PetroTal Corp (AIM: PTAL): Another significant reserves increase
• YE22 1P, 2P and 3P reserves respectively stand at 45.4 mmbbl, 96.7 mmbbl and 168.3 mmbbl. This represents increases of respectively 21%, 24% and 14% versus YE21.• The higher 2P reserves reflect an increase to the Oil Initially in Place estimate (+14%) and an improved recovery factor (+2%). The 2P case recovery factor is still 24%.
• The 2022 Reserve Life Index for 1P and 2P reserves, are 10.1 and 22 years respectively with a higher production run rate of 12.2 mbbl/d, compared to 7.3 mbbl/d previously.
• The number of wells required to produce the 1P, 2P and 3P reserves has increased by 4, 7, and 7 wells to 21, 29, and 36 wells, respectively, which reflects the greater Original Initial Oil in Place estimate that requires additional wells to be properly drained.
• This is the third year in a row that the reserves estimates of PetroTal have increased. This reflects a combination of reservoir performance and drilling success. We are increasing our target price from £1.30 per share to £1.50 per share.
Reserves Valuation
The auditor values PetroTal’s 1P, 2P and 3P reserves at respectively US$784 mm, US$1,509 mm and US$2,468 mm on an NPV10 after tax basis. This assumes Brent price of US$81-85/bbl from 2023 to 2028. The 2P case future development cost estimates have increased by 40% to US$404 mm to incorporate the seven additional wells.
Valuation
We have extended our production plateau of 19-20 mbbl/d by two years to YE26 with a shallower decline profile thereafter. Our new Core NAV based on the 2P reserves is ~£1.10/sh with a ReNAV of ~£1.50/sh. We continue forecast net cash of ~US$370 mm (calculated as working capital minus debt) at YE24 increasing to ~US$500 mm at YE25.
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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