PetroTal Corp

PetroTal has announced its financial and operating results for the three and nine months ended September 30, 2022.

Selected financial and operational information is outlined below and should be read in conjunction with the Company’s unaudited consolidated financial statements, and management’s discussion and analysis for the three and nine months ended September 30, 2022, which are available on SEDAR at and on the Company’s website at www.PetroTal‐  All amounts herein are in United States dollars unless otherwise stated.

Q3 2022 Highlights

·    Production in the quarter averaged 12,229 barrels of oil per day with sales of 12,186 bopd (1.1 million barrels), despite being constrained as low river levels reduced barge capacity;

·    Generated net operating income(1) (“NOI”) of approximately $62.3 million, EBITDA(1) of $57.6 million, and free cash flow(1) before all debt service of $37.0 million equating to a 44% free cash flow margin(2);

·    Capital investment totaled $20.6 million, primarily to drill well 13H and key infrastructure projects;

·    Petroperu exported approximately 720,000 barrels of oil to an international refiner, crystalizing for PetroTal over $64 million (including VAT) of true up revenue and reducing the amount of PetroTal’s oil in the Northern Peruvian Pipeline (“ONP”) to 2.4 million barrels;

·    Demonstrated continued balance sheet strength with cash of $93 million at September 30, 2022, a net surplus(2) balance of $75.5 million.  The Company remains in full compliance with all bond covenants as at September 30, 2022; and,

·    On September 15, 2022, PetroTal welcomed two new Directors, Messrs. Luis Carranza and Jon Harris, and announced the retirement of Messrs. Gary Guidry and Ryan Ellson.

(1)      Free cash flow defined as EBITDA less capital expenditures.  Free cash flow margin defined as free cash flow divided by crude oil revenues.  See “Selected Financial Measures”

(2)      Net debt / surplus defined as (total cash + total trade and VAT receivables + total derivative assets) – (trade and VAT payables + total bond debt + total derivative obligations + total lease obligations)

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

“Having produced over 10.5 million barrels of oil since inception, we are on track to deliver average production growth of approximately 40% and almost $200 million in free cash flow in 2022.  Although the Company encountered external transportation challenges, we expect to deliver double digit yearly production growth with potentially 40% plus free cash flow yields under current Brent oil forward strip pricing conditions.  The high margin nature of our business should be at the forefront of investors’ sentiment, alongside our proven ability to execute technically.” 

This is another exceptional performance by PetroTal under the circumstances of the Amazon river levels in Brazil during October which it is already making up for. The conference call is scheduled for this afternoon so I will comment further on the company tomorrow morning if necessary. 

In the meantime the initial markdown in the shares which is short sighted in the extreme and one that offers an excellent buying opportunity should be reversed when the sheer value, size and margins of the business become apparent. My TP of 150p will not be changing on this announcement.   


Selected Financial and Operational Highlights




                                                                               Three Months Ended                                 Nine Months Ended

 (in thousands USD)

Sept 30, 2022

Sept 30, 2021

Sept 30, 2022

Sept 30, 2021


  Crude oil revenues





  Royalties (3)





  Net operating income (1)





  Commodity price derivative (gain)/loss





  Net income





  Diluted net income (US$/share)





  Capital expenditures






  Average production (bopd)





  Average sales (bopd)





  Average Brent price ($/bbl)





  Contracted sales price, gross ($/bbl)





  Netback ($/bbl)(2)





  Funds flow provided by operations





Balance sheet

  Cash and restricted cash



  Working capital



  Total assets



  Current liabilities






1.  Net operating income (“NOI”) and Netback represent revenues less royalties, operating expenses, and direct transportation.

2.  Netback per barrel (“bbl”) and funds flow provided by operations do not have standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures for other entities. See “Selected Financial Measures” section.

3.  Royalties in Q3 2022 include the value since January 1, 2022 inception for the 2.5% social trust initiative.

Q3 2022 Financial Highlights

Strong revenue profile.  Oil revenue in Q3 2022 was $84.2 million ($75.07/bbl) compared to Q2 2022 of $118.4 million ($89.04/bbl) and Q3 2021 of $44.8 million ($53.24/bbl).

High margin operational cash flow.  Generated NOI and EBITDA of $62.3 million ($55.60/bbl) and $57.6 million ($51.42/bbl), respectively, compared to $98.6 million ($74.12/bbl) and $93.4 million ($70.26/bbl), respectively, in Q2 2022 and $29.6 million ($35.18/bbl) and $26.1 million ($31.07/bbl), respectively, in Q3 2021.

Efficient capital deployment.  Capital expenditures in the quarter totalled $20.6 million and were focused on drilling and completing well 13H.  During the nine months ended September 30, 2022, the Company invested a total of $62.2 million, demonstrating capital flexibility under sales constraint conditions.

Robust free cash flow.  Generated free cash flow before changes in non-cash working capital and debt service of $37.0 million ($33.03/bbl) in the quarter.  Total free cash flow before changes in non-cash working capital and debt service for the nine months ended September 30, 2022 is nearly $150 million significantly strengthening the Company’s net surplus position by nearly $130 million.

Total operating costs under $10/bbl.  The Company had lower gross total operating cost expense in the quarter of $10.1 million ($9.06/bbl) from $11.7 million ($8.82/bbl) in Q2 2022.  Total quarterly lifting costs were $7.4 million ($6.62/bbl), a decrease from Q2 2022 of $8.4 million ($6.28/bbl) and an increase from Q3 2021 of $5.4 million ($6.47/bbl).  Total transportation costs were $2.7 million ($2.44/bbl) a slight decrease from $3.4 million ($2.54/bbl) in Q2 2022 and a substantial decrease from $7.1 million ($8.50/bbl) in Q3 2021.

G&A on budget.  Q3 2022 G&A was $4.7 million ($4.18/bbl) compared to $5.1 million ($3.87/bbl) in Q2 2022 and $3.4 million ($4.11/bbl) in Q3 2021. 

Net income/loss.  PetroTal posted net income of $2.6 million, a decrease from Q2 2022 net income of approximately $84 million, primarily from lower sales in the quarter, a non cash commodity price derivative loss of approximately $33 million, and royalty provision for the social trust. 

Balance sheet in a cash surplus position.  Net surplus was approximately $75.5 million as at September 30, 2022, consistent with the prior quarter and up substantially from Q3 2021, as defined internally by the Company.

Net derivative asset balance.  The total net derivative asset on the balance sheet as at September 30, 2022 was $3.5 million, a decrease of $53.3 million from Q2 2022, as a result of reclassified true up revenue of $64 million realized in July 2022, along with other mark to market changes in the value of oil in the ONP.  As at September 30, 2022 approximately 2.4 million barrels remained in the ONP.

Operational and Financial Highlights Subsequent to September 30, 2022

Excellent well 13H results.  Well 13H successfully tested at over 8,000 bopd during its first week of production and has averaged approximately 6,200 bopd month to date ending November 14, 2022, which was slightly constrained during this period.  At its current trend and assuming a $55/bbl netback, the well is on track to payout within 60 days.  In addition, the technical team encountered the producing formation five meters higher near the end of the horizontal section of the well possibly increasing future oil in place and reserve estimates.

Commenced drilling well 12H.  On October 16, 2022, the Company commenced drilling well 12H with a budgeted cost of $14 million and estimated completion in mid December 2022.

Slowly rising river levels in November.  During the month of October, river levels in Brazil continued to be at record low levels, in some cases, exposing sand bars above the water level.  This significantly impacted the Company’s ability to sell oil in the month of October limiting production to approximately 6,500 bopd.  The Company expects to sell nearly 900 thousand barrels over November and December as river levels return to normal.  On November 10 and 11th, 2022 the Company was able to produce over 20,000 bopd.

2021 ESG report being finalized.  Over the coming weeks PetroTal will release its second annual Sustainability Report covering the 2021 year.  The Company is now calibrated to Sustainability Accounting Standards (“SASB”), Global Reporting Initiatives (“GRI”), and Sustainable Development Goal standards and is committed to being a sustainable energy leader in Peru.  In 2021, the Company had zero hydrocarbon spills, delivered a scope 1 emissions intensity metric of 11.4 kg/bbl, and invested millions in various ESG projects as outlined in the report, showcasing the modest operational footprint that the Company has managed in the Loreto region.

Petroperu update.  The Company continues to work with Petroperu’s management team to assess and negotiate payment of approximately $90 million of receivable value.  On October 10, 2022 the government of Peru agreed to make a capital contribution to Petroperu of $1 billion in order to strengthen its financial capacity for continued operations, and provide $500 million of credit facility support.  The priority of allocation is immediate fuel and energy needs in Peru, and the Company expects that the $64 million outstanding amount owed to the Company will be paid on a negotiated payment schedule. 

Guidance Update

The Company is adjusting Q4 2022, and therefore 2022 guidance based on October 2022 and early November river conditions into Brazil.  Final 2022 guidance is now between 12,000 and 13,000 bopd for Q4 2022 and 2022 full year.

Adjusted Guidance

Q1 (actual)

Q2 (actual)

Q3 (actual)



Oil wells completed

1 (10H)

1 (11H)




Average Production (bopd)




12,000 – 13,000


CAPEX (millions)







USD millions, unless stated otherwise


Realized Brent (USD/bbl)


Average Production (bopd)

12,000 – 13,000

Net operating income




Net derivative settlements


Adjusted EBITDA




Free cash flow


PetroTal Rebranding

PetroTal is excited to announce a corporate rebranding which includes a new vision, color scheme and logo design.  Over the coming weeks we will be rolling out a new website with many new and exciting features for investors and or interested stakeholders.  Further updates on this will be made when available.

Jadestone Energy

Jadestone has provided the following operational update.

Montara Project

Since the Company’s H1 2022 results announcement on 20 September 2022, a comprehensive programme of hull and tank inspection, repairs and maintenance has been underway on the Montara Venture FPSO.  In particular, the following activities have been carried out in recent weeks:

·    Oil cargo tank 2C: the site of the original hull defect which resulted in the small release of oil in June 2022 has been removed and a permanent repair has now been completed. Initial visual inspection of the tank confirms the overall condition to be good, with a small number of minor defects to be addressed.

·    Ballast water tank 4S: the bulkhead location of the defect identified in August 2022 has been repaired. Several smaller defects identified as part of a wider inspection of tank 4S are currently being repaired.

While the Company remains unable to advise on a restart date for Montara, based on the tank inspection activity to date it reaffirms an intent to remain within the lower end of the production guidance range announced on 12 September 2022, which would see Jadestone’s 2022 production average at least 11,000 boe/d. 

Separately, the independent reviewer described in NOPSEMA’s general direction dated 12 September 2022 was appointed in October, with the contract awarded to DNV, the world’s leading maritime classification society and an independent expert in risk management and assurance.  The gap recognition review, which has the intent of assuring Jadestone’s remediation plans and operational readiness prior to the restart of production operations, is progressing well. DNV’s report on this will be considered by NOPSEMA prior to the restart of production through the FPSO.

The Company currently estimates the cost incurred in 2022 in respect of the additional inspection and repair activities on the FPSO to be US$4 million, consistent with the initial US$2-4 million estimate published on 12 August 2022.

A short presentation containing photos of recent tank work on the Montara Venture FPSO is available from the Company’s website at

Stag Infill Drilling Programme

At the Stag field, the two infill wells Stag-50H and 51H have been drilled successfully and initial results from well data are in line with pre-drill expectations. The final completions are currently being run on both wells by the Valaris-107 rig, prior to it moving off location later this month.  A further update will be provided once the wells are brought into production.

Liftings Schedule

The Company will lift over one million barrels of crude in November and December 2022, with a lifting of ~160,000 barrels recently from Montara, removing all remaining oil onboard the FPSO to help accelerate the inspection process.  A lifting of approximately 620,000 barrels, attributable to Jadestone’s recently acquired interest in the North West Shelf Oil Project, is expected imminently.  Additionally, the next Stag lifting of ~190,000 barrels is provisionally timed for early December at a US$21.88/bbl premium to Brent, while a further two liftings from the Peninsular Malaysia assets are also expected prior to year-end 2022.

Paul Blakeley, President and CEO commented:

“Significant work has been undertaken at Montara in recent weeks, with completion of repairs in tank 2C and the 4S ballast tank being key milestones.  The ongoing inspection and repair programme will underpin operational readiness and a safe restart of production.

We are building a solid baseline survey on the FPSO’s remaining tanks – a fundamental step towards a risk-based inspection regime going forward.  This survey, and the physical work underway on the FPSO, should help to ensure the highest levels of safety, integrity and vessel uptime in future, and maximise the life and value of the Montara fields for all our stakeholders.”

Nothing much new here from Jadestone but as ever a detailed and helpful analysis of the situation at Montara which is clearly going the distance but will make for a good 2023. Elsewhere the numbers are good with high volumes ensuring that the year finishes as well as possible under the circumstances. I’m looking forward to some activity on the M&A front…