PetroTal Completes Third Horizontal Well at the Bretana Oil Field

Achieves record average quarterly production of 9,688 bopd in Q1 2020

Prudent management of cash resources and dividend suspension

Calgary, Alberta and Houston, Texas–(Newsfile Corp. – April 21, 2020) – PetroTal Corp. (TSX: TAL) (AIM: PTAL) (“PetroTal” or the “Company“) is pleased to provide an update on its operations and production at the Bretana oil field in Block 95 in Peru (100% working interest), together with a wider Company financing update. All monetary amounts in this release are in United States dollars.


  • The BN 95-6H horizontal well (“6H”) came online on April 10, 2020 and is currently producing approximately 5,750 barrels of oil per day (“bopd”), in line with management’s expectations. During these ten days the well has achieved average production of approximately 4,500 bopd.
  • The 6H well was completed on time and under the original $12.6 million budget.
  • The 6H well reached a lateral length of 1,178 meters and has been completed using autonomous inflow control device (“AICD”) valves that restrict water inflow, to help maximize oil production.
  • The Bretana oil field reached new record quarterly production of approximately 9,688 bopd and sales of 9,937 bopd during the first quarter of 2020.
  • Completed commissioning of the enhanced central production facilities (“CPF-1”), bring overall oil production capacity to between 16,000 bopd and 18,000 bopd.
  • In order to preserve liquidity, the Company will postpone drilling the water disposal well that was scheduled to spud after 6H and, based on the enhanced CPF-1 production capacity, also delay completion of the CPF-2 facilities, reducing the Company’s overall 2020 capital expenditure budget by 33% to $66 million.
  • In light of global market uncertainty, and to further conserve cash, the Company will postpone drilling the BN 95-7H horizontal well until at least July 2020, instead of the previously announced mid-May spud date.
  • As of March 31, 2020, the Company has $7.3 million of cash on hand, which is prior to receipt of approximately $7.5 million, from net proceeds of March oil sales.

Further Information

PetroTal has successfully completed the 6H well, the Company’s third horizontal well in the Bretana oil field, which is currently producing 5,750 bopd, in line with management’s expectations. The well reached the target Vivian formation at a vertical depth of 2,698 meters. The 1,178-meter horizontal section inside the main productive oil reservoir makes the 6H well the longest horizontal well drilled to date in Peru. Based on the success in the BN 95-4H (“4H”) and BN 95-5H (“5H”) wells, the 6H well completion utilizes additional AICD valves to maximize oil production. The 6H well was drilled to the west of 5H, slightly downdip of the crest of the structure, at a similar depth to the 4H. The well cost was approximately $12.5 million, under budget by approximately $0.15 million.

The Company has postponed drilling the second water disposal well, and now expects to spud the next oil well in July 2020, at the earliest, with the drill rig now on standby status at negotiated reduced rates. Decisions on additional 2020 capital activity, including drilling additional oil wells, will be made in due course. PetroTal will look to preserve capital by deferring certain projects, such as drilling the previously mentioned water disposal well and finalizing the CPF-2, as required. The Company has discretion over when to undertake all major capital projects.

Bretana Oilfield Operations and Operational Netbacks

The safety of the Company’s workforce in Peru is of the utmost importance, consequently, PetroTal has proactively implemented measures to prevent the occurrence of COVID-19 at the Bretana oil field, in conjunction with employees and the nearby community. These measures include: the restricted movement of people and goods; increased hygiene and cleanliness; social distancing and remote working; deferring some projects to reduce the workforce on site; working with the surrounding communities and developing contingency plans for potential disruptions.

As announced on March 10, 2020, the Company expected to achieve operational netbacks of $11 per barrel with its benchmark Brent priced at $30 per barrel. To date, the Company has achieved netbacks of $12 per barrel and continues to engage with all its contractors to further optimize its cost structure. PetroTal will now look to achieve netbacks of $13 per barrel, equivalent to 43% at $30 Brent.

Because of the strict safety and health measures and relatively high netbacks under the current Brent pricing environment, the Bretana oilfield is the only oil field still producing in the Maranon basin of Peru.

Financial Update

The Company continues to prudently manage its cash resources. In order to increase its financial flexibility, PetroTal is in discussions to establish a credit facility either based on the increased year-end 2019 reserve valuation, or from the recently completed production facilities investment. Having access to such a credit facility will strengthen PetroTal’s liquidity and allow it to continue to progress the majority of its development plans. The Company has additional flexibility to further reduce its cost structure as needed. Such measures include further deferrals of non-essential capital expenditures, seeking cost reductions from suppliers and extension of payment terms. Taking these steps will help to ensure the sustenance of resource operations in Peru, for all parties.

Dividend Suspension

Due to the financial impact of the global oil price disruption, the Company has decided to suspend declaration and payment of all dividends in order to manage cash for business operations. The Board of Directors will evaluate this decision on a semi-annual basis going forward and expects to reinstate its dividend policy when appropriate.

Manolo Zuniga, President and Chief Executive Officer, commented:

“PetroTal is pleased to announce another strong drilling result, with 6H being our third horizontal well drilled on time and under budget. The 6H well complements the performance of the 4H and 5H wells, and over the next few months, PetroTal will focus on optimizing production from our seven producing oil wells and preserving the Company’s capital position. PetroTal is fortunate to have loyal and understanding partners amongst its many contractors and related Peruvian government ministries and agencies and we are pleased to have already achieved an increase in netbacks to $12 a barrel.

In closing, I want to sincerely commend the entire PetroTal team for their ongoing determination to deal with the COVID-19 pandemic and I look forward to keeping all of our stakeholders apprised of developments over the coming months.”

Qualified Person’s Statement

Estuardo Alvarez-Calderon, the Company’s Vice President, Exploration and Development, who has over 35 years of relevant experience in the oil industry, has approved the technical information contained in this announcement. Mr. Alvarez-Calderon received a Bachelor of Science degree in Geology from the University of Texas at Austin and is registered on the Texas Board of Professional Geoscientists.


PetroTal is a publicly‐traded, dual‐quoted (TSX: 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 the Bretana oil field in Peru’s Block 95 where oil production was initiated in June 2018, six months after acquisition. 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 Bretana oil field.

For further information, please see the Company’s website at, the Company’s filed documents at, or contact:

Douglas Urch
Executive Vice President and Chief Financial Officer
T: (713) 609-9101

Manolo Zuniga
President and Chief Executive Officer
T: (713) 609-9101

Celicourt Communications
Mark Antelme / Jimmy Lea
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

Numis Securities Limited (Joint Broker)
John Prior / Emily Morris
T: +44 (0) 207 260 1000


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; drilling, completion, commissioning and workover activities of oil producing and water disposal wells and facilities and the results and timing of such activities; the use of AICD valves to optimize well productivity; the ability of the Company to achieve drilling success consistent with management’s expectations; anticipated future production and production capacity; the 2020 capital program; engaging a partner to drill the Osheki prospect; the suspension of the Company’s dividend and the possible future reinstatement of a dividend; future development and growth prospects; and the Company’s ability to remain operating in accordance with developing public health efforts to contain COVID-19. 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 and availability of required equipment and services. 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 for the year ended December 31, 2018 and management’s discussion and analysis for the three and nine months ended September 30, 2019 which are available on SEDAR at 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.

OIL AND GAS INFORMATION: 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 of operations, production, production capacity, capital budget and capital activity, cash flow, growth and components thereof, all of 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 approved by management as of the date of this press release and was included 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 Canadian Securities Administrators’ 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.

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