PetroTal Corp (AIM: PTAL): Better balance sheet than expected
• 1Q24 production of 18,518 bbl/d was in line with our expectations.• Production over the last 30 days was 20.5 mbbl/d with the recently drilled 17H well, now on pump, delivering 4,500 bbl/d.
• This bodes very well for 2Q24 production given that the 18H well is expected to commence production in May. We currently forecast only 19 mbbl/d production in 2Q24, which could be on the low side.
• PetroTal held US$63 mm in unrestricted cash plus US$22 mm of restricted March as the end of March.
• While the amount of unrestricted cash was below our expectations of ~US$89 mm, the difference was due to a negative working capital movement with a significant increase in receivables from US$68 mm at YE23 to ~US$111.7 mm at the end of March 2024, while current payables were only down ~US$6 mm.
• With revenue payments received in early April, we anticipate a reversal of this working capital build-up in coming periods assuming everything else being equal.
• Overall Petrotal held working capital (being unrestricted and restricted cash plus receivables minus payables) of ~US$122 mm at the end of March (we anticipated only ~US$92 mm). This represents an increase of >US$27 mm compared to YE23.
• Pending the publication of the detailed accounts, we re-iterate our target price of £1.45 per share. The shares continue to offer investors growth and generous shareholder distributions.
Valuation
Our Core NAV and ReNAV stand are unchanged at £1.03 per share and £1.46 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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