PetroTal reports solid quarterly progress

Peru-focussed oil producer PetroTal reported strong second-quarter financial and operational results on Thursday, reflecting robust production, significant cash flow generation, and ongoing strategic growth.

The AIM-traded company said it achieved an average production of 18,290 barrels of oil per day and sales of 18,050 daily barrels during the quarter, despite a brief river blockade that temporarily affected operations.

Financially, PetroTal delivered a solid performance with EBITDA reaching $69.5m, equating to $42.31 per barrel.

The firm also generated $36.3m in free funds flow, or $22.11 per barrel, underscoring its operational efficiency.

PetroTal exited the quarter with a solid cash position, holding $95.9m in total cash, of which $84.1m was unrestricted.

Additionally, the company had over $93.2m in receivables due after 30 June, which further strengthened its financial standing.

In line with its commitment to shareholder returns, PetroTal declared a dividend of $0.015 per share, payable on 13 September.

During the second quarter, the company paid out dividends and repurchased 1.2 million common shares, returning around $15m to shareholders, representing about 3% of its market capitalisation as of 30 June.

That reflected PetroTal’s continued focus on delivering value to its investors.

Operationally, PetroTal maintained impressive cost control, keeping lifting and variable transportation costs under $8.00 per barrel.

The board said that cost management contributed to a near 78% net operating income margin during the quarter.

Its capital expenditure totalled $38.9m, with significant investment directed towards drilling wells 18H and 19H.

Notably, well 19H averaged over 6,860 barrels of oil per day in its initial 30 days, ranking it among the company’s top-performing wells and achieving payout in approximately 40 days.

Strategically, PetroTal expanded its footprint by signing an acquisition agreement in early May to acquire a 100% working interest in Peru's Block 131, including the producing Los Angeles field.

The purchase price was $5m, with the transaction effective from 1 January 2024.

PetroTal said it also made progress on its Oleoducto de Crudos Pesados Oil Pipeline (OCP) project, securing all necessary regulatory approvals.

Oil loading into barges started in mid-July, with the final sale of pilot oil expected in October.

PetroTal’s financial performance was further highlighted by a strong net income of $35.4m, or four cents per share, for the quarter.

“Our second-quarter operating and financial results were robust, and the third and fourth quarter are now underpinned by strong drilling results this quarter,” said president and chief executive officer Manuel Pablo Zuniga-Pflucker.

“The 19H well was initially producing in excess of 8,000 barrels of oil per day despite being designed with a shorter horizontal section compared to previous drills and has now averaged over 6,800 barrels per day over the last 30 days.

“In addition, we are extremely excited about our formal route activation through the OCP.”

Zuniga-Pflucker said that having completed all the regulatory approvals, the company was now in a position to further diversify its oil sales routes and to allow for offtake optionality during the dry season.

“Activating additional routes to market is a priority for the company, and we look forward to sending further updates in the fall of 2024.

“We are expecting to close the Block 131 acquisition later this year becoming the company's first diversified production stream with the expectation of significantly increasing its light oil production profile in 2025.”

At 1226 BST, shares in PetroTal were up 2.9% at 40.24p.

Reporting by Josh White for Sharecast.com.