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(Sharecast News) - PetroTal announced a fully-funded 2023 capital investment programme of $125m on Monday, that it said was expected to generate "significant" after-tax, pre debt-service free cash flow of $55m during the year.
The AIM-traded firm said combined with its year-end 2022 cash balance of more than $100m, other working capital inflows, and contracted 2023 cash inflows of $57m from Petroperu, it expected to have about $240m of available cash to repay its debt, accrued interest, and initiate a capital return programme to shareholders through a combination of share buybacks and dividends.
It said it was targeting 2023 production growth of between 15% and 19% above 2022 levels, equivalent to 14,000 to 15,000 barrels of oil per day, with similar associated sales volumes.
Should additional sales capacity become available mid-year, the company said it could increase late 2023 production to around 17,000 barrels per day.
The company said it was expecting to generate EBITDA of $220m, based on the forward strip price of Brent oil for 2023 as at 30 December, representing an average of $84 per barrel.
It was expecting to drill and complete three horizontal development wells and one water disposal well in the year, and complete two workovers of previously-drilled wells.
PetroTal said it would also invest in production infrastructure to support future development and production, including additional oil storage and water injection systems, the construction of a new west drilling platform, enabling future drilling until the end of 2025 and spending on erosion control for the company's site.
The company was anticipating after-tax free cash flow before all debt service of about $55m, net of an estimated $40m in corporate tax and related obligations.
It said it would become debt free in the first quarter of 2023 from the full payout of the remaining $80 million in bonds, and thereafter would maintain a minimum liquidity balance of $50m, distributing out available cash that exceeds that amount through a share buyback and dividend programme.
The board said it would allocate an estimated $7.5m in social trust payments this year, and another $10m in other general and administrative-related community projects.
"The approved 2023 budget allows PetroTal to return a large portion of its current market capitalisation to shareholders, while still delivering meaningful annual production growth in a tactical way," said president and chief executive officer Manuel Pablo Zuniga-Pflucker.
"The company's 2023 budget uses an average $84-per-barrel Brent oil forecast, and has the flexibility, should oil prices be lower, to adjust non-core components of its capital programme.
"Similarly, it allows for production flexibility in the event that oil export conditions improve during the year - this will ensure return of capital stability in 2023 and beyond."
At 1511 GMT, shares in PetroTal were down 3.53% in London at 41p.
Reporting by Josh White for Sharecast.com.
