PetroTal Recommences Oil Production at the Bretana Field
The Peruvian government and communities agree to funding plan
Calgary, Alberta and Houston, Texas--(Newsfile Corp. - September 30, 2020) - PetroTal Corp. (TSXV: TAL) (AIM: PTAL) ("PetroTal" or the "Company") is pleased to announce the recommencement of oil production and operations at the Bretana oil field. The recommencement of oil production follows agreements between the indigenous communities in the northeastern region of Peru (inclusive of Loreto, where Bretana is located), Regional governments and the Central Government of Peru, that will see enhanced funding available for these regions to aid community projects.
- PetroTal recommenced operations at the Bretana oil field on September 28, 2020, and as all seven wells continue to be gradually brought into full operation, current production is approximately 11,000 barrels of oil per day ("bopd"), approaching the pre shut down level of 11,500 bopd;
- The indigenous communities and government bodies have reached an agreement that will see increased funding for the local communities;
- Oil deliveries will commence to the Iquitos refinery immediately, and the Northern Oil Pipeline ("ONP") at the Saramuro Pump Station will be ready to receive deliveries of Bretana oil when the barges arrive; and,
- The Company's stringent Covid-19 protocols continue to ensure that the camp remains safe and operates with minimal downtime.
Resolution between Communities and Governments
The Central Government has made three important announcements tackling the social unrest, which was exacerbated by the Covid-19 crisis. These measures will provide a long-term solution to these issues.
The first was Supreme Decree Nº 145-2020-PCM1 signed by the President (published August 28, 2020) establishing an investment plan to bridge the income gap among the poor indigenous communities, known in Spanish as the Plan de Cierres de Brechas ("PCB"). PetroTal strongly supports this initiative, which provides a six-year financial commitment of approximately US $1.7 billion2 to support development of the communities, of which US $28 million will be designated for economic development of the local communities over the next four months.
The second announcement was Ministerial Resolution Nº 268-2020-PCM3 signed by the Prime Minister (published September 20, 2020) establishing a working group called "The Management Committee for monitoring interventions and outcomes for the development of the native communities and localities of the provinces under the sphere of hydrocarbon activities in the provinces of Maynas, Loreto, Datem del Maranon, Requena and Alto Amazonas, of the department of Loreto", that will decide the projects under the PCB and who would manage them.
The third announcement was a Decree of Urgency Nº 114-20204 signed by the President (published September 23, 2020) allocating approximately US $250 million5 to a list of infrastructure projects throughout the country, with US $20 million5 allocated to the Loreto Region where Bretana is located. This decree expedites the procurement process to ensure all the allocated funds are properly deployed to maximize employment throughout all the communities.
2) Related news article found at https://andina.pe/agencia/noticia-gobierno-destinara-6-mil-millones-soles-para-cerrar-brechas-la-amazonia-811705.aspx
PetroTal acknowledges the efforts made by the indigenous communities and all levels of the Peruvian government to resolve the recent social disruption and to ensure a long-term solution is in place to minimize future disruptions. Going forward, PetroTal will continue its dedication to community support, along with focusing on sound environmental and corporate governance policies as well as maintaining stringent Covid-19 protocols to ensure that the camp remains safe and is operated with minimal downtime.
Bretana Oil Field Recommencement
With the full support from the local indigenous communities and governments, PetroTal has recommenced operations at the Bretana oil field. All seven wells have now commenced operation and are being gradually optimized for effective reservoir management. Production is currently at approximately 11,000 bopd, and expected to reach the pre shut down level of 11,500 bopd, shortly.
While production was shut in at Bretana, Petroperu used that time to carry out some maintenance work on the pipeline, which is expected to be completed on time without affecting Bretana's oil deliveries. Similarly, with the social unrest at Bretana that originated at the pipeline now resolved, the Government expects to have the pipeline social issues also resolved in time for the pipeline to receive Bretana's oil production. In the meantime, the Iquitos refinery operated continuously throughout the recent social unrest, thereby allowing PetroTal to deliver oil from inventory over the last month.
At September 29, 2020, PetroTal had cash resources of US $12 million, with accounts payable and accrued liabilities of approximately US $36 million, a reduction of US $14 million from the end of Q2 2020. Ongoing payments will be managed from expected oil field revenues and internal cash resources. Pursuant to contractual terms with our suppliers, approximately 30% of the amount is not due until into 2021.
Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:
"PetroTal commends the efforts of all parties in reaching a negotiated settlement that will ultimately benefit the indigenous communities, the Peruvian government, and all operating companies, including PetroTal. On behalf of PetroTal, I would like to sincerely thank the PetroTal team for their continued dedication during this period and for their contribution towards this long-term community funding solution. Our corporate commitment is to ensure all stakeholders benefit from the Bretana project, including the local communities that support our Company."
PetroTal is a publicly‐traded, dual‐quoted (TSXV: TAL and AIM: PTAL) oil and gas development and production company domiciled in Calgary, Alberta, focused on the development of oil assets in Peru. PetroTal's flagship asset is its 100% working interest in Bretana oil field in Peru's Block 95 where oil production was initiated in June 2018, and in early 2020 became the second largest crude oil producer in Peru with more than 10,000 bopd of production. Additionally, the Company has large exploration prospects and is engaged in finding a partner to drill the Osheki prospect in Block 107. The Company's management team has significant experience in developing and exploring for oil in Northern Peru and is led by a Board of Directors that is focused on safely and cost effectively developing the Bretaña oil field.
Executive Vice President and Chief Financial Officer
T: (713) 609-9101
Manuel Pablo Zuniga-Pflucker
President and Chief Executive Officer
T: (713) 609-9101
Mark Antelme / Jimmy Lea
T : 44 (0) 208 434 2643
Strand Hanson Limited (Nominated & Financial Adviser)
James Spinney / Ritchie Balmer
T: 44 (0) 207 409 3494
Stifel Nicolaus Europe Limited (Joint Broker)
Callum Stewart / Simon Mensley / Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Auctus Advisors LLP (Joint Broker)
Jonathan Wright / Rupert Holdsworth Hunt / Harry Baker
T: +44 (0) 7711 627449
FORWARD‐LOOKING STATEMENTS: This press release contains certain statements that may be deemed to be forward‐looking statements. Such statements relate to possible future events, including, but not limited to: PetroTal's business strategy, objectives, strength and focus; increased oil production volumes due to the reopening of the Bretana oil field and resumption of oil production therefrom; the effects and duration of the Funding Agreement; PetroTal's plans regarding community support, the environmental and corporate governance; and the ongoing effects of Covid-19 on the Company and its employees. All statements other than statements of historical fact may be forward‐looking statements. Forward‐ looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "estimate", "potential", "will", "should", "continue", "may", "objective" and similar expressions. The forward‐looking statements are based on certain key expectations and assumptions made by the Company, including, but not limited to: expectations and assumptions concerning the reopening of existing infrastructure, its ability to deliver production and the anticipated capital expenditures associated therewith; successful implementation of the Decree; prevailing commodity prices and actual prices received for PetroTal's products; the availability and performance of drilling rigs, facilities, pipelines, inventory and barge storage capacity, other oilfield services and skilled labour; royalty regimes; exchange rates; the application of regulatory and licensing requirements; current legislation; the success of future drilling and development activities; and general economic conditions. Although the Company believes that the expectations and assumptions on which the forward‐looking statements are based are reasonable, undue reliance should not be placed on the forward‐looking statements because the Company can give no assurance that they will prove to be correct. Since forward‐looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Please refer to the risk factors identified in the Company's annual information form for the year ended December 31, 2019 and management's discussion and analysis for the three and six months ended June 30, 2020 which are available on SEDAR at www.sedar.com. The forward‐looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward‐looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/64920