PetroTal reports record production, net income in first quarter

PetroTal reported record quarterly production on Thursday, of 11,746 barrels of oil per day in its first quarter, and record quarterly sales of 15,518 barrels per day, up a respective 60% and 80% year-on-year.

The AIM-traded firm said it represented its sixth straight quarter of growth, despite production being either constrained or completely shut down during six weeks of the period due to “social protests”.

Based on the 67 production days in the three months ended 31 March, average production was 15,778 barrels per day.

The company completed well 10H on 30 January - Peru's longest ever horizontal well - with an all-in cost of $11.5m, and which averaged 10,500 barrels per day over its first 10 days, accumulating 251,320 barrels in February, delivering a pay-back of four weeks.

PetroTal also achieved a new daily company production record of 21,000 barrels per day twice in February.

It received Ministry approval for its central processing facility, CPF-2, to operate Bretana to its maximum capacity range of 24,000 to 26,000 barrels per day, allowing PetroTal “significant” running room for development.

The firm said it generated record net operating income and EBITDA of $64.2m (£50.97m) and $58.7m, respectively, more than tripling the equivalent amounts from the first quarter of 2021.

It also generated record free cash flow of $41.2m before changes in non-cash working capital and debt service, providing it with a liquidity buffer to navigate the downtime in March due to social unrest, and to repay $20m of its long-term debt on 1 April.

The company said it invested $17.5m in capital expenditures, which was $18.5m under-budget due to drilling delays from the March social protests.

Of the $17.5m invested, about 65% was related to drilling activities, and the rest was mostly spent on infrastructure projects.

On 22 Februar, PetroTal announced a $120m fully-funded capital programme that the board said could potentially generate up to $230m of free cash flow in 2022, allowing it the option to redeem the remaining $80m in bonds early and implement its strategy of returning capital to shareholders in the fourth quarter of 2022 or the first three months of 2023, subject to board approval and economic viability.

“PetroTal was able to pivot through social downtime challenges extremely well while still showing quarter-over-quarter production growth and a revised 2022 budget that shareholders should be very excited about considering the drilling delays encountered in March,” said president and chief executive officer Manuel Pablo Zuniga-Pflucker.

“The social trust working table has been formed, met initially on 3 May, and ongoing meetings will continue to advance the formal policy and procedure formation for the social trust.

“The positive response for this initiative has been overwhelming and we are excited about formalising additional items as the year progresses.”

At 1121 BST, shares in PetroTal Corp. were up 4.76% at 41.8p.

Reporting by Josh White at Sharecast.com.