PetroTal Corp (AIM: PTAL): High Production in 4Q23 and high YE23 net cash
• 4Q23 production was 14,865 bbl/d with 20,090 bbl/d in December. This compares with 11,808 bbl/d in October and 13,420 bbl/d in mid November.• Well 16H is expected to start production by mid-January. The well will allow PetroTal to maintain production over 20 mbbl/d for the foreseeable future.
• PetroTal expects to replace the 2P reserves produced in 2023.
• PetroTal held US$90 mm in unrestricted cash at YE23. This is above our expectations of ~US$70 mm. In addition, PetroTal holds US$21 mm in restricted cash, US$70 mm in accounts receivable and US$68 mm in accounts payable.
• The latest quarterly dividend of US$0.02 per share (US$0.08 per share per year) represents a dividend yield of ~13.5%. The ongoing share buyback programme represents a further return of >2% per year. We re-iterate our target price of £1.50 per share.
Export route through Ecuador
The pilot 0.1 mmbbl oil sales shipment through the OCP Ecuador pipeline to Esmeralda’s port is expected to take place in mid to late 1H24 with regular shipments expected in mid to late 2H24 as the company is working through the various authorizations required at the port (multiple authority bodies). It will open-up a new route for 2-4 mbbl/d initially and then up to 5 mbbl/d on a longer term basis.
Valuation
While the YE23 net cash was above our expectations, this is offset by the impact on our lower assumptions for Brent price in 2024 (~US$85.5/bbl instead of US$89/bbl previously). We have not changed our capex and production forecasts for 2024 ahead of the publication of the 2024 budget on the 22nd of January. We forecast that PetroTal will distribute US$55 mm in dividends in 2024 and continue its share buyback programme of ~US$3 mm per quarter. We forecast that PetroTal will hold US$150 mm in unrestricted cash (and no debt) at yrear end. Our Core NAV and ReNAV stand respectively at £1.01 per share and £1.42 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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