Report
Stephane Foucaud

PetroTal Corp (AIM: PTAL): Large reduction of capex on rig delay

• 2Q25 production and net cash as of end-June have been previously disclosed.
• July production at Bretana averaged ~20 mbbl/d. Elevated Amazon River levels may ease seasonal constraints in 3Q25, potentially avoiding the ~3 mbbl/d decline seen in 3Q24.
• Following commissioning delays for the new rig (announced in July), PetroTal has reduced FY25 capex guidance from US$140 mm to US$80 mm (–45%). Consequently, the FY25 production guidance has been revised from 21–23 mbbl/d to 20–21 mbbl/d (–7%). The impact on our YE25 net cash forecast is positive (+~US$30 mm).
• We now assume drilling at Los Angeles and Bretana will resume in early 2026, resulting in a production decline from 2Q25 through 1Q26.
• Pending further detail, we now assume FY26 capex of ~US$100 mm (from US$140 mm), with only three new wells drilled (at a Brent price of US$70/bbl). This results in a revised FY26 production forecast of ~20 mboe/d (previously ~26 mboe/d). YE26 net debt is expected to remain in line with YE25, even after paying a dividend equal to the 2025 level.
• We have lowered our production outlook from 2027 by 2–3 mbbl/d to reflect reduced volumes in 2026. From 2027 onward, we assume 2–4 wells drilled annually. The YE24 CPR identified 16 remaining 2P locations at Bretana; we model three new wells at Los Angeles.
• Reflecting the revised production profile, we adjust our target price to £1.00 per share. The shares continue to offer value and the FY25 dividend yield remains attractive at ~11% at current share levels.

Takeaways from operations
Workover operations at Los Angeles are expected to be completed in September, with potential incremental production of ~500-1,000 bbl/d. The nominal oil treatment capacity at Bretana has been increased to 26,000 bbl/d. Oil production remains constrained by water treatment capacity, which currently stands at just over 170,000 bw/d.

Valuation
Our 2P Core NAV is now £0.74 per share with a ReNAV of £0.97 per share.
Underlying
Provider
Auctus Advisors
Auctus Advisors

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. 

Analysts
Stephane Foucaud

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