PetroTal Corp (AIM: PTAL): Another strong quarter
• 1Q25 production was 23,280 bbl/d, comprising 22,660 bbl/d at Bretana and 620 bbl/d at Los Angeles.• 1Q25 production at Bretana was ~1 mbbl/d above our expectations. The high production reflects the strong performance of the recent wells. Well 23H produced 3,363 bbl/d in March, reaching a maximum daily high of 5,110 bb/d. Well 22H, which was brought onstream in mid-January, produced an average of 4,386 bbl/d in March.
• The company has re-iterated its FY25 production guidance of 21,000 bbl/d to 23,000 bbl/d.
• Field work for the erosion project is expected to commence at Bretana next month. Drilling at Los Angeles is expected to start in early 2H25. PetroTal has significant flexibility to adapt its capital program to changes in oil pricing. Additional colours could be provided with the 1Q25 results in mid-May.
• At the current share price, the expected FY25 dividend yield is greater than 16%.
• As we reduce our assumptions for Brent price over 2Q25 and 3Q25 from US$75/bbl to US$60/bbl, we have changed our target price to £1.20 per share.
Balance sheet
The total cash position at the end of March was of US$113.6 mm, of which US$103 mm was unrestricted. This exceeded our expectations of approximately ~US$100 mm. Additionally, accounts receivable, less accounts payable, amounted to US$27 mm, outperforming our forecast of a US$3 mm deficit. Overall, the balance sheet at the end of March was ~US$40 mmm ahead of our expectations, driven by strong production levels and the postponement of a cash tax payment (originally projected at US$25 million in 1Q25, now expected in 2Q25).
Valuation
Our 2P Core NAV is now £0.96 per share with a ReNAV of £1.24 per share.
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