PetroTal Corp (AIM: PTAL): Delivering on guidance
• FY23 production of 14,248 bbl/d had been reported previously and the YE23 cash position of US$105 mm (including ~US$15 mm of restricted cash) is very close to previous indications.• PetroTal is re-iterating its FY24 production guidance of ~17 mbbl/d with US$134 mm capex.
• Production currently trends ahead of guidance with 24,453 bbl/d in January and 17,411 bbl/d in February. While PetroTal had to shut down the field for two days in early March for safety precautions and, as a result, production averaged only 15.6 mbbl/d in March, production continues to be expected to average ~18.5 mbbl/d in 1Q24.
• The two day shut down was related to PetroTal providing equipment to a third party operator following a barge incident between two independently operated barges that resulted in a small release of oil into the Puniuaha river ~2 km away from the field. The clean-up has been substantially completed. During the time the equipment was with the third party, PetroTal did not consider it safe to unload oil and the field was shut down for two days until a new equipment was procured.
• Approval letters from the Ecuadorian Ministry of Environment and Ecuadorian Navy, together with the signing of a use of port agreement with Petroecuador, have been received for the OCP pilot oil shipment trough Ecuador. One final letter from the Port Subsecretariate is still required to start the first 100,000 bbl pilot. A second pilot could take place in 2H24 with recurring sales expected in 4Q24 with an initial export capacity of 2 mbbl/d growing to 5 mbbl/d.
• We re-iterate our target price of £1.45 per share. The shares continue to offer investors growth and generous shareholder distributions.
Drilling update
Well 17H commenced production on 1 March with average production to date of 3.3 mbbl/d under natural flow conditions (no pump). Well 18H was spudded on 5 March. Well 16H is now producing 2.5 mbbl/d (~7.5 mbbl/d during the first week of production in January).
Valuation
Our Core NAV and ReNAV stand are unchanged at £1.02 per share and £1.45 per share.
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