PetroTal Announces Q2 2023 Financial and Operating Results
- Record Q2 2023 production and sales demonstrate substantial growth over Q1 2023, leading to a strong cash position and significant EBITDA and Free Funds Flow. The declaration of a cash dividend for Q3 2023 showcases the company's confidence in its financial performance.
- None.
Record Q2 2023 production of 19,031 bopd (
Record Q2 2023 sales of 18,483 bopd (
60 days of production above 20,000 bopd in Q2 2023 and a quarter exit rate of 21,700 bopd
Calgary, Alberta and Houston, Texas--(Newsfile Corp. - August 8, 2023) - PetroTal Corp. (TSX: TAL) (AIM: PTAL) (OTCQX: PTALF) ("PetroTal" or the "Company") is pleased to report its operating and financial results for the three and six months ended June 30, 2023 ("Q2").
Selected financial and operational information is outlined below and should be read in conjunction with the Company's unaudited consolidated financial statements and management's discussion and analysis ("MD&A") for the three and six months ended June 30, 2023, which are available on SEDAR at www.sedar.com and on the Company's website at www.PetroTal‐Corp.com. All amounts herein are in United States dollars unless otherwise stated.
Key Selected Highlights
Achieved record average quarterly sales of 18,483 barrels ("bbls") of oil per day ("bopd"), up
46% from the first quarter ("Q1") 2023;Produced a record 19,031 bopd in the quarter, up
56% from Q1 2023. During the quarter the Company posted 60 days with production over 20,000 bopd;Exited the quarter in a strong cash position with
$92.6 million in total cash ($17.3 million restricted), up29% from end of Q1 2023;As a result of excellent Q2 2023 performance, the Company will declare and pay in Q3 2023, a cash dividend of US
$0.02 5 per common share, which includes the recurring US$0.01 5 per common share amount, plus an amount for a minimum liquidity sweep of US$0.01 per common share;
Exported oil sales through Brazil averaged 513,000 bbls per month. In April 2023 the Company had exported oil sales of approximately 590,000 barrels, that combined with Iquitos refinery deliveries represented total realized oil sales of 630,462 bbls for the month;
Commenced drilling well 15H on April 11, 2023, with first oil production in early June 2023, ahead of schedule. The well produced at an average of 7,920 bopd for the last 19 days in June 2023 and has averaged 7,140 bopd for the 30 day period from June 12, 2023 to July 11, 2023, prior to the start of the dry season;
Generated significant EBITDA and Free Funds Flow of
$70.0 million ($41.63 /bbl) and$37.7 million ($22.41 /bbl) respectively, compared to$47.9 million ($42.22 /bbl) and$7.9 million ($6.96 /bbl) in Q1 2023;Achieved Net Income in the quarter of
$46.6 million (US$0.05 /share) compared to$17.0 million (US$0.02) in Q1 2023; and,During the quarter, the Company paid a dividend of US
$0.01 5/share and repurchased 582,708 shares representing a total of$14.7 million of capital returned to shareholders (~3.4% of June 30, 2023 market capitalization).
Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:
"PetroTal delivered its strongest quarter to date in Q2 2023. Underpinned by unconstrained Brazilian export sales, the Company was able to produce over 20,000 bopd for 60 days which allowed the Company to achieve records in almost all major cash flow metrics including generating over
The Board and Management are pleased with the additions of Mr. Jose Contreras (Senior VP Operations) and Mr. Felipe Arbelaez Hoyos (independent non-executive director). These individuals are fitting in extremely well and adding significant value to the Company.
Looking ahead to Q3 2023, the Amazon River water level is currently low near Iquitos and is consequently forecast to be low on the Brazilian side near the end of Q3 2023, leading to a lighter barge fill requirement projected for most of the quarter. As a result, the Company is reiterating its full year oil production guidance of 14,000 - 15,000 bopd. This showcases the importance of securing other oil export routes and promoting the full and consistent operation of the ONP pipeline, both of which the Company are committed to advancing."
Selected Three and Six Month Ended June 30, 2023 Highlights
The table below summarizes PetroTal's comparative financial position.
| Three Months Ended | Six Months Ended | | ||||||||||||||||||||||
| Q2-2023 | Q1-2023 | Q2-2023 | Q2-2022 | |||||||||||||||||||||
| ($ thousands US) | $/bbl | $/bbl | $/bbl | $/bbl | ||||||||||||||||||||
| Average Production (bopd) | 19,031 | 12,193 | 15,631 | 13,114 | ||||||||||||||||||||
| Average sales (bopd) | 18,483 | 12,618 | 15,567 | 15,065 | ||||||||||||||||||||
| Total sales (bbls) | 1,681,962 | 1,135,611 | 2,817,573 | 2,726,675 | ||||||||||||||||||||
| Average Brent price | $ | 77.29 | $ | 82.51 | $ | 79.73 | $ | 101.54 | ||||||||||||||||
| Contracted sales price, gross | $ | 77.88 | $ | 80.32 | $ | 78.86 | $ | 99.42 | ||||||||||||||||
| Tariffs, fees and differentials | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Realized sales price, net | $ | 56.61 | $ | 60.31 | $ | 58.11 | $ | 77.44 | ||||||||||||||||
| Oil revenue(1) | $ | 56.61 | $ | 95,229 | $ | 60.31 | $ | 68,494 | $ | 58.11 | $ | 163,723 | $ | 77.44 | $ | 211,187 | ||||||||
| Royalties(2) | $ | 5.29 | $ | 8,899 | $ | 5.49 | $ | 6,238 | $ | 5.37 | $ | 15,137 | $ | 5.31 | $ | 14,477 | ||||||||
| Operating expense | $ | 4.22 | $ | 7,100 | $ | 5.60 | $ | 6,354 | $ | 4.78 | $ | 13,454 | $ | 6.75 | $ | 18,416 | ||||||||
| Direct Transportation: | ||||||||||||||||||||||||
| Diluent | $ | 0.98 | $ | 1,641 | $ | 1.20 | $ | 1,368 | $ | 1.07 | $ | 3,009 | $ | 2.49 | $ | 6,794 | ||||||||
| Barging | $ | 0.53 | $ | 896 | $ | 0.80 | $ | 906 | $ | 0.64 | $ | 1,802 | $ | 1.63 | $ | 4,436 | ||||||||
| Diesel | $ | 0.07 | $ | 120 | $ | 0.10 | $ | 113 | $ | 0.08 | $ | 233 | $ | 0.30 | $ | 828 | ||||||||
| Storage | $ | 0.00 | $ | 0 | $ | 0.00 | $ | 0 | $ | 0.00 | $ | 0 | $ | 1.27 | $ | 3,453 | ||||||||
| Total Transportation | $ | 1.58 | $ | 2,657 | $ | 2.10 | $ | 2,387 | $ | 1.79 | $ | 5,044 | $ | 5.69 | $ | 15,511 | ||||||||
| Net Operating Income(4) | $ | 45.53 | $ | 76,573 | $ | 47.12 | $ | 53,515 | $ | 46.17 | $ | 130,088 | $ | 59.70 | $ | 162,783 | ||||||||
| G&A | $ | 3.89 | $ | 6,548 | $ | 4.90 | $ | 5,559 | $ | 4.30 | $ | 12,107 | $ | 3.62 | $ | 9,861 | ||||||||
| EBITDA(3) | $ | 41.63 | $ | 70,025 | $ | 42.22 | $ | 47,956 | $ | 41.87 | $ | 117,981 | $ | 56.08 | $ | 152,922 | ||||||||
| Adjusted EBITDA(3) | $ | 38.09 | $ | 64,064 | $ | 35.95 | $ | 40,825 | $ | 37.23 | $ | 104,889 | $ | 49.69 | $ | 135,495 | ||||||||
| Net Income | $ | 27.73 | $ | 46,635 | $ | 14.95 | $ | 16,979 | $ | 22.58 | $ | 63,614 | $ | 54.56 | $ | 148,759 | ||||||||
| Basic Shares Outstanding | 922,306 | 883,800 | 922,306 | 844,721 | ||||||||||||||||||||
| Market Capitalization(6) | $ | 433,484 | $ | 521,046 | $ | 433,484 | $ | 450,490 | ||||||||||||||||
| Net Income/Share | $ | 0.051 | $ | 0.019 | $ | 0.069 | $ | 0.176 | ||||||||||||||||
| Capex | $ | 26,367 | $ | 32,919 | $ | 59,286 | $ | 41,553 | ||||||||||||||||
| Free Funds Flow(3) (7) | $ | 22.41 | $ | 37,697 | $ | 6.96 | $ | 7,906 | $ | 16.19 | $ | 45,604 | $ | 34.45 | $ | 93,941 | ||||||||
| % of Market Capitalization(6) | ||||||||||||||||||||||||
| Total Cash(8) | $ | 92,552 | $ | 71,635 | $ | 92,552 | $ | 77,016 | ||||||||||||||||
| Net Surplus (Debt) (3) (9) | $ | 97,523 | $ | 71,117 | $ | 97,523 | $ | 79,401 | | |||||||||||||||
- Approximately
91% of sales over Q2 2023 were through the Brazilian route vs86% in Q1 2023. - Royalties in Q2 2023 include the impact of the
2.5% community social trust. - Non-GAAP (defined below) measure that does not have any standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures presented by other entities. See "Selected Financial Measures" section.
- Net operating income represents revenues less royalties, operating expenses, and direct transportation; See "Selected Financial Measures" section.
- Adjusted EBITDA is net operating income less general and administrative ("G&A") and plus/minus realized derivative impacts. See "Selected Financial Measures" section.
- Market capitalization for Q2 2023, Q1 2023, and Q2 2022 assume share prices of US
$0.47 , US$0.59 , and US$0.53 , respectively. - Free funds flow is defined as adjusted EBITDA less capital expenditures. See "Selected Financial Measures" section.
- Includes restricted cash balances.
- Net Surplus/(Debt) = Total cash + all trade and VAT receivables + short and long term net derivative balances - total current liabilities - long term debt - non current lease liabilities - net deferred tax - other long term obligations.
Q2 2023 Financial Commentary and Variance Summary:
Record oil sales in the quarter driving considerable Net Operating Income ("NOI")(1), EBITDA, and Net Income;
Solid per barrel OPEX and run rate G&A metrics of
$5.80 /bbl and$3.89 /bbl respectively, compared to$7.70 /bbl and$4.90 /bbl in the prior quarter; and,Strong liquidity demonstrated with the Company's net surplus(1) growing to over
$97 million from$71 million in the prior quarter.
(1) See "Selected Financial Measures"
| Three months ended | Six months ended | |||||||||||||||||
| US$/bbl Variance Summary | Q2 2023 | Q1 2023 | Variance | Q2 2023 | Q2 2022 | Variance | ||||||||||||
| Oil Sales (in thousands of barrels) | 1,682 | 1,136 | 545 | 2,818 | 2,727 | 91 | ||||||||||||
| Contracted Brent Price | $ | 77.88 | $ | 80.32 | ( | ) | $ | 78.86 | $ | 99.42 | ( | ) | ||||||
| Realized Sales Price | $ | 56.61 | $ | 60.31 | ( | ) | $ | 58.11 | $ | 77.44 | ( | ) | ||||||
| Royalties | $ | 5.29 | $ | 5.49 | ( | ) | $ | 5.37 | $ | 5.31 | $ | 0.06 | ||||||
| Total OPEX | $ | 5.80 | $ | 7.70 | ( | ) | $ | 6.57 | $ | 12.44 | ( | ) | ||||||
| Net Operating Income(1) | $ | 45.53 | $ | 47.12 | ( | ) | $ | 46.17 | $ | 59.70 | ( | ) | ||||||
| G&A | $ | 3.89 | $ | 4.90 | ( | ) | $ | 4.30 | $ | 3.62 | $ | 0.68 | ||||||
| EBITDA | $ | 41.63 | $ | 42.22 | ( | ) | $ | 41.87 | $ | 56.08 | ( | ) | ||||||
| Net Income | $ | 27.73 | $ | 14.82 | $ | 12.91 | $ | 22.58 | $ | 54.56 | ( | ) | ||||||
| Free Funds Flow(2) | $ | 22.41 | $ | 6.96 | $ | 15.45 | $ | 16.19 | $ | 34.45 | ( | ) | ||||||
- Net operating income represents revenues less royalties, operating expenses, and direct transportation; See "Selected Financial Measures" section.
- Free funds flow is defined as adjusted EBITDA less capital expenditures. See "Selected Financial Measures" section.
Financial and Operating Updates Subsequent to June 30, 2023
Workovers and Rig Move. PetroTal moved its contracted drilling rig to service three of its older Bretana oil wells. The three workovers were all completed in July for an average cost of approximately
Current Oil Production. July 2023 average production was 11,552 bopd and was impacted by low river levels and barging sales constraints with August 2023 expected to average at approximately 13,000 bopd. These rates have been intentionally constrained to manage barge river logistics during the current dry season.
ONP Update. As announced in May 2023, the Northern Peruvian Pipeline ("ONP") briefly resumed pipeline operations on April 12, 2023, after over a year of being shut down for maintenance and social unrest related reasons. Currently, the pipeline is operational, however, the Company is not delivering any oil into this route, due to Petroperu's credit line not being available. If their credit facility was available, the Company could continue producing in the order of 20,000 bopd during the ongoing dry season. The Company is also pleased to announce it has received the final payment from Petroperu of last year's outstanding
Return of Capital Policy. In Q1 2023, the Company formalized its dividend and share buyback policy stating, subject to maintaining a minimum liquidity level of
Q2 2023 Dividend Declaration. Based on the Company's current excess liquidity above
Ex dividend date: August 30, 2023
Record date: August 31, 2023
Payment date: September 15, 2023
The dividend is an eligible dividend for the purposes of the Income Tax Act (Canada) and investors should note that the excess liquidity sweep portion of all future dividends may be subject to fluctuations up or down in accordance with the Company's return of capital policy. Shareholders outside of Canada should contact their respective brokers or registrar agents for the appropriate tax election forms regarding this dividend.
Mr. Felipe Arbelaez Hoyos Appointed to PetroTal's Board. As announced on July 6, 2023, the Company welcomed Mr. Felipe Arbelaez Hoyos, who was recently appointed to PetroTal's board as an independent non-executive director. Mr. Arbelaez Hoyos is currently the Senior Vice President Hydrogen and Carbon Capture Systems for BP Energy in London and brings an in depth commercial and ESG knowledge base to the Company.
H2 2023 Outlook and Full Year Guidance
Based on emerging seasonably low river levels through the Amazon River from Iquitos to Manaus, and temporary longer than normal border barge permitting times, the Company is re-iterating its 2023 guidance. Based on river system data, the Company estimates the dry season will now be similar to the 2022 level, however, has factored this into its guidance as previously stated. From a full year cash flow perspective, the Company also estimates having similar free cash flow to previous guidance.
Updated Corporate Presentation
The Company has updated its Corporate Presentation, which is available for download or viewing at www.petrotal-corp.com.
Enercom Conference in Denver
The Company will be presenting at the upcoming Enercom Energy Conference in Denver, Colorado on August 14, 2023 and will be posting a replay of the presentation on its website shortly after.
Q2 2023 webcast link
Please join the Company for its Q2 2023 webcast on August 8, 2023 at 9am CT and 3PM London Time.
https://stream.brrmedia.co.uk/broadcast/646f74f3c0e842f4c6ea72ed
ABOUT PETROTAL
PetroTal is a publicly traded, tri‐quoted (TSX: TAL) (AIM: PTAL) and (OTCQX: PTALF) oil and gas development and production Company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. PetroTal's flagship asset is its
For further information, please see the Company's website at www.petrotal-corp.com, the Company's filed documents at www.sedar.com, or below:
Douglas Urch
Executive Vice President and Chief Financial Officer
Durch@PetroTal-Corp.com
T: (713) 609-9101
Manolo Zuniga
President and Chief Executive Officer
Mzuniga@PetroTal-Corp.com
T: (713) 609-9101
PetroTal Investor Relations
InvestorRelations@PetroTal-Corp.com
Celicourt Communications
Mark Antelme / Jimmy Lea
petrotal@celicourt.uk
T : 44 (0) 20 7770 6424
Strand Hanson Limited (Nominated & Financial Adviser)
Ritchie Balmer / James Spinney / Robert Collins
T: 44 (0) 207 409 3494
Stifel Nicolaus Europe Limited (Joint Broker)
Callum Stewart / Simon Mensley / Ashton Clanfield
T: +44 (0) 20 7710 7600
Peel Hunt LLP (Joint Broker)
Richard Crichton / David McKeown / Georgia Langoulant
T: +44 (0) 20 7418 8900
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, oil production levels and guidance, including the ramp up and resumption of shut-in production. 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. Without limitation, this press release contains forward-looking statements pertaining to: PetroTal's drilling, completions, workovers and other activities; the Company's expectation that workovers of Bretana oil wells will provide strong economics; anticipated future production and revenue; drilling plans including the timing of drilling, commissioning, and startup (including in respect of well 16H, well 17H and the L2 West Platform); expectations surrounding disrupted barge logistics and the consequences in respect thereof, including in relation to the Company's H2 2023 production guidance; forecasted conditions for the remainder of 2023 and consequences thereof including the forecast that the Amazon River's elevation will be low on the Brazilian side near the end of the third quarter of 2023 leading to lighter barge fill requirement projections and lessening PetroTal's H2 2023 production levels; expectation that construction of the L2 West Platform will be completed in September 2023 and corresponding effect on the timing of well 16H drilling and development; expectations relating to the ONP reopening including in respect of exportation volumes; expectations surrounding oil production rates throughout the remainder of 2023 including that it will average approximately 13,000 bopd in August 2023; plans to commence drilling well 17H in December 2023 and anticipated costs in respect of the same; intentions with respect to return of capital, including quarterly eligible dividend payments equal to the sum of US
OIL REFERENCES: All references to "oil" or "crude oil" production, revenue or sales in this press release mean "heavy crude oil" as defined in NI 51-101.
SPECIFIED FINANCIAL MEASURES: This press release includes various specified financial measures, including non-GAAP financial measures, non-GAAP financial ratios and capital management measures as further described herein. These measures do not have a standardized meaning prescribed by generally accepted accounting principles ("GAAP") and, therefore, may not be comparable with the calculation of similar measures by other companies. Management uses these non- GAAP measures for its own performance measurement and to provide shareholders and investors with additional measurements of the Company's efficiency and its ability to fund a portion of its future capital expenditures. "Adjusted EBITDA" (non-GAAP financial measure) is calculated as consolidated net income (loss) before interest and financing expenses, income taxes, depletion, depreciation and amortization and adjusted for G&A impacts and certain non-cash, extraordinary and non-recurring items primarily relating to unrealized gains and losses on financial instruments and impairment losses, including derivative true-up settlements. PetroTal utilizes adjusted EBITDA as a measure of operational performance and cash flow generating capability. Adjusted EBITDA impacts the level and extent of funding for capital projects investments. Reference to EBITDA is calculated as net operating income less G&A. "Net Operating Income" (non-GAAP financial measure) is calculated as revenues less royalties, operating expenses, and direct transportation. The Company considers Net Operating Income measure as they demonstrate Company's profitability relative to current commodity prices. "Net surplus (debt)" is calculated by adding together total cash, trade and VAT receivables, and short and long-term net derivative balances less total current liabilities, long-term debt, non-current lease liabilities, deferred tax, and other long-term obligations. Net surplus (debt) is used by management to provide a more complete understanding of the Company's capital structure and provides a key measure to assess the Company's liquidity. "Free funds flow" (non-GAAP financial measure) is calculated as net operating income less G&A less exploration and development capital expenditures less realized derivative gains/losses and is calculated prior to all debt service, taxes, lease payments, hedge costs, factoring, and lease payments. Management uses free funds flow to determine the amount of funds available to the Company for future capital allocation decisions. Please refer to the MD&A for additional information relating to specified financial measures. "Funds flow provided by operations" (non-GAAP financial measure) includes all cash generated from operating activities and is calculated before changes in non-cash working capital. "Free cash flow" (non-GAAP financial measure) is calculated as EBITDA less G&A less Capex prior to the realization of any derivative impacts.
Eligible Dividend: An eligible dividend is one which is characterized as such by the dividend-paying corporation for Canadian residents. The primary benefit of an eligible dividend is that it benefits from an enhanced gross-up and credit regime at the shareholder level (i.e., the shareholder pays less tax on eligible dividends than non-eligible dividends). This is meant to compensate for the higher general corporate tax rate paid by non-CCPC's on their income and generally preserve integration of Canada's tax rates. As an example, for federal income tax purposes the gross-up rate for eligible dividends is
FOFI DISCLOSURE: This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about PetroTal's H2 2023 guidance and components thereof, prospective results of operations and production, infrastructure costs, free funds1 flow and components thereof (including total EBITDA, tax and Capex), revenue, margins, net operating income and shareholder returns 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 and its management believe that FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments, and represent, to the best of management's knowledge and opinion, the Company's expected course of action. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results. 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. Changes in forecast commodity prices, differences in the timing of capital expenditures, and variances in average production estimates can have a significant impact on the key performance measures included in PetroTal's guidance. The Company's actual results may differ materially from these estimates.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/176421
FAQ
What are PetroTal Corp.'s stock ticker symbols?
What is PetroTal Corp.'s Q2 2023 production and sales growth over Q1 2023?
What is the declared cash dividend for PetroTal Corp. in Q3 2023?
What is the significance of PetroTal Corp.'s Q2 2023 financial performance?
