PetroTal Announces Q3 2024 Operations and Liquidity Update

PetroTal release

Calgary, Alberta and Houston, Texas–(Newsfile Corp. – October 8, 2024) – PetroTal Corp. (TSX: TAL) (AIM: PTAL) (OTCQX: PTALF) (“PetroTal” or the “Company“) is pleased to provide the following operational and financial update. All amounts are in US dollars unless stated otherwise.

Key Highlights

• Q3 production averages 15,160 barrels of oil per day (bopd), a 39% increase on Q3 2023

• 2024 annual production on track to meet top end of guidance range

• Total cash of $133 million as of September 30, 2024, an 18% increase on Q3 2023

• Well 20H achieves initial production rates over 5,300 bopd

• President of Peru grants Supreme Decree for transfer of Block 131 to PetroTal

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

“I am pleased to report that PetroTal’s production exceeded expectations in Q3 2024. Our operations and logistics teams have done an outstanding job of managing record low river levels, which have impacted our ability to export crude through the Brazil route in recent weeks. We are nearing the end of dry season in the coming weeks and remain optimistic that production should return to capacity by the middle of November.

With $133 million of cash in reserve, PetroTal’s liquidity remains healthy, despite a reduction in oil prices over the month of September. We are committed to a capital returns policy that includes a stable dividend, balanced with the advancement of our key development initiatives. With that in mind, the budgeting process for our 2025 capital program is well advanced, and we look forward to updating the market on our future development program at the appropriate time.”

Q3 2024 Production

PetroTal produced 15,160 bopd in Q3 2024, above previous guidance of 13,000 bopd. As is to be expected during the local dry season, production declined 17% relative to the prior quarter (Q2 2024: 18,290 bopd); however, production increased substantially (39%) compared to the same period last year (Q3 2023: 10,909 bopd). Drought conditions have contributed to record low river levels in Peru’s Loreto region in 2024, but PetroTal has consistently worked to improve its logistics capabilities and was able to maximize barge fleet capacity during the quarter. Year to date, through September 30, 2024, the Company has produced approximately 17,800 bopd, slightly above the full year production guidance range (FY 2024: 16,500 to 17,500 bopd). Production has averaged approximately 10,700 bopd during the first week of October.

Well 20H Drilling & Completion Update

The 20H well at Bretaña, which was spud on July 26, was completed on September 23. As previously announced on September 3, PetroTal decided to jointly complete this well in both the Upper (VS1) and Main (VS2) Vivian sand units. In response to low river levels, which have constrained the Company’s ability to store and export crude, PetroTal has not been producing the well continuously; oil production from the 20H well achieved a peak daily date of 5,357 bopd on October 3, while production has averaged 3,120 bopd over the six days it has been onstream. PetroTal will continue to manage production from new wells in response to river levels, with a view to maximizing total field output throughout the coming rainy season. The 20H well was drilled and completed on time and budget, at a cost of approximately $15.5 million.

PetroTal commenced drilling well 21H at Bretaña on September 25, 2024. This well is expected to be completed by mid-November, at a total cost of $14 million. Following this well, PetroTal plans to drill and complete wells 22H and 23H, before releasing the rig in Q1 2025.

Cash and Liquidity Update

PetroTal maintained a strong liquidity position throughout Q3 2024, exiting the quarter with a total cash position of approximately $133 million, of which of $121 million was unrestricted. This compares to total cash of $96 million at the end of Q2 2024, and $113 million at the same time last year. PetroTal ended the quarter with accounts payable and receivable of $81 million and $55 million, respectively.

During the quarter, PetroTal entered into a hedge agreement for an average of 172,000 barrels per month through August 2025. The costless collars have a floor price of $65.00/bbl and a ceiling of $84.25/bbl, with a cap of $104.25/bbl.

Pursuant to its ongoing share buyback program, PetroTal repurchased 1.0 million shares in Q3 2024, at an average price of US$0.51/share. The Company also paid a dividend of $13.7 million (US$0.015/share) on September 13, 2024, related to Q2 2024 operations.

Block 131 (CESPA) Acquisition Update

On October 2, 2024, the President of Peru signed a Supreme Decree allowing for the amendment of the hydrocarbon exploration and production license for Block 131 in Peru. As previously announced on May 7, 2024, PetroTal reached a definitive agreement to acquire a 100% working interest in Block 131 through the acquisition of CEPSA Peruana, S.A.C. The Supreme Decree represents the last major regulatory hurdle in the transfer of this asset to PetroTal. The Parties now await the renewal of an investment certificate from the Peruvian tax authority, expected within the next 30 business days, at which point the transaction is expected to close.

Ecuador Export Pilot

As disclosed previously, PetroTal initiated a pilot shipment of Bretaña crude to Ecuador’s OCP pipeline in mid-July 2024. While one barge was ultimately successful in delivering its cargo to Puerto Providencia, near the head of the OCP pipeline, five barges were turned back as the convoy encountered unseasonably low river levels. PetroTal remains committed to developing safe, cost-effective options for its crude oil exports, and will continue to evaluate the commercial viability of the OCP route against other available options. The Company anticipates final sale of the Ecuador pilot crude will occur in October.

Social Update

As of September 2024, PetroTal’s total contributions to the Social Trust Fund amounted to nearly $20 million. Distributions from the Fund will be used to finance projects that benefit the citizens of Puinahua District, where the Bretaña Norte field is located. For example, a bidding process is currently underway to select a contractor for the establishment of internet connectivity across the entire Puinahua District. This project was prioritized by the fund’s Board of Directors and its advisory committee. PetroTal was also recently recognized as a “Company that Transforms / Empresas que Transforman” by IPAE Accion Empresarial – a private, non-profit business association in Peru. The distinction is a response to PetroTal’s ongoing efforts to promote socially responsible business practices, in the category for medium and large companies.

Q3 2024 results webcast link for November 14, 2024

PetroTal will host a webcast for its Q3 2024 results on Thursday November 14, 2024 at 9am CT (Houston), 3pm GMT (London). Please see the link below to register.

https://stream.brrmedia.co.uk/broadcast/66fd576693baf50dfe9f3597

Corporate Presentation

PetroTal has posted an updated corporate presentation on its website. Please visit the link below to view the presentation in full:

https://petrotalcorp.com/investors/