Malcy Says13 Nov 2025 18:14
'This is actually a good set of quarterly results as good production of 18,414 b/d stems from a strong drilling programme last year, favourable river conditions and good reservoir management which has led to positive EBITDA and importantly strong free funds flow. Total cash of $141.5m reflects this and as management always has, indicates that the desire for sensible cash preservation is at the forefront of the board’s mind.
But, as the dividend announcement below shows, the payment has been suspended as a matter of prudence as the company looks into its operational performance over the next year, along with a careful scrutiny over costs and specific expenses. This has been on the back of a temporary, short term output fall which is down to the rig availability and not because of any reserves shortfall.
This detailed analysis of the 2026 budget has led to a wise look at netbacks, at $60 oil they are down and it is certainly wise to ensure that drilling is tightly controlled as to costs, both in terms of workover opportunities and the planning for a new programme over Bretana and the rest of the portfolio. This will include the erosion control expenditure which is ongoing but will eventually end and leave the estate in a stronger position.
But there are plenty of good things to look forward to as PetroTal looks ahead to 2026, primarily that the reserves in the portfolio, clearly at Bretana and block 131 are still very good and a tight grip on matters such as water production will be key. Also there appears to be scope to tighten up margins on transport and with multi-optionality with regard to offtake partners netbacks could be improved here.
Overall I am satisfied that the management team, whom I know to be of the highest possible class, from operations to finance and particularly from the non-exec advice available which I consider to be absolutely top notch are doing a good, if difficult job.
I am convinced that it has been a sensible, pragmatic decision to postpone the dividend whilst focusing on a return to production growth next year. This policy of concentrating on mid to long term growth whilst preserving short term liquidity in order to ‘evaluate the optimal development plan for the Bretana field’ is understandable.
The shares have understandably taken a hit today, we have all I suspect been surprised but I still believe that with world class assets, a prudent and interactive board who are not shy to make difficult decisions it is not time to throw the baby out with the bath water, easy to say I know but PetroTal stays in the Bucket list for all the above long-term reasons.'
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