WTI (Apr) $81.27 -$2.20, Brent (May) $85.95 -$1.43, Diff -$4.68 +77c.

USNG (Apr) $1.70 -4c, UKNG (Apr) 70.5p -2.9p, TTF (Apr) €27.15 -€1.04.

Oil price

Crude fell yesterday, there isn’t any real reason for it, the Fed didn’t surprise and the inventory stats were actually pretty good, crude drew by 1.952m b’s against the whisper of even Stephen. And a big draw in gasoline is worth noting at this time of year..

Nope, If I had to guess it would be that with Easter coming up and the month and quarter end next week there may be one or two punters out there looking to take a bit of money off the table, know what I mean guv? 

PetroTal Corp

PetroTal has reported its operating and audited financial results for the three and twelve months ended December 31, 2023.

Selected financial and operational information is outlined below and should be read in conjunction with the Company’s audited consolidated financial statements and management’s discussion and analysis for the three and twelve months ended December 31, 2023, which are available on SEDAR+ at www.sedarplus.ca and on the Company’s website at www.PetroTal‐Corp.com. All amounts herein are in United States dollars unless otherwise stated.

 Selected Q4 and 2023 Highlights

·    Average Q4 sales and production of 15,033 and 14,865 barrels  of oil per day, respectively, impacted by a severe dry season and consequent low river levels that limited barge transport and tanker unloading capacity at Manaus;

·    Average 2023 sales and production of 14,421 bbls and 14,248 bopd, respectively, within guidance range for the year and generating a production growth rate of 17% over 2022;

·    2023 return on capital employed of 30% compared to 49% in 2022;(1)

·    Exited 2023 in a strong cash position with $111 million in total cash ($91 million unrestricted), after repaying $80 million of bonds in early 2023 and returning over $61 million in dividends and share buybacks in 2023;

·    Capital expenditures totaled $32.2 million in Q4 and were focused on drilling well 16H, bringing 2023 total capex spend to just over $108 million, lower than guidance of approximately $120 million;

·    Successfully drilled three new oil wells and one water disposal well in 2023.  During 2023, the three new oil wells produced nearly 1 million bbls of oil and generated approximately $45 million in net operating income representing nearly a full payout of their cost to drill by December 31, 2023;

·    PetroTal successfully executed workover operations on wells 1XD and 2XD in May and June 2023, with both wells producing between 500 and 700 bopd since July 2023 and accumulating over 180,000 bbls of oil in the second half of 2023 thereby recovering their workover cost approximately 2.5 times by the end 2023;

·    Generated Q4 EBITDA2 and free funds flow2 of $50.8 million ($36.71/bbl) and $8.1 million ($5.87/bbl), respectively, and 2023 EBITDA and free funds flow of $210.8 million ($40.06/bbl) and $90.7 million ($17.23/bbl) respectively and in line with cash flow guidance for 2023;

·    Delivered Q4 net income of $21.5 million ($0.02/share) and over $110.5 million for 2023 ($0.12/share); and,

·    Paid total dividends of $0.06/share and repurchased 11.3 million common shares in 2023, representing approximately $61 million of total capital returned to shareholders (approximately 11% of December 31, 2023, market capitalization).

(1)   Return on capital employed = earnings before interest and tax (“EBIT”) / (Total Assets – Current Liabilities)

(2)   Non-GAAP (defined below) measure that does not have any standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures presented by other entities. See “Selected Financial Measures” section.

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

“PetroTal’s operational and financial targets were achieved in 2023, increasing average production 17% over 2022, repaying $80 million in debt and returning over $61 million to shareholders in the form of dividends and share buybacks.  The Company managed through a challenging dry season, to achieve market guidance and exit December 2023 with production of approximately 20,000 bopd. 

2024 is off to a record start having maintained nearly 19,000 bopd over the first two months in an eighty-dollar oil price environment, enabling us to maintain a robust cash position through the first quarter.  With continued advancements on the OCP oil export pilot through Ecuador, the Company will continue to prioritize derisking oil sales so PetroTal can embark on new production growth projects.

With its strong, debt free, balance sheet, PetroTal will continue to evaluate accretive growth opportunities.  I would like to thank shareholders for their continued support, as well as PetroTal’s board of directors and the rest of the PetroTal team for their continued valuable contributions to our success.”  

PetroTal beat the whisper in 2023 with a fine operational performance that despite shipping hazards and occasional oil price challenges enabled a pay down of debt and substantial dividend and buy-back payments. Going into 2024 things already look very good indeed, production is higher than ever with the 17H well already doing 3,300 b/d pre ESP installation and the 18H well spudded on March 5th, and prices are high…

In addition, diversifying routes for existing and maybe more crude in the future has led to discussions on the OCP export route and the pilot project through Ecuador and that may not be the only route diversification. 

Given the yield, accentuated by the buy-back PetroTal offers exceptional capital and income return, my Target Price of 150p still stands, but maybe if the company decided to add a little, say sizzle to the portfolio then heaven knows what might happen. 

Selected Financial Highlights

The table below summarizes PetroTal’s comparative financial position.

Three Months Ended

Year Ended December 31

Q4-2023

 

Q3-2023

 

2023

 

2022

 

 

$/bbl

$ 000

$/bbl

$ 000

$/bbl

$ 000

$/bbl

$ 000

Average Production (bopd)

 

14,865

 

10,909

 

14,248

 

12,200

Average sales (bopd)

 

15,033

 

11,553

 

14,421

 

13,168

Total sales (bbls)(1)

 

1,383,061

 

1,062,851

 

5,263,485

 

4,806,431

Average Brent price

$82.21

 

$84.65

 

$81.53

 

$98.92

 

Contracted sales price, gross

$81.05

 

$84.31

 

$80.54

 

$96.67

 

Tariffs, fees and differentials

($20.28)

 

($19.25)

 

($20.33)

 

($21.96)

 

Realized sales price, net

$60.77

 

$65.05

 

$60.21

 

$74.71

 

Oil revenue(1)

$60.77

$84,046

$65.05

$69,142

$60.21

$316,911

$74.71

$359,106

Royalties(2)

$7.00

$9,676

$5.49

$5,835

$5.82

$30,648

$6.66

$31,991

Operating expense

$7.24

$10,010

$8.45

$8,982

$6.16

$32,446

$6.86

$32,954

Direct Transportation:

 

 

 

 

 

 

 

 

     Diluent

$1.46

$2,020

$1.72

$1,829

$1.30

$6,857

$1.96

$9,440

     Barging

$0.60

$828

$0.80

$845

$0.66

$3,475

$1.34

$6,431

     Diesel

$0.10

$142

$0.13

$141

$0.10

$516

$0.23

$1,083

     Storage

$1.45

$2,001

$1.99

$2,114

$0.78

$4,115

$0.76

$3,668

Total Transportation

$3.61

$4,991

$4.64

$4,929

$2.84

$14,963

$4.29

$20,622

Net Operating Income(3,4)

$42.92

$59,369

$46.47

$49,396

$45.39

$238,854

$56.90

$273,539

G&A

$6.21

$8,588

$6.92

$7,355

$5.33

$28,049

$4.14

$19,891

EBITDA(3)

$36.71

$50,781

$39.55

$42,041

$40.06

$210,805

$52.77

$253,648

Adjusted EBITDA(3,5)

$29.13

$40,284

$50.76

$53,953

$37.83

$199,127

$53.28

$256,070

Net Income

$15.57

$21,529

$23.86

$25,359

$20.99

$110,505

$39.22

$188,527

Basic Shares Outstanding (000)

 

912,314

 

916,700

 

912,314

 

862,209

Market Capitalization(6)

 

$556,512

 

$522,519

 

$556,512

 

$431,104

Net Income/Share ($/share)

 

$0.02

 

$0.03

 

$0.12

 

$0.219

Capex

 

$32,157

 

$17,011

 

$108,453

 

$94,203

Free Funds Flow(3) (7)

$5.87

$8,127

$34.76

$36,944

$17.23

$90,674

$33.68

$161,868

% of Market Capitalization(6)

 

1.5%

 

7.1%

 

16.3%

 

37.5%

Total Cash(8)

 

$111,299

 

$112,827

 

$111,299

 

$119,969

Net Surplus (Debt) (3) (9)

 

$57,298

 

$86,545

 

$57,298

 

$74,224

1.  Approximately 85% of Q4 2023 sales were through the Brazilian route vs 82% in Q3 2023.

2.  Royalties at year to date December 31, 2023 and December 31, 2022 include the impact of the 2.5% community social trust.

3.  Non-GAAP (defined below) measure that does not have any standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures presented by other entities. See “Selected Financial Measures” section.

4.  Net operating income represents revenues less royalties, operating expenses, and direct transportation.

5.  Adjusted EBITDA is net operating income less general and administrative (“G&A”) and plus/minus realized derivative impacts.

6.  Market capitalization for Q4, 2023, Q3 2023, and Q4 2022 assume share prices of $0.61 $0.57, and $0.50 respectively.

7.  Free funds flow is defined as adjusted EBITDA less capital expenditures. See “Selected Financial Measures” section.

8.  Includes restricted cash balances.

9.  Net Surplus (Debt) = Total cash + all trade and net VAT receivables + short and long term net derivative balances – total current liabilities – long term debt – non current lease liabilities – net deferred tax – other long term obligations.

Q4 2023 Financial Variance Summary

 

Three Months Ended

Year Ended December 31

US$/bbl Variance Summary

Q4 2023

Q3 2023

Variance

2023

2022

Variance

Oil Sales (bopd)

15,033

11,553

3,480

14,421

13,168

1,253

Contracted Brent Price

$81.05

$84.31

($3.26)

$80.54

$96.67

($16.13)

Realized Sales Price

$60.77

$65.05

($4.28)

$60.21

$74.71

($14.50)

Royalties

$7.00

$5.49

$1.51

$5.82

$6.66

($0.84)

Total Opex and Transportation

$10.85

$13.09

($2.24)

$9.00

$11.15

($2.15)

Net Operating Income(1,2)

$42.92

$46.47

($3.55)

$45.39

$56.90

($11.51)

G&A

$6.21

$6.92

($0.71)

$5.33

$4.14

$1.19

EBITDA

$36.71

$39.55

($2.84)

$40.05

$52.77

($12.72)

Net Income

$15.57

$23.86

($8.29)

$20.99

$39.22

($18.23)

Free Funds Flow(1,3)

$5.87

$34.76

($28.89)

$17.23

$33.68

($16.45)

 

Q4 2023 Financial Variance Commentary

·    Weaker contracted Brent price of $81.05/bbl compared to the preceding quarter of $84.31/bbl, resulting in a 7% lower realized price of $60.77/bbl.

·    Lower operating expenses per bbl resulting from higher sales volumes in Q4 2023 compared to Q3 2023.  Q4 2023 operating expenses included additional floating storage costs caused by longer than usual barge travel times during the final months of the dry season.

·    Capital spending in the quarter was $32 million compared to $17 million in Q3 2023 driven by the drilling commencement of well 16H and continued investment in water handling facilities.  This resulting in a decrease in Q4 2023 free funds flow(1,3)  dollar figure to approximately $8.1 million compared to $37 million in Q3 2023.

·    Liquidity was flat in Q4 2023 compared to Q3 2023, with total cash decreasing by $1.5 million to $111 million driven by favorable working capital timing.

·    Strong balance sheet position in Q4 2023 with no debt and a net surplus (1,4)   of $57 million now inclusive of a $42 million net deferred tax liability.

1.  See “Selected Financial Measures”

2.  Net operating income represents revenues less royalties, operating expenses, and direct transportation.

3.  Free funds flow is defined as adjusted EBITDA less capital expenditures.

4.  Net Surplus (Debt) = Total cash + all trade and net VAT receivables + short and long term net derivative balances – total current liabilities – long term debt – non current lease liabilities – net deferred tax – other long term obligations.

Financial and Operating Updates Subsequent to December 31, 2023

Robust oil production.  Production continues to trend ahead of 2024 guidance with the Company producing 20,453 bopd in January and 17,411 bopd in February 2024.  March production to date has averaged 15,600 bopd with the Company’s most recently drilled well (16H) producing around 2,500 bopd and nearing full investment payout.  The field was shut down from March 6, 2024 until March 8, 2024 as a safety precaution after an independently operated barging incident caused a small release of oil into the Puniuaha river approximately 2km away from the field.  No injuries were reported and the cleanup has been substantially completed.  The field downtime did not materially impact Q1 2024 production and the Company is still expected to meet Q1 2024 production guidance of 18,500 bopd.  

Well 17H update.  The Company has completed drilling well 17H on time, materially on its $14 million budget, and commenced production on March 1, 2024.  The well has a total depth of approximately 4,960 meters with a lateral section of 1,245 meters.  Production since start up has averaged 3,300 bopd under natural flow conditions allowing the well continuing to clean out drilling fluids and reach maximum initial production.

Well 18H drilling commencement.  The Company commenced drilling well 18H on March 5, 2024 with an estimated cost of $14 million.  The well is expected to take approximately 60 days to drill and complete with initial production estimated to occur by mid May 2024. 

OCP pilot project.  PetroTal is pleased to announce continued advancement on the OCP pilot oil shipment with the signing of three key approvals.  In early February 2024, the Company received approval letters from the Ecuadorian Ministry of Environment and Ecuadorian Navy along with the successful signing of a use of port agreement with Petroecuador.  The Company is awaiting on a final letter from the Port Subsecretariate to start the 100,000 bbl pilot.  Pending success of the first pilot, the Company anticipates an additional pilot in the second half of 2024 with recurring sales expected in Q4 2024. 

2024 Budget guidance.  On January 22, 2024, the Company released its 2024 guidance, forecasting an average 2024 production and sales target of 17,000 bopd, delivering an estimated 20% growth rate over 2023 average production. If this forecast is achieved, PetroTal will generate approximately $200 million in EBITDA underpinned by a total 2024 capex spend of $134 million and allowing for a stable return of capital program.  Should production and/or Brent price outperform the Company’s base case budget assumptions (Brent oil at $77/bbl), liquidity sweep for shareholder return upside is possible.  At March 15, 2024, the Company estimates it is trending in line with budget expectations.

2023 year ended reserves On February 12, 2024, PetroTal announced its updated reserves profile ending December 31, 2023.  The Company was able grow its 2P after tax per share reserves value to $1.80/share with a $1.64 billion after tax net present value of reserves, discounted at 10% (“NPV10”) and associated 2P reserves of 100 million bbls.  The Company’s 2023 year ended 2P reserve replacement ratio is at 167%, with an associated 2P reserve life index of 19 years.  For the full text of this announcement, please refer to PetroTal’s press release dated February 12, 2024, filed on SEDAR+ (www.sedarplus.ca) and posted on PetroTal’s website (www.petrotalcorp.com).  In addition to the summary information disclosed in this press release, more detailed information will be included in the annual information form for the year ended December 31, 2023, to be filed on SEDAR+ (www.sedarplus.ca) and posted on PetroTal’s website (www.petrotalcorp.com) on March 28, 2024.

Corporate presentation update.  The Company has updated its Corporate Presentation, which is available for download or viewing at www.petrotal-corp.com.

Touchstone Exploration

Touchstone has reported its operating and condensed financial results for the three months and year ended December 31, 2023. Selected financial information is outlined below and should be read in conjunction with our December 31, 2023 audited consolidated financial statements and related Management’s discussion and analysis, both of which will be available under our profile on SEDAR+ (www.sedarplus.ca) and on our website (www.touchstoneexploration.com). Unless otherwise stated, all financial amounts presented herein are rounded to thousands of United States dollars, and all production volumes disclosed herein are sales volumes based on Company working interest before royalty burdens.

Paul Baay, President and Chief Executive Officer, commented: 

“The transformational increase in production through the final months of 2023 reflects the commencement of production at our Cascadura field. The associated growth in cash from operations combined with our anticipated increase in borrowing capacity, will enable us to pursue our previously announced 2024 capital budget focused on driving further growth. Since year-end we have made substantial progress on our 2024 capital program, with one well successfully drilled and cased, and two further wells currently drilling. We continue to expect to bring the additional Cascadura wells on stream late in the third quarter of 2024 once the tie-in pipeline to our production facilities is completed. We are confident that 2024 will be another period of significant operational development and we look forward to updating our stakeholders on our progress.”

Touchstone is now delivering as expected from Cascadura where the rollout of the 2024 capital programme is expected to bring further drilling success and throughout this year. This is funded by increased cash flow from operations and the recently announced borrowing restructuring. 

I can see steadily rising cash flow from increasing operations and whilst the delay from a year ago created a temporary halt to the run in the share price the recent run up has been, in my view the start of a long term rise in the rating as the market realises quite what a substantial asset this is.

 

 

Fourth Quarter 2023 Financial and Operating Highlights

·     Average quarterly production increased 151 percent to 8,504 boe/d (79 percent natural gas) relative to 3,391 boe/d produced in the third quarter of 2023, reflecting a full quarter of Cascadura production volumes.

·      Realized petroleum and natural gas sales of $20,759,000 compared to $11,682,000 in the third quarter of 2023, mainly attributed to incremental Cascadura natural gas and associated liquids sales.

–     Cascadura field production volumes in the quarter contributed $8,437,000 of net natural gas sales at an average realized price of $2.45 per Mcf and $4,170,000 of net NGL sales at an average realized price of $72.92 per barrel.

–     Natural gas production from the Coho-1 well averaged net volumes of 3.1 MMcf/d (517 boe/d) in the quarter and contributed $617,000 of net natural gas sales at an average realized price of $2.16 per Mcf.

·     Generated an operating netback of $13,731,000, a 128 percent increase from the third quarter of 2023, benefiting from a full quarter of production from our Cascadura field. Operating netbacks were $17.54 per boe, representing a 9 percent decrease from the $19.27 per boe reported in the third quarter of 2023, attributed to an increased weighting of natural gas volumes to total production.

·     Achieved quarterly record funds flow from operations of $10,489,000 in the fourth quarter compared to $2,432,000 in the preceding quarter, primarily driven by the $7,720,000 quarter-over-quarter increase in operating netback.

·      $1,186,000 in quarterly capital investments primarily focused on expenditures directed to Royston-1X production testing, final Cascadura facility commissioning and pre-drill expenditures relating to the Cascadura-2 well.

·      Reduced net debt by 25 percent in the quarter, exiting the year with a cash balance of $8,186,000, a working capital deficit of $7,581,000 and a bank loan principal balance of $28,000,000, resulting in a net debt position of $22,581,000.

Annual 2023 Financial and Operating Highlights

·     Commissioned and achieved first natural gas and associated liquids production from our Cascadura facility on September 6, 2023.

·      Delivered average daily production volumes of 3,981 boe/d (65 percent natural gas), an increase of 152 percent year-over-year.

·      Realized petroleum and natural gas sales of $48,098,000 compared to $42,944,000 in the prior year, as $15,742,000 of incremental Cascadura natural gas and associated liquids sales were partially offset by a $12,598,000 decrease in crude oil sales, reflecting a 21 percent decline in realized crude oil pricing and a 12 percent reduction in crude oil production.

·     Generated funds flow from operations of $13,730,000 (2022 – $3,540,000) and an annual operating netback of $26,220,000 or $18.04 per boe (2022 – $19,281,000 and $33.42 per boe).

·      Executed an incident-free $18,949,000 capital program, primarily focused on completing the Cascadura natural gas facility and drilling and testing the Royston-1X exploration well.

·      December 31, 2023 net debt was $22,581,000, resulting in a reduced net debt to annual funds flow from operations ratio of 1.64 times.

·      Responsible operations remained a top priority throughout 2023, as Touchstone had one lost time injury and released its third environmental, social and governance report encompassing the 2022 year.

We recorded exploration and evaluation asset impairment expenses of $32,649,000 related to the Chinook and Royston areas of our Ortoire block, as the carrying value of the assets exceeded the estimated recoverable amount based on forecasted allocation of future capital spending and the previously announced results of production tests which deemed the Royston-1X sidetrack well uneconomic. The impairment expense was partially offset by an aggregate pre-tax net impairment reversal of $11,452,000 on three petroleum and natural gas development asset cash generating-units ($3,896,000 after-tax) and increased fourth quarter 2024 funds flow from operations. This resulted in a net loss of $21,236,000 ($0.09 per basic share) recognized in the fourth quarter of 2023 and $20,598,000 ($0.09 per basic share) reported in 2023. Excluding net impairment expenses recognized in each period, fourth quarter net earnings were $7,662,000 ($0.03 per basic and diluted share) and annual 2023 net earnings were $8,347,000 ($0.04 per basic and diluted share). 

Post Year-End Highlights

·      We safely and successfully drilled and cased our Cascadura-2 delineation well on the Ortoire block.

·      Spudded the CO-374 well on the CO-1 block on February 28, 2024 and spudded the Cascadura-3 well on March 1, 2024, with drilling operations currently underway at both locations.

·      We executed a binding term sheet providing for $13 million of additional borrowing capacity from our existing Trinidad-based lender, with the parties currently documenting an amended loan agreement.

·      In February 2024, we achieved average net sales volumes of 7,081 boe/d as follows:

–     Cascadura contributed net sales volumes of 5,440 boe/d consisting of:

–     net natural gas sales volumes of 31.1 MMcf/d or 5,179 boe/d with a realized price of $2.49 per Mcf; and

–     net natural gas liquids volumes of 261 bbls/d with an average realized price of $69.85 per barrel;

–     Coho net average natural gas sales volumes were 2.8 MMcf/d or 469 boe/d at a realized price of $2.28 per Mcf (excluding third party processing fees); and

–     average net daily crude oil sales volumes were 1,172 bbls/d per day with an average realized price of $69.85 per barrel.

Outlook and Guidance

Our first quarter 2024 capital program is progressing as planned with a primary focus on Cascadura field drilling, CO-1 infill well drilling and road and pipeline construction to tie-in our Cascadura development wells to our natural gas facility. The majority of the estimated production from our current capital activity is expected to be weighted to the fourth quarter of 2024. We currently forecast to maintain our preliminary 2024 guidance announced on December 19, 2024.

2023 Financial and Operating Results Overview

Three months ended December 31,

(4)

Year ended December 31,

(4)

2023

2022

2023

2022

 

 

 

 

Operational

 

 

 

 

 

 

 

 

Average daily production

 

 

Crude oil(1) 

1,133

1,274

(11)

1,181

1,340

(12)

NGLs(1) (bbls/d)

622

n/a

201

n/a

Crude oil and liquids(1) (bbls/d)

1,755

1,274

38

1,382

1,340

3

Natural gas(1) 

40,491

5,729

100

15,593

1,444

100

Average daily production (2)

8,504

2,229

100

3,981

1,581

100

 

 

Average realized prices(3)

 

 

Crude oil(1) 

72.26

75.10

(4)

67.80

85.52

(21)

NGLs(1) ($/bbl)

72.92

n/a

74.07

n/a

Crude oil and liquids(1) ($/bbl)

72.49

75.10

(3)

68.72

85.52

(20)

Natural gas(1) 

2.43

2.11

15

2.36

2.11

12

Realized commodity price ($/boe)(2)

26.53

48.36

(45)

33.10

74.43

(56)

 

 

Production mix (% of production)

 

 

Crude oil and liquids(1)

21

57

35

85

Natural gas(1)

79

43

65

15

 

 

Operating netback ($/boe)(2)

 

 

Realized commodity price(3)

26.53

48.36

(45)

33.10

74.43

(56)

Royalties(3)

(5.53)

(15.24)

(64)

(8.38)

(25.37)

(67)

Operating expenses(3)

(3.46)

(12.07)

(71)

(6.68)

(15.64)

(57)

Operating netback(3)

17.54

21.05

(17)

18.04

33.42

(46)

 

 

Financial

 

 

($000’s except per share amounts)

 

 

 

 

Petroleum and natural gas sales

20,759

9,919

100

48,098

42,944

12

 

 

Cash from (used in) operating activities

8,512

(1,189)

n/a

12,743

5,752

100

 

 

Funds flow from operations

10,489

691

100

13,730

3,540

100

 

 

Net loss

(21,236)

(1,921)

100

(20,598)

(3,197)

100

Per share – basic and diluted

(0.09)

(0.01)

100

(0.09)

(0.01)

100

 

 

Exploration capital expenditures

595

2,290

(74)

17,638

9,788

80

Development capital expenditures

591

219

100

1,311

1,542

(15)

Capital expenditures(3)

1,186

2,509

(53)

18,949

11,330

67

 

 

Working capital deficit (surplus)(3)

 

7,581

(4,992)

n/a

Principal long-term bank debt

 

15,000

21,000

(29)

Net debt(3) – end of period

 

22,581

16,008

41

 

 

Share Information 

 

 

 

 

Weighted avg. shares outstanding:

 

 

Basic and diluted

234,213

217,106

8

233,487

213,211

10

Outstanding shares – end of period

 

234,213

233,037

1

Notes:

(1)   Refer to the “Advisories – Product Type Disclosures” for further information.

(2)   In the table above and elsewhere in this announcement, references to “boe” mean barrels of oil equivalent that are calculated using the energy equivalent conversion method. Refer to the “Advisories – Oil and Natural Gas Measures” for further information.

(3)   Non-GAAP financial measure. See the “Advisories – Non-GAAP Financial Measures” for further information.

(4)   Percentages have been rounded to the nearest whole number and limited to increases or decreases of 100 percent.

Challenger Energy Group

Yesterday I had the great opportunity to interview Eytan Uliel, CEO of Challenger Energy Group a share that I have been almost single handedly been cheering for since Uruguaygate started. 

In his detailed and very frank discussion Eytan talks me through how he got the licenses in what is now one of the hottest post codes in International oil exploration and what the outlook is with his new besties at Chevron. 

This one is most definitely worth watching…

Core Finance CEO Interview: Eytan Uliel, Challenger Energy Group

Gulf Keystone Petroleum.

Gulf Keystone, today announces its results for the full year ended 31 December 2023.  

Jon Harris, Gulf Keystone’s Chief Executive Officer, said:

“Following a challenging year in 2023, in which our operational and financial performance was impacted by the suspension of Kurdistan exports and delays to KRG payments, we successfully adapted to the new local sales environment. Local sales volumes have rebounded since the beginning of 2024, with year to date gross average sales of c.33,300 bopd and March to date sales of c.43,000 bopd. We are more than covering our monthly expenditures and have significantly reduced accounts payable, with all invoices now current. Free cash flow from current robust local sales demand is being used to further improve our liquidity position. Looking ahead, we remain resilient with upside potential from the restart of exports and normalisation of payments. While there is no defined timeline, we continue to actively engage with government stakeholders to secure a solution to unlock significant value for all stakeholders.”

I listened to the webcast, not expecting much and I wasn’t disappointed, clearly there is nothing to say and there were no questions at all for the management. I can add nothing to this process…

Highlights to 31 December 2023 and post reporting period

Operational

·     Continued rigorous focus on safety, with Zero Lost Time Incidents for 430 days as at 20 March 2024

·     Significant operational transition following the Iraq-Turkey Pipeline (“ITP”) closure on 25 March 2023 as GKP moved from pipeline exports and reservoir development to the shut-in of production, suspension of all expansion activities and subsequent start-up of local sales

·     2023 gross average production of 21,891 bopd (2022: 44,202 bopd), reflecting strong growth prior to the suspension of exports followed by the start-up of local sales in H2 2023 at lower levels

 Gross production averaged 49,165 bopd between 1 January and 24 March 2023, with the ramp-up of SH-16 and start-up of SH-17 driving production to highs of over 55,000 bopd on several days in March 2023

 Gross average local sales of 23,331 bopd between 19 July and 31 December 2023

·     Increasing local demand in 2024 year to date has driven a rebound in sales volumes

 Year to date gross average sales of 33,300 bopd, with gross average sales in March 2024 to date of c.43,000 bopd, as at 19 March 2024

 Ramp up in local sales reflects strong market demand for certain refined products, the further easing of seasonal logistic challenges and a realised price of c.$25/bbl

Financial

·     Material impact on 2023 financial performance from the suspension of exports and continued delays to payments from the Kurdistan Regional Government (“KRG”)

·     Decisive action taken to preserve liquidity¸ with significant expenditure reductions and transition to local sales

·     Reduction in revenue and profitability from lower production and realised prices

 Revenue reduced to $123.5 million (2022: $460.1 million), reflecting the 50% decrease in gross average production to 21,891 bopd and lower average realised prices from local sales in H2 2023 of $30/bbl

 Loss after tax of $11.5 million (2022: profit after tax of $266.1 million), including an increase in the expected credit loss provision determined under IFRS 9 of $21.4 million (2022: $2.0 million) related to the $151 million overdue receivables from the KRG for October 2022 to March 2023 export sales. The Company continues to expect to recover the receivables

·     Free cash outflow of $13.1 million (2022 free cash flow of $266.5 million), reflecting lower Adjusted EBITDA and delays to KRG payments, partially offset by reduced net capex and costs

 Adjusted EBITDA declined to $50.1 million (2022: $358.5 million)

 Revenue receipts of $109.2 million (2022: $450.4 million), reflecting $65.7 million for export sales in August and September 2022 received in Q1 2023 and $43.5 million from local sales in H2 2023

 2023 net capex of $58.2 million (2022: $114.9 million), of which $11.2 million was in H2 2023, as the Company suspended all Shaik