PetroTal reports dry season challenges in third quarter

The AIM-traded company recorded an average of 11,553 barrels of oil per day in sales and 10,909 daily barrels in production.

Despite the challenges, PetroTal said it ended the quarter in a solid financial position, with a total cash balance of $113m, including $94m in unrestricted cash.

That represented a 22% increase from the end of the second quarter.

PetroTal announced a cash dividend of two cents per share, to be paid on 15 December with a record date of 30 November.

The board said that represented a 15% annualised yield based on the current share price and added that it planned to continue its share buyback programme with around $1m per month allocated for the fourth quarter.

On the operational front, PetroTal said it completed its latest well, 15H, in early June, achieving an average production rate of 7,203 barrels of oil per day during its first 30 days online.

However, the well was temporarily shut in in mid-July due to production constraints caused by low river levels.

It was briefly reopened last month, averaging 5,000 daily barrels, with full reopening expected by the last week of November as river levels rise.

The firm also installed the new west drilling platform, the ‘L2 West Platform’, which would be used for future oil well drilling.

Regarding financial performance, PetroTal reported EBITDA and free funds flow of $42m and $36.9m during the third quarter.

That was compared to $70m and $37.7m in the second quarter.

Net income for the third quarter was $25.4m, or three cents per share, compared to $46.6m or five cents per share in the second quarter.

During the quarter, PetroTal paid a dividend of 2.5 cents per share and repurchased 5.6 million shares, totalling $26.1m in capital returned to shareholders, representing about 5% of its market capitalisation as of 30 September.

Finally, PetroTal strengthened its board by adding two new independent directors, Felipe Arbelaez Hoyos and Emily Morris.

“Despite a challenging third quarter from an oil sales perspective due to extremely low river levels, the company delivered strong cash flows for the quarter, driven by robust Brent prices and prudent spending by the management team,” said president and chief executive officer Manuel Pablo Zuniga-Pflucker.

“This has allowed the company to declare a cash dividend of two cents per common share.

“With river levels now rising, we expect to be producing approximately 20,000 barrels of oil per day consistently by the last week of November.”

Zuniga-Pflucker said that looking ahead to the fourth quarter, management was “very focussed” on optimising existing logistics and unlocking new commercial sales routes, starting with its 100,000-barrel oil sales pilot through the Ecuador pipeline.

“If successful, and with some added facilities, we estimate this route could carry up to 5,000 barrels of oil per day, significantly limiting the impact of future dry seasons.

“In addition, the commercial team has completed a significant Brazilian export milestone by unloading directly from barge to ship without requiring a terminal to unload the crude, bypassing that potential bottleneck.

“As we contemplate future sales routes in our 2024 budget planning, including the route via Yurimaguas that should be ready next year, we are still expecting an ONP sales option in 2024 as Petroperu continues to work through their financial and operational challenges.”

At 1241 GMT, shares in PetroTal were up 1.56% at 44.18p.

Reporting by Josh White for Sharecast.com.