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(Alliance News) - PetroTal Corp on Tuesday expressed confidence in managing finances amid a crash in the oil price, while operationally a new well is on budget and on time.
Shares were 33% higher on Tuesday in London at 14.60 pence each. This follows a slip on Monday, however, when shares fell towards 10.00p.
The oil price has slumped towards the USD30 level, though did recover slightly on Tuesday, after Saudi Arabia and Russia failed to agree output cuts last week.
PetroTal, which operates the Bretana oil field onshore Peru, said some of its contracts allow the firm to negotiate lower fees and tariffs to stabilise netbacks if the oil price drops below USD50 per barrel.
The firm also said each barrel of oil contributes towards all costs and investments. The firm has no debt or interest expenses, and no concerns over loan covenants.
Its current USD99 million capital expenditure programme is second-half weighted, PetroTal continued, and this will be monitored.
Turning to current operations in Peru, Calgary-based PetroTal said drilling of the 6H well at Bretana is going well. It expects the well to be producing before the middle of April 2020.
Chief Executive Manolo Zuniga said: "PetroTal remains confident in its ability to manage oil price fluctuations through a disciplined financial approach. Our assessments show that, based on current projections and pricing environment, the company will remain cash flow positive this year.
"Importantly, if the global oil price retraction continues for an extended period, PetroTal has the flexibility to defer capital investment. At this stage, our 2020 oil production guidance remains in effect and the expected success of the 6H well will contribute significantly towards our target."
"On behalf of our valued shareholders, please be assured that we'll make the right decisions, at the right time, to ensure we maintain the financial flexibility to be cash flow positive. I would like to sincerely thank our team for their continued laser-focus on all costing aspects, as well as our contractors for their ongoing support of PetroTal's financial resources," Zuniga added.
By George Collard; georgecollard@alliancenews.com
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