PetroTal Corp (AIM: PTAL): Boosting 2Q23 dividend distribution. Reiterating production guidance
• 2Q23 production, net debt and working capital at the end of June had already been reported.• The dry season has started, resulting in low river levels, which constrains barging sales. Production in July was 11,552 bbl/d increasing to 13 mbbl/d in August. The company has re-iterated its FY23 production guidance of 14-15 mbbl/d.
• Given its strong balance sheet, PetroTal has declared a dividend of US$0.025 per share for 2Q23 (to be paid during 3Q23). This represents an increase of US$0.010 per share compared to the recurring quarterly dividend of US$0.15 per share. A quarterly dividend of US$0.025 per share (US$0.10 per year per year) would represent a dividend yield of ~18%. A buyback programme of US$3 mm per quarter would represent a further return of >2% per year.
• Important upcoming newsflow includes the potential reopening of the ONP pipeline allowing PetroTal to increase its production capacity and eliminate the production constraint during the dry season when the Amazon river water level is low.
• We also expect the company to progressively return to exploration drilling.
• We re-iterate our target price of £1.50 per share.
Final payment from Petroperu received
PetroTal has now received the final payment from Petroperu of last year’s outstanding US$64 mm revenue true-up. Since the end of March, a total of US$39 mm has been repaid. Overall outstanding receivables from Petroperu total US$22 mm which relates to oil delivered to the ONP in early 2022. Of the US$100 mm overall receivables outstanding at the end of June, US$57 mm was related to the sales through Brazil, which has now been paid.
Valuation
Our Core NAV of £1.11 per share and ReNAV of ~£1.56 per share are broadly unchanged. Assuming US$85/bbl for Brent from 3Q23, we continue to forecast that PetroTal will have returned >US$100 mm (~20% of the current market cap) in dividends and share buybacks by YE24 and still hold US$225 mm in working capital (and no debt) by then.
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.
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