PetroTal Corp (AIM: PTAL): Good balance sheet. Flexible capex
• 1Q25 production and net cash at the end of March had been previously announced.• PetroTal maintains a solid financial position with US$116.6 mm in cash. Additionally, the company has secured a term loan with a syndicate of Peruvian banks, with commitments of up to US$65 mm to finance the erosion project at Bretana. The interest rate is 8.65%; which compares favourably with other credit options available to the company. The loan terms do not impose any material restrictions on PetroTal’s ability to distribute dividends to shareholders.
• If Brent remains at current levels until August, PetroTal may decide to scale back its capital program. As PetroTal owns its rig, it retains full flexibility in determining the new well count. Given the high IP of new wells, a strong oil price in the first month of production has a disproportionate impact on NPV.
• April production averaged ~23 mbbl/d, in line with March levels, despite pump failures in four wells (out of 24), which curtailed ~4 mbbl/d. Export capacity remains the key production driver. The failed pumps will be replaced using a work-over rig in 3Q25.
• At the current share price, the expected FY25 dividend yield is ~ 16%. We re-iterate our target price of £1.20 per share.
Other take aways from the 1Q15 results
The initial tax payment was made in early April, and PetroTal is expected to pay ~US$40 mm in cash tax in 2Q25. At Los Angeles (Block 131) workover and acid stimulation program (up to four wells) is scheduled to begin by late June, running through September, with the goal of boosting production by ~500-1,000 bbl/d, bringing output to >1,000 bbl/d, up from 620 bbl/d in 1Q25. The US$140 mm capex program for 2025 currently includes four new wells—two at Los Angeles and two at Bretana—to support future production growth.
Valuation
Our 2P Core NAV is now £0.94 per share with a ReNAV of £1.21 per share. Assuming US$65/bbl in 2Q25 and 3Q25 and US$70/bbl from 4Q25, we forecast YE25 net cash of ~US$55 mm (after ~US$55 mm in dividends).
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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