PetroTal makes solid development progress in first quarter

PetroTal updated the market on its operations in its first quarter on Wednesday, reporting that it had started its 2021 drilling program by spudding the first well, 7D, on 29 March, with completion expected in the first week of May.

The AIM-traded firm said it had successfully completed the workover of well 4H on time and under budget, and had continued the installation of expanded production facilities, which had arrived at the field, with start-up dates finalised.

It also achieved first quarter exit production of 8,275 barrels of oil per day, with production averaging about 7,300 barrels per day through the period.

Following completion of the 7D well, the company said it would drill the second water disposal well, 3WD, on the western flank of the structure, adding 50,000 barrels per day of water disposal capacity.

Following completion of that well, it said it would then drill four development horizontal oil wells in the second half of 2021.

Cash liquidity at period end totalled around $76m, inclusive of an unrestricted balance of $53m, with $23m restricted for acquisitions and commodity price hedging.

In addition, future Petroperu true-up payments of around $36m to PetroTal were expected, which the board said would “significantly enhance” its cash flow profile for the year compared to budget.

“Due to an unprecedented decrease in world commodity prices, the impact of Covid-19, and government related social issues, it has been over a year since our team was drilling for growth and we are very happy to be back doing what we do best for our stakeholders,” said president and chief executive officer Manuel Pablo Zuniga-Pflucker.

“I am also very encouraged that considering the deferral of drilling, required maintenance activities, and natural field declines, our production levels remain strong as base oil production declines have performed as expected.”

Zuniga-Pflucker said the successful workover of the 4H well was a “valuable operational test” that, as a result of the higher production levels and revised expected ultimate recovery, “set the stage” for PetroTal to do the same on other oil wells at the appropriate time.

“With our strong current liquidity position, approximately $36m of unbudgeted true-up revenue coming in 2021, and a fully-funded capital program, I anticipate an exciting growth trajectory for our company over the coming years.”

At 1530 BST, shares in PetroTal were up 1.41% at 18p.