PetroTal Corp (AIM: PTAL): Budget stress‑case ready: production to trough in 3Q26 before doubling in 2027
• PetroTal expects 2026 production of 11,750–12,250 bbl/d, landing at the lower end of the indicative forecasts of 12-15 mbbl/d provided in November (vs. our prior forecast of 13.9 mbbl/d).• The FY26 capex budget is set at US$80–90 mm, which is US$10–20 mm below our expectations.
• The FY26 budget includes two new Bretana wells, US$15 mm allocated to erosion control (total capex for the project unchanged) and minimal upgrades to Bretana water handling facilities. The budget also includes ~US$18 mm carried over from 2025. The programme is based on US$60/bbl Brent and ensures the company maintains US$60 mm of unrestricted cash.
• PetroTal will contract a new third‑party rig and intends to market the undelivered Amazonia‑1 rig for sale in partnership with its banking partners. With drilling at Bretana only expected to resume in October 2026, production is expected to fall to ~10.5 mbbl/d in 3Q26. With six additional wells planned for 2027 and further expansion of water‑handling capacity, we forecast production to rebound to more than 20 mbbl/d in 2027. We assume US$150 mm of capex for that year.
• Beyond 2027, the company has eight remaining 2P drilling locations at Bretana. We model a stable production profile of 18–20 mbbl/d for 2028–2030.
• We have revised our target price to £0.65 per share to reflect the lower 2026 production outlook and a reduced long‑term plateau. The release of the FY26 budget provides welcome visibility on 2026–27 activity and removes a key area of uncertainty. At current levels, the stock offers substantial deep‑value characteristics, with growth resuming from 3Q26 onward.
Los Angeles
Bretana is the near‑term priority, with Los Angeles drilling not restarting until 2028 and two additional wells in 2029.
Valuation
In addition to revising our production profile and capex forecasts, we have rolled forward the starting point of our DCF to YE26. Our 2P Core NAV now stands at £0.51 per share, more than 2× the current share price, with a ReNAV of £0.63 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.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.