PetroTal outperforms second quarter production guidance

(Sharecast News) - PetroTal said on Thursday that it outperformed its second quarter production guidance by 2% and its first quarter production by 21%, delivering 8,839 barrels of oil per day under constrained production conditions.
The AIM-traded firm said in its update that it generated a "significant" increase in revenue of $42.8m, or $53.20 per barrel, in the second quarter of 2021, compared to $32.4m or $41.91 per barrel in the first.

It achieved "record" netback and net operating income in the second quarter, of $36.88 per barrel and $29.7m, respectively.

Operating and direct transportation costs in the period totalled $10.8m, or $13.45 per barrel, compared to $10.6m or $13.78 per barrel in the first three months of the year.

PetroTal said it generated free cash flow before leverage and working capital adjustments of $2.4m in the second quarter and of $11.5m in the first half overall, which was a record for the company.

It reported a "strong" liquidity position, building total cash quarter-on-quarter to more than $79.5m as at 30 June, up 5% from 31 March, with $25.4m of total cash restricted.

Net income stood at $11.4m for the quarter, which the board said demonstrated an "efficient" operating cost structure, "attractive" capital base, and "supportive" fiscal terms.

All second quarter bond covenants were met with substantial headroom, with the firm exiting the period with a 0.41x leverage ratio, which included $40.6m of net debt calculated per the bond indenture.

It continued to de-risk its commodity price exposure through the quarter, bringing the total corporate hedge percentage to 44% for the remaining four months of 2021 forecast production, protecting prices of $60 per barrel of Brent crude.

Necessary modifications to the water disposal system were ongoing, with the field now able to actively dispose of around 80,000 barrels of water per day, and 100,000 barrels per day when the modifications are completed in September.

PetroTal reported that it achieved payback on well 7D about 2.5 months post-completion, while current constrained production stood at 8,513 barrels of oil per day, and unrestrained production expected to be restored in September.

PetroTal revised its second half production guidance as a result of a rescheduled and deferred drilling programme, stemming initially from the impact of Covid-19 protocols, and from the water disposal well drilling delays.

The 2021 average production range was now guided at 10,000 to 11,000 barrels of oil per day, from a previous 11,000 to 12,000 barrels per day.

Exit December production was revised down "slightly" to 17,000 to 18,000 barrels of oil per day, from 18,000 to 19,000 barrels per day, as the impact of the BN-10H well would not be incorporated until early in the 2022 financial year.

Its updated 2021 EBITDA guidance was for between $140m and $145m, up "materially" from the original $90m budget.

"We are pleased to share our strong second quarter results which demonstrate continued operational success and resilience in the face of challenges," said president and chief executive officer Manuel Pablo Zuniga-Pflucker.

"Our second quarter results were strong, contributing to record net operating income, netbacks, and free cash flow in the second quarter and first half, which we anticipate will continue in the second half.

"Despite the water disposal bottlenecks and drilling delays we slightly outperformed production guidance in the second quarter."

Zuniga-Pflucker said that, with the booster pump issue now fixed and new pipeline infrastructure being put in place, the company would be able to use its full water disposal capacity.

"Wells BN-8H and 9H, on production in the second half, are anticipated to lift PetroTal's production to record levels.

"We are also again reminded that our battle with Covid-19 is not to be underestimated, as we experienced some CFP-2 installation delays which, fortunately, should not impact the company's ability to bring on new oil production in the second half.

"The company continues to allocate appropriate capital to fighting the Covid-19 pandemic and make health and safety a top priority for all our employees and contractors."

At 1300 BST, shares in PetroTal Corporation were up 2.92% at 15.31p.