(Alliance News) - PetroTal Corp said Friday it has entered into an arrangement with Peruvian state-owned petroleum firm Petroperu SA, which will result in the company's liability to Petroperu in relation to recent oil price movement being payable over a three-year period.
This is instead of the liability being paid at the point of sale of the oil.
The new arrangement was structured to reduce the impact of the recent oil price declines on PetroTal's cash flows and forward plans. The liability will be paid over an annual interest rate of 6.5%
In addition, PetroTal announced an extension to the oil sales contract between it and Petroperu signed in December from one year to three years on enhanced terms.
In December, the contract allowed PetroTal to ship all oil in the excess of its 1,200 barrels per day - which is a part of agreement with the Iquitos refinery - through the North Peruvian oil pipeline, which is owned by Petroperu.
To assist with this, PetroTal intends to raise GBP14.1 million through a placing, which will go towards the ongoing development of the Bretana oilfield in Peru, in connection with its proposed reopening which is set to occur in July.
In addition, the proceeds will lead to a stronger balance sheet, allowing PetroTal will be able to finalise a credit facility for daily operations and structure derivatives to minimise the impact of furture oil price fluctuations.
The Peruvian exploration & production firm will issue 141.2 million units - each of which is made up of one share and one half of a warrant - at a price of 10 pence per unit.
Shares in PetroTal were down 0.5% at 11.19 pence on Friday afternoon in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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PetroTal (PTAL)