CALGARY and HOUSTON, Feb. 13, 2019 /CNW/ - PetroTal Corp. ("PetroTal" or the "Company") (TSX-V: TAL and AIM: PTAL) is pleased to announce its capital budget for 2019 and provide an operations update. All amounts in this release are quoted in U.S Dollars.
2019 Capital Budget – Increasing Bretaña Field Production
- Investment aimed at increasing production to approximately 5,000 barrels of oil per day ("BOPD") in mid-2019
- Drilling campaign to include targeting three new oil producing wells
- Drilling rig mobilized to Bretaña with the first well expected to spud in February 2019
- Second phase of facilities to further increase oil production capacity to be installed in September/October 2019
- Ongoing commissioning of oil production facilities throughout Q4 2018 as expected
- Production from first producer stabilized at approximately 1,100 BOPD with over 200,000 barrels of crude oil produced to date
- Independent evaluation of oil sample demonstrates lighter 19.4 degree API oil and lower oil viscosity
Capital Budget Expenditure
The Board of Directors has approved PetroTal's capital budget for 2019, with key spending at Block 95 as follows:
-Drilling of three wells expected to produce oil at an average cost of $12.1 million each
-Additional processing facilities to be installed in Q3 2019, with an expected total spend in 2019 to approximate $16.0 million, increasing capacity to 10,000 BOPD
-One water disposal well for approximately $7.0 million
-Abandonment costs of approximately $2.0 million associated with legacy drilling site approximately 4.5 miles south of the Bretaña drill and production pad
The Company does not intend to spend material amounts of capital in Block 107 as the primary effort there is to secure a joint interest partner, with assistance from GMP FirstEnergy in London.
Manuel Zuniga, President and Chief Executive Officer, commented:
"This capital budget is expected to allow the Company to ramp up production to approximately 5,000 BOPD in mid-2019, in line with expectations. We have negotiated excellent terms with our rig contractor and other service providers, giving the Company additional operational flexibility as we go into this three well drilling program.
With an expected total of four wells online by the end of 2019, PetroTal will have reached an important inflection point in the development of the Bretaña Field. This will provide the momentum to further increase production to our target of over 10,000 BOPD in 2020. We continue to monitor commodity prices and retain the flexibility to adjust our budget if required.
Overall, 2019 is set to be an exciting year for PetroTal and its shareholders. We enter the year with a net liquidity position of approximately $22.0 million, and with the cash flow being generated from our operations, we are well placed for the year ahead."
As stated above, the well the Company inherited from the previous operator was placed on production in mid-2018 and has accumulated over 200,000 barrels of crude oil production to date. Current rates, following expected declines, approximate 1,100 BOPD. Total production and sales in the fourth quarter of 2018, while the well was under Long Term Test, was 106,500 and 110,285 barrels of oil, respectively. At the request of the local refinery, a second oil sample since acquisition was sent to Bureau Veritas, an international certification agency, for evaluation with the results showing the same 19.4 degree API, an improvement over the 18.5 degree API estimated at acquisition in December 2017, and also lower oil viscosity.
The next expected Bretaña oil producer, which will be the first oil well drilled by the Company, is expected to spud later this month. The rig and accompanying equipment have been mobilized to the Bretaña oil field and is currently being rigged up. The well is expected to be online in late March 2019.
PetroTal has engaged GMP FirstEnergy's team in London to assist in the farm-out of Block 107. Significant interest has been shown in the asset and the Company's intention is to sign a joint-interest partner in mid-2019 and to begin drilling the Osheki prospect in 2020. More information on the Osheki prospect can be found in the Company's December 2018 AIM Admission Document, which is available on the Company's website at www.petrotal-corp.com.
PetroTal is a publicly-traded, dual-listed (TSX-V: TAL and AIM: PTAL) oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. PetroTal's development asset is the Bretaña field in Peru's Block 95 where oil production was initiated in June 2018. Additionally, the Company has large exploration prospects and is engaged in finding a partner to drill the Osheki prospect in Block 107. The Company's management team has significant experience in developing and exploring for oil in Northern Peru and is led by a Board of Directors that is focused on safely and cost effectively developing and exploiting the Bretaña oil field.
FORWARD-LOOKING STATEMENTS: This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to: PetroTal's business strategy, objectives, strength and focus; rig mobilization, drilling, water and other activities and the anticipated costs and results of such activities the ability of the Company to achieve drilling success consistent with management's expectations; anticipated future production and revenue; drilling plans including the timing of drilling; oil production levels, including average production, exit production in 2019 and estimated ultimate recovery; decline rates; the 2019 drilling program and capital budget; securing a joint partner in respect of the development of Block 107; arrangements with rig contractor and other service providers; future development and growth prospects; and shareholder returns. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "estimate", "potential", "will", "should", "continue", "may", "objective" and similar expressions. The forward-looking statements are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the ability of existing infrastructure to deliver production and the anticipated capital expenditures associated therewith, reservoir characteristics, recovery factor, exploration upside, prevailing commodity prices and the actual prices received for PetroTal's products, the availability and performance of drilling rigs, facilities, pipelines, other oilfield services and skilled labour, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the accuracy of PetroTal's geological interpretation of its drilling and land opportunities, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of new wells, the Company's growth strategy, general economic conditions and availability of required equipment and services. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company's production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Please refer to the risk factors identified in the Company's annual information form for the year ended December 31, 2017 and management's discussion and analysis for the three and nine months ended September 30, 2018 which are available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
OIL AND GAS INFORMATION: Estimates of production and cost of production included in this press release are based upon an independent assessment completed by Netherland Sewell & Associates, Inc., a qualified independent reserves evaluator as defined in Canadian Securities Administrators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), with an effective date of June 30, 2018 and prepared in accordance with the Canadian Oil and Gas Evaluation Handbook and the standards established by NI 51-101.
This press release contains metrics commonly used in the oil and natural gas industry. These terms have been calculated by management and do not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons. Management uses these oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare PetroTal's operations over time. All oil and gas disclosure contained in this press release complies with the requirements of NI 51-101.
References in this press release to production test rates, initial test production rates, and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for PetroTal. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the Company cautions that the test results should be considered to be preliminary.
FOFI DISCLOSURE: This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about PetroTal's prospective results of operations, production, operating costs and components thereof, all of which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this press release was made as of the date of this press release and was provided for the purpose of providing further information about PetroTal's anticipated future business operations. PetroTal disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein. All FOFI contained in this press release complies with the requirements of Canadian securities legislation, including NI 51-101.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
SOURCE PetroTal Corporation
For further information: Greg Smith, Executive Vice President and Chief Financial Officer, [email protected], T: (713) 609-9101; Manolo Zuniga, President and Chief Executive Officer, [email protected], T: (713) 609-9101; Mark Antelme / Henry Lerwill, Celicourt Communications (Financial PR), [email protected], T: 44 (0) 207 520 9261; James Spinney / Ritchie Balmer / Eric Allan, Strand Hanson Limited (Nominated & Financial Adviser), T: 44 (0) 207 409 3494; John Prior / Emily Morris / George Price, Numis Securities Limited (Joint Broker), T: +44 (0) 207 260 1000; Jonathan Wright / Hugh R. Sanderson, GMP FirstEnergy (Joint Broker), T: +44 (0) 20 7448 0200