: This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to the Company's objectives; the Company's capital program, capital budget, cash flow and proposed drilling, reactivation, water and other activities and the anticipated costs and results of such activities; cost controls and savings; anticipated future production and revenue; 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 Sterling'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 Sterling'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, availability of required equipment and services and prevailing commodity prices. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company's production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Please refer to the risk factors identified in the Company's annual information form and management's discussion and analysis for the year ended December 31, 2017 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 operating netbacks (calculated on a per unit basis as oil revenues less royalties and barging, pipeline and lifting costs). 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. All oil and gas disclosure contained in this press release complies with the requirements of National Instrument 51-101 ("NI 51-101").

References in this press release to production test rates, initial test production rates, and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for PetroTal. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the Company cautions that the test results should be considered to be preliminary.

FOFI DISCLOSURE: This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about PetroTal's prospective results of operations, production, operating netbacks, operating 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 made as of the date of this press release and was provided for the purpose of providing further information about PetroTal's anticipated future business operations. PetroTal disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein. All FOFI contained in this press release complies with the requirements of Canadian securities legislation, including 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.

SOURCE PetroTal Corporation

View original content: http://www.newswire.ca/en/releases/archive/November2018/29/c7603.html

Greg Smith, Executive Vice President and Chief Financial Officer, [email protected], T: (713) 609-9101; Manolo Zuniga, President and Chief Executive Officer, [email protected], T : (713) 609-9101, http://www.petrotal-corp.com; Mark Antelme / Henry Lerwill, Celicourt Communications, [email protected], T : 44 207 520 9261Copyright CNW Group 2018


Source: Canada Newswire (November 29, 2018 - 4:05 PM EST)

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