PetroTal upbeat on positive first quarter

PetroTal reported positive first-quarter performance in an update on Thursday, with a 21% increase in average quarterly sales, reaching 12,618 barrels of oil per day.

The AIM-traded firm said it achieved record sales in March, with more than 660,000 barrels of oil sold through Brazil and to the Iquitos refinery.

During the quarter, PetroTal successfully repaid the remaining $80m in corporate bonds, which the board said set the stage for a dividend and share buyback programme set to start in the second quarter.

The company said it was planning to reinstate a return-of-capital programme, including a quarterly eligible dividend of 1.5 cents per share payable in June.

Based on a trading price of 60 cents per share, that would represent an annualised yield of 10%.

Additionally, PetroTal said it intended to initiate a normal course issuer bid (NCIB) share buyback programme in the second quarter, subject to approval by the Toronto Stock Exchange (TSX).

Looking at its financial performance, PetroTal generated $53.5m, or 47.12 per barrel, of net operating income, and $47.9m, or 42.23 per barrel, of EBITDA during the first quarter.

The board said those figures reflected an average increase of 10.5% in net operating income and EBITDA compared to the previous quarter, primarily driven by higher sales volumes.

PetroTal also achieved a number of operational milestones, having negotiated an upsized barging fleet in collaboration with an oil trading company handling Bretana oil exports through Brazil.

The agreement granted PetroTal access to more than 1.5 million barrels of barging capacity, making for a 25% increase from its previous capacity of 1.2 million barrels.

Additionally, well 14H was completed on 27 March, and had been producing oil at an average constrained rate of 2,880 barrels per day since then, aligning with expectations.

Furthermore, PetroTal finalised the construction of a fourth water disposal well in late January.

The company said the new well would enhance its disposal capacity, allowing it to handle more than 150,000 barrels of water per day when fully integrated into the field disposal system.

Closing the first quarter, PetroTal reported a total cash balance of $71.6m and a net surplus of $71.1m.

“I am pleased to report that the company has achieved production in excess of 20,000 barrels of oil per day for over 74 days since late-February,” said president and chief executive officer Manuel Pablo Zuniga-Pflucker.

“The first quarter was transformational for our business, as we repaid our corporate bonds in full, reinitiated a material and rewarding return of capital program, and upsized the barging fleet.”

Zuniga-Pflucker said that with the recent permit approval of the L2 West Platform, the firm could now drill for more than two years ahead, allowing for increasing production levels to be achieved.

“Our value proposition is very clear - we can deliver both material production growth per share and a significant free cash flow yield, instead of having to prioritise one over the other.”

At 1200 BST, shares in PetroTal Corporation were up 2.77% in London, at 44.45p.

Reporting by Josh White for Sharecast.com.