PetroTal Corp (AIM: PTAL): Higher production and cash balance than expected. Adding exploration assets
• 3Q24 production was 19,150 bbl/d including 18,938 bbl/d from Bretana and the remainder at Block 131. This performance exceeded expectations, as we had anticipated 17,900 bbl/d for Bretana.• FY24 production at Bretana was 17,733 bbl/d, which is above the guidance of 16.5-17.5 mbbl/d.
• PetroTal held US$115 mm of cash (including US$103 mm of unrestricted cash) at YE24. Including payables and receivables, YE24 working capital was US$112 mm, higher than our forecast of US$107 mm.
• Well 22H is in production, and Well 23H has been spudded. The drilling programme will be paused in 1H25 as the company focuses on the erosion remediation project.
• As expected, the acquisition of Block 131 had no material impact on the company’s balance sheet.
• We re-iterate our target price of £1.30 per share. Our FY25 forecasts are unchanged ahead of the publication of the FY25 budget on 16 January.
Adding exploration assets
The duration of the exploration block 107 licence has been extended to February 2027. PetroTal has also signed two Technical Evaluation Agreements (TEA) for Blocks XCVII and XCVIII which are located in the vicinity and on trend with PetroTal’s Block 131, as well as with the Aguaytia and Agua Caliente fields in Peru’s Ucayali Basin. Blocks XCVII and XCVIII contain several drillable prospects and leads identified with existing 2D seismic coverage in the producing Cushabatay light oil play. The obligations consist of G&G desktop studies. The TEAs also grant PetroTal the option to convert the blocks to exploration licences within the next 24 months.
Valuation
Our Core NAV and ReNAV are respectively ~£0.93/sh and £1.28/sh. We forecast US$74/bbl in 2025 and US$70/bbl thereafter.
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.
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