Calgary, Alberta and Houston, Texas – August 23, 2018—PetroTal Corp. (or the “Company”) (TSX-V: TAL) is pleased to provide a summary of its financial and operating results as of June 30, 2018.
Selected financial 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 the quarter ended June 30, 2018, which are available on SEDAR at www.sedar.com and the Company’s website at www.petrotalcorp.wpengine.com. All figures referred to in this press release are denominated in U.S. dollars.
2018 SECOND QUARTER HIGHLIGHTS
- Initiated oil production at the Bretaña field on June 1 to begin commissioning facilities
- Produced approximately 6,300 barrels of oil (“bbls”) during commissioning phase in June
- Produced approximately 24,700 bbls in July as expected under restricted choke
- Installation of full water handling facilities is ahead of schedule
- PetroTal has been qualified by Perupetro as a 100 percent working interest operator
The Company placed the Bretaña oil field online at approximately 1,000 bbl/d during the initial testing and commissioning phase. To date, the well has accumulated approximately 40,000 bbls with no sign of water produced from the aquifer. The oil is being sold at the local Iquitos refinery owned by PetroPeru. As part of the testing phase, the well is currently undergoing a pressure build up test to gather reservoir data. During this initial phase, the Company continues to produce the well under a choke that will reduce the risk of aquifer water production until water handling facilities are installed in the field.
During the testing phase, prior to Declaration of Commerciality, the company will record all production costs, royalties, and sales as part of capital expenditures. For this reason, any oil in the storage tanks will not be considered “revenues” until after the declaration of commerciality. Since testing started, the Company has realized an average oil price of $58.16, net of transportation.
Water injection pumps have arrived at the field and are being installed. Remaining water handling facilities, such as the desalter, originally scheduled to be ready by November, are now scheduled to arrive in September and be ready for operation in late October. Once the facilities are installed and commissioned, the well will be opened to produce at an expected rate of 2,000 and 2,500 bbl/d.
The Company plans to spud the first development well in the first quarter of 2019. As previously reported, this well will be drilled down to the Chonta formation to evaluate its oil potential, and then horizontally sidetracked into the main Vivian formation as an oil producer. The rig used to begin drilling in Bretaña is currently drilling for another operator and will be mobilized to the Bretaña field in December to begin the drilling campaign.
Earlier this month, Perupetro presented to the Company the certificates of qualification as the 100 percent working interest operator of Blocks 95, 107 and 133. The Supreme Decree authorizing Perupetro to execute the amended license contracts in respect of these blocks is expected by year-end 2018.
Manolo Zuniga, President and Chief Executive Officer stated “Our team continues to deliver ahead of schedule and we are pleased with the initial well test and early production thus far. Strong realized oil prices of over $58.00 plus our ability to barge directly to the refinery, which saves on pipeline tariffs, provides key cash to the Company at this stage.” Mr. Zuniga continued “with Perupetro providing the certificates of qualification, this sets the stage for PetroTal to grow for the foreseeable future.”
The following table summarizes key financial highlights associated with the Company’s financial performance for the second quarter ended June 30, 2018.
- Until the Company receives a declaration of commerciality, which is expected later this year, the Company will, in accordance with International Accounting Standards Rule 16, record all production costs, royalties and sales as capital expenditures rather than revenue. Any oil held in the storage tanks will also be recorded as capital expenditures.
- The past year has been transformative for the Company. The transactions that were completed had a significant impact on the comparability of the Company’s period over period results. See the Financial Statements and MD&A for further details.
ABOUT BRETANA FIELD
Oil in the Bretaña field was first discovered in the 1970’s and was subsequently re-discovered. Several wells have been drilled to delineate the field and recent seismic has de-risked the structure. The rediscovery well drilled in 2014 tested 18.5 degrees API oil from the Vivian formation. The Northern oil fields in Peru have produced over one billion barrels of oil, mostly from the Vivian formation. The Company acquired the assets in Peru on December 18, 2017. The Company is working to put the field on long-term test and begin production as early as Q4 2018.
PetroTal is a publicly-traded oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. The Company’s management team has significant experience in developing oil fields in Northern Peru and is led by an independent Board of Directors, focused on safely and cost effectively developing and exploiting the Bretaña oil field.
For further information, please contact:
|Executive Vice President and Chief Financial Officer
|T: (713) 609-9026
|President and Chief Executive Officer
|T : (713) 609-9101
READER ADVISORIES FORWARD-LOOKING STATEMENTS:
This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to the Company’s objectives; the Company’s capital program, capital budget, cash flow and proposed drilling, reactivation, water and other activities and the anticipated timing, costs and results of such activities; cost controls and savings; anticipated future production and revenue; future development and growth prospects; receipt of a declaration of commerciality. 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, including, but not limited to, expectations and assumptions concerning the ability of existing infrastructure to deliver production and the anticipated capital expenditures associated therewith, reservoir characteristics, recovery factor, exploration upside, prevailing commodity prices and the actual prices received for PetroTal’s products, the availability and performance of drilling rigs, facilities, pipelines, other oilfield services and skilled labour, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the accuracy of PetroTal’s geological interpretation of its drilling and land opportunities, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of new wells, the Company’s growth strategy, general economic conditions, availability of required equipment and services and prevailing commodity prices. 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. 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, 2017 and the MD&A 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.
References in this press release to production test rates, initial test production rates, and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for PetroTal. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the Company cautions that the test results should be considered to be preliminary.
FOFI DISCLOSURE: This press release contains future-oriented financial information and financial outlook information (collectively, “FOFI”) about PetroTal’s prospective results o f operations, which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this press release was made as of the date of this press release and was provided for the purpose of providing further information about PetroTal’s anticipated future business operations. PetroTal disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein. All FOFI contained in this press release complies with the requirements of Canadian securities legislation, including National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.