PetroTal Corp (AIM: PTAL): 208% 2P Reserves Replacement Ratio
• YE24 1P, 2P and 3P reserves at Bretana were estimated at 62.9 mmbbl (YE23: 48 mmbbl), 108 mmbbl (YE23: 100.2 mmbbl) and 206.6 mmbbl (YE23: 199.6 mmbbl) respectively. Additionally, Los Angeles is now estimated to hold 5.8 mmbbl of 2P reserves, an increase of 1.5 mmbbl from previous estimates. Overall, the new reserves estimates represent a Reserves Replacement Ratio of 293% for 1P and 208% for 2P reserves.• The increase in 1P reserves reflects the conversion of reserves from the 2P and 3P categories, due to a better understanding of well production profiles and the drilling of seven development wells in 2024.
• The increase in 2P reserves reflects eight additional infill wells and the lateral extension of the field to the west and southwest, following successful appraisal drilling in 2024.
• We have increased our production profile for 2026-2028 by approximately 20% and incorporated higher capex forecasts until 2030. We assume the remaining 11 wells of the 2P reserve case will be drilled by YE29.
• We have also revisited our valuation for Bretana based on a production profile that recovers all 2P reserves by YE41. This results in a greater proportion of the 2P reserves being associated with production later in the life of the field, thereby carrying a lower NPV per barrel.
• As we incorporate the impact of the additional reserves, the new production profile, our new valuation approach, and the recent appreciation of the £ versus the US$, we have kept our target price of £1.30 per share unchanged.
• We now forecast that PetroTal’s YE28 net cash plus the aggregate dividend distribution over 2025-2028 will exceed the current market cap. At the current share price, the expected FY25 dividend yield is greater than 12%.
Net Present Value
The after-tax NPV15% of PetroTal’s YE24 2P reserves is estimated at US$1.34 bn. This valuation is based on a Brent price averaging approximately US$80/bbl from 2025 to 2029 and future development costs of US$645 mm. This estimate is consistent with our NPV15% of US$1.13 bn for the 2P reserves, which is based on a lower Brent price averaging only ~US$71/bbl over the same period.
Valuation
Our 2P Core NAV is now £1.01/sh with a ReNAV of £1.25 per share.
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.
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