PetroTal Corp (AIM: PTAL): Another strong quarter with continued high production
• Production continues to be very high, averaging ~21 mbbl/d in April and ~21.14 mbbl/d so far in May. Production has exceeded 20 mbbl/d for over 74 consecutive days.• We understand that April sales matched production, which demonstrates that the Brazil export route is working well.
• PetroTal continues to expect that ~270,000 bbl of oil will be exported in late 2Q23 at Bayovar, generating US$5-6 mm in net revenue. For the time being, PetroTal is not exporting new volumes through the ONP until there is a guarantee of payment and Petroperu’s credit lines function normally.
• Given the high production so far in 2Q23 (leading us to increase our forecast from 17 mbbl/d to 18.5 mbbl/d), the FY23 production guidance of 14 15 mbbl/d looks increasingly conservative. PetroTal has also highlighted an upside case of 17 mbbl/d for 2H23 depending on river levels. Under that scenario and using our forecasts for 2Q23, production could potentially average 16.5 mbbl/d in 2023. We conservatively assume only 15.1 mbbl/d.
• The story continues to be about significant free cash flow generation, production and reserves growth with generous shareholders returns through a share buyback programme of ~US$3 mm per quarter and a US$0.015 per share quarterly dividend (~11% annual dividend yield).
• We re-iterate our target price of £1.50 per share.
Net cash and financials
At the end of 1Q23, PetroTal held US$56 mm in unrestricted cash (plus US$15 mm of restricted cash), accounts receivable of US$93 mm and accounts payable of ~US$60 mm. We understand that Petroperu continues to repay the historical US$64 mm receivables according to the monthly plan. PetroTal has finalized a US$20 mm unsecured revolving loan for working capital purposes. The loan does not carry any covenants. Following payment of the June 2023 dividend, the PetroTal anticipates having ~US$60 to US$70 mm of total cash.
Valuation
As we incorporate a lower Brent price assumption for 2Q23, the weakening of the US$ versus the £ and slightly higher production expectations, our new Core NAV is £1.08/sh with a ReNAV of £1.51/sh. Assuming US$80/bbl for Brent from 3Q23, we forecast that PetroTal will have returned ~US$50 mm in dividends and share buybacks in 2023 and will still hold US$150 mm in net working capital at YE23. At YE24, the net working capital would be ~US$200 mm net of a further dividend distribution of US$55 mm in 2024.
PetroTal is an energy company engaged in the exploration for, and development of, crude oil and natural gas in selected areas of the world outside Canada. Co. has interests in four countries, the United Kingdom (offshore and onshore), Romania (offshore and onshore) France (onshore) and the Netherlands (offshore). Each country has established hydrocarbon basins, extensive infrastructure and attractive contractual and fiscal terms. As of Dec 31 2010, total gross proved plus probable reserves for light or medium oil consisting of 0.010 million barrels, natural gas consisting of 186.101 billion standard cubic feet and natural gas liquids consisting of 0.757 million barrels.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.