PetroTal Regulatory News (PTAL)

PetroTal announces First Quarter 2020 Financial and Operating Results

Average Q1 2020 oil production of 9,686 bopd

Calgary and Houston - July 10, 2020-PetroTal Corp. ("PetroTal" or the "Company") (TSX‐V: TAL and AIM: PTAL) is pleased to announce its financial and operating results for the three months ended March 31, 2020 ("Q1 2020").

Selected financial, reserves and operational information is outlined below and should be read in conjunction with the Company's unaudited consolidated financial statements ("Financial Statements") and management's discussion and analysis ("MD&A") for Q1 2020, which are available on SEDAR at www.sedar.com and the Company's website at www.petrotal-corp.com. Reserve numbers presented herein were derived from an independent reserves report (the "NSAI Report") prepared by Netherland, Sewell & Associates, Inc. ("NSAI") effective December 31, 2019. All amounts herein are in United States dollars ("US$") unless otherwise stated.

Q1 2020 highlights

The Company reached several key operational and financial achievements as described below:

Q1 2020 Operational Highlights

· Commenced drilling the BN 95-6H horizontal well (the "6H well") on February 17, 2020. The well reached a lateral length of 1,178 meters and was completed using autonomous inflow control device ("AICD") valves that restrict water inflow. The 6H well came online on April 10, 2020 producing approximately 5,750 barrels of oil per day ("bopd") initially, and achieved average production of approximately 4,500 bopd for the first 10 production days during April;

· The 6H well was completed on time and under the original $12.6 million budget;

· The Bretaña oil field reached new record quarterly production of 9,686 bopd and sales of 10,313 bopd. This represents a 25% increase from Q4 2019 production of 7,767 bopd;

· Completed commissioning of the enhanced central production facilities ("CPF-1") bringing overall oil production capacity to between 16,000 bopd and 18,000 bopd;

· Announced increases in all reserve categories following 2019 year-end reserves evaluation by NSAI:

o Proved ("1P") reserves of 21.5 million barrels ("mmbbl"), an increase of 20% (17.9 mmbbl at

year-end 2018);

o Proved plus Probable ("2P") reserves of 47.7 mmbbl, an increase of 21% (39.4 mmbbl at year

end 2018); and,

o Proved plus Probable and Possible ("3P") reserves of 84.8 mmbbl, an increase of 8% (78.7

mmbbl at year end 2018);

· In light of global market uncertainty, postponed the drilling of a second water disposal well, delayed completion of CPF-2 facilities, and postponed drilling of the BN 95-7H horizontal well.

Q1 2020 Financial Highlights

· Generated revenue of $41.8 million ($44.51/bbl) compared to $50.5 million ($57.71/bbl) in Q4 2019;

· Royalties to the Peruvian government were $1.8 million (4.3% of revenue) during Q1 2020 compared to $1.8 million (3.6% of revenue) for Q4 2019;

· Funds flow provided by operations was $15.1 million compared to $21.7 million in Q4 2019;

· Operating costs were $6.0 million ($6.42/bbl) for Q1 2020 consistent with $6.0 million ($6.91/bbl) for Q4 2019;

· Transportation costs, were $16.1 million ($17.18/bbl) for Q1 2020 increased from $14.3 million ($16.30/bbl) for Q4 2019, as a result of the new oil sales contract finalized in December 2019;

· The company had cash of $7.4 million at the end of Q1 2020 compared to $21.1 million at year-end 2019 and $17.8 million at the end of Q1 2019. Current cash (as at July 9, 2020) is $24 million;

· Net operating income was $17.8 million ($18.98/bbl) in Q1 2020 compared to net operating income of $28.4 million ($32.42/bbl) in Q4 2019; and,

· Resulting from the significant global oil price reduction, the Company had a contingent derivative liability of $40.8 million at March 31, 2020. The actual liability of the oil price difference determination is expected to be lower due to the projected improvement in oil prices when physical sales occur in Q3 and Q4 2020 (for reference, based on the average Brent oil price of approximately $40/bbl for June 2020, the contingent liability is approximately $25 million).

March 31, 2020 Subsequent Events

· On May 7, 2020, the health department of the Peruvian government issued a directive for COVID-19 prevention in certain high-risk areas. As a result of the directive:

o Petroperu temporarily shut down pipeline operations to comply;

o Operations at the Bretaña oil field were temporarily shut in due to storage capacity limitations. The Bretaña oil field was producing approximately 11,500 bopd prior to being shut in;

o PetroTal is coordinating with Petroperu to reopen the Bretaña oil field in July 2020;

o The Company deferred its planned capital expenditure for 2020;

o The oil field shutdown triggered significant reductions in operating and transportation costs; and,

o The Company proactively reduced its general and administrative costs, inclusive of an average 20% compensation reduction for management and directors.

· During May 2020, the Company received government-sponsored financial support related to the Covid-19 economic impact totaling $3.2 million. The Peruvian government provided $2.9 million (to be repaid over four years, with repayment commencing after one year for a three year period, and annual interest at 1.12%) and the US government provided $0.3 million under the Paycheck Protection Program (no repayment is required);

· On June 12, 2020, the Company announced that the contingent liability pertaining to the Brent oil price reduction had been structured into a three-year payment arrangement ("Arrangement") with Petroperu (the "Parties"):

o The amount of this contingent liability to Petroperu will be definitively determined when the security arrangements for PetroTal's obligations are finalized, expected to be by the end of July 2020. Based on current Brent oil prices, the liability is expected to be approximately $25 million;

o The Arrangement allows PetroTal to settle the obligations to Petroperu now while still allowing the Company to benefit from higher oil prices forecasted by the Brent forward strip pricing curve when the physical oil sales occur;

o The Parties have agreed to extend the one-year Oil Sales Contract to three years upon expiry of the current term on December 23, 2020;

o The Parties established a framework to ensure that future oil sales under the Oil Sales Contract have adequate hedge protection to avoid future downside losses; and,

o The Parties have agreed to further amendments to the Oil Sales Contract for lower pipeline tariffs and fees during the period of low oil prices;

· On June 18, 2020, the Company completed an equity issue, raising gross proceeds of approximately $18 million. The Company intends to use the net proceeds for the ongoing development of the Bretaña oilfield, to enhance working capital and towards the reopening of the oilfield;

· On June 25, 2020, PetroTal entered into a financial swap for 460,000 barrels of oil to cover the upcoming sale by Petroperu at the Bayovar port. The ICE Brent crude oil swap is priced at $40.58 per bbl and settles on July 17, 2020, using the July 1-17,2020 average ICE Brent crude oil price; and,

· The Company is confident in its ability to ramp up activity at Bretaña, ahead of the planned reopening in July 2020, to ensure the oil field will return to normal operating status.

The following table summarizes key financial and operating highlights associated with the Company's performance for the three months ended March 31, 2020, December 31, 2019 and March 31, 2019. Note that the commodity price derivative is a non-cash item. See the Financial Statements and MD&A for further details.

(1) On June 12, 2020, the Company announced that this contingent liability will be paid over a three-year period.

Based on current oil prices, the overall amount has been reduced to approximately $25 million.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

"Despite the challenging macro backdrop, PetroTal achieved a great deal during the first quarter of 2020. The Company successfully drilled the 6H well on time and under the original budget. To date, the well has performed in line with expectations, producing approximately 4,500 bopd for the first 10 days in April 2020.

Post-period end, we chose to take decisive action to preserve the Company's liquidity position and I am pleased with the results we have achieved to date. We remain on track to restart production at Bretaña later this month and I look forward to updating all our stakeholders as we look to resume normal operating conditions in due course."

ABOUT PETROTAL

PetroTal is a publicly‐traded, dual‐quoted (TSXV: TAL and AIM: PTAL) oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. PetroTal's flagship asset is its 100% working interest in Bretaña oil field in Peru's Block 95 where oil production was initiated in June 2018, and in early 2020 became the second largest crude oil producer in Peru. Additionally, the Company has large exploration prospects and is engaged in finding a partner to drill the Osheki prospect in Block 107. The Company's management team has significant experience in developing and exploring for oil in Northern Peru and is led by a Board of Directors that is focused on safely and cost effectively developing the Bretaña oil field.

For further information, please see the Company's website at www.petrotal-corp.com, the Company's filed documents at www.sedar.com, or contact:

Douglas Urch

Executive Vice President and Chief Financial Officer

Durch@PetroTal-Corp.com

T: (713) 609-9101

Manolo Pablo Zuniga- Pflucker

President and Chief Executive Officer

Mzuniga@PetroTal-Corp.com

T: (713) 609-9101

Celicourt Communications

Mark Antelme / Jimmy Lea

petrotal@celicourt.uk

T : 44 (0) 208 434 2643

Strand Hanson Limited (Nominated & Financial Adviser)

James Spinney / Ritchie Balmer

T: 44 (0) 207 409 3494

Stifel Nicolaus Europe Limited (Joint Broker)

Callum Stewart / Simon Mensley / Ashton Clanfield

Tel: +44 (0) 20 7710 7600

Auctus Advisors LLP (Joint Broker)

Jonathan Wright / Rupert Holdsworth Hunt / Harry Baker

T: +44 (0) 7711 627449

READER ADVISORIES

FORWARD‐LOOKING STATEMENTS: This press release contains certain statements that may be deemed to be forward‐looking statements.  Such statements relate to possible future events, including, but not limited to: PetroTal's business strategy, objectives, strength and focus; the Company's ability to operate in accordance with developing public health efforts to contain COVID-19; the timing of filing the Interim Filings. All statements other than statements of historical fact may be forward‐looking statements. Forward‐ looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "estimate", "potential", "will", "should", "continue", "may", "objective" and similar expressions. The forward‐looking statements are based on certain key expectations and assumptions made by the Company. Although the Company believes that the expectations and assumptions on which the forward‐looking statements are based are reasonable, undue reliance should not be placed on the forward‐looking statements because the Company can give no assurance that they will prove to be correct. Since forward‐looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties.  Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e. g. , operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company's production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.  In addition, the Company cautions that current global uncertainty with respect to the spread of the COVID-19 virus and its effect on the broader global economy may have a significant negative effect on the Company. While the precise impact of the COVID-19 virus on the Company remains unknown, rapid spread of the COVID-19 virus may continue to have a material adverse effect on global economic activity, and may continue to result in volatility and disruption to global supply chains, operations, mobility of people and the financial markets, which could affect interest rates, credit ratings, credit risk, inflation, business, financial conditions, results of operations and other factors relevant to the Company. Please refer to the risk factors identified in the Company's annual information form and management's discussion and analysis for the year ended December 31, 2019 which are available on SEDAR at www.sedar.com. The forward‐looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward‐looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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